Document:

EXHIBIT 10.5
  AMENDED
AND RESTATED
  SPECIALTY PROGRAM BUSINESS AND
INSURANCE RISK SHARING BUSINESS
  QUOTA SHARE REINSURANCE AGREEMENT
  between
  TOWER INSURANCE COMPANY OF NEW YORK

TOWER NATIONAL INSURANCE COMPANY

(each a “Company”)
  and
  CASTLEPOINT REINSURANCE COMPANY, LTD.

(“Reinsurer”)
  Effective April 1, 2006
  ARTICLE I                                                           BUSINESS
COVERED
  A.            This Agreement applies to all in-force, new and renewal
Policies, except as hereinafter excluded, written and classified by the Company
as Fire and Allied Perils, Commercial Multiple Peril, Homeowners Multiple Peril
and Liability, Workers’ Compensation, Inland Marine and Automobile Liability
and Physical Damage and Umbrella, with an inception date effective during the
term of this Agreement and which are classified by the Company as Specialty
Program Business and Insurance Risk Sharing Business.
  ARTICLE II                                                       DEFINITIONS
   “Business Covered” shall mean the business
described in Article I.
  “Extra-Contractual Obligations” shall mean those
liabilities not covered under any other provision of this Agreement, other than
Loss Excess of Policy Limits, including but not limited to compensatory,
consequential, punitive, or exemplary damages together with any legal costs and
expenses incurred in connection therewith, paid as damages or in settlement by
the Company arising from an allegation or claim of its insured, its insured’s
assignee, or other third party, which alleges negligence, gross negligence, or
other tortious conduct on the part of the Company in the handling,
adjustment, rejection, defense or settlement of a claim under a Policy.
   “Insurance Risk
Sharing Business” shall mean various risk sharing arrangements such as (i) pooling
or sharing of premiums and losses between the Company and other insurance
companies based upon their respective percentage allocations or (ii) appointing
other third party insurance companies as Program Underwriting Agents with such
third party insurance

    companies
assuming through reinsurance a portion of the business they produce as Program
Underwriting Agents.
  “Letter(s) of Credit” shall
have the meaning set forth in Article XVI.
  “Loss” or “Losses” shall mean,
with respect to a Policy, the amount paid or payable by the Company to an
insured with regards a Loss Occurrence, including (i) any Ex Gratia Payments
(i.e., a claim payment not necessarily required by a Policy as a
commercial accommodation by the Company to the insured or reinsured) and (ii) any
payments for Extra-Contractual Obligations or Losses in Excess of Policy
Limits.
  “Loss Adjustment Expenses” as
used in this Agreement shall mean all loss adjustment expenses incurred by the
Company in settling claims including costs and expenses allocable to a specific
claim that are incurred by the Company in the investigation, appraisal,
adjustment, settlement, litigation, defense or appeal of a specific claim,
including court costs and costs of supersedes and appeal bonds and including (i) pre-judgment
interest, unless included as part of the award or judgment; (ii) post-judgment
interest and (iii) legal expenses and costs incurred in connection with
coverage questions and legal actions connected thereto, including pro rata
declaratory judgment expenses.
  Loss
Adjustment Expenses shall include in-house adjusters, defense attorneys, and
other claims and legal personnel of Tower Insurance Company of New York/Tower
Risk Management and other costs allocated to the defense and adjustment of a
specific claim.
  “Loss in Excess of Policy Limits” means any amount of
loss, together with any legal costs and expenses incurred in connection
therewith, paid as damages or in settlement by the Company in excess of its
Policy Limits, but otherwise within the coverage terms of the Policy, arising
from an allegation or claim of its insured, its insured’s assignee, or other
third party, which alleges negligence, gross negligence, or other tortious
conduct on the part of the Company in the handling of a claim under a
Policy or bond, in rejecting a settlement within the Policy Limits, in
discharging a duty to defend or prepare the defense in the trial of an action
against its insured, or in discharging its duty to prepare or prosecute an
appeal consequent upon such an action. For the avoidance of doubt, the decision
by the Company to settle a claim for an amount within the coverage of the
Policy but not within the Policy limit when the Company has reasonable basis to
believe that it may have liability to its insured or assignee or other
third party on the claim will be deemed a Loss in Excess of Policy Limits.
  “Losses Incurred” shall mean
Losses ceded and Loss Adjustment Expense ceded as of the effective date of
calculation, plus the ceded reserves for Losses and Loss Adjustment Expense
outstanding as of the same date (including losses incurred but not reported),
it being understood and agreed that all Losses and related Loss Adjustment
Expense under Policies with effective or renewal dates during an adjustment
period shall be charged to the adjustment period, regardless of the date said
Losses actually occur.
  “Loss Occurrence” shall mean the
sum of all individual losses directly occasioned by any one disaster, accident
or loss or series of disasters, accidents or losses arising out of one
event

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    which occurs within the area of one state of
the United States or province of Canada and states or provinces contiguous
thereto and to one another. However, the duration and extent of any one “Loss
Occurrence” shall be limited to all individual losses sustained by the Company
occurring during any period of 168 consecutive hours arising out of and directly
occasioned by the same event except that the term “Loss Occurrence” shall be
further defined as follows:
  (i)            As regards windstorm, hail, tornado, hurricane, cyclone,
including ensuing collapse and water damage, all individual losses sustained by
the Company occurring during any period of 72 consecutive hours arising out of
and directly occasioned by the same event. However, the event need not be
limited to one state or province or states or provinces contiguous thereto.
  (ii)           As regards riot, riot attending a strike, civil commotion,
vandalism and malicious mischief, all individual losses sustained by the
Company occurring during any period of 72 consecutive hours within the area of
one municipality or county and the municipalities or counties contiguous
thereto arising out of and directly occasioned by the same event. The maximum
duration of 72 consecutive hours may be extended in respect of individual
losses which occur beyond such 72 consecutive hours during the continued
occupation of an assured’s premises by strikers, provided such occupation
commenced during the aforesaid period.
  (iii)          As regards earthquake (the epicenter of which need not
necessarily be within the territorial confines referred to in the opening
paragraph of this definition) and fire following directly occasioned by the
earthquake, only those individual fire losses which commence during the period
of 168 consecutive hours may be included in the Company’s “Loss
Occurrence.”
  (iv)          As regards “Freeze,” only individual losses directly occasioned
by collapse, breakage of glass and water damage (caused by bursting of frozen
pipes and tanks) may be included in the Company’s “Loss Occurrence.
  Except
for those “Loss Occurrences” referred to in (i) and (ii) above, the
Company may choose the date and time when any such period of consecutive
hours commences provided that it is not earlier than the date and time of the
occurrence of the first recorded individual loss sustained by the Company
arising out of that disaster, accident or loss and provided that only one such
period of 168 consecutive hours shall apply with respect to one event.
  However,
as respects those “Loss Occurrences” referred to in (i) and (ii) above,
if the disaster, accident or loss occasioned by the event is of greater
duration than 72 consecutive hours, then the Company may divide that
disaster, accident or loss into two or more “Loss Occurrences” provided no two
periods overlap and no individual loss is included in more than one such period
and provided that no period commences earlier than the date and time of the
occurrence of the first recorded individual loss sustained by the Company
arising out of that disaster, accident or loss.
  No
individual losses occasioned by an event that would be covered by 72 hours
clauses may be included in any “Loss Occurrence” claimed under the 168
hours provision.

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    “Net Liability” shall mean the
liability for Losses and Loss Adjustment Expenses which the Company retains net
for its own account and unreinsured in any way, except for excess of loss reinsurance,
after recoveries from inuring reinsurance.
  “Net Loss Ratio” shall mean,
for any period of time, the ratio of Losses Incurred during such period to net
Premiums Earned for such period.
  “Net Written Premium” shall
mean direct premium written on the Policies covered by this Agreement plus
additions, less refunds and return premium for cancellations and reductions
(but not dividends) and less premium paid or payable for reinsurance that
inures to the benefit of this Agreement.
  “Obligations” shall have the
meaning set forth in Article XVI.
  “Policy” or “Policies” shall
mean all policies, binders, contracts, certificates, or agreements of
insurance, whether written or oral, covering Specialty Program Business and
Insurance Risk Sharing Business in-force, issued or renewed on or after the
Effective Date by the Company.
  “Premiums Earned” shall mean,
with regards to any adjustment period, ceded net written premiums for Policies
with effective or renewal dates during the adjustment period, less the unearned
portion thereof as of the effective date of calculation, it being understood
and agreed that all premiums for Policies with effective or renewal dates
during an adjustment period shall be credited to that adjustment period.
  “Program Business” shall mean narrowly
defined classes of business that are underwritten on an individual policy basis
by a Program Underwriting Agent on behalf of insurance companies.
  “Specialty Program Business”
shall mean (i) Program Business other than Traditional Program Business and
(ii) Traditional Program Business that Company elects not to manage but
that CastlePoint Management Corp. elects to manages.
  “Terrorism” shall mean an act,
including but not limited to the use of force or violence and/or the threat
thereof, any person or group(s) of persons, whether acting alone or on behalf
of or in connection with any organization(s) or government(s), committed for
political, religious, ideological or similar purposes including the intention
to influence any government and/or to put the public, or any section of
the public, in fear that has been determined by the appropriate federal
authority to have been an act of terrorism.
  Terrorism
will include loss, damage, cost of expense of whatsoever nature directly or
indirectly caused by, resulting from or in connection with any action taken in
controlling, preventing, supervising or in any way relating to any act of
terrorism.
  “Traditional Program Business”
shall mean blocks of Program Business in excess of $5 million in annual gross
written premium Tower historically has underwritten, consisting of non-auto
related personal lines and the following commercial lines of business: retail
stores and

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    wholesale
trades, commercial and residential real estate, restaurants, grocery stores,
office and service industries, and artisan contractors.
  “Trust Account” shall have the
meaning specified in Article XVI.
  “Trust Agreement” shall have
the meaning specified in Article XVI.
  “Trustee” shall have the meaning specified in Article XVI.
  In the
event any portion of this definition section is found to be invalid or
unenforceable, the remainder will remain in full force and effect.
  ARTICLE III                                                   COMMENCEMENT
AND TERMINATION
  A.            This Agreement is effective at 12:01 a.m., Eastern
Standard Time, April 1, 2006 (the “Effective Date”) and shall have a
term of three (3) years. Either party may terminate the Agreement as
of the date twelve (12) months after the Effective Date and on the twelve month
anniversary thereafter thereafter by giving at least sixty (60) days prior written
notice to the other party by certified or registered mail, or as otherwise
provided below.
  B.            The Reinsurer shall have the right to terminate this
Agreement as of the date twenty four (24) months after the Effective Date and
annually thereafter by giving sixty (60) days prior written notice by certified
or registered mail to the Company if the sum of the Net Loss Ratio plus
(weighted) ceding commission percentage hereunder for the Business Covered
hereunder since the Effective Date equals or exceeds 99 % at the end of the
calendar quarter immediately preceding the date of such notice. If the parties
cannot agree as to the calculation of the Net Loss Ratio or ceding commission,
within 30 days of receiving the appropriate report, the calculation shall be
arbitrated. The actuarial firm of Towers Perrin shall furnish an arbiter for
Company and Reinsurer will choose another actuarial firm to furnish its
arbiter. Those two arbiters will select a third independent actuarial firm to
furnish the third arbiter. However, it is agreed that in the event of
termination by Reinsurer pursuant to this provision, the parties will act
reasonably to negotiate a new reinsurance agreement on terms similar to those
then being offered by other reinsurers.
  C.            In the event either party terminates this Agreement in
accordance with Paragraph A. or B. above, the Reinsurer shall participate in
all Policies ceded within the terms of this Agreement written or renewed by the
Company after receipt of notice of termination but prior to termination, and
shall remain liable for all cessions in force at termination of this Agreement;
however, the liability of the Reinsurer shall cease with respect to Loss
Occurrences subsequent to the first anniversary, natural expiration or
cancellation of each Policy ceded, but not to extend beyond twelve (12) months
after such termination. The Company and the Reinsurer may agree to
terminate this Agreement or some portion of the Business Covered on a cut-off
basis. Upon such termination, the Reinsurer shall incur no liability for Loss
Occurrences subsequent to the effective date of termination and the Reinsurer
shall return to the Company the Reinsurer’s portion of the unearned premium
reserve for all in force Policies less previously paid Ceding Commission on
such unearned premium reserve.

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    D.            Either
the Company or the Reinsurer may terminate this Agreement at any time by
the giving of thirty (30) days prior written notice to the other party upon the
happening of any one of the following circumstances:
  (1)           A State Insurance Department or other legal authority
orders the other party to cease writing business, or;
  (2)           The other party has become merged with, acquired or
controlled by any company, corporation, or individual(s) not controlling the
party’s operations previously, or
  (3)           The other party has reinsured its entire liability under
this Agreement without the terminating party’s prior written consent, or
  (4)           The Company ceases to retain any of the risks of the
Business Covered.
  E.             The Company may terminate this Agreement
immediately upon the happening of any of the following circumstances:
  (1)           The Reinsurer has become insolvent or has been placed into
liquidation or receivership (whether voluntary or involuntary), or there has
been instituted against it proceedings for the appointment of a receiver,
liquidator, rehabilitator, conservator, or trustee in bankruptcy, or other
agent known by whatever name, to take possession of its assets or control of
its operations, or
  (2)           The Reinsurer’s statutory policyholders’ surplus has been
reduced by either 50% of the amount of surplus at the inception of this
Agreement or 50% of the amount at the latest anniversary, whichever is greater,
or has lost any part of, or has reduced its paid-up capital, or
  F.             The
Company may terminate this Agreement upon thirty (30) days notice if the A.M.
Best Rating of the Reinsurer falls below “A-”
  G.            Notwithstanding the foregoing, this Agreement will
terminate upon the effective date of a Specialty Program Business Pooling
Agreement between the Company and CastlePoint Insurance Company or such other
entity designated by the Reinsurer.
  H.            In the event of any such termination under D., E., or F.,
the liability of the Reinsurer shall be terminated in accordance with the
termination provisions set forth in Paragraph C. above. However, in the case of
a termination under D or E, if the terminating party is the Company, the
Company shall have the right, by the giving of prior written notice, to
terminate this Agreement on a cut-off basis as provided in Paragraph C. above.
  ARTICLE IV                                                  TERRITORIAL
SCOPE
  The territorial limits of this Agreement shall be
identical with those of the Company’s Policies.

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    ARTICLE V          EXCLUSIONS
  This Agreement shall not apply to and specifically
excludes:
  A.                                   Nuclear Incident, in
accordance with the following clauses attached hereto:
  1.             Nuclear Incident Exclusion Clause – Physical Damage – Reinsurance
– U.S.A. – NMA 1119;
  2.             Nuclear Incident Exclusion Clause – Liability –
Reinsurance – U.S.A. – NMA 1590;
  B.                                     War Risks, in
accordance with BRMA Clause 56B;
  C.                                     Insolvency, in
accordance with BRMA Clause 20A;
  D.            Liability assumed by the Company as a member of any pool,
association or syndicate, in accordance with BRMA Clause 40A;
  E.             Earthquake when written as such;
  F.             Liability arising out of ownership, maintenance or use
of any aircraft or flight operations;
  G.            Professional Liability, when written as such, however not
to exclude when written as part of a package Policy or when written in
conjunction with other Policies issued by the Company;
  H.            Insolvency and Financial Guarantee;
  I.              Any acquisitions of companies or books of business
outside of the normal course of business (“agent rollovers”) without the prior
written consent of the Reinsurer hereon;
  J.             Asbestos liabilities of any nature;
  K.            Pollution liabilities of any nature;
  L.             Assumed reinsurance with the exception of
inter-affiliate reinsurance.
  ARTICLE VI                                                  REINSURANCE
COVERAGE
  A.             Upon the contribution of capital to the Reinsurer by its
parent in the amount of at least $156 million, the Company shall automatically
and obligatorily cede to the Reinsurer, and the Reinsurer shall be obligated to
accept as assumed reinsurance, an 85% quota share portion of the Net
Liabilities with respect to such Policies, subject to adjustment as set forth
below. The Company may, in its sole discretion, change the quota share
participation of the Reinsurer from time to time effective as of any 6 month
anniversary date of the effective date of this Agreement upon not less than
ninety (90) days prior written notice to the Reinsurer; provided, however
that the quota share participation of the Company shall at all times during the
term of this Agreement

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    be a
minimum of 15% and a maximum of 25%, and provided further that the quota share
participation of the Company does not exceed $25 million during the first 12
month period ended March 31, 2007, with such maximum amount subject to a
25% growth factor per twelve (12) month period thereafter. If the Company’s
quota share participation maximum of $25 million (subject to the growth factor)
is attained in any twelve month period ended March 31, then the quota
share participation percentage, which shall apply to all premiums and losses on
a pro-rated basis for such period, shall be decreased for that 12 month period even
if such participation is below 15%. Each such change shall apply to Policies
issued or renewed after the effective date of such change.
  B.            The Reinsurer’s
liability as respect Losses shall be subject to the following limits:
  	  Property:
  	   
  	  $1,000,000 Per
  Risk
  
	   
  	   
  	   
  
	   
  	   
  	  $10,000,000 Per
  Occurrence
  
	   
  	   
  	   
  
	  Liability:
  	   
  	  $1,000,000 Per
  Claim
  
	   
  	   
  	   
  
	  Terrorism Sub-Limit:
  	   
  	  $10,000,000 Per
  Occurrence property and liability combined
  

   
  ARTICLE VII                                              REINSURANCE
PREMIUM
  As
premium for the reinsurance provided by this Agreement, the Company shall cede
to the Reinsurer an amount equal to the Reinsurer’s quota share cession of the
Net Written Premium of the Company for the Business Covered by this Agreement.
The Company’s ceded net unearned premium reserve for the Business Covered for
the 2005 and 2006 treaty years as of March 31, 2006 was $250,369.
  ARTICLE VIII                                          CEDING
COMMISSION
  The Reinsurer shall allow the Company a 30% commission
on all premiums ceded hereunder. The ceding commission may be adjusted
every six (6) months on each six (6) month anniversary of the
Effective Date based on the Net Loss Ratio of the Specialty Program Business
and Insurance Risk Sharing Business ceded hereunder from the Effective Date. It
shall increase by nine-tenths of a percentage point for every 1.0 percentage
point decline in the Net Loss Ratio below 63% up to a maximum ceding commission
of 36%, as follows:
    	  Net Loss Ratio
  	   
  	  Ceding Commission
  	   
  
	  63.0% or higher
  	   
  	  30.0
  	  %
  
	  62
  	   
  	  30.9
  	   
  
	  61
  	   
  	  31.8
  	   
  
	  60
  	   
  	  32.7
  	   
  
	  59
  	   
  	  33.6
  	   
  
	  58
  	   
  	  34.5
  	   
  
	  57
  	   
  	  35.4
  	   
  
	  56.33 or lower
  	   
  	  36.0
  	   
  

  
   

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    The Company shall allow the Reinsurer return
commission on return premiums at the same rate. It is expressly agreed that the
ceding commission allowed the Company includes provision for all dividends,
commissions, taxes, assessments, and all other expenses of whatever nature,
except loss adjustment expense. However, in the event that regulatory
authorities do not approve an intercompany transaction containing these ceding
commissions, the pariticipating companies shall use their best good faith
effort to structure the transaction for the Participating Companies in order
that the sum of the Net Loss Ratio plus ceding commission percentage equals 93%
for the Specialty Program Business and Insurance Risk Sharing Business.
  ARTICLE IX                                                  REPORTS
AND REMITTANCES
  A.            Within
forty five (45) days following the end of each calendar month during the term
of this Agreement, the Company shall provide the Reinsurer with a report
summarizing the following with regards to such month and on a cumulative basis:
  1.             Net
Written Premium and ceded Net Written Premiums received by line of business;
  2.             Net
Premiums Earned and ceded net Premiums Earned by line of business;
  3.             Ceding
commission due on ceded Net Written Premium received;
  4.             Net
ceded Loss and Loss Adjustment Expenses paid by line of business; and
  5.             Salvage
recovered plus net salvage recovered by line of business.
  In addition, the Company shall furnish the Reinsurer
such other information as may be required by the Reinsurer for completion
of its financial statements.
  B.            Amounts due by either party shall be (1) ceded Net
Written Premiums received less (2) ceding commission on ceded Net Written
Premiums received less (3) ceded Loss and Loss Adjustment Expenses paid
plus (4) net salvage recovered, and shall be remitted within 15 days of
the report on a collected basis. Should payment due from the Reinsurer exceed
$100,000 as respects any one Loss Occurrence, the Company may give the
Reinsurer notice of payment made or its intention to make payment on a certain
date. If the Company has paid the loss, payment shall be made by the Reinsurer
immediately after receipt of notice from the Company. If the Company intends to
pay the loss by a certain date and has submitted a satisfactory proof of loss
or similar document, payment shall be due from the Reinsurer 24 hours prior to
that date, provided the Reinsurer has a period of five working days after
receipt of said notice to make the payment. Cash amounts specifically remitted
by the Reinsurer as set forth herein shall be credited to the next monthly
account.

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    ARTICLE X                                                      EXTRA-CONTRACTUAL
OBLIGATIONS/LOSS EXCESS OF POLICY LIMITS
  A.            The Reinsurer shall protect the Company for the Reinsurer’s
quota share portion of Extra-Contractual Obligations and Loss Excess of Policy
Limits, subject to the limitations set forth in Article VI.
  B.            An Extra-Contractual Obligation or a Loss Excess of
Policy Limits shall be deemed to have occurred on the same date as the loss
covered under the Company’s original Policy and shall be considered part of
the original loss (subject to other terms of this Agreement.)
  C.            Neither an Extra-Contractual Obligation nor a Loss Excess
of Policy Limits shall include a loss incurred by the Company as the result of
any bad faith, fraudulent or criminal act by the Company.
  D.            Recoveries, whether collectible or not, including any
retentions and/or deductibles, from any other form of insurance or
reinsurance which protect the Company against any loss or liability covered
under this Article shall inure to the benefit of the Reinsurer and shall
be deducted from the total amount of any Extra-Contractual Obligation and/or
Loss Excess of Policy Limits in determining the amount of Extra-Contractual
Obligation and/or Loss Excess of Policy Limits that shall be indemnified under
this Article.
  E.             The Company shall be indemnified in accordance with this
Article to the extent permitted by, and not contrary to, New York and
other applicable law.
  ARTICLE XI                                                  ORIGINAL
CONDITIONS
  The Reinsurer’s liability to the Company shall attach
simultaneously with that of the Company and the reinsurance of all Business
Covered hereunder shall be subject in all respects to the same risks, terms,
clauses, conditions, interpretations, alterations, modifications cancellations
and waivers as the respective insurances (or reinsurances) of the Company’s
Policies and the Reinsurer shall pay losses as may be paid thereon, the
true intent of this Agreement being that in each and every case to which this
Agreement applies, the Reinsurer shall follow the settlements and fortunes of
the Company, subject always to the limits, terms and conditions of this
Agreement.
  ARTICLE XII                                              ERRORS
AND OMISSIONS
  Inadvertent delays, errors or omissions made by the Company
in connection with this Agreement (including the reporting of claims) shall not
relieve the Reinsurer from any liability which would have attached had such
delay, error or omission not occurred, provided always that such delay, error
or omission shall be rectified as soon as possible after discovery.
  ARTICLE XIII                                          CURRENCY
  Whenever the word “Dollars” or the “$” sign appears in
this Agreement, they shall be construed to mean United States Dollars and all
transactions under this Agreement shall be in United States Dollars. Amounts
paid or received by the Company in any other currency shall be

 10

converted
to United States Dollars at the rate of exchange at the date such transaction
is entered on the books of the Company.

ARTICLE XIV                                         FEDERAL
EXCISE TAX AND OTHER TAXES

A.            To the extent that any portion of the reinsurance premium
for this Agreement is subject to the Federal Excise Tax (as imposed under
Section 4371 of the Internal Revenue Code) and the Reinsurer is not exempt
therefrom, the Reinsurer shall allow for the purpose of paying the Federal
Excise Tax, a deduction by the Company of the applicable percentage of the
premium payable hereon. In the event of any return of premium becoming due
hereunder, the Reinsurer shall deduct the applicable same percentage from the
return premium payable hereon and the Company or its agent shall take steps to
recover the tax from the United States Government. In the event of any
uncertainty, upon the written request of the Company, the Reinsurer will
immediately file a certificate of a senior corporate officer of the Reinsurer
certifying to its entitlement to the exemption from the Federal Excise Tax with
respect to one or more transactions.

B.            In consideration of the terms under which this Agreement
is issued, the Company undertakes not to claim any deduction of the premium
hereon when making tax returns, other than income or profits tax returns, to
any State or Territory of the United States of America or to the District of
Columbia.

ARTICLE XV                                             ACCESS
TO RECORDS

The Company shall place at the disposal of the
Reinsurer at all reasonable times, and the Reinsurer shall have the right to
inspect (and make reasonable copies) through its designated representatives,
during the term of this Agreement and thereafter, all books, records and papers
of the Company directly related to any reinsurance hereunder, or the subject
matter hereof, provided that if the Reinsurer has ceased active market
operations, this right of access shall be subject to that Reinsurer being
current in all payments owed the Company.

ARTICLE XVI                                         RESERVES

A.            If any Reinsurer is unauthorized or otherwise unqualified
in any state or other United States jurisdiction, and if, without such
security, a financial penalty to the Company would result on any statutory
statement or report it is required to make or file with insurance regulatory
authorities or a court of law in the event of insolvency, the Reinsurer will
timely secure the Reinsurer’s share of obligations under this Agreement in a
manner, form, and amount acceptable to the Company and to all applicable
insurance regulatory authorities in accordance with this Article.

B.            The Reinsurer shall secure such Obligations by either:

1.             Clean, irrevocable, and unconditional evergreen
letter(s) of credit (“Letter(s) of Credit”) meeting the requirements of New
York Regulation 133; and/or

2.             A trust account meeting the requirements of New York
Regulation 114.

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C.            The
“Obligations” referred to herein means the then current (as of the end of each
calendar quarter) sum of:

1.             The amount of the ceded unearned premium reserve for
which the Reinsurer is responsible to the Company;

2.             The amount of Losses and Loss Adjustment Expenses and
other amounts paid by the Company for which the Reinsurer is responsible to the
Company but has not yet paid;

3.             The amount of ceded reserves for Losses and Loss
Adjustment Expenses (including, ceded reserves for losses incurred but not
reported) for which the Reinsurer is responsible to the Company; and

4.             The amount of return and refund premiums paid by the
Company for which the Reinsurer is responsible to the Company but has not yet
paid.

D.            To the extent that the Reinsurer elects to provide
Letter(s) of Credit, the following shall apply.

1.             Each Letter of Credit will be issued for a term of at
least one year and will include an “evergreen clause”, which automatically
extends the term for at least one additional year at each expiration date
unless written notice of non-renewal is given to the Company not less than 30
days prior to said expiration date.

2.             The Letter of Credit must be issued or confirmed by a
bank which is authorized to issue letters of credit, which is either a member
of the Federal Reserve System or is a New York State chartered bank, and which
in all other respects satisfies the definition of a “Qualified Bank” under
Section 79.1(e) of New York Insurance Regulation 133. If the Letter
of Credit is issued by a bank authorized to issue letters of credit but which
is not such a “Qualified Bank”, then the Letter of Credit must be confirmed by
such a bank and the Letter of Credit must meet all of the conditions set forth
in Section 79.4 of New York Insurance Regulation 133.

3.             The Reinsurer and the Company agree that the Company
may draw upon the Letter(s) of Credit at any time, notwithstanding any
other provisions in the Agreement, provided such assets are applied and
utilized by the Company or any successor of the Company by operation of law,
including, without limitation, any liquidator, rehabilitator, receiver or
conservator of the Company, without diminution because of the insolvency of the
Company or the Reinsurer, only for the following purposes:

(i)            to reimburse the Company for the Reinsurer’s share of
premiums returned to the owners of policies reinsured under this Agreement on
account of cancellations of such policies;

(ii)           to reimburse the Company for the Reinsurer’s share of
surrenders and benefits or losses paid by the Company under the terms and
provisions of the policies reinsured under this Agreement;

 12
 

(iii)          to
fund an account with the Company in an amount at least equal to the deduction,
for reinsurance ceded, from the Company’s liabilities for policies ceded under
this Agreement. Such amount shall include, but not be limited to, amounts for
policy reserves for claims and losses incurred (including losses incurred but
not reported), loss adjustment expenses, and unearned premiums; and

(iv)          to pay any other amounts the Company
claims are due under this Agreement.

4.             The Company shall immediately return to the Reinsurer
any amounts drawn down on the Letter of Credit that are subsequently determined
not to be due.

5.             The issuing bank shall have no responsibility whatsoever
in connection with the propriety of withdrawals made by the Company of the
disposition of funds withdrawn, except to ensure that withdrawals are made only
upon the order of properly authorized representatives of the Company.

E.             To the extent that the Reinsurer elects to establish a
trust account, the following shall apply.

1.             It is agreed that the Reinsurer shall enter into a trust
agreement (the “Trust Agreement”) in a form acceptable to the Company and
establish a trust account (the “Trust Account”) for the sole benefit of the
Company with a trustee (the “Trustee”), which shall be at the time the Trust is
established, and shall continue to be, either a member of the Federal Reserve
System or a New York state chartered bank and which shall not be a parent,
subsidiary or affiliate of the Reinsurer or the Company.

2.             The Reinsurer agrees to deposit and maintain in said
Trust Account assets to be held in trust by the Trustee for the benefit of the
Company as security for the payment of the Reinsurer’s Obligations to the
Company under the Agreement. Such assets shall be maintained in the Trust
Account by the Reinsurer as long as the Reinsurer continues to remain liable
for such Obligations.

3.             The Reinsurer agrees that the assets deposited into the
Trust Account shall be valued according to their current fair market value and
shall consist only of currency of the United States of America, certificates of
deposit issued by a United States bank and payable in United States legal
tender, and investments of the types specified in paragraphs (1), (2), (3),
(8) and (10) of Section 1404(a) of the New York Insurance
Law, provided such investments are issued by an institution that is not the
parent, subsidiary or affiliate of either the Grantor or the Beneficiary (“Authorized
Investments”).

4.             The Reinsurer, prior to depositing assets with the
Trustee, shall execute all assignments and endorsements in blank, and shall
transfer legal title to the Trustee of all shares, obligations or any other
assets requiring assignments, in order that the Company, or the Trustee upon
direction of the Company, may whenever necessary negotiate any such assets
without consent or signature from the Reinsurer or any other entity.

 13
 

5.             All settlements of account under the Trust Agreement
between the Company and Reinsurer shall be made in cash or its equivalent.

6.             The Reinsurer and the Company agree that the assets in
the Trust Account may be withdrawn by the Company at any time,
notwithstanding any other provisions in the Agreement, provided such assets are
applied and utilized by the Company or any successor of the Company by
operation of law, including, without limitation, any liquidator, rehabilitator,
receiver or conservator of the Company, without diminution because of the
insolvency of the Company or the Reinsurer, only for the following purposes:

(i)            to reimburse the Company for the Reinsurer’s share of any
Losses and Loss Adjustment Expenses paid by the Company but not received from
the Reinsurer or for unearned premiums due to the Company but not otherwise
paid by the Reinsurer under the Agreement; or

(ii)           to make payment to the Reinsurer of any amounts held in
the Trust Account that exceed 102% of the Reinsurer’s Obligations (less the balance
of credit available under any Letter(s) of Credit) hereunder; or

(iii)          where the Company has received notification of termination
of the Trust Account, and where the Reinsurer’s entire Obligations under the
Agreement remain unliquidated and undischarged ten (10) days prior to such
termination, to withdraw amounts equal to such Obligations (less the balance of
credit available under any Letter(s) of Credit) and deposit such amounts in a
separate account, in the name of the Company, in any United States bank or
trust company, apart from its general assets, in trust for such uses and
purposes specified in sub-paragraphs (i) and (ii) above as
may remain executory after such withdrawal and for any period after such
termination.

7.             The Reinsurer shall have the right to seek the Company’s
approval to withdraw all or any part of the assets from the Trust Account
and transfer such assets to the Reinsurer, provided that the withdrawal
conforms to the following requirements:

(i)            the Reinsurer shall, at the time of withdrawal, replace
the withdrawn assets with other Authorized Investments having a market value
equal to the market value of the assets withdrawn,

(ii)           after such withdrawal and transfer, the market value of
the Trust Account is no less than 102% of the Reinsurer’s Obligations (less the
balance of credit available under any Letter(s) of Credit).

8.             In the event that the Reinsurer seeks the Company’s
approval hereunder, the Company shall not unreasonably or arbitrarily withhold
its approval.

9.             In the event that the Company withdraws assets from the
Trust Account for the purposes set forth in Paragraph (6)(i) above in
excess of actual amounts required to meet the Reinsurer’s Obligations to the
Company (less the balance of credit available under any Letter(s) of Credit),
or in excess of amounts determined to be due and under Paragraph
(6)(iii) above, the Company will return such excess to the Reinsurer.

 14
 

10.           The Company will prepare and forward at annual intervals
or more frequently as determined by the Company, but not more frequently than
quarterly to the Reinsurer a statement for the purposes of this Article,
showing the Reinsurer’s share of Obligations as set forth above. If the
Reinsurer’s share thereof exceeds the then existing balance of the security provided,
the Reinsurer will, within fifteen (15) days of receipt of the Company’s
statement, but never later than December 31 of any year, increase the
amount of the letter of credit, or Trust Account to the required amount of the
Reinsurer’s share of Obligations set forth in the Company’s statement, but
never later than December 31 of any year. If the then existing balance of
the security provided exceeds an amount equal to 100% of the Reinsurer’s share
thereof, the Company will release the excess thereof to the Reinsurer upon the
Reinsurer’s written request.

F.             The Reinsurer will take any other reasonable steps that
may be required for the Company to take full credit on its statutory
financial statements for the reinsurance provided by this Agreement.

ARTICLE XVII                                     SERVICE
OF SUIT

A.            This Article only applies to a Reinsurer domiciled
outside of the United States and/or unauthorized in any state, territory or
district of the United States having jurisdiction over the Company.
Furthermore, this Article will not be read to conflict with or override
the obligations of the parties to arbitrate their disputes as provided for in
the Article entitled Arbitration. This Article is intended as an aid
to compelling arbitration or enforcing such arbitration or arbitral award, not
as an alternative to the Arbitration Article for resolving disputes
arising out of this Agreement.

B.            In the event of any dispute, the Reinsurer, at the
request of the Company, shall submit to the jurisdiction of a court of
competent jurisdiction within the United States. Nothing in this
Article constitutes or should be understood to constitute a waiver of any
obligation to arbitrate disputes arising from this Agreement or the Reinsurer’s
rights to commence an action in any court of competent jurisdiction in the
United States, to remove an action to a United States District Court, or to
seek a transfer of a case to another court as permitted by the laws of the
United States or of any state in the United States.

C.            Service of process in any such suit against the Reinsurer
may be made upon Mendes and Mount, 750 Seventh Avenue, New York, New York
10019-6829 (“Firm”), or the party identified on behalf of the Reinsurer on the
Reinsurer’s signature page to this Agreement, and in any suit instituted,
the Reinsurer shall abide by the final decision of such court or of any
Appellate Court in the event of an appeal.

D.            The Firm is authorized and directed to accept service of
process on behalf of the Reinsurer in any such suit and/or upon the request of
the Company to give a written undertaking to the Company that they shall enter
a general appearance upon the Reinsurer’ behalf in the event such a suit shall
be instituted.

E.             Further, as required by and pursuant to any statute of
any state, territory or district of the United States which makes provision
therefore, the Reinsurer hereby designates the Superintendent, Commissioner or
Director of Insurance or other officer specified for that

 15
 

purpose in the statute, or his successor or
successors in office, as their true and lawful attorney upon whom may be
served any lawful process in any action, suit or proceeding instituted by or on
behalf of the Company or any beneficiary hereunder arising out of this
Agreement, and hereby designates the above-named as the person to whom the said
officer is authorized to mail such process or a true copy thereof.

ARTICLE XVIII                                 ARBITRATION

A.            Any dispute or other matter in question between the
Company and the Reinsurer arising out of, or relating to, the formation,
interpretation, performance, or breach of this Agreement, whether such dispute
arises before or after termination of this Agreement, shall be settled by
arbitration. Arbitration shall be initiated by the delivery of a written notice
of demand for arbitration by one party to the other within a reasonable time
after the dispute has arisen.

B.            If more than one reinsurer is involved in the same
dispute, all such reinsurers shall constitute and act as one party for the
purposes of this Article, provided, however, that nothing herein shall impair
the rights of such reinsurers to assert several, rather than joint, defenses or
claims, nor be construed as changing the liability of the Reinsurer under the
terms of this Agreement from several to joint.

C.            Except as set forth in Article III, each party shall
appoint an individual as arbitrator and the two so appointed shall then appoint
a third arbitrator. If either party refuses or neglects to appoint an
arbitrator within 60 days, the other party may appoint the second
arbitrator. If the two arbitrators do not agree on a third arbitrator within 60
days of the appointment of the second arbitrator, each of the arbitrators shall
nominate three individuals. If the two arbitrators are unable to agree upon the
third arbitrator within thirty (30) days of their appointment, the third
arbitrator shall be selected from a list of six individuals (three named by
each arbitrator) by a judge of the United States District Court having
jurisdiction over the geographical area in which the arbitration is to take
place, or if that court declines to act, the state court having general
jurisdiction in such area. The arbitrators shall be active or retired officers
of insurance or reinsurance companies or Lloyd’s of London Underwriters; the
arbitrators shall not have a personal or financial interest in the result of
the arbitration.

D.            The arbitration hearings shall be held in New York, New
York. Each party shall submit its case to the arbitrators within 60 days of the
selection of the third arbitrator or within such longer period as may be
agreed by the arbitrators. The arbitrators shall not be obliged to follow
judicial formalities or the rules of evidence except to the extent
required by governing law, that is, the state law of the situs of the arbitration
as herein agreed; they shall make their decisions according to the practice of
the reinsurance business. The decision rendered by a majority of the
arbitrators shall be final and binding on both parties. Such decision shall be
a condition precedent to any right of legal action arising out of the
arbitrated dispute which either party may have against the other. Judgment
upon the award rendered may be entered in any court having jurisdiction
thereof.

E.             Each party shall pay the fee and expenses of its own
arbitrator and one-half of the fee and expenses of the third arbitrator. All
other expenses of the arbitration shall be equally divided between the parties.

 16
 

F.             Except as provided above, arbitration shall be based,
insofar as applicable, upon the procedures of the American Arbitration
Association.

ARTICLE XIX                                         INSOLVENCY

A.            The reinsurance shall be payable by the reinsurer on the
basis of liability of the Company under the Policies reinsured without
diminution because of the insolvency of the Company and the liability for such
reinsurance is assumed by the Reinsurer as of the same effective date. In the
event of insolvency and the appointment of a conservator, liquidator, or
statutory successor of the Company, the portion of any risk or obligation
assumed by the Reinsurer shall be payable to the conservator, liquidator, or
statutory successor on the basis of claims allowed against the insolvent
Company by any court of competent jurisdiction or by any conservator,
liquidator, or statutory successor of the Company having authority to allow
such claims, without diminution because of that insolvency, or because the
conservator, liquidator, or statutory successor has failed to pay all or a
portion of any claims.

B.            Payments by the Reinsurer as above set forth shall be
made directly to the Company or to its conservator, liquidator, or statutory
successor, except where the Agreement of insurance or reinsurance specifically
provides another payee of such reinsurance or except as provided by applicable
law and regulation (such as subsection (a) of section 4118 of
the New York Insurance laws) in the event of the insolvency of the Company.

C.            In the event of the insolvency of the Company, the
liquidator, receiver, conservator or statutory successor of the Company shall
give written notice to the Reinsurer of the pendency of a claim against the
insolvent Company on the Policy or Policies reinsured within a reasonable time
after such claim is filed in the insolvency proceeding and during the pendency
of such claim the Reinsurer may investigate such claim and interpose, at
its own expense, in the proceeding where such claim is to be adjudicated any
defense or defenses which it may deem available to the Company or its
liquidator, receiver, conservator or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable subject to court approval against
the insolvent Company as part of the expense of liquidation to the extent
of a proportionate share of the benefit which may accrue to the Company
solely as a result of the defense undertaken by the Reinsurer.

D.            Where two or more Reinsurers are involved in the same
claim and a majority in interest elects to interpose defense to such claim, the
expense shall be apportioned in accordance with the terms of this Agreement as
though such expense had been incurred by the Company.

ARTICLE XX                                             CLAIMS
COOPERATION 

When so requested in writing,
the Company shall afford the Reinsurer or its representatives an opportunity to
be associated with the Company, at the expense of the Reinsurer, in the defense
of any claim, suit or proceeding involving this reinsurance, and the Company
and the Reinsurer shall cooperate in every respect in the defense of such
claim, suit or proceeding, provided the Company shall have the right to make
any decision in the event of disagreement over any matter of defense or
settlement.

 17
 

ARTICLE XXI                                         CONFIDENTIALITY

A.            The information, data, statements, representations and
other materials provided by the Company or the Reinsurer to the other arising
from consideration and participation in this Agreement whether contained in the
reinsurance submission, this Agreement, or in materials or discussions arising
from or related to this Agreement, may contain confidential or proprietary
information as expressly indicated by the disclosing party in writing from time
to time to the other party of the respective parties (“Confidential Information”).
This Confidential Information is intended for the sole use of the parties to
this Agreement (and their retrocessionaires, respective auditors and legal
counsel) as may be necessary in analyzing and/or accepting a participation
in and/or executing their respective responsibilities under or related to this
Agreement. Disclosing or using Confidential Information disclosed under this Agreement
for any purpose beyond (i) the scope of this Agreement, (ii) the
reasonable extent necessary to perform rights and responsibilities
expressly provided for under this Agreement, (iii) the reasonable extent
necessary to administer, report to and effect recoveries from retrocessional
reinsurers, (iv) the extent necessary to comply with legal or regulatory
requirements or (v) persons with a need to know the information and who
are obligated to maintain the confidentiality of the Confidential Information
or who have agreed in writing to maintain the confidentiality of the
Confidential Information is expressly forbidden without the prior written
consent of the disclosing party. Copying, duplicating, disclosing, or using
Confidential Information for any purpose beyond this expressed purpose is
forbidden without the prior written consent of the disclosing party.

B.            Should a party (“Receiving Party”) receive a third party
demand pursuant to subpoena, summons, or court or governmental order, to
disclose Confidential Information that has been provided by another party to
this Agreement (“Disclosing Party”), the Receiving Party shall, to the extent
permitted by law, make commercially reasonable efforts to notify the Disclosing
Party promptly upon receipt of the demand and prior to disclosure of the
Confidential Information and provide the Disclosing Party a reasonable
opportunity to object to the disclosure. If such notice is provided, the
Receiving Party may after the passage of five (5) business days after
providing notice, proceed to disclose the Confidential Information as necessary
to satisfy such a demand without violating this Agreement. If the Disclosing
Party timely objects to the release of the Confidential Information, the
Receiving Party will comply with the reasonable requests of the Disclosing
Party in connection with the Disclosing Party’s efforts to resist release of
the Confidential Information. The Disclosing Party shall bear the cost of
resisting the release of the Confidential Information.

ARTICLE XXII                                     OFFSET

The Company and the Reinsurer shall have the right to
offset any balance or amounts due from one party to the other under the terms
of this Agreement, as permitted by sections 1308 and 7427 of the New York
Insurance Law. The party asserting the right of offset may exercise such
right any time whether the balances due are on account of premiums or losses or
otherwise. However, in the event of the insolvency of any party hereto, offset
shall only be allowed in accordance with applicable law.

 18
 

ARTICLE XXIII                                 RECOVERIES

A.            All recoveries, including but not limited to salvage,
subrogation, payments and reversals or reductions of verdicts or judgments (net
of the cost of obtaining such recovery, payment or reversal or reduction of a
verdict or judgment) whether recovered, received or obtained prior or
subsequent to a loss settlement under this Agreement, including amounts
recoverable under other reinsurance whether collected or not, shall be applied
as if recovered, received or obtained prior to the aforesaid settlement and
shall be deducted from the actual losses sustained to arrive at the amount of
the Net Liability. Nothing in this Article shall be construed to mean
amounts are not recoverable from the Reinsurer until the final Net Liability to
the Company has been ascertained. Amounts recovered from salvage and/or
subrogation will always be used to reimburse any excess reinsurers (and the
Company should it carry a portion of excess coverage net) before being used in
any way to reimburse the Company and the Reinsurer hereon, who will share
pro-rata in any remainder.

B.            The Reinsurer shall be subrogated, as respects any Loss
Occurrence for which the Reinsurer shall actually pay or become liable, but
only to the extent of the amount of payment by or the amount of liability to
the Reinsurer, to all the rights of the Company against any person or other
entity who may be legally responsible for damages as a result of said Loss
Occurrence. Should the Company elect not to enforce such rights, the Reinsurer
is 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
Reinsurer shall promptly remit to the Company the amount of any judgment
awarded in such an action in excess of the amount of payment by, or the amount
of liability to, the Reinsurer hereunder.

C.            In the event that this Agreement shall provide
reinsurance for the Net Liability from a Loss Occurrence or event incurred by
two or more Companies, each Company contributing to the Net Liability shall be
entitled to its proportionate share of the recovery in the proportion that its
contribution to the total Net Liability bears to the total Net Liability.
Payment of any recovery amount to one Company by the Reinsurer shall make that
Company the agent for payment of all other Companies contributing to the Net
Liability.

ARTICLE XXIV                                MISCELLANEOUS

A.            This Agreement shall be binding upon and inure to the
benefit of the Company and Reinsurer and their respective successors and
assigns provided, however, that this Agreement may not be assigned by
either party without the prior written consent of the other which consent
may be withheld by either party in its sole unfettered discretion. This
provision shall not be construed to preclude the assignment by the Company of
reinsurance recoverables to another party for collection.

B.            This Agreement shall constitute the entire agreement
between the parties with respect to the Business Covered hereunder. There are
no understandings between the parties other than as expressed in this Agreement
or any amendment thereto. Any change or modification of this Agreement shall be
null and void unless made by amendment to the Agreement and signed by the
parties or otherwise clearly and unequivocally amended by

 19
 

exchange of letters or electronic mail.
Nothing in this Article shall act to preclude the introduction of
submission-related documents in any dispute between the parties.

C.            This Agreement shall be governed by and construed
according to the laws of the state of the New York, exclusive of the
rules with respect to conflicts of law.

D.            The headings preceding the text of the Articles and
paragraphs of this Agreement are intended and inserted solely for the
convenience of reference and shall not affect the meaning, interpretation,
construction or effect of this Agreement.

E.             This Agreement is solely between the Company and the
Reinsurer, and in no instance shall any insured, claimant or other third party
have any rights under this Agreement.

F.             If any provisions of this Agreement should be invalid
under applicable laws, the latter shall control but only to the extent of the
conflict without affecting the remaining provisions of this Agreement.

G.            The failure of the Company or Reinsurer to insist on strict
compliance with this Agreement or to exercise any right or remedy shall not
constitute a waiver of any rights contained in this Agreement nor estop the
parties from thereafter demanding full and complete compliance nor prevent the
parties from exercising any remedy.

H.            Each party shall be excused for any reasonable failure or
delay in performing any of its respective obligations under this Agreement, if
such failure or delay is caused by Force Majeure. “Force Majeure” shall mean
any act of God, strike, lockout, act of public enemy, any accident, explosion,
fire, storm, earthquake, flood, drought, peril of sea, riot, embargo, war or
foreign, federal, state or municipal order or directive issued by a court or
other authorized official, seizure, requisition or allocation, any failure or
delay of transportation, shortage of or inability to obtain supplies,
equipment, fuel or labor or any other circumstance or event beyond the
reasonable control of the party relying upon such circumstance or event;
provided, however, that no such Force Majeure circumstance or event shall
excuse any failure or delay beyond a period exceeding ten (10) days from
the date such performance would have been due but for such circumstance or
event.

I.              All Articles of this Agreement shall survive the
termination of this Agreement until all obligations between the parties have
been finally settled, provided however that this Agreement shall not be
construed to provide reinsurance for Business Covered, other than as
specifically described in the Articles of this Agreement entitled Reinsurance
Coverage nor to Loss occurring after the termination date of this Agreement
other than as expressed in the Article entitled Commencement and
Termination.

J.             This Agreement may be executed by the parties
hereto in any number of counterparts, and by each of the parties hereto in
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

K.            Each party to this agreement shall honor the terms set
forth herein as if this Agreement were a separate agreement between the
reinsurer and each company. Balances

 20
 

payable or recoverable by any reinsurer, or
each named Company, shall not serve to offset any balances, payable, or
recoverable to, any company hereunder.

Reports and remittances made to
the Reinsurer in accordance with the applicable articles hereof are to be in
sufficient detail to identify both the Reinsurer’s loss obligations due each
reinsured company and each reinsured company’s premium remittance under the
report. In the event of insolvency of any of the parties to this Agreement,
offsets shall only be allowed in accordance with section 7427 of the New
York Insurance Law.

L.             This Agreement is entered into as of the date hereof by
the parties hereto subject in any case to the satisfaction of applicable
insurance regulatory requirements of New York and Massachusetts, including any
conditions such regulators may impose on the terms of this Agreement
subsequent to the date hereof. Subject to the foregoing, this Agreement shall
be effective as of April 1, 2006.

[Signature
Page Follows]

 21
 

IN WITNESS WHEREOF,
the Company and the Reinsurer have caused this Amended and Restated Agreement
to be executed August 30, 2006.

	
  

  	
  TOWER INSURANCE COMPANY OF NEW YORK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Francis M. Colalucci

  	
   

  
	
   

  	
   

  	
  Name: Francis M. Colalucci

  
	
   

  	
   

  	
  Title: Senior Vice-President and Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TOWER NATIONAL INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Francis M. Colalucci

  	
   

  
	
   

  	
   

  	
  Name: Francis M. Colalucci

  
	
   

  	
   

  	
  Title: Senior Vice-President and Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CASTLEPOINT REINSURANCE COMPANY, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph Beitz

  	
   

  
	
   

  	
   

  	
  Name: Joseph Beitz

  
	
   

  	
   

  	
  Title: Acting President

  
					

 

 22Exhibit 10.6

 

Amendment No.1

 

To

 

Amended and Restated

Brokerage Business 

Quota Share Reinsurance
Agreement 

 

 

This is Amendment Number 1 (this “Amendment”), dated as of the date set
forth below to the Amended and Restated Brokerage Business Quota Share Reinsurance
Agreement (“Agreement”), dated August 30, 2006, by and among Tower Insurance
Company of New York and Tower National Insurance Company (collectively the
“Company”) and CastlePoint Reinsurance Company, Ltd. (“Reinsurer”), effective
as of April 1, 2006.

 

RECITALS

 

A.                                   The
parties entered into the Agreement effective as of April 1, 2006, whereby the
Reinsurer agreed to reinsure Brokerage Business written by the Company subject
to the terms and conditions as set forth in the Agreement.

 

B.                                     The
parties now desire to further amend the Agreement in accordance with paragraph
B of Article XXIV of the Agreement.

 

Now therefore, in consideration of the foregoing, of the mutual
covenants and undertakings as set forth below, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:

 

1.                                       Amendment

 

        A.            Effective April 1, 2006, Article V,
Exclusions, paragraph K is revised to read as follows: 

 

“Pollution loss or
liability excluded by the provisions of the applicable ISO Pollution
Exclusionary language drafted by the Company in use at the time the policy
involved is written or renewed and where available per filed rule and not
precluded by regulatory constraint.  Further, the Reinsurers agree that
this exclusion shall not apply in any case where the Company has included such
language in an original policy and/or as an endorsement to an original policy
but has sustained a loss as a result of such exclusionary language being
declared invalid or inapplicable by a court of law.”

 

B.            Effective July 1,
2006, Article VI, Reinsurance Coverage, paragraph A is revised to read as
follows:

 1
 

“Upon
the contribution of capital to Reinsurer by its parent in the amount of at
least $156 million, the Company shall automatically and obligatorily cede to
the Reinsurer, and the Reinsurer shall be obligated to accept as assumed
reinsurance, a 40% quota share portion of the Net Liabilities with respect to
such Policies, subject to adjustment as set forth below.  The Company may, in its sole discretion,
change the quota share participation of the Reinsurer, from time to time, as of
any six month anniversary date of the effective date of this Agreement upon not
less than thirty (30) days prior written notice to the Reinsurer, unless such
notice is waived by the Reinsurer, and provided, however, that the Company and
the Reinsurer may agree to change the Reinsurer’s quota share participation as
of any calendar quarter, with all such changes being affixed to the Agreement; provided
further, however, that the quota share participation of the
Reinsurer shall at all times during the term of this Agreement be a minimum of
25% and a maximum of 45%, and provided further that the quota share
participation of the Reinsurer does not exceed $150 million for the 12 month
period ended March 31, 2007, with such maximum amount subject to a 25% growth
factor per year thereafter. If the Reinsurer’s quota share participation
maximum of $150 million (subject to the growth factor) is attained in any
twelve month period ended March 31, then the quota share participation
percentage, which shall apply to all premiums and losses on a pro-rated basis
for such period, shall be decreased for that 12 month period even if such
participation is below 25%. Each such change shall apply to Policies issued or
renewed after the effective date of such change. Notwithstanding the foregoing,
if the Company writes business of the type that it has historically not written
or writes more than 25% of its gross written premiums outside the state of New
York in any 12 month period ending on the anniversary date of this Agreement,
then the Reinsurer has the right to refuse to reinsure such business that the
Company has not historically written and such excess business written outside
the State of New York. Furthermore, for the period beginning April 1, 2007, to
the extent that the total amount ceded to the Reinsurer and pooled with
CastlePoint Insurance Company (“CPIC”) exceeds 43.75% of Company’s Brokerage
Business Premiums, the amount of property catastrophe premiums ceded that will
be paid by the Reinsurer shall be 30% or the total amount, whichever is lesser,
of property catastrophe premiums ceded by the brokerage pool less the amount
paid by CPIC under the Brokerage Business Pooling Agreement, and, for the
period beginning April 1, 2007, to the extent that the total amount ceded to
the Reinsurer and pooled with CPIC exceeds 43.75% of the Company’s Brokerage
Business premiums,  the amount of
property catastrophe losses incurred that will be paid by the reinsurer shall
be 30% or the total amount, whichever is lesser, of property catastrophe losses
actually incurred within the property catastrophe deductible for the brokerage
pool less the amount paid by CPIC under the Brokerage Business Pooling
Agreement,

 2
 

The quota share
participation of the Reinsurer effective July 1, 2006 shall apply to new and
renewal business written by the Company after July 1, 2006.”

 

C.                                     Effective
January 1, 2007, Tower National Insurance Company shall be neither a party nor
a company within the definition of Company and shall not cede any premiums or
losses directly to the Reinsurer.

 

D                                       The
first sentence of Article III, paragraph A, shall read “This Agreement is
effective 12:01 a.m., Eastern Standard Time, April 1, 2006 (the Effective
Date”) and shall have a term of four (4) years. 

 

2.                                                               Miscellaneous

 

A.            Except as specifically set forth in this Amendment, the
Agreement shall remain in full force and effect without modification thereto.

 

B.            This Amendment may be executed by the parties hereto in
any number of counterparts, and by each of the parties hereto in separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, but all such counterparts shall together
constitute but one and the same instrument.

 

C.            This Amendment and all actions arising out of or in
connection with this Amendment shall be governed by and construed according to
the laws of the State of New York, exclusive of the rules with respect to
conflict of laws.

 3
 

IN WITNESS WHEREOF, the
Company and the Reinsurer have caused this Agreement to be executed.

 

 

	
  

  	
  TOWER
  INSURANCE COMPANY OF NEW YORK

  
	
   

  
	
   

  	
  By:

  	
  /s/ Francis M.
  Colalucci

  	
   

  
	
   

  	
  Name:

  	
  Francis M.
  Colalucci

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice
  President and Chief Financial Officer

  	
   

  
	
   

  	
  Date:

  	
  January 11,
  2007

  	
   

  
	
   

  
	
   

  
	
   

  	
  TOWER
  NATIONAL INSURANCE COMPANY

  
	
   

  
	
   

  	
  By:

  	
  /s/ Francis M.
  Colalucci

  	
   

  
	
   

  	
  Name:

  	
  Francis M.
  Colalucci

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice
  President and Chief Financial Officer

  	
   

  
	
   

  	
  Date:

  	
  January 11,
  2007

  	
   

  
	
   

  	
   

  
	
   

  	
  CASTLEPOINT
  REINSURANCE COMPANY, LTD.

  
	
   

  
	
   

  	
  By:

  	
  /s/ Joel S.
  Weiner

  	
   

  
	
   

  	
  Name:

  	
  Joel S. Weiner

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice
  President and Chief Financial Officer

  	
   

  
	
   

  	
  Date:

  	
  January 11, 2007

  	
   

  

 

 4

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