Document:

Exhibit 10.2

 

COAST NATIONAL INSURANCE COMPANY

SECURITY NATIONAL INSURANCE COMPANY

BRISTOL WEST INSURANCE COMPANY

BRISTOL WEST CASUALTY INSURANCE COMPANY

QUOTA SHARE REINSURANCE AGREEMENT

Effective:  January 1, 2002

 

TABLE OF CONTENTS

 

	
  ARTICLE

  	
   

  	
  SUBJECT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
   

  	
  Business Covered

  	
   

  	
   

  
	
  II

  	
   

  	
   

  	
  Term and Termination

  	
   

  	
   

  
	
  III

  	
   

  	
   

  	
  Quota Share
  Participation

  	
   

  	
   

  
	
  IV

  	
   

  	
   

  	
  Territory

  	
   

  	
   

  
	
  V

  	
   

  	
   

  	
  Premium

  	
   

  	
   

  
	
  VI

  	
   

  	
   

  	
  Limit of Liability

  	
   

  	
   

  
	
  VII

  	
   

  	
   

  	
  Ceding Commission

  	
   

  	
   

  
	
  VIII

  	
   

  	
   

  	
  Fee Income

  	
   

  	
   

  
	
  IX

  	
   

  	
   

  	
  Commutation

  	
   

  	
   

  
	
  X

  	
   

  	
   

  	
  Experience Account
  Balance

  	
   

  	
   

  
	
  XI

  	
   

  	
   

  	
  Reports and
  Remittances

  	
   

  	
   

  
	
  XII

  	
   

  	
   

  	
  Offset

  	
   

  	
   

  
	
  XIII

  	
   

  	
   

  	
  Agency/Combined
  Results

  	
   

  	
   

  
	
  XIV

  	
   

  	
   

  	
  Maximum Subject Net
  Premium

  	
   

  	
   

  
	
  XV

  	
   

  	
   

  	
  Cancellation for
  Non-Payment

  	
   

  	
   

  
	
  XVI

  	
   

  	
   

  	
  Cancellation for
  Change in Control

  	
   

  	
   

  
	
  XVII

  	
   

  	
   

  	
  Special
  Termination

  	
   

  	
   

  
	
  XVIII

  	
   

  	
   

  	
  Exclusions

  	
   

  	
   

  
	
  XIX

  	
   

  	
   

  	
  Warranty

  	
   

  	
   

  
	
  XX

  	
   

  	
   

  	
  Definitions

  	
   

  	
   

  
	
  XXI

  	
   

  	
   

  	
  Loss Settlements

  	
   

  	
   

  
	
  XXII

  	
   

  	
   

  	
  Net Retained
  Lines Clause

  	
   

  	
   

  
	
  XXIII

  	
   

  	
   

  	
  No Third Party
  Rights

  	
   

  	
   

  
	
  XXIV

  	
   

  	
   

  	
  Errors or
  Omissions

  	
   

  	
   

  
	
  XXV

  	
   

  	
   

  	
  Insolvency Clause

  	
   

  	
   

  
	
  XXVI

  	
   

  	
   

  	
  ECO and Excess
  Limits Liability

  	
   

  	
   

  
	
  XXVII

  	
   

  	
   

  	
  Access to
  Records

  	
   

  	
   

  
	
  XXVIII

  	
   

  	
   

  	
  Arbitration

  	
   

  	
   

  
	
  XXIV

  	
   

  	
   

  	
  Governing Law

  	
   

  	
   

  
	
  XXX

  	
   

  	
   

  	
  Entire Agreement/Interpretation

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ATTACHMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Nuclear
  Incident Exclusion Clauses

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule A

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule B

  	
   

  	
   

  

 

1

 

QUOTA SHARE REINSURANCE AGREEMENT

between

COAST NATIONAL INSURANCE COMPANY (“Coast National”)

SECURITY NATIONAL INSURANCE COMPANY (“Security National”)

BRISTOL WEST INSURANCE COMPANY (“Bristol”)

BRISTOL WEST CASUALTY INSURANCE COMPANY (“Bristol”)

(hereinafter called the “Company”)

and

THE PARTICIPANTS SUBSCRIBING TO THE RESPECTIVE

INTERESTS AND LIABILITIES AGREEMENTS TO WHICH THIS AGREEMENT

IS ATTACHED

(hereinafter called the “Reinsurer”)

 

ARTICLE I

 

BUSINESS COVERED

 

The Reinsurer hereby
reinsures, subject to the limits and 
terms and conditions contained herein;

 

A Quota Share Percentage of the Company’s paid Ultimate Net Loss
(“UNL”) of Loss Occurrences on Policies attaching during the Term of this
Agreement for Non-standard Auto business (“Policies”).

 

ARTICLE II

 

TERM AND
TERMINATION

 

This agreement shall commence at 12:01 a.m. Eastern Standard Time,
January 1, 2002, except for Bristol which shall commence at 12:01 a.m.
Eastern Standard Time, July 1, 2002. 
It shall remain in effect until 11:59 p.m. December 31, 2004.

 

In the event of the
cancellation/termination of this Agreement the liability of the Reinsurer
shall  cease with respect to losses
occurring after the effective date of cancellation/termination date regardless
of whether the Company is prohibited by statute or otherwise to cancel or nonrenew
the policy.

 

Special Terminations
shall be in accordance with Article XVII Paragraph 4.

 

ARTICLE III

 

QUOTA SHARE PARTICIPATION

 

The Quota Share
Percentage for Policies attaching during Underwriting Year 2002 for Coast
National and Security National, shall be 28%. 
The Quota Share Percentage for Policies attaching during Underwriting
Year 2002 for Bristol shall be 80%.  The
Company has the option to cede from 25% to 60% for Policies attaching during
the Underwriting Years 2003 and 2004. 
The Company shall notify the Reinsurer of the actual percentage, in
writing, no later then 30 Business Days before January 1st, of
each Underwriting Year.  In the event
the Company fails to notify the Reinsurer, as provided herein, the Quota Share
Percentage shall be 25%.

 

2

 

ARTICLE IV

 

TERRITORY

 

This Agreement covers
policies on risks located in the states of the United States in which the
Company was writing business as of the effective date of this Agreement.  This Agreement will cover risks located in
other states if agreed to by the Reinsurer in writing.

 

ARTICLE V

 

PREMIUM

 

The Company shall pay the Reinsurer its Quota Share Percentage of the
Company’s Subject Net premium written for the Business Covered hereinafter
referred to as the “Ceded Premium.”

 

ARTICLE VI

 

LIMIT OF LIABILITY

 

The maximum amount recoverable for any one Underwriting Year shall be
150% of the Ceded Premium for that Underwriting Year subject to the third
paragraph of this Article.

 

The maximum amount recoverable for a Catastrophic Loss Occurrence shall
be the Quota Share Percentage applicable of the product of .5% times the
Subject Net Premium written for the Underwriting Year in which the loss
occurred.  The maximum amount
recoverable for the aggregate of Catastrophic Loss Occurrences shall be the
Quota Share Percentage applicable of the product of .4% times the Subject Net
Premium written for the term of this Agreement.  For the avoidance of doubt, Terrorist Event shall be deemed a
Catastrophic Loss Occurrence.

 

Subject to the foregoing, the Reinsurer’s initial liability shall be
limited to 80% of the aggregate Ceded Premium for the term of this
agreement.  In the event the Loss Ratio
is in excess of 90% the Reinsurer shall be liable for an additional 15% of the
aggregate Ceded Premium for the term of this agreement.  For the avoidance of doubt the Company shall
be liable for losses above a Loss Ratio of 80% up to 90% and for those losses
above a Loss Ratio of 105%.

 

ARTICLE VII

 

CEDING COMMISSION

 

The Company shall receive a commission equal to 25% of Ceded
Premium.  This includes all acquisition
costs, taxes and all other expenses of whatever nature, except loss adjustment
expense.

 

Effective on the commencement of any calendar quarter, by giving 30
Business Days prior written notice, the Company has the option to increase or
decrease the percent of Ceding Commission. 
In such event the Fee Income percentage is increased or decreased by the
same amount.

 

ARTICLE VIII

 

FEE INCOME

 

On the date that the Ceded Premium is paid hereunder the Company shall
pay the Reinsurer an amount equal to 8% of Ceded Premium, or the percent
applicable of Ceded Premium if changed in accordance with the Ceding Commission
Article.  For the avoidance of doubt
this Fee Income is not a part of Ceded Premium.

 

3

 

ARTICLE IX

 

COMMUTATION

 

The Company may, at its sole option, commute this Agreement on
December 31st, 2004 or any December 31st
thereafter by giving the Reinsurer 30 Business Days prior written notice.  In such event, within 45 Business Days of
Commutation the Reinsurer shall pay the Company a Profit Commission equal to
the Experience Account Balance as of the end of the prior month, if
positive.  Such payment shall be made
within 45 Business Days of the commutation date.  Upon payment of the Profit Commission the Company shall fully and
finally release the Reinsurer from all past, present or future liabilities
under this agreement.

 

ARTICLE X

 

EXPERIENCE ACCOUNT BALANCE

 

At the end of each calendar quarter, the Reinsurer shall calculate and
report to the Company an Experience Account Balance as follows:

 

(a) Ceded Premium paid; plus

(b) Fee Income paid; less

(c )Ceding Commission; less

(d) Reinsurer’s Margin; less

(e) Ultimate Net Loss paid by the Reinsurer hereunder

 

ARTICLE XI

 

REPORTS AND REMITTANCES

 

Within 30 Business Days following the end of each calendar month, the
Company shall provide a written report (the “Loss Report”) to the Reinsurer,
which shall include the following data, in the aggregate as well as by each
Relevant Company named:

 

1.  Subject Net
Premium written and Collected for the month.

 

2.  Cumulative
Subject Net Premium written and Collected.

 

3.  Ceded Net
Premium written and Collected for the month.

 

4.  Cumulative
Ceded Net Premium written and Collected.

 

5.  Ceded Ultimate Net Loss paid by the Company
during the quarter, separating Allocated Loss Adjustment Expense and
Unallocated Loss Adjustment Expense.

 

6.  Ceded Cumulative Ultimate Net Loss paid by
the Company, separating Allocated Loss Adjustment Expense and Unallocated Loss
Adjustment Expense.

 

7.  Ceded Ultimate Net Loss outstanding
including incurred but not reported amounts, separating Allocated Loss
Adjustment Expense and Unallocated Loss Adjustment Expense.

 

8.  Ceded
unearned premium.

 

4

 

The Reinsurer shall pay losses owed hereunder within 30 Business Days
of receiving the Loss Report.

 

The Company shall pay the ceded Collected Premium, net of Ceding
Commission, plus Fee Income, simultaneous with the sending of the Loss Report.

 

In the event of late payments on any of the foregoing by either party
interest shall accrue at an effective annual yield of 6% for the overdue period
(the  “Interest”).

 

Within 30 Business Days following the end of each calendar quarter, the
Company shall provide a written report to the Reinsurer that shall include
Actuarial Data as mutually agreed.

 

ARTICLE XII

 

OFFSET

 

Each party hereto shall have, and may exercise at any time and from
time to time, the right to offset any undisputed balance or balances, whether
on account of premiums or on account of losses, due from such party to the
other (or, if more than one, any other) party hereto under this Agreement or under
any other reinsurance agreement heretofore or hereafter entered into by and
between them, and may offset the same against any undisputed balance or
balances due to the former from the latter under the same or any other
reinsurance agreement between them, and the party asserting the right of offset
shall have and may exercise such right whether any undisputed balance or
balances due to such party from the other are on account of premiums or on
account of losses and regardless of the capacity, whether as assuming insurer
or as ceding insurer, in which each party acted under the agreement or, if more
than one, the different agreements involved.

 

For the avoidance of doubt the Reinsurer’s liability shall be reduced
by any amounts owed to the Reinsurer by any Relevant Company.

 

ARTICLE XIII

 

AGENCY/COMBINED RESULTS

 

It is agreed that Coast National shall be the agent for the Company
authorized to receive any payments due the Company and/or any communication
relating to this Agreement.  Any
payments made to Coast National by the Reinsurer or communications given to
Coast National by the Reinsurer shall discharge the Reinsurer as to all
Relevant Companies in this Agreement. 
All calculations, including but not limited to, Loss Corridor, Limit of
Liability, Experience Account Balance shall be on the combined sum of all
Relevant Companies that are included as Company.

 

ARTICLE XIV

 

MAXIMUM SUBJECT NET PREMIUM

 

It is agreed that the Maximum Subject Net Premium written for the
Company for Underwriting Years 2002, 2003 and 2004, shall equal
$400,000,000,  $575,000,000  and 
$650,000,000 respectively.

 

It is agreed that the Maximum Subject Net Premium for Security National
for Underwriting Years 2002, 2003 and 2004, shall equal $50,000,000,  $65,000,000 
and $80,000,000  respectively.

 

It is agreed that the Maximum Subject Net Premium written in the state
of Texas for Underwriting Years 2002, 
2003 and 2004, shall equal $20,000,000, 
$35,000,000  and  $45,000,000 respectively.

 

5

 

In the event the aforementioned maximum Subject Net Premiums written
for any individual Underwriting Year are exceeded, the Quota Share Percentage
applicable shall be the quotient of (1) the product of (A) the Quota Share
Percentage otherwise applicable times (B) the maximum Subject Net Premium
written, divided by (2) the Subject Net Premium written.

 

ARTICLE XV

 

CANCELLATION FOR NON-PAYMENT

 

If the Company fails to pay Ceded Premium when due to the Reinsurer,
the Reinsurer shall promptly notify the Company in writing of the balance
due.  If the Company fails to remit
payment within thirty (30) Business Days including interest at a rate of 6% per
annum on the balance, then the Reinsurer shall have the right to cancel the
agreement on a run-off basis for Policies attaching prior to cancellation and
the Limit of Liability shall be reduced to Ceded Premium paid, plus Fee Income
paid, net of Ceding Commission, less Reinsurer’s Margin, effective on the last
day for which payment was received.

 

ARTICLE XVI

 

CANCELLATION FOR CHANGE IN CONTROL

 

In the event of a Change in Control, in accordance with
Schedule B, the Reinsurer or the Company has the option to cancel coverage
for the Relevant Company at the end of the calendar quarter in which the Change
in Control occurred, or any subsequent quarter, on a cut-off basis.  For the avoidance of doubt, in the event of
such cancellation, the Reinsurer shall have no further liability under or
related to this Agreement to the Relevant Company after the cancellation date.  Provided however that within 45 Business
Days of such cancellation, the Reinsurer shall pay the Relevant Company a
Profit Commission equal to the positive Experience Account Balance as of the
end of the prior month of the Relevant Company, if any.  The payment shall be reflected in the
Experience Account Balance as Ultimate Net Loss paid and/or return premium paid
by the Reinsurer.

 

Furthermore, in the event this option is elected and after the cut-off
of business for the Relevant Company or Relevant Companies, the combined
surplus of the remaining Companies would be less than 50% of the combined
surplus of all Relevant Companies as of December 31, 2001, the Reinsurer
or the Companies has the option to cancel the entire agreement, at the end of
such quarter or any subsequent quarter, on a cut-off basis.  For the avoidance of doubt, in the event of
such cancellation, the Reinsurer shall have no further liability under or
related to this Agreement to the Company. 
In such event within 45 Business Days of such cancellation, the
Reinsurer shall pay the Company a Profit Commission equal to the positive
Experience Account Balance, as of the end of the prior month, if any.

 

ARTICLE XVII

 

SPECIAL TERMINATION

 

1. This agreement shall automatically terminate without the need for
any action by any party hereto in the event that any other party should at any
time become insolvent, or suffer any impairment of contributed capital, or file
a petition in bankruptcy, or enter liquidation, rehabilitation, or voluntary
supervision, or have a receiver appointed.

 

2. The Reinsurer may terminate this agreement effective
December 31, 2003 if the estimated Loss Ratio from Inception through
September 30, 2003 is greater than 85%. 
If the Reinsurer elects to exercise this option, it will notify the
Company on or before November 15, 2003. 
In the event the Company does not agree with the estimated inception to
date Loss Ratio it will notify the Reinsurer within 5 days of receipt of the
Notice of Cancellation of its desire to have an independent actuary, appointed
jointly, to determine the Loss Ratio. 
In the event the independent actuary’s estimated inception to date Loss
Ratio is less than 85% the cancellation notice shall be rescinded.

 

6

 

3. The Reinsurer may terminate this agreement in the event the
Company’s combined Policyholders Surplus, as reported in their annual or
quarterly statement in accordance with statutory accounting policies and
procedures, falls below 70% of the Company’s combined Policyholders Surplus as
of December 31, 2001.  However, in
the event the Company’s combined Policyholders Surplus increases to 80% of the
Company’s combined Policyholders Surplus as of December 31, 2001 prior to
the effective date of cancellation, the cancellation notice shall be rescinded.

 

4.  If termination is effective
under paragraph 3, 30 Business Days notice shall be given.  For termination under either paragraph 1, 2
or 3, the Reinsurer has the option to run-off or cut off the in-force business.  In the event the Reinsurer elects to cut off
the in-force business it shall return the unearned Ceded Premium, net of Ceding
Commission, minus the net unpaid portion of the unearned Ceded Premium and it
shall not be liable for any losses occurring after the effective date of
cancellation.

 

ARTICLE XVIII

 

EXCLUSIONS

 

A. Any loss or liability accruing to the Company directly or indirectly
from any insurance written by or through and Pool or Association including
Pools or Associations in which membership by the Company is required under any
statutes or regulations (other than assigned risk automobile plans).

 

B.  War Risks as excluded by War
Risk Exclusion Clauses appearing in original policies.

 

C.  Assumed Reinsurance of any
kind, except policies written in Texas on County Mutual paper and reinsured by
a Relevant Company.

 

D.  Business excluded by the
attached Nuclear Incident Exclusion Clauses.

 

E.  All liability of the Company
arising, by contract, operation of law, or otherwise, from its participation or
membership, whether voluntary or involuntary, in any insolvency fund.  “Insolvency fund” includes any guaranty
fund, insolvency fund, plan, pool, association, fund or other arrangement,
howsoever denominated, established or governed, 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 is otherwise deemed unable to meet any claim, debt, charge, fee or
other obligation in whole or in part.

 

ARTICLE XIX

 

WARRANTY

 

The Company warrants that it shall retain the Loss Corridor net and
unreinsured, with the exception of contract T2-2001-5417 between Inter-Ocean of
Ireland Limited and Coast National and Security National, effective
January 1, 2001 and expiring December 31, 2003, or a subsequent
agreement thereto, provided that the terms of such subsequent agreement have
been reviewed and approved by the Reinsurer in writing (such approval shall not
be unreasonably withheld). 
Notwithstanding the foregoing, the Company shall retain the Quota Share
Percentage of Ultimate Net Loss in the Loss Corridor that would otherwise be
ceded net and unreinsured.

 

7

 

ARTICLE XX

 

DEFINITIONS

 

Business Day shall mean a day when banks in New York are open for
business.

 

Ultimate Net Loss shall mean Loss Payment and shall include Allocated
Loss Adjustment Expenses, plus Unallocated Loss Adjustment Expenses subject to
a limit of 10% of Ceded Premium, plus 80% of the Reinsurer’s Quota Share
Percentage of the first $3,000,000 of Extra Contractual Obligations and or
Excess Limits Liability.

 

Allocated Loss Adjustment Expense and Unallocated Loss Adjustment
Expense shall be in accordance with statutory accounting rules, as described in
the NAIC Annual Statement Instructions.

 

Subject Net Premiums shall mean the premium charged the insured, net of
return premium, on the Business Covered.  
The Reinsurer acknowledges that the current operating procedures of the
Company results in no uncollectable premium. 
In the event that these operating procedures produce uncollectable
premium, the amount of uncollectable premium shall not exceed 1% of the
otherwise Subject Net Premiums.

 

Collected Premium shall mean the Subject Net Premium paid by the
Insured.

 

Underwriting Year shall mean the 12-month period from January 1
until December 31, both days inclusive, except that for Bristol where, the
first Underwriting Year shall be the period from July 1, 2002 until
December 31, 2002.  For the
avoidance of doubt, all premiums on all Policies attaching during such period
and the loss liability on those Policies shall be included for purposes of any
calculation hereunder related to any Underwriting Year.

 

Loss Ratio shall mean the Company’s ceded Ultimate Net Loss plus
incurred but not reported divided by the ceded Subject Net Premium on the
Business Covered.  This calculation
shall be in the aggregate and not for each individual Underwriting Year and
shall include the Ultimate Net Loss in the Loss Corridor.

 

Loss Corridor shall mean the ceded Ultimate Net Loss retained by the
Company (ie: Ultimate Net Loss otherwise recoverable) from and including 80% to
90% of ceded Subject Net Premium.

 

Catastrophic Loss Occurrence shall mean a loss from the same occurrence
involving more than one risk.

 

The definition of occurrence shall be as defined in the Company’s
catastrophe reinsurance agreement however shall include a Terrorist Event as
defined in the Schedule A attached.

 

Reinsurer’s Margin shall mean 3% of Ceded Premium.

 

Relevant Company shall mean an individual company named as part of
Company.

 

ARTICLE XXI

 

LOSS SETTLEMENTS

 

The Company alone and at
its full discretion shall adjust, settle or compromise all claims and
losses.  All such adjustments,
settlements, and compromises, including ex gratia payments, shall be binding on
the Reinsurer in proportion to its participation.  Ex gratia payments include only those payments made to settle a
loss or claim covered under the Company’s underlying insurance policy for
purposes of avoiding the costs of a lawsuit. Under no circumstances will the
Company make a payment for a claim or loss not covered under the Company’s
underlying insurance policy. The Company shall likewise at its sole discretion
commence, continue, defend, compromise, settle or withdraw from actions, suits
or proceedings and generally do all such matters and things relating to any
claim or loss as in its judgment may be beneficial or expedient, and all
payments made and costs and expenses incurred in connection therewith or in
taking legal

 

8

 

advice therefore.  The Reinsurer shall receive credit for their
pro-rata share of all salvage and subrogation received by the Company.  In the event the Company shall fail or
neglect to do so, the Reinsurer is hereby authorized and empowered to bring any
appropriate action in the name of the Company to enforce any rights of
subrogation.

 

ARTICLE XXII

 

NET RETAINED LINES CLAUSE

 

This Agreement applies only to that portion of any insurance or
reinsurance which the company retains net for its own account.  Notwithstanding the foregoing, it is
understood that the stop loss outlined in Article XIX Warranty, shall not
inure to the benefit of this Agreement.

 

ARTICLE XXIII

 

NO THIRD PARTY RIGHTS

 

No parties, other than the Company and the Reinsurer, shall have any
rights under this Agreement unless specifically stated herein.

 

ARTICLE XXIV

 

ERRORS OR OMISSIONS

 

Any inadvertent delay, omission or error shall not 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 immediately upon discovery.

 

ARTICLE XXV

 

INSOLVENCY CLAUSE

 

In the event of the insolvency of the Company, this reinsurance shall
be payable directly to the Company, or to its liquidator, receiver, conservator
or statutory successor immediately upon demand on the basis of the liability of
the Company without diminution because of the insolvency of the Company or
because the liquidator, receiver, conservator or statutory successor of the
Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the Company shall give written
notice to the Reinsurers of the pendency of a claim against the Company which
would involve a possible liability on the part of the Reinsurers, indicating
the policy or bond reinsured, within a reasonable time after such claim is
filed in the conservation or liquidation proceeding or in the
receivership.  It is further agreed that
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 that they may deem available to the
Company or its liquidator, receiver, conservator, or statutory successor.  The expense thus incurred by the Reinsurers
shall be chargeable, subject to the approval of the Court, against the Company
as part of the expense of conservation or liquidation to the extent of a pro
rata share of the benefit which may accrue to the Company solely as a result of
the defense undertaken by the Reinsurers.

 

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

 

9

 

The reinsurance shall be
payable by the Reinsurers to the Company or to its liquidator, receiver,
conservator, or statutory successor, except as proved by Section 4118 (a)
(1) (A) and 1114 (c) of the New York Insurance Law or except (a) where the
Agreement specifically provides another payee of such reinsurance in the event
of the insolvency of the Company, or (b) where the Reinsurers with the
consent  of the direct insured or
insureds have voluntarily assumed under such policies and in substitution for
the obligations of the Company to the payees. 
Then, and in that event only, the Company, with the prior approval of
the certificate of assumption on New York risks by the Superintendent of
Insurance of the State of New York, is entirely released from its obligation
and the Reinsurers pay any loss directly to payees under such policy.

 

ARTICLE XXVI

 

EXTRA CONTRACTUAL OBLIGATIONS AND EXCESS LIMITS
LIABILITY

 

This Agreement will extend to cover any claims-related extra
contractual obligations and/or excess limits liability arising because of, but
not limited to, the following:

 

A.  Failure of the Company to agree to pay a
claim within the policy limits or to provide a defense against such claims.

 

B.  Actual or alleged bad faith, fraud, or
negligence in investigating or handling a claim or in rejecting an offer of
settlement.

 

C.  Negligence or breach of duty in the
preparation of the defense or the conduct of a trial or the preparation or
prosecution of any appeal and/or subrogation and/or any subsequent action
resulting therefrom.

 

“Extra contractual obligation” as used in this Agreement will mean
those liabilities not covered under any other provision of this Agreement for
which the Company is liable to its insured or a third-party claimant, or that
the Company paid as its share of a claims-related extra contractual obligation
awarded against one or more of its co-insurers.

 

“Excess limits liability” as used in this Agreement will mean any
amount for which the Company would have been contractually liable to pay had it
not been for the limits of the reinsured policy.

 

There will be no recovery hereunder where the extra contractual obligation
or excess limits liability has been incurred due to fraud committed by a member
of the board of directors or a corporate officer of the Company, acting
individually, collectively, or in collusion with a member of the board of
directors, a corporate officer, or a partner of any other corporation,
partnership, or organization involved in the defense or settlement of a claim
on behalf of the Company.

 

The date on which any extra contractual obligation and/or excess limits
liability is incurred by the Company will be deemed, in all circumstances, to
be the date of the original loss. 
Nothing in this Article will be construed to create a separate or
distinct loss apart from the original covered loss that gave rise to the extra
contractual obligations and/or excess limits liability discussed in the
preceding paragraphs.  The Reinsurers’
liability as respects extra contractual obligations and/or excess limits
liability under the Agreement will be in addition to the indemnification
coverage set.

 

10

 

ARTICLE XXVII

 

ACCESS TO RECORDS

 

The Reinsurer or its designated representative shall have access to the
books and records of the Company at all reasonable times for the purpose of
obtaining information, which pertains in any way to this reinsurance.  This clause shall survive termination of
this Agreement.

 

ARTICLE XXVIII

 

ARBITRATION

 

As a
condition precedent to any right of action hereunder, any dispute arising out
of the interpretation, performance, or breach of this Contract, including the
formation or validity thereof, shall be submitted for decision to a panel of
three arbitrators.  Notice requesting
arbitration will be in writing and sent certified or registered mail, return
receipt requested.

 

Each
party shall choose one arbitrator and the two arbitrators shall, before
instituting the hearing, choose an impartial third arbitrator who shall preside
at the hearing.  If either party fails
to appoint the arbitrator within thirty (30) days after being requested to do so
by the other party, the latter, after ten (10) days notice by certified or
registered mail of its intention to do so, may appoint the second arbitrator.

 

If the
two arbitrators are unable to agree upon the third arbitrator within thirty
(30) days of their appointment, the third arbitrator will be chosen by ARIAS
US.  All arbitrators shall be
disinterested active or former executives officers of insurance or reinsurance
companies or Underwriters at Lloyd’s London.

 

Within
thirty (30) days after notice of appointment of all arbitrators, the panel
shall meet and determine timely periods for briefs, discovery procedures and
schedules for hearings.  The panel shall
be relieved of all judicial formality and shall not be bound by the strict
rules of procedure and evidence.  Unless
the panel agrees otherwise, the arbitration will take place in New York, but
the venue may be changed when deemed by the panel to be to be in the best
interest of the arbitration proceeding.  
The decision rendered by a majority of the arbitrators shall be final
and binding on both parties.  The panel
shall make its decision considering the custom and practice of the applicable
insurance and reinsurance business as promptly as possible following the
termination of the hearings.  Judgment
upon the award may be entered in any court having jurisdiction thereof.

 

Each
party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the cost of the third arbitrator.  The remaining costs of the arbitration shall
be divided equally between the parties.

 

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 by the Company to each of the reinsurers
constituting the one party provided, however, that nothing therein shall impair
the rights of such reinsures 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.

 

ARTICLE XXIV

 

GOVERNING LAW

 

This agreement shall be interpreted and governed by the laws of New
York without regard to that jurisdiction’s rules with respect to conflicts of
laws.

 

11

 

ARTICLE XXX

 

ENTIRE AGREEMENT/INTERPRETATION

 

With respect to the business being reinsured hereunder, “i” this
Agreement constitutes the entire agreement between the parties, and “ii” there
are no understandings or agreements between the parties other than those
expressed in this Agreement.  Any change
to or modification of this Agreement will be made by written amendment to this
Agreement and signed by the parties hereto.

 

This Agreement is between sophisticated parties, each of which has
reviewed the Agreement and is fully knowledgeable about its terms and
conditions.  The parties therefore agree
that this Agreement shall be construed without regard to the authorship of the
language and without any presumption or rule of construction in favor of either
of them.

 

U.S.A.

 

NUCLEAR
INCIDENT EXCLUSION CLAUSE – LIABILITY – REINSURANCE

 

(1)                                  This
reinsurance does not cover any loss or liability accruing to the Reassured as
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 reinsurance 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*) (bodily injury or property
damage) 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

 

*NOTE:  The
words printed in italics in the Limited Exclusion Provision and in the Broad
Exclusion Provision shall apply only in relation to original liability policies
that include a Limited Exclusion Provision or a Broad Exclusion Provision
containing those words.

 

12

 

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.

 

(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 reinsurance 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

(bodily injury or property damage

 

(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 (intermediate
medical or surgical relief  
(first aid, to expenses

 

13

 

incurred
with respect to (bodily injury, sickness, disease or death   (bodily injury   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  (bodily injury or property damage   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 there from;

(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 (bodily injury or property
damage 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  (property damage to
such nuclear facility and any property thereat.

 

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 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”,
“property damage” includes all forms of radioactive contamination of property.
Includes
all forms of radioactive contamination of property.)

 

14

 

V.             The
inception dates and thereafter all original polices affording coverages
specified in this paragraph (3), whether new, renewal or replacement, being
policies which become effective on or after 1st May, 1960, 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.

 

(4)                                  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 adopted by the Canadian Underwriters’
Association of the Independent Insurance Conference of Canada.

 

15

 

U.S.A.

 

NUCLEAR INCIDENT EXCLUSION CLAUSE –
PHYSICAL DAMAGE – REINSURANCE

 

(1)                                  This
Reinsurance does not cover any loss or liability accruing to the Reassured,
directly or indirectly and whether as Insurer or Reinsurer, from any Pool of
Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear
Energy risks.

 

(2)                                  Without
in any way restricting the operation of paragraph (1) of this Clause, this
Reinsurance does not cover any loss or liability accruing to the Reassured,
directly or indirectly and whether as Insurer or Reinsurer, from any insurance
against Physical Damage (including business interruption or consequential loss
arising out of such Physical Damage) to:

 

I.                 Nuclear
reactor power plants including all auxiliary property on the site, or

II.             Any
other nuclear reactor installation, including laboratories handling radioactive
materials in connection with reactor installations, and “critical facilities”
as such, or

III.         Installations
for fabricating complete fuel elements or for processing substantial quantities
of “special nuclear material,” and for reprocessing, salvaging, chemically
separating, storing or disposing of “spent” nuclear fuel or waste materials, or

IV.         Installations
other than those listed in paragraph (2) III above using substantial quantities
of radioactive isotopes or other products of nuclear fission.

 

3.                                       Without
in any way restricting the operations of paragraphs (1) and (2) hereof, this
Reinsurance does not cover any loss or liability by radioactive contamination
accruing to the Reassured, directly or indirectly, and whether as Insurer or
Reinsurer, from any insurance on property which is on the same site as a
nuclear reactor power plant or other nuclear installation and which normally
would be insured therewith except that this paragraph (3) shall not operate

 

(a)          where
Reassured does not have knowledge of such nuclear reactor power plant or
nuclear installation, or

 

(b)         where
said insurance contains a provision excluding coverage for damage to property
caused by or resulting from radioactive contamination, however caused.  However, on and after 1st
January 1960 this sub-paragraph (b) shall only apply provided the said
radioactive contamination exclusion provision has been approved by the
Governmental Authority having jurisdiction thereof.

 

4.                                       Without
in any way restricting the operations of paragraphs (1), (2) and (3) hereof,
this Reinsurance does not cover any loss or liability by radioactive contamination
accruing to the Reassured, directly or indirectly, and whether as Insurer or
Reinsurer, when such radioactive contamination is a named hazard specifically
insured against.

 

5.                                       It
is understood and agreed that this Clause shall not extend to risks using
radioactive isotopes in any form where the nuclear exposure is not considered
by the Reassured to be the primary hazard.

 

6.                                       The
term “special nuclear material” shall have the meaning given it in the Atomic
Energy Act of 1954 or by any law amendatory thereof.

 

16

 

7.                                       Reassured
to be sole judge of what constitutes:

 

(a)                                  substantial
quantities, and

(b)                                 the
extent of installation, plant or site.

 

Note:                  Without in any way restricting the
operation of paragraph (1) hereof, it is understood and agreed that

 

(a)          all
policies issued by the Reassured on or before 31st
December 1957 shall be free from the application of the other provisions
of this Clause until expiry date or 31st December 1960,
whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada,
policies issued by the Reassured on or before 31st
December 1958 shall be free from the application of the other provisions
of this Clause until expiry date or 31st December 1960,
whichever first occurs whereupon all the provisions of this Clause shall apply.

 

Schedule A

 

For purposes of this
Agreement, “Terrorist Event” shall mean a disaster, accident, casualty or loss
or series of disasters, accidents, casualties or losses arising out of an event
or series of related events, regardless of time, space or geography, that:

 

1.               directly
result in loss or loss expense that would otherwise by covered by this
Agreement,

2.               occur
in time of either peace or war,

3.               occur
on land, on sea, in the air, in space, or any combination thereof, and

4.               are
directly caused by, conducted by, engaged in, or coordinated by any hostile or
unfriendly person or persons, organization, group, sub-group, power, authority
or force, whether governmental, quasi-governmental, military, quasi-military,
civilian, ethnic, religious, quasi-religious, or otherwise,

 

and that are directly
occasioned by, directly caused by, directly result from, directly arise from,
or directly relate to:

 

1.               any
war, civil war, religious war, ethnic war, racial war, or tribal war, whether
declared or undeclared, whether recognized or unrecognized, whether solemn,
public, perfect, mixed, or private;

 

2.               any
war, warlike, hostile or unfriendly acts, actions or activities against a
government of any country, any political sub-division or public authority
thereof, or any of its religious, public or private organizations, businesses
or citizens;

 

3.               any
terroristic or violent acts, actions or activities against a government of any
country, any political sub-division or public authority thereof, or any of its
religious, public or private organizations, businesses or citizens;

 

4.               any
invasion of any country, any political sub-division, public authority,
territory or part thereof;

 

5.               any
acts, actions or activities of foreign enemies, whether governmental,
quasi-governmental, ethnic, religious, quasi-religious, or otherwise against a
government of a country, any political sub-division or public authority
thereof, of any of its religious, public or private organizations, businesses
or citizens;

 

17

 

6.               any
acts, actions or activities of rebellion, insurrection, or revolution against a
government of any country or any political sub-division or public authority
thereof;

 

7.               any
acts, actions or activities of military power, usurped power or martial law;

 

8.               any
confiscation by act or order of any governmental or quasi-governmental
authority or activities;

 

9.               defending,
hindering, or combating against an actual, expected or impending acts, actions,
activities or attacks caused by, resulting from or occasioned by any of the
above.

 

The term “acts, actions,
or activities” as used herein shall include but not be limited to:

 

1.               murder
or infliction of bodily injury,

 

2.               hostage
taking, hi-jacking or kid-napping,

 

3.               extortion,
theft of robbery,

 

4.               causing
any fire of flood,

 

5.               infecting,
interfering with or disrupting any (a) communication or information system
(including the release or insertion of any virus, worm, or Trojan horse into
any communication or information system), or (b) supply of water, power, oil,
gas or other fundamental resource,

 

6.               use
of any weapon or explosive including bombs or bombing,

 

7.               use
of release of any contaminant, pollutant, biological, chemical, gaseous,
poisonous or other hazardous materials or weapons that may harm or endanger any
person, property, animals or the environment,

 

8.               seizure,
blockage, damage to, or destruction of public or private property including
governmental and infrastructure facilities,

 

9.               seizure,
blockage, damage to, or destruction of any means of public or private transport
including subways, buses, trains, planes, ships, boats, ferries, and all other
aircraft and watercraft, or

 

10.         seizure,
blockage, damage to, or destruction of tunnels, roads, streets and highways, or
other places of public use, or

 

11.         threatening
to commit any of the above acts, actions, or activities.

 

Any loss and loss expense
arising from any of the above is included regardless of any other cause or
event contributing concurrently or in any sequence to the loss or event.  The public declarations and descriptions,
written or oral, of the senior officials or leadership of the executive or
legislative branch of any government or political subdivision or public
authority thereof directly or indirectly affected by any of the above events,
acts, actions, activities or conditions shall be conclusively determinative of
the existence or non-existence of any of the above events, acts, actions,
activities or conditions.

 

It shall not be a
Terrorist Event if the Reinsured can reasonably establish to the reasonable
satisfaction of the Reinsurer that the acts, actions, or activities were not
conducted for the purposes of (i) furthering the political, ideological,
philosophical, racial, ethnic, social or religious causes or objectives of the
perpetrators, (ii) overthrowing or influencing the actions or policies of any
government, or (iii) intimidating or putting the public or any part or
section of the public in fear.

 

18

 

Schedule B

 

A Change in Control shall be deemed to have
occurred if (a) KKR, its affiliates and the Management Group shall at any time
not own, in the aggregate, directly or indirectly, beneficially and of record,
at least 35% of the outstanding voting stock of any of the Reinsureds and/or
(b) any person, entity or group shall at any time have acquired direct or
indirect beneficial ownership of a percentage of the outstanding voting stock
of any of the Reinsureds that exceeds the percentage of such voting stock then
beneficially owned, in the aggregate, by KKR, its affiliates and
the Management Group, unless in the case of either (a) or (b) above, KKR,
its affiliates and the Management Group have, at such time, the right or
the ability by voting power, contract or otherwise to elect or designate for
election a majority of the board of directors of the relevant Reinsured.

 

KKR shall mean each of Kohlberg Kravis Roberts &
Co., L.P. and KKR Associates, L.P.. 
Management Group shall mean, at any time, the Chairman of the Board, the
President, any Executive Vice President or Vice President, the Chief Financial Officer of
the relevant Reinsured.

 

Interests and Liabilities Agreement

(hereinafter referred to as the “Agreement”)

to the

Quota Share Reinsurance Contract

(hereinafter referred to as the “Contract”)

It is hereby mutually agreed by

Coast National Insurance Company (“Coast
National”)

Anaheim, California

Security National Insurance Company
(“Security National”)

Davie, Florida

Bristol West Insurance Company (“Bristol”)

Philadelphia, Pennsylvania

and

Bristol West Casualty Insurance Company
(“Bristol”)

Independence, Ohio

(hereinafter together referred to as the “Subscribing Company”)

and

National Union Fire Insurance Company of
Pittsburgh, PA

Harrisburg, Pennsylvania

(hereinafter referred to as the “Subscribing Reinsurer”)

 

 

Under the terms of the
Agreement attached hereto, the Subscribing Reinsurer shall have a 50%
participation in the interest and liabilities of the Reinsurer described in the
attached Agreement.

 

Such participants shall
be several and not joint with the participation of other subscribing
reinsurers, and under no circumstances shall the Subscribing Reinsurer
participate in the interests and liabilities, if any, of the other subscribing
reinsurers in said Agreement.

 

19

 

This Agreement shall
commence at 12:01 a.m. Eastern Standard Time, January 1, 2002, except for
Bristol which shall commence at 12:01 a.m. Eastern Standard Time, July 1,
2002.  It shall remain in effect until
11:59 p.m. December 31, 2004, unless terminated in accordance with the
provisions of the attached Agreement.

 

In
Witness Whereof, the party hereto have caused this Interests
and Liabilities Agreement to be signed in duplicate by their duly authorized
representatives.

 

	
  Anaheim,
  California, this
              day of
              in the
  year 2002.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Gregory J. Hammond

  	
   

  
	
   

  	
   Coast
  National Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Davie, Florida,
  this             day
  of             in the
  year 2002.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Gregory J.
  Hammond

  	
   

  
	
   

  	
   Security
  National Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Philadelphia,
  Pennsylvania, this
              day of
              in the
  year 2002.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Alexis S.
  Oster

  	
   

  
	
   

  	
   Bristol
  West Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Independence,
  Ohio, this            
  day of             in
  the year 2002.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Alexis S.
  Oster

  	
   

  
	
   

  	
   Bristol
  West Casualty Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  New York, New
  York, this            
  day of             in
  the year 2002.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Robert J.
  Coords

  	
   

  
	
   

  	
   

  	
  National Union Fire Insurance Company

  of Pittsburgh, PA

  	
   

  
				

 

20Exhibit
10.3

 

Addendum I

to

Quota Share Reinsurance Agreement

(Effective January 1, 2002)

between

COAST NATIONAL INSURANCE COMPANY (“Coast National”)

SECURITY NATIONAL INSURANCE COMPANY (“Security National”)

BRISTOL WEST INSURANCE COMPANY (“Bristol”)

BRISTOL WEST CASUALTY INSURANCE COMPANY (“Bristol”)

(hereinafter called the “Company”)

and

THE PARTICIPANTS SUBSCRIBING TO THE RESPECTIVE

INTERESTS AND LIABILITIES AGREEMENTS TO WHICH THIS AGREEMENT

IS ATTACHED

(hereinafter called the “Reinsurer”)

 

It is understood and
agreed by the parties hereto that effective January 1, 2002 the following
article is amended to read as follows:

 

ARTICLE XIV

 

MAXIMUM SUBJECT
NET PREMIUM

 

It is agreed that the
Maximum Subject Net Premium written for the Company for Underwriting Years
2002, 2003 and 2004, shall equal $450,000,000, $575,000,000 and $650,000,000
respectively unless otherwise agreed to by the Reinsurer.

 

It is agreed that the
Maximum Subject Net Premium for Security National for Underwriting Years 2002,
2003 and 2004, shall equal $50,000,000, $65,000,000 and $80,000,000
respectively unless otherwise agreed to by the Reinsurer.

 

It is agreed that the
Maximum Subject Net Premium written in the state of Texas for Underwriting
Years 2002, 2003 and 2004, shall equal $20,000,000, $35,000,000 and $45,000,000
respectively unless otherwise agreed to by the Reinsurer.

 

If at any time the
Company estimates that the Maximum Subject Net Premium, as heretofore itemized,
will be exceeded they may request a revision in writing and the Reinsurer shall
respond to that request in writing, within 30 days, with its approval or
denial.  However, this request

 

 

cannot be made for an
Underwriting Year prior to the year of the request of change.  Such approval shall not be unreasonably
withheld.

 

In the event the
aforementioned or otherwise agreed upon Maximum Subject Net Premiums written
for any individual Underwriting Year are exceeded, the Quota Share Percentage
applicable shall be the quotient of (1) the product of (A) the Quota Share
Percentage otherwise applicable time (B) the Maximum Subject Net Premium
written, divided by (2) the Subject Net Premium written.

 

Nothing herein contained shall alter, vary or extend
any provision or condition of this Contract other than as above stated.

 

 

In Witness Whereof,
the parties hereto have caused this Addendum I to be signed in duplicate by
their duly authorized representatives.

 

	
  Anaheim,
  California, this
              day of
              in the
  year 2002.

  
	
   

  
	
   

  
	
   

  	
  /s/ Gregory J.
  Hammond

  	
   

  
	
   

  	
  Coast
  National Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Davie, Florida,
  this             day
  of             in the
  year 2002.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Gregory J.
  Hammond

  	
   

  
	
   

  	
  Security
  National Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Philadelphia,
  Pennsylvania, this
              day of
              in the
  year 2002.

  
	
   

  
	
   

  
	
   

  	
  /s/ Alexis S.
  Oster

  	
   

  
	
   

  	
  Bristol
  West Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Independence,
  Ohio, this            
  day of             in
  the year 2002.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Alexis S.
  Oster

  	
   

  
	
   

  	
  Bristol
  West Casualty Insurance Company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  New York, New
  York, this            
  day of             in
  the year 2002.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Robert J.
  Coords

  	
   

  
	
   

  	
  National
  Union Fire Insurance Company

  of Pittsburgh, PA

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}]]