Document:

exv10w9

 

Exhibit 10.9

First and Second Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

			
	 	 	 
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Table of Contents

	 	 	 	 	 	 	 
	Article	 	 	 	Page
	 
	 	 	 	 	 	 
	I

	 	Coverage
	 	 	1	 
	 
	 	 	 	 	 	 
	II

	 	Commencement and Termination
	 	 	1	 
	 
	 	 	 	 	 	 
	III

	 	Concurrency of Conditions
	 	 	3	 
	 
	 	 	 	 	 	 
	IV

	 	Reinsurance Premium
	 	 	3	 
	 
	 	 	 	 	 	 
	V

	 	Loss Notices and Settlements
	 	 	4	 
	 
	 	 	 	 	 	 
	VI

	 	Late Payments
	 	 	4	 
	 
	 	 	 	 	 	 
	VII

	 	Offset (BRMA 36D)
	 	 	6	 
	 
	 	 	 	 	 	 
	VIII

	 	Access to Records (BRMA 1D)
	 	 	6	 
	 
	 	 	 	 	 	 
	IX

	 	Errors and Omissions (BRMA 14F)
	 	 	6	 
	 
	 	 	 	 	 	 
	X

	 	Currency (BRMA 12A)
	 	 	6	 
	 
	 	 	 	 	 	 
	XI

	 	Taxes (BRMA 50B)
	 	 	6	 
	 
	 	 	 	 	 	 
	XII

	 	Federal Excise Tax
	 	 	7	 
	 
	 	 	 	 	 	 
	XIII

	 	Funding Requirements
	 	 	7	 
	 
	 	 	 	 	 	 
	XIV

	 	Insolvency
	 	 	8	 
	 
	 	 	 	 	 	 
	XV

	 	Arbitration
	 	 	9	 
	 
	 	 	 	 	 	 
	XVI

	 	Service of Suit
	 	 	10	 
	 
	 	 	 	 	 	 
	XVII

	 	Agency Agreement
	 	 	11	 
	 
	 	 	 	 	 	 
	XVIII

	 	Governing Law
	 	 	11	 
	 
	 	 	 	 	 	 
	XIX

	 	Confidentiality
	 	 	11	 
	 
	 	 	 	 	 	 
	XX

	 	Severability
	 	 	11	 
	 
	 	 	 	 	 	 
	XXI

	 	Intermediary (BRMA 23A)
	 	 	11	 
	 
	 	 	 	 	 	 
	 

	 	Schedule A	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Schedule B	 	 	 	 

			
	 	 	 
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First and Second Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

(hereinafter referred to collectively as the “Company”)

by

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the “Reinsurer”)

Article I — Coverage

By this Contract the Reinsurer agrees to indemnify the Company for 100% of any reinstatement
premium which the Company pays or becomes liable to pay as a result of loss occurrences commencing
during the term of this Contract under the provisions of the First and Second Excess layers of the
Company’s Florida Only Excess Catastrophe Reinsurance Contract, effective June 1, 2007 (hereinafter
referred to as the “Underlying Contract” and described in Schedule A attached to and forming part
of this Contract), subject to the terms and conditions set forth herein and in Schedule B attached
to and forming part of this Contract.

Article II — Commencement and Termination

	A.	 	This Contract shall become effective at 12:01 a.m., Local Standard Time at the location where
the loss occurrence commences, June 1, 2007, with respect to reinstatement premium payable by
the Company under the provisions of the Underlying Contract as a result of losses arising out
of loss occurrences commencing at or after that time and date, and shall remain in force until
12:01 a.m., Local Standard Time at the location where the loss occurrence commences, June 1,
2008.

	B.	 	Notwithstanding the provisions of paragraph A above, if any of the following events occur on
or after the date lines are bound and, with the timing exceptions as qualified by

			
	 	 	 
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subparagraphs 1 and 2 below, before the termination of the Contract, the Company may terminate
a Subscribing Reinsurer’s percentage share in this Contract:

	 	1.	 	The Subscribing Reinsurer’s surplus as regards policyholders or the foreign
equivalent thereto after the date lines are bound for this Contract has been reduced by
more than 25.0% of the amount of surplus or foreign equivalent 12 months prior to that
date; or
	 
	 	2.	 	The Subscribing Reinsurer’s surplus as regards policyholders or the foreign
equivalent thereto at any time between the date lines are bound and the date of
termination of this Contract has been reduced by more than 25.0% of the amount of surplus
or foreign equivalent at the date of the Subscribing Reinsurer’s most recent financial
statement filed with regulatory authorities and available to the public as of the date
lines are bound for this Contract; or
	 
	 	3.	 	The Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
below A- (inclusive of “Not Rated” ratings) and/or Standard & Poor’s rating has been
assigned or downgraded below BBB+; or
	 
	 	4.	 	The Subscribing Reinsurer has become merged with, acquired by or controlled by any
other company, corporation or unaffiliated individual(s) not controlling the Subscribing
Reinsurer’s operations previously; or
	 
	 	5.	 	A State Insurance Department or other legal authority has ordered the Subscribing
Reinsurer to cease writing business; or
	 
	 	6.	 	The Subscribing Reinsurer has become insolvent or has been placed into liquidation
or receivership (whether voluntary or involuntary) or proceedings have been instituted
against the Subscribing Reinsurer 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
	 
	 	7.	 	The Subscribing Reinsurer has reinsured its entire liability under this Contract
without the Company’s prior written consent (except for inter-company pooling
arrangements); or
	 
	 	8.	 	The Subscribing Reinsurer has ceased assuming new or renewal property or casualty
treaty reinsurance business.

The Company has 30 days from the date of public announcement or discovery to exercise the
option to terminate a Subscribing Reinsurer’s percentage share in this Contract. To terminate
a Subscribing Reinsurer’s percentage share in this Contract, the Company must provide the
Subscribing Reinsurer with formal notice. Such notice, which shall be postmarked no later than
the last day of the aforementioned 30-day period, shall include the effective date of
termination. The effective date of termination shall be as selected by the Company and shall
be one of the following:

	 	a.	 	The last day of the month prior to the date of any public announcement or
discovery; or

			
	 	 	 
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	 	b.	 	The date of any public announcement or discovery; or
	 
	 	c.	 	The last day of any month after the date of any public announcement or
discovery; or
	 
	 	d.	 	The date of the Company’s written notice to the Subscribing Reinsurer
advising of the termination; or
	 
	 	e.	 	The date of notice provided by the Subscribing Reinsurer (should the
Subscribing Reinsurer elect to provide one).

	C.	 	If this Contract is terminated or expires while a loss occurrence covered hereunder is in
progress, the Reinsurer’s liability hereunder shall, subject to the other terms and conditions
of this Contract, be determined as if the entire loss occurrence had occurred prior to the
termination or expiration of this Contract, provided that no part of such loss occurrence is
claimed against any renewal or replacement of this Contract.

Article III — Concurrency of Conditions

	A.	 	It is agreed that this Contract will follow the terms, conditions, exclusions, definitions,
warranties and settlements of the Company under the Underlying Contract which are not
inconsistent with the provisions of this Contract.

	B.	 	The Company shall advise the Reinsurer of any material changes in the Underlying Contract
which may affect the liability of the Reinsurer under this Contract.

Article IV — Reinsurance Premium

	A.	 	As premium for the reinsurance provided hereunder for each excess layer for the term of this
Contract, the Company shall pay the Reinsurer the product of the following:

	 	1.	 	The factor, shown as “Reinstatement Factor” for that excess layer in Schedule B
attached hereto; times
	 
	 	2.	 	The final adjusted Rate on Line for the corresponding excess layer under the
Underlying Contract; times
	 
	 	3.	 	The final adjusted premium paid by the Company for the corresponding excess layer
under the Underlying Contract.

“Final adjusted Rate on Line” as used herein shall mean the final adjusted premium paid by the
Company for the corresponding excess layer under the Underlying Contract divided by the amount
shown as “Underlying Contract Reinsurer’s Per Occurrence Limit” for that excess layer in
Schedule B attached hereto.

 
			
	 	 	 
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	B.	 	The Company shall pay the Reinsurer an annual deposit premium for each excess layer of the
amount shown as “Deposit Premium” for that excess layer in Schedule B attached hereto, in four
equal installments of the amount shown as “Quarterly Deposit Premium” for that excess layer in
Schedule B attached hereto, on June 1, September 1 and December 1 of 2007 and March 1 of 2008.

	C.	 	Within 45 days after the expiration of this Contract, the Company shall provide a report to
the Reinsurer setting forth the premium due hereunder for each excess layer, computed in
accordance with paragraph A above, and any additional premium due the Reinsurer or return
premium due the Company for each such excess layer shall be remitted promptly.

	D.	 	In the event a Subscribing Reinsurer’s participation in this Contract is terminated under the
provisions of paragraph B of the Commencement and Termination Article, no deposit premium
installment shall be due after the effective date of termination and the adjusted premium for
each excess layer shall be calculated by dividing the number of days the Subscribing Reinsurer
participated on this Contract by the number of days of the original term of this Contract, and
multiplying the quotient thereof by the Subscribing Reinsurer’s percentage share of the
reinsurance premium for such excess layer calculated in accordance with paragraph A above.

Article V — Loss Notices and Settlements

	A.	 	Whenever reinstatement premium settlements made by the Company under the Underlying Contract
appear likely to result in a claim hereunder, the Company shall notify the Reinsurer. The
Company will advise the Reinsurer of all subsequent developments relating to such claims that,
in the opinion of the Company, may materially affect the position of the Reinsurer.

	B.	 	All reinstatement premium settlements made by the Company under the Underlying Contract,
provided they are within the terms of the Underlying Contract and within the terms of this
Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for
which it may be liable upon receipt of reasonable evidence of the amount paid (or scheduled to
be paid within 14 days) by the Company.

Article VI — Late Payments

	A.	 	The provisions of this Article shall not be implemented unless specifically invoked, in
writing, by one of the parties to this Contract.

	B.	 	In the event any premium, loss or other payment due either party is not received by the
intermediary named in the Intermediary Article (BRMA 23A) (hereinafter referred to as the
“Intermediary”) by the payment due date, the party to whom payment is due may, by notifying
the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to
pay, an interest penalty on the amount past due calculated for each such payment on the last
business day of each month as follows:

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

It is agreed that interest shall accumulate until payment of the original amount due plus
interest penalties have been received by the Intermediary.

	C.	 	The establishment of the due date shall, for purposes of this Article, be determined as
follows:

	 	1.	 	As respects the payment of routine deposits and premiums due the Reinsurer, the due
date shall be as provided for in the applicable section of this Contract. In the event a
due date is not specifically stated for a given payment, it shall be deemed due 30 days
after the date of transmittal by the Intermediary of the initial billing for each such
payment.
	 
	 	2.	 	Any claim or loss payment due the Company hereunder shall be deemed due 10 business
days after the proof of loss or demand for payment is transmitted to the Reinsurer. If
such loss or claim payment is not received within the 10 days, interest will accrue on
the payment or amount overdue in accordance with paragraph B above, from the date the
proof of loss or demand for payment was transmitted to the Reinsurer.
	 
	 	3.	 	As respects any payment, adjustment or return due either party not otherwise
provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as
provided for in the applicable section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 10 business days
following transmittal of written notification that the provisions of this Article have
been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon
receipt by the Intermediary.

	D.	 	Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from
contesting the validity of any claim, or from participating in the defense of any claim or
suit, or prohibiting either party from contesting the validity of any payment or from
initiating any arbitration or other proceeding in accordance with the provisions of this
Contract. If the debtor party prevails in an arbitration or other proceeding, then any
interest penalties due hereunder on the amount in dispute shall be null and void. If the
debtor party loses in such proceeding, then the interest penalty on the amount determined to
be due hereunder shall be calculated in accordance with the provisions set forth above unless
otherwise determined by such proceedings. If a debtor party advances payment of any amount it
is contesting, and proves to be correct in its contestation, either in whole or in part, the
other

			
	 	 	 
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party shall reimburse the debtor party for any such excess payment made plus interest on the
excess amount calculated in accordance with this Article.

	E.	 	Interest penalties arising out of the application of this Article that are $100 or less from
any party shall be waived unless there is a pattern of late payments consisting of three or
more items over the course of any 12-month period.

Article VII — Offset (BRMA 36D)

The Company and the Reinsurer, each at its option, may offset any balance or balances, whether on
account of premiums, claims and losses, loss expenses or salvages due from one party to the other
under this Contract; provided, however, that in the event of the insolvency of a party hereto,
offsets shall only be allowed in accordance with applicable statutes and regulations.

Article VIII — Access to Records (BRMA 1D)

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

Article IX — Errors and Omissions (BRMA 14F)

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

Article X — Currency (BRMA 12A)

	A.	 	Whenever the word “Dollars” or the “$” sign appears in this Contract, they shall be construed
to mean United States Dollars and all transactions under this Contract shall be in United
States Dollars.

	B.	 	Amounts paid or received by the Company in any other currency shall be converted to United
States Dollars at the rate of exchange at the date such transaction is entered on the books of
the Company.

Article XI — Taxes (BRMA 50B)

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

			
	 	 	 
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Article XII — Federal Excise Tax

	A.	 	The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the
applicable percentage of the premium payable hereon as imposed under Section 4371 of the
Internal Revenue Code to the extent such premium is subject to the Federal Excise Tax.

	B.	 	In the event of any return of premium becoming due hereunder the Reinsurer will deduct the
applicable percentage from the return premium payable hereon and the Company or its agent
should take steps to recover the tax from the United States Government.

Article XIII — Funding Requirements

	A.	 	The Reinsurer agrees to fund, within 30 days of the Company’s request, subject to receipt of
satisfactory information from the Company, its share of the Company’s ceded unearned premium
and outstanding loss reserves (being the sum of all reinstatement premiums paid by the Company
under the Underlying Contract but not yet recovered from the Reinsurer, plus the Company’s
reserves for reinstatement premiums due under the Underlying Contract, if any, determined as
of the date that this paragraph A first applies to the Reinsurer according to the provisions
of subparagraph (a) and/or (b) below) by:

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

if the Reinsurer:

	 	a.	 	Is unauthorized in any state of the United States of America or the
District of Columbia having jurisdiction over the Company and if, without such
funding, a penalty would accrue to the Company on any financial statement, including
but not limited to quarterly filings, it is required to file with the insurance
regulatory authorities involved; or
	 
	 	b.	 	Has an A.M. Best’s rating below A- (inclusive of “Not Rated” ratings)
and/or a Standard & Poor’s rating below BBB+. However, this funding requirement
will not apply to authorized reinsurers who at inception are rated A or higher by
A.M. Best and have a policyholders’ surplus of $2,000,000,000 or more.

The Reinsurer, at its sole option, may fund in other than cash if its method of funding is
acceptable to the Company and to the insurance regulatory authorities involved.

			
	 	 	 
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For the purpose of this Contract, the Lloyd’s U.S. Credit for Reinsurance Trust Fund shall be
considered an acceptable funding instrument.

	B.	 	With regard to funding in whole or in part by letters of credit, it is agreed that each
letter of credit will be in a form acceptable to insurance regulatory authorities involved,
will be issued for a term of at least one year and will include an “evergreen clause,” which
automatically extends the term for at least one additional year at each expiration date unless
written notice of non-renewal is given to the Company not less than 60 days prior to said
expiration date or longer where required by insurance regulatory authorities. The Company and
the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that
said letters of credit may be drawn upon by the Company or its successors in interest at any
time, without diminution because of the insolvency of the Company or the Reinsurer, but only
for one or more of the following purposes:

	 	1.	 	To reimburse itself for the Reinsurer’s share of reinstatement premiums paid by the
Company under the terms of the Underlying Contract, unless paid in cash by the Reinsurer;
	 
	 	2.	 	To reimburse itself for the Reinsurer’s share of any other amounts claimed to be
due hereunder, unless paid in cash by the Reinsurer;
	 
	 	3.	 	To fund a cash account in an amount equal to the Reinsurer’s share of any ceded
unearned premium and/or outstanding loss reserves funded by means of a letter of credit
which is under non-renewal notice, if said letter of credit has not been renewed or
replaced by the Reinsurer 10 days prior to its expiration date;
	 
	 	4.	 	To refund to the Reinsurer any sum in excess of the actual amount required to fund
the Reinsurer’s share of the Company’s ceded unearned premium and/or outstanding loss
reserves, if so requested by the Reinsurer; and
	 
	 	5.	 	To reimburse itself for the Reinsurer’s portion of the unearned reinsurance premium
paid to the Reinsurer hereunder.

In the event the amount drawn by the Company on any letter of credit is in excess of the actual
amount required for B(1) or B(3), or in the case of B(2), the actual amount determined to be
due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

Article XIV — Insolvency

	A.	 	In the event of the insolvency of one or more of the reinsured companies, this reinsurance
shall be payable directly to the company or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the company without diminution because of
the insolvency of the company or because the liquidator, receiver, conservator or statutory
successor of the company has failed to pay all or a portion of any claim. It is agreed,
however, that the liquidator, receiver, conservator or statutory successor of the

			
	 	 	 
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company shall give written notice to the Reinsurer of the pendency of a claim against the
company indicating the policy or bond reinsured which claim would involve a possible liability
on the part of the Reinsurer within a reasonable time after such claim is filed in the
conservation or liquidation proceeding or in the receivership, and that during the pendency of
such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated, any defense or defenses that it may deem
available to the company or its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the
Court, against the company as part of the expense of conservation or liquidation to the extent
of a pro rata share of the benefit which may accrue to the company solely as a result of the
defense undertaken by the Reinsurer.

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

	C.	 	It is further understood and agreed that, in the event of the insolvency of one or more of
the reinsured companies, the reinsurance under this Contract shall be payable directly by the
Reinsurer to the company or to its liquidator, receiver or statutory successor, except as
provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract
specifically provides another payee of such reinsurance in the event of the insolvency of the
company or (2) where the Reinsurer with the consent of the direct insured or insureds has
assumed such policy obligations of the company as direct obligations of the Reinsurer to the
payees under such policies and in substitution for the obligations of the company to such
payees.

Article XV — Arbitration

	A.	 	As a condition precedent to any right of action hereunder, any dispute or difference between
the Company and any Reinsurer relating to the interpretation or performance of this Contract,
including its formation or validity, or any transaction under this Contract, whether arising
before or after termination, shall be submitted to arbitration.

	B.	 	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 Article provided that communication shall
be made by the Company to each of the reinsurers constituting the one party, and provided,
however, that nothing therein shall impair the rights of such reinsurers to assert several,
rather than joint, defenses or claims, nor be construed as changing the liability of the
Reinsurer under the terms of this Contract from several to joint.

	C.	 	Upon written request of any party, each party shall choose an arbitrator and the two chosen
shall select a third arbitrator. If either party refuses or neglects to appoint an arbitrator
within 30 days after receipt of the written request for arbitration, the requesting party may
appoint a second arbitrator. If the two arbitrators fail to agree on the selection of a third
arbitrator within 30 days of their appointment, the Company shall petition the American
Arbitration Association to appoint the third arbitrator. If the American Arbitration
Association fails to appoint the third arbitrator within 30 days after it has been requested
to do so, either

			
	 	 	 
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party may request a justice of a court of general jurisdiction of the state in which the
arbitration is to be held to appoint the third arbitrator. All arbitrators shall be active or
retired officers of insurance or reinsurance companies, or Lloyd’s London Underwriters, and
disinterested in the outcome of the arbitration. Each party shall submit its case to the
arbitrators within 30 days of the appointment of the third arbitrator.

	D.	 	The parties hereby waive all objections to the method of selection of the arbitrators, it
being the intention of both sides that all the arbitrators be chosen from those submitted by
the parties.

	E.	 	The arbitrators shall have the power to determine all procedural rules for the holding of the
arbitration including but not limited to inspection of documents, examination of witnesses and
any other matter relating to the conduct of the arbitration. The arbitrators shall interpret
this Contract as an honorable engagement and not as merely a legal obligation; they are
relieved of all judicial formalities and may abstain from following the strict rules of law.
The arbitrators may award interest and costs. Each party shall bear the expense of its own
arbitrator and shall share equally with the other party the expenses of the third arbitrator
and of the arbitration.

	F.	 	The decision in writing of the majority of the arbitrators shall be final and binding upon
both parties. Judgment may be entered upon the final decision of the arbitrators in any court
having jurisdiction. The arbitration shall take place in Pinellas Park, Florida, unless
otherwise mutually agreed between the Company and the Reinsurer.

	G.	 	This Article shall remain in full force and effect in the event any other provision of this
Contract shall be found invalid or non-binding.

	H.	 	All time limitations stated in this Article may be amended by mutual consent of the parties,
and will be amended automatically to the extent made necessary by any circumstances beyond the
control of the parties.

Article XVI — Service of Suit

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not
authorized in any State, Territory or District of the United States where authorization is required
by insurance regulatory authorities. This Article is not intended to conflict with or override the
parties’ obligations to arbitrate their disputes in accordance with the Arbitration Article.)

	A.	 	It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due
hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of
any court of competent jurisdiction within the United States. Nothing in this Article
constitutes or should be understood to constitute a waiver of the Reinsurer’s rights to
commence an action in any court of competent jurisdiction in the United States, to remove an
action to a United States District Court, or to seek a transfer of a case to another court as
permitted by the laws of the United States or of any state in the United States.

			
	 	 	 
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	B.	 	Further, pursuant to any statute of any state, territory or district of the United States
which makes provision therefore, the Reinsurer hereby designates the party named in its
Interests and Liabilities Agreement, or if no party is named therein, the Superintendent,
Commissioner or Director of Insurance or other officer specified for that purpose in the
statute, or his successor or successors in office, as its true and lawful attorney upon whom
may be served any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract.

Article XVII — Agency Agreement

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

Article XVIII — Governing Law

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

Article XIX — Confidentiality

The Reinsurer, except with the express prior written consent of the Company, shall not directly or
indirectly, communicate, disclose or divulge to any third party, any knowledge or information that
may be acquired either directly or indirectly as a result of the inspection of the Company’s books,
records and papers. The restrictions as outlined in this Article shall not apply to communication
or disclosures that the Reinsurer is required to make to its statutory auditors, retrocessionaires,
legal counsel, arbitrators involved in any arbitration procedures under this Contract or
disclosures required upon subpoena or other duly-issued order of a court or other governmental
agency or regulatory authority.

Article XX — Severability

If any provision of this Contract 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 Contract.

Article XXI — Intermediary (BRMA 23A)

Benfield, Inc. is hereby recognized as the Intermediary negotiating this Contract for all business
hereunder. All communications (including but not limited to notices, statements, premium, return
premium, commissions, taxes, losses, loss adjustment expense, salvages and loss

			
	 	 	 
	07\M2U1140
 Page 11
	 	

 

 

settlements) relating thereto shall be transmitted to the Company or the Reinsurer through
Benfield, Inc. Payments by the Company to the Intermediary shall be deemed to constitute payment
to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to constitute
payment to the Company only to the extent that such payments are actually received by the Company.

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

Pinellas Park, Florida, this 16th day of July in the year 2007.

	 	 	 	 	 
	 	Liberty American Insurance Group, Inc. (for and on behalf of the "Company") 	 
	 	 	 
	 	                        /s/ T. Bruce Meyer
 	 
	 	 T. Bruce Meyer, Pres. & CEO 

(Print name and title)

 	 
	 	 	 
	 	 	 
	 	 	 
	 

 
			
	 	 	 
	07\M2U1140
 Page 12
	 	

 

 

Schedule A

First and Second Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

	 	 	 	 	 	 	 	 	 
	 	 	First	 	Second
	 	 	Excess	 	Excess
	 	 	 	 	 	 	 	 	 
	Company’s Retention	 	$	3,500,000	 	 	$	7,700,000	 
	 	 	 	 	 	 	 	 	 
	Reinsurer’s Per Occurrence Limit	 	$	4,200,000	 	 	$	8,300,000	 
	 	 	 	 	 	 	 	 	 
	Reinsurer’s Term Limit	 	$	8,400,000	 	 	$	16,600,000	 
	 	 	 	 	 	 	 	 	 
	Minimum Premium	 	$	1,599,360	 	 	$	2,390,400	 
	 	 	 	 	 	 	 	 	 
	Adjustment Rate	 	 	0.031565	%	 	 	0.047178	%
	 	 	 	 	 	 	 	 	 
	Deposit Premium	 	$	1,999,200	 	 	$	2,988,000	 
	 	 	 	 	 	 	 	 	 
	Quarterly Deposit Premium	 	$	499,800	 	 	$	747,000	 

 
			
	 	 	 
	07\M2U1140
 Schedule A
	 	

 

 

Schedule B

First and Second Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

	 	 	 	 	 	 	 	 	 
	 	 	First	 	Second
	 	 	Excess	 	Excess
	 	 	 	 	 	 	 	 	 
	Reinstatement Factor	 	 	1.17647	 	 	 	1.25000	 
	 	 	 	 	 	 	 	 	 
	Underlying Contract Reinsurer’s Per Occurrence Limit	 	$	4,200,000	 	 	$	8,300,000	 
	 	 	 	 	 	 	 	 	 
	Deposit Premium	 	$	1,119,552	 	 	$	1,344,600	 
	 	 	 	 	 	 	 	 	 
	Quarterly Deposit Premium	 	$	279,888	 	 	$	336,150	 

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer in the
percentage share for that excess layer as expressed in its Interests and Liabilities Agreement
attached hereto.

			
	 	 	 
	07\M2U1140
 Schedule B
	 	

 

 

Interests and Liabilities Agreement

of

DaVinci Reinsurance Ltd.

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

First and Second Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

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

     50.0% of the First Excess Reinstatement Premium Protection Reinsurance

     50.0% of the Second Excess Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Local Standard Time, June 1, 2007, and shall
continue in force until 12:01 a.m., Local Standard Time, June 1, 2008, unless earlier terminated in
accordance with the provisions of the attached Contract.

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

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

Hamilton, Bermuda, this 24 day of July in the year 2007.

	 	 	 	 	 
	 
	DaVinci Reinsurance Ltd.	 	 
	 
	 	 	 	 
	 
	By 	/s/ Justin O’Keefe	 	 
	 
	 	 Justin O’Keefe, VP	 	 

			
	 	 	 
	07IL\M2U1140
	 	

 

 

Interests and Liabilities Agreement

of

Renaissance Reinsurance, Ltd.

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

First and Second Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

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

     50.0% of the First Excess Reinstatement Premium Protection Reinsurance

     50.0% of the Second Excess Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Local Standard Time, June 1, 2007, and shall
continue in force until 12:01 a.m., Local Standard Time, June 1, 2008, unless earlier terminated in
accordance with the provisions of the attached Contract.

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

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

Hamilton, Bermuda, this 24 day of July in the year 2007.

	 	 	 	 	 
	 
	Renaissance Reinsurance, Ltd.	 	 
	 
	 	 
	 	 
	 
	By 	/s/ Justin O’Keefe	 	 
	 
	 	Justin O’Keefe, VP	 	 
	 
	 	 	 	 

 
			
	 	 	 
	07IL\M2U1140
	 	

 

 

First and Second Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

First Excess Reinstatement Premium Protection Reinsurance

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	DaVinci Reinsurance Ltd.
	 	 	50.0	%
	Renaissance Reinsurance, Ltd.
	 	 	50.0	 
	 
	 	 	 	 
	Total
	 	 	100.0	%

Second Excess Reinstatement Premium Protection Reinsurance

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	DaVinci Reinsurance Ltd.
	 	 	50.0	%
	Renaissance Reinsurance, Ltd.
	 	 	50.0	 
	 
	 	 	 	 
	Total
	 	 	100.0	%

			
	 	 	 
	07IL\M2U1140exv10w10

 

Exhibit 10.10

Third Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

			
	 	 	 
	07\M2U1141
	 	

 

 

Table of Contents

	 	 	 	 	 	 	 
	Article	 	 	 	Page	 
	 
	 	 	 	 	 	 
	I
	 	Coverage	 	 	1	 
	 
	 	 	 	 	 	 
	II
	 	Commencement and Termination	 	 	1	 
	 
	 	 	 	 	 	 
	III
	 	Concurrency of Conditions	 	 	3	 
	 
	 	 	 	 	 	 
	IV
	 	Reinsurance Premium	 	 	3	 
	 
	 	 	 	 	 	 
	V
	 	Loss Notices and Settlements	 	 	4	 
	 
	 	 	 	 	 	 
	VI
	 	Late Payments	 	 	4	 
	 
	 	 	 	 	 	 
	VII
	 	Offset (BRMA 36D)	 	 	5	 
	 
	 	 	 	 	 	 
	VIII
	 	Access to Records (BRMA 1D)	 	 	5	 
	 
	 	 	 	 	 	 
	IX
	 	Errors and Omissions (BRMA 14F)	 	 	6	 
	 
	 	 	 	 	 	 
	X
	 	Currency (BRMA 12A)	 	 	6	 
	 
	 	 	 	 	 	 
	XI
	 	Taxes (BRMA 50B)	 	 	6	 
	 
	 	 	 	 	 	 
	XII
	 	Federal Excise Tax	 	 	6	 
	 
	 	 	 	 	 	 
	XIII
	 	Funding Requirements	 	 	6	 
	 
	 	 	 	 	 	 
	XIV
	 	Insolvency	 	 	8	 
	 
	 	 	 	 	 	 
	XV
	 	Arbitration	 	 	9	 
	 
	 	 	 	 	 	 
	XVI
	 	Service of Suit	 	 	10	 
	 
	 	 	 	 	 	 
	XVII
	 	Agency Agreement	 	 	10	 
	 
	 	 	 	 	 	 
	XVIII
	 	Governing Law	 	 	10	 
	 
	 	 	 	 	 	 
	XIX
	 	Confidentiality	 	 	10	 
	 
	 	 	 	 	 	 
	XX
	 	Severability	 	 	11	 
	 
	 	 	 	 	 	 
	XXI
	 	Intermediary (BRMA 23A)	 	 	11	 
	 
	 	 	 	 	 	 
	 
	 	Schedule A	 	 	 	 

			
	 	 	 
	07\M2U1141
	 	

 

 

Third Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

(hereinafter referred to collectively as the “Company”)

by

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the “Reinsurer”)

Article I — Coverage

By this Contract the Reinsurer agrees to indemnify the Company for 100% of any reinstatement
premium which the Company pays or becomes liable to pay as a result of loss occurrences commencing
during the term of this Contract under the provisions of the Third Excess layer of the Company’s
Florida Only Excess Catastrophe Reinsurance Contract, effective June 1, 2007 (hereinafter referred
to as the “Underlying Contract” and described in Schedule A attached to and forming part of this
Contract), subject to the terms and conditions set forth herein.

Article II — Commencement and Termination

	A.	 	This Contract shall become effective at 12:01 a.m., Local Standard Time at the location where
the loss occurrence commences, June 1, 2007, with respect to reinstatement premium payable by
the Company under the provisions of the Underlying Contract as a result of losses arising out
of loss occurrences commencing at or after that time and date, and shall remain in force until
12:01 a.m., Local Standard Time at the location where the loss occurrence commences, June 1,
2008.
	 
	B.	 	Notwithstanding the provisions of paragraph A above, if any of the following events occur on
or after the date lines are bound and, with the timing exceptions as qualified by

			
	 	 	 
	07\M2U1141

Page 1
	 	

 

 

subparagraphs 1 and 2 below, before the termination of the Contract, the Company may terminate
a Subscribing Reinsurer’s percentage share in this Contract:

	 	1.	 	The Subscribing Reinsurer’s surplus as regards policyholders or the foreign
equivalent thereto after the date lines are bound for this Contract has been reduced by
more than 25.0% of the amount of surplus or foreign equivalent 12 months prior to that
date; or
	 
	 	2.	 	The Subscribing Reinsurer’s surplus as regards policyholders or the foreign
equivalent thereto at any time between the date lines are bound and the date of
termination of this Contract has been reduced by more than 25.0% of the amount of surplus
or foreign equivalent at the date of the Subscribing Reinsurer’s most recent financial
statement filed with regulatory authorities and available to the public as of the date
lines are bound for this Contract; or
	 
	 	3.	 	The Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
below A- (inclusive of “Not Rated” ratings) and/or Standard & Poor’s rating has been
assigned or downgraded below BBB+; or
	 
	 	4.	 	The Subscribing Reinsurer has become merged with, acquired by or controlled by any
other company, corporation or unaffiliated individual(s) not controlling the Subscribing
Reinsurer’s operations previously; or
	 
	 	5.	 	A State Insurance Department or other legal authority has ordered the Subscribing
Reinsurer to cease writing business; or
	 
	 	6.	 	The Subscribing Reinsurer has become insolvent or has been placed into liquidation
or receivership (whether voluntary or involuntary) or proceedings have been instituted
against the Subscribing Reinsurer 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
	 
	 	7.	 	The Subscribing Reinsurer has reinsured its entire liability under this Contract
without the Company’s prior written consent (except for inter-company pooling
arrangements); or
	 
	 	8.	 	The Subscribing Reinsurer has ceased assuming new or renewal property or casualty
treaty reinsurance business.

The Company has 30 days from the date of public announcement or discovery to exercise the
option to terminate a Subscribing Reinsurer’s percentage share in this Contract. To terminate
a Subscribing Reinsurer’s percentage share in this Contract, the Company must provide the
Subscribing Reinsurer with formal notice. Such notice, which shall be postmarked no later than
the last day of the aforementioned 30-day period, shall include the effective date of
termination. The effective date of termination shall be as selected by the Company and shall
be one of the following:

	 	a.	 	The last day of the month prior to the date of any public announcement or
discovery; or
	 
	 	b.	 	The date of any public announcement or discovery; or

			
	 	 	 
	07\M2U1141

Page 2
	 	

 

 

	 	c.	 	The last day of any month after the date of any public announcement or
discovery; or
	 
	 	d.	 	The date of the Company’s written notice to the Subscribing Reinsurer
advising of the termination; or
	 
	 	e.	 	The date of notice provided by the Subscribing Reinsurer (should the
Subscribing Reinsurer elect to provide one).

	C.	 	If this Contract is terminated or expires while a loss occurrence covered hereunder is in
progress, the Reinsurer’s liability hereunder shall, subject to the other terms and conditions
of this Contract, be determined as if the entire loss occurrence had occurred prior to the
termination or expiration of this Contract, provided that no part of such loss occurrence is
claimed against any renewal or replacement of this Contract.

Article III — Concurrency of Conditions

	A.	 	It is agreed that this Contract will follow the terms, conditions, exclusions, definitions,
warranties and settlements of the Company under the Underlying Contract which are not
inconsistent with the provisions of this Contract.
	 
	B.	 	The Company shall advise the Reinsurer of any material changes in the Underlying Contract
which may affect the liability of the Reinsurer under this Contract.

Article IV — Reinsurance Premium

	A.	 	As premium for the reinsurance provided hereunder, the Company shall pay the Reinsurer
0.00606298% of the sum of the Company’s aggregate total insured value and 25.0% of USIC of
Florida, Inc.’s aggregate total insured value for policies that include wind coverage in force
on September 30, 2007, subject to a minimum premium of $307,200.
	 
	B.	 	The Company shall pay the Reinsurer an annual deposit premium of $384,000 in four equal
installments of $96,000 on June 1, September 1 and December 1 of 2007 and March 1 of 2008.
	 
	C.	 	Within 45 days after the expiration of this Contract, the Company shall provide a report to
the Reinsurer setting forth the premium due hereunder, computed in accordance with paragraph A
above, and any additional premium due the Reinsurer or return premium due the Company shall be
remitted promptly.
	 
	D.	 	In the event a Subscribing Reinsurer’s participation in this Contract is terminated under the
provisions of paragraph B of the Commencement and Termination Article, no deposit premium
installment shall be due after the effective date of termination and the adjusted premium
shall be calculated by dividing the number of days the Subscribing Reinsurer participated on
this Contract by the number of days of the original term of this Contract, and multiplying the
quotient thereof by the Subscribing Reinsurer’s percentage share of the final reinsurance
premium calculated in accordance with paragraph A above. Any premium paid to the Subscribing
Reinsurer in excess of the adjusted premium shall be returned to the Company as promptly as
possible after the effective date of termination.

			
	 	 	 
	07\M2U1141

Page 3
	 	

 

 

Article V — Loss Notices and Settlements

	A.	 	Whenever reinstatement premium settlements made by the Company under the Underlying Contract
appear likely to result in a claim hereunder, the Company shall notify the Reinsurer. The
Company will advise the Reinsurer of all subsequent developments relating to such claims that,
in the opinion of the Company, may materially affect the position of the Reinsurer.
	 
	B.	 	All reinstatement premium settlements made by the Company under the Underlying Contract,
provided they are within the terms of the Underlying Contract and within the terms of this
Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for
which it may be liable upon receipt of reasonable evidence of the amount paid (or scheduled to
be paid within 14 days) by the Company.

Article VI — Late Payments

	A.	 	The provisions of this Article shall not be implemented unless specifically invoked, in
writing, by one of the parties to this Contract.
	 
	B.	 	In the event any premium, loss or other payment due either party is not received by the
intermediary named in the Intermediary Article (BRMA 23A) (hereinafter referred to as the
“Intermediary”) by the payment due date, the party to whom payment is due may, by notifying
the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to
pay, an interest penalty on the amount past due calculated for each such payment on the last
business day of each month as follows:

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

It is agreed that interest shall accumulate until payment of the original amount due plus
interest penalties have been received by the Intermediary.

	C.	 	The establishment of the due date shall, for purposes of this Article, be determined as
follows:

	 	1.	 	As respects the payment of routine deposits and premiums due the Reinsurer, the due
date shall be as provided for in the applicable section of this Contract. In the event a
due date is not specifically stated for a given payment, it shall be deemed due 30 days
after the date of transmittal by the Intermediary of the initial billing for each such
payment.

			
	 	 	 
	07\M2U1141

Page 4
	 	

 

 

	 	2.	 	Any claim or loss payment due the Company hereunder shall be deemed due 10 business
days after the proof of loss or demand for payment is transmitted to the Reinsurer. If
such loss or claim payment is not received within the 10 days, interest will accrue on
the payment or amount overdue in accordance with paragraph B above, from the date the
proof of loss or demand for payment was transmitted to the Reinsurer.
	 
	 	3.	 	As respects any payment, adjustment or return due either party not otherwise
provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as
provided for in the applicable section of this Contract. In the event a due date is not
specifically stated for a given payment, it shall be deemed due 10 business days
following transmittal of written notification that the provisions of this Article have
been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon
receipt by the Intermediary.

	D.	 	Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from
contesting the validity of any claim, or from participating in the defense of any claim or
suit, or prohibiting either party from contesting the validity of any payment or from
initiating any arbitration or other proceeding in accordance with the provisions of this
Contract. If the debtor party prevails in an arbitration or other proceeding, then any
interest penalties due hereunder on the amount in dispute shall be null and void. If the
debtor party loses in such proceeding, then the interest penalty on the amount determined to
be due hereunder shall be calculated in accordance with the provisions set forth above unless
otherwise determined by such proceedings. If a debtor party advances payment of any amount it
is contesting, and proves to be correct in its contestation, either in whole or in part, the
other party shall reimburse the debtor party for any such excess payment made plus interest on
the excess amount calculated in accordance with this Article.
	 
	E.	 	Interest penalties arising out of the application of this Article that are $100 or less from
any party shall be waived unless there is a pattern of late payments consisting of three or
more items over the course of any 12-month period.

Article VII — Offset (BRMA 36D)

The Company and the Reinsurer, each at its option, may offset any balance or balances, whether on
account of premiums, claims and losses, loss expenses or salvages due from one party to the other
under this Contract; provided, however, that in the event of the insolvency of a party hereto,
offsets shall only be allowed in accordance with applicable statutes and regulations.

Article VIII — Access to Records (BRMA 1D)

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

			
	 	 	 
	07\M2U1141

Page 5
	 	

 

 

Article IX — Errors and Omissions (BRMA 14F)

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

Article X — Currency (BRMA 12A)

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

Article XI — Taxes (BRMA 50B)

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

Article XII — Federal Excise Tax

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

Article XIII — Funding Requirements

	A.	 	The Reinsurer agrees to fund, within 30 days of the Company’s request, subject to receipt of
satisfactory information from the Company, its share of the Company’s ceded unearned premium
and outstanding loss reserves (being the sum of all reinstatement premiums paid by the Company
under the Underlying Contract but not yet recovered from the Reinsurer, plus the Company’s
reserves for reinstatement premiums due under the Underlying Contract, if any, determined as
of the date that this paragraph A first applies to the Reinsurer according to the provisions
of subparagraph (a) and/or (b) below) by:

	 	1.	 	Clean, irrevocable and unconditional letters of credit issued and confirmed, if
confirmation is required by the insurance regulatory authorities involved, by a bank or

			
	 	 	 
	07\M2U1141

Page 6
	 	

 

 

	 	 	 	banks meeting the NAIC Securities Valuation Office credit standards for issuers of
letters of credit and acceptable to said insurance regulatory authorities; and/or

	 	2.	 	Escrow accounts for the benefit of the Company; and/or
	 
	 	3.	 	Cash advances;

if the Reinsurer:

	 	a.	 	Is unauthorized in any state of the United States of America or the
District of Columbia having jurisdiction over the Company and if, without such
funding, a penalty would accrue to the Company on any financial statement, including
but not limited to quarterly filings, it is required to file with the insurance
regulatory authorities involved; or
	 
	 	b.	 	Has an A.M. Best’s rating below A- (inclusive of “Not Rated” ratings)
and/or a Standard & Poor’s rating below BBB+. However, this funding requirement
will not apply to authorized reinsurers who at inception are rated A or higher by
A.M. Best and have a policyholders’ surplus of $2,000,000,000 or more.

The Reinsurer, at its sole option, may fund in other than cash if its method of funding is
acceptable to the Company and to the insurance regulatory authorities involved.

For the purpose of this Contract, the Lloyd’s U.S. Credit for Reinsurance Trust Fund shall be
considered an acceptable funding instrument.

	B.	 	With regard to funding in whole or in part by letters of credit, it is agreed that each
letter of credit will be in a form acceptable to insurance regulatory authorities involved,
will be issued for a term of at least one year and will include an “evergreen clause,” which
automatically extends the term for at least one additional year at each expiration date unless
written notice of non-renewal is given to the Company not less than 60 days prior to said
expiration date or longer where required by insurance regulatory authorities. The Company and
the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that
said letters of credit may be drawn upon by the Company or its successors in interest at any
time, without diminution because of the insolvency of the Company or the Reinsurer, but only
for one or more of the following purposes:

	 	1.	 	To reimburse itself for the Reinsurer’s share of reinstatement premiums paid by the
Company under the terms of the Underlying Contract, unless paid in cash by the Reinsurer;
	 
	 	2.	 	To reimburse itself for the Reinsurer’s share of any other amounts claimed to be
due hereunder, unless paid in cash by the Reinsurer;
	 
	 	3.	 	To fund a cash account in an amount equal to the Reinsurer’s share of any ceded
unearned premium and/or outstanding loss reserves funded by means of a letter of credit
which is under non-renewal notice, if said letter of credit has not been renewed or
replaced by the Reinsurer 10 days prior to its expiration date;

			
	 	 	 
	07\M2U1141

Page 7
	 	

 

 

	 	4.	 	To refund to the Reinsurer any sum in excess of the actual amount required to fund
the Reinsurer’s share of the Company’s ceded unearned premium and/or outstanding loss
reserves, if so requested by the Reinsurer; and
	 
	 	5.	 	To reimburse itself for the Reinsurer’s portion of the unearned reinsurance premium
paid to the Reinsurer hereunder.

In the event the amount drawn by the Company on any letter of credit is in excess of the actual
amount required for B(1) or B(3), or in the case of B(2), the actual amount determined to be
due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

Article XIV — Insolvency

	A.	 	In the event of the insolvency of one or more of the reinsured companies, this reinsurance
shall be payable directly to the company or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the company without diminution because of
the insolvency of the company or because the liquidator, receiver, conservator or statutory
successor of the company has failed to pay all or a portion of any claim. It is agreed,
however, that the liquidator, receiver, conservator or statutory successor of the company
shall give written notice to the Reinsurer of the pendency of a claim against the company
indicating the policy or bond reinsured which claim would involve a possible liability on the
part of the Reinsurer within a reasonable time after such claim is filed in the conservation
or liquidation proceeding or in the receivership, and that during the pendency of such claim,
the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses that it may deem available to
the company or its liquidator, receiver, conservator or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against
the company as part of the expense of conservation or liquidation to the extent of a pro rata
share of the benefit which may accrue to the company solely as a result of the defense
undertaken by the Reinsurer.
	 
	B.	 	Where two or more reinsurers are involved in the same claim and a majority in interest elect
to interpose defense to such claim, the expense shall be apportioned in accordance with the
terms of this Contract as though such expense had been incurred by the company.
	 
	C.	 	It is further understood and agreed that, in the event of the insolvency of one or more of
the reinsured companies, the reinsurance under this Contract shall be payable directly by the
Reinsurer to the company or to its liquidator, receiver or statutory successor, except as
provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract
specifically provides another payee of such reinsurance in the event of the insolvency of the
company or (2) where the Reinsurer with the consent of the direct insured or insureds has
assumed such policy obligations of the company as direct obligations of the Reinsurer to the
payees under such policies and in substitution for the obligations of the company to such
payees.

			
	 	 	 
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Article XV — Arbitration

	A.	 	As a condition precedent to any right of action hereunder, any dispute or difference between
the Company and any Reinsurer relating to the interpretation or performance of this Contract,
including its formation or validity, or any transaction under this Contract, whether arising
before or after termination, shall be submitted to arbitration.
	 
	B.	 	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 Article provided that communication shall
be made by the Company to each of the reinsurers constituting the one party, and provided,
however, that nothing therein shall impair the rights of such reinsurers to assert several,
rather than joint, defenses or claims, nor be construed as changing the liability of the
Reinsurer under the terms of this Contract from several to joint.
	 
	C.	 	Upon written request of any party, each party shall choose an arbitrator and the two chosen
shall select a third arbitrator. If either party refuses or neglects to appoint an arbitrator
within 30 days after receipt of the written request for arbitration, the requesting party may
appoint a second arbitrator. If the two arbitrators fail to agree on the selection of a third
arbitrator within 30 days of their appointment, the Company shall petition the American
Arbitration Association to appoint the third arbitrator. If the American Arbitration
Association fails to appoint the third arbitrator within 30 days after it has been requested
to do so, either party may request a justice of a court of general jurisdiction of the state
in which the arbitration is to be held to appoint the third arbitrator. All arbitrators shall
be active or retired officers of insurance or reinsurance companies, or Lloyd’s London
Underwriters, and disinterested in the outcome of the arbitration. Each party shall submit
its case to the arbitrators within 30 days of the appointment of the third arbitrator.
	 
	D.	 	The parties hereby waive all objections to the method of selection of the arbitrators, it
being the intention of both sides that all the arbitrators be chosen from those submitted by
the parties.
	 
	E.	 	The arbitrators shall have the power to determine all procedural rules for the holding of the
arbitration including but not limited to inspection of documents, examination of witnesses and
any other matter relating to the conduct of the arbitration. The arbitrators shall interpret
this Contract as an honorable engagement and not as merely a legal obligation; they are
relieved of all judicial formalities and may abstain from following the strict rules of law.
The arbitrators may award interest and costs. Each party shall bear the expense of its own
arbitrator and shall share equally with the other party the expenses of the third arbitrator
and of the arbitration.
	 
	F.	 	The decision in writing of the majority of the arbitrators shall be final and binding upon
both parties. Judgment may be entered upon the final decision of the arbitrators in any court
having jurisdiction. The arbitration shall take place in Pinellas Park, Florida, unless
otherwise mutually agreed between the Company and the Reinsurer.
	 
	G.	 	This Article shall remain in full force and effect in the event any other provision of this
Contract shall be found invalid or non-binding.
	 
	H.	 	All time limitations stated in this Article may be amended by mutual consent of the parties,
and will be amended automatically to the extent made necessary by any circumstances beyond the
control of the parties.

			
	 	 	 
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Article XVI — Service of Suit

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not
authorized in any State, Territory or District of the United States where authorization is required
by insurance regulatory authorities. This Article is not intended to conflict with or override the
parties’ obligations to arbitrate their disputes in accordance with the Arbitration Article.)

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

Article XVII — Agency Agreement

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

Article XVIII — Governing Law

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

Article XIX — Confidentiality

The Reinsurer, except with the express prior written consent of the Company, shall not directly or
indirectly, communicate, disclose or divulge to any third party, any knowledge or information that
may be acquired either directly or indirectly as a result of the inspection of the Company’s books,
records and papers. The restrictions as outlined in this Article shall not apply to communication
or disclosures that the Reinsurer is required to make to its statutory auditors, retrocessionaires,
legal counsel, arbitrators involved in any arbitration procedures under this

			
	 	 	 
	07\M2U1141

Page 10
	 	

 

 

Contract or disclosures required upon subpoena or other duly-issued order of a court or other
governmental agency or regulatory authority.

Article XX — Severability

If any provision of this Contract 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 Contract.

Article XXI — Intermediary (BRMA 23A)

Benfield, Inc. is hereby recognized as the Intermediary negotiating this Contract for all business
hereunder. All communications (including but not limited to notices, statements, premium, return
premium, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements)
relating thereto shall be transmitted to the Company or the Reinsurer through Benfield, Inc.
Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer.
Payments by the Reinsurer to the Intermediary shall be deemed to constitute payment to the Company
only to the extent that such payments are actually received by the Company.

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

Pinellas Park, Florida, this 16th day of July in the year
2007.

	 	 	 	 	 
	 	 	Liberty American Insurance Group, Inc. (for and on behalf of the "Company") 	 
	 	 	 
	 	  	/s/ T. Bruce Meyer
 	 
	 	 	T. Bruce Meyer, Pres. & CEO  	 
	 	 	(Print name and title) 	 
	 

			
	 	 	 
	07\M2U1141

Page 11
	 	

 

 

Schedule A

Third Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

	 	 	 	 	 
	 	 	Third
	 	 	Excess
	Company’s Retention
	 	$	16,000,000	 
	Reinsurer’s Per Occurrence Limit
	 	$	8,000,000	 
	Reinsurer’s Term Limit
	 	$	16,000,000	 
	Minimum Premium
	 	$	1,280,000	 
	Adjustment Rate
	 	 	0.025262	%
	Deposit Premium
	 	$	1,600,000	 
	Quarterly Deposit Premium
	 	$	400,000	 

The figures listed above shall apply to each Subscribing Reinsurer in the percentage share as
expressed in its Interests and Liabilities Agreement attached hereto.

			
	 	 	 
	07\M2U1141

Schedule A
	 	

 

 

Interests and Liabilities Agreement

of

Montpelier Reinsurance Limited

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Third Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

The Subscribing Reinsurer hereby accepts a 33.0% share in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Local Standard Time, June 1, 2007, and shall
continue in force until 12:01 a.m., Local Standard Time, June 1, 2008, unless earlier terminated in
accordance with the provisions of the attached Contract.

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

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

Hamilton, Bermuda, this 25th day of July in the year
2007.

	 	 	 	 	 
	 	  Montpelier Reinsurance Limited

 	 
	 	 	By  	/s/ Paul Hopwood 	 
	 	 	 	 Paul Hopwood, 	 
	 	 	 	 SVP & NA Treaty Underwriter 	 
	 

 
			
	 	 	 
	 07IL\M2U1141

	 	

 

 

Interests and Liabilities Agreement

of

Certain Underwriting Members of Lloyd’s

shown in the Signing Schedules attached hereto

(hereinafter referred to as the “Subscribing Reinsurer")

with respect to the

Third Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

The Subscribing Reinsurer hereby accepts a 67.0% share in the interests and liabilities of the
“Reinsurer” as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Local Standard Time, June 1, 2007, and shall
continue in force until 12:01 a.m., Local Standard Time, June 1, 2008, unless earlier terminated in
accordance with the provisions of the attached Contract.

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

In any action, suit or proceeding to enforce the Subscribing Reinsurer’s obligations under the
attached Contract, service of process may be made upon Mendes & Mount, 750 Seventh Avenue, New
York, New York 10019.

Signed for and on behalf of the Subscribing Reinsurer in the Signing Schedules attached hereto.

Signed by Manager at Lloyds of London

			
	 	 	 
	07IL\M2U1141

	 	

 

 

Third Excess Reinstatement Premium Protection

Reinsurance Contract

Effective: June 1, 2007

issued to

Liberty American Insurance Company

Pinellas Park, Florida

Liberty American Select Insurance Company

Pinellas Park, Florida

and

any and all other companies which are now

or may hereafter become member companies of

Liberty American Insurance Group, Inc.

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	Montpelier Reinsurance Limited
	 	 	33.0	%
	 
	 	 	 	 
	Through Benfield Limited
	 	 	 	 
	Lloyd’s Underwriters Per Signing Schedule
	 	 	67.0	 
	 
	 	 	 	 
	Total
	 	 	100.0	%

			
	 	 	 
	07IL\M2U1141

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