Document:

Exhibit 10.30

Property Excess of Loss 

Reinsurance Contract

Effective: January 1, 2006

Issued to

Safety Insurance Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

 

 

Table of
Contents

	
  Article

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Classes of Business Reinsured

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Commencement and Termination

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Territory (BRMA 51A)

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Exclusions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  Retention and Limit

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI

  	
   

  	
  Reinstatement

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII

  	
   

  	
  Definitions

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII

  	
   

  	
  Loss Occurrence

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX

  	
   

  	
  Loss Notices and Settlements

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X

  	
   

  	
  Salvage and Subrogation

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XI

  	
   

  	
  Reinsurance Premium

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XII

  	
   

  	
  Late Payments

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIII

  	
   

  	
  Offset (BRMA 36C)

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIV

  	
   

  	
  Access to Records (BRMA 1D)

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XV

  	
   

  	
  Liability of the Reinsurer

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVI

  	
   

  	
  Net Retained Lines (BRMA 32B)

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVII

  	
   

  	
  Errors and Omissions (BRMA 14F)

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVIII

  	
   

  	
  Currency (BRMA 12A)

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIX

  	
   

  	
  Taxes (BRMA 50B)

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XX

  	
   

  	
  Federal Excise Tax

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXI

  	
   

  	
  Unauthorized Reinsurers

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXII

  	
   

  	
  Insolvency

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXIII

  	
   

  	
  Arbitration

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXIV

  	
   

  	
  Service of Suit (BRMA 49C)

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXV

  	
   

  	
  Agency Agreement

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVI

  	
   

  	
  Governing Law (BRMA 71B)

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVII

  	
   

  	
  Severability (BRMA 72E)

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XXVIII

  	
   

  	
  Intermediary (BRMA 23A)

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Schedule A

  	
   

  	
   

  

 

Property Excess of Loss 

Reinsurance Contract 

Effective: January
1, 2006

issued to

Safety Insurance Company

and 

Safety Indemnity Insurance Company

both of Boston, Massachusetts 

(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 - Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability
which may accrue to the Company under its policies, contracts and binders of
insurance or reinsurance (hereinafter called “policies”) in force on the
effective date hereof or issued or renewed on or after that date, and
classified by the Company as Fire, Allied Lines, Homeowners Multiple Peril
(Section I only), Commercial Multiple Peril (Section I only) and Inland Marine
business, subject to the terms, conditions and limitations set forth herein and
in Schedule A attached to and forming part of this Contract.

Article II - Commencement and Termination

A.                      This
Contract shall become effective at 12:01 a.m., Eastern Standard Time, January
1, 2006, with respect to losses occurring at or after that time and date, and
shall remain in force until 12:01 a.m., Eastern Standard Time, January 1, 2007.

B.                        Notwithstanding
the provisions of paragraph A above, the Company may terminate a Subscribing
Reinsurer’s percentage share in this Contract at any time by giving written
notice to the Subscribing Reinsurer in the event any of the following
circumstances occur:

1.                         The
Subscribing Reinsurer’s policyholders’ surplus at the inception of this
Contract has been reduced by more than 20.0% of the amount of surplus 12 months
prior to that date; or

2.                         The
Subscribing Reinsurer’s policyholders’ surplus at any time during the term of
this Contract has been reduced by more than 20.0% of the amount of surplus at
the date

 1
 

of the  Subscribing
Reinsurer’s most recent financial statement filed with regulatory authorities
and available to the public as of the inception of this Contract; or

3.                         The
Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
below A- and/or Standard & Poor’s rating has bean assigned or downgraded
below BBB+; or

4.                         The
Subscribing Reinsurer has become merged with, acquired by or controlled by any
other company, corporation or 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; or

8.                         The
Subscribing Reinsurer has ceased assuming new and renewal property treaty
reinsurance business.

C.                        The
Reinsurer shall have no liability hereunder with respect to losses occurring
after  the effective date of
termination.

Article III - Territory (BRMA 51A)

The territorial limits of this Contract shall be identical with those
of the Company’s policies

Article IV - Exclusions

This Contract does not
apply to and specifically excludes the following

1.                         Loss
or damage occasioned by war, invasion, hostilities, acts of foreign enemies,
civil war, rebellion, insurrection, military or usurped power, martial law or
confiscation by order of any government or public authority, but not excluding
loss or damage which would be covered under a standard form of policy
containing a standard war exclusion clause.

2.                         Nuclear
risks as defined in the “Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance” attached to and forming part of this Contract.

3.                         Liability
as a member, subscriber or reinsurer of any Pool, Syndicate or Association; and
any combination of insurers or reinsurers formed for the purpose of covering

 2
 

specific perils, specific classes of business or for
the purpose of insuring risks located in specific geographical areas; but this
exclusion shall not apply to FAIR Plans or to SIR Pool, Franklin Pool, Coastal
Pools, Beach Plans or similar plans, however styled. It is understood and
agreed, however, that this reinsurance does not include any increase in
liability to the Company resulting from (a) the inability of any other
participant in a FAIR Plan. SIR Pool, Franklin Pool, Coastal Pool, Beach Plan
or similar plan to meet its liability, or (b) any claim against such a FAIR
Plan, SIR Pool, Franklin Pool, Coastal Pool, Beach Plan or similar plan, or any
participant therein, including the Company, whether by way of subrogation or
otherwise, brought by or on behalf of any insolvency fund.

4.                         Financial
guarantee and insolvency.

5.                         Third
party liability.

6.                         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, however 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.

7.                         All
classes of business not specifically listed in the Classes of Business
Reinsured Article.

8.                         Reinsurance
assumed, except pro rata local agency reinsurance on specific risks.

9.                         Ex-gratia
payments.

10.                   Risks
excluded under the provisions of the “Total Insured Value Clause” attached to
and forming part of this Contract.

11.                   Loss
or liability excluded under the “Terrorism Exclusion Clause” attached to and
forming part of this Contract.

12.                   Loss
and/or damage and/or costs and/or expenses arising from Seepage and/or
Pollution and/or Contamination, other than contamination from Smoke Damage.
Nevertheless, this exclusion does not preclude any payment of the cost of the
removal of debris of property damaged by a loss otherwise covered hereunder,
but subject always to a limit of 25.0% of the Company’s property loss under the
original policy.

Article V - Retention and Limit

A.                      As
respects each excess layer of reinsurance coverage provided by this Contract,
the Company shall retain and be liable for the first amount of ultimate net
loss, shown as “Company’s Retention” for that excess layer in Schedule A
attached hereto, as respects

 3
 

each risk, each loss. The Reinsurer shall then be liable, as respects
each excess layer, for the amount by which such ultimate net loss exceeds the
Company’s applicable retention, but the liability of the Reinsurer under each
excess layer shall not exceed the amount, as respects each risk, each loss,
shown as “Reinsurer’s Per Risk Limit” for that excess layer in Schedule A
attached hereto, nor shall it exceed the amount, shown as “Reinsurer’s Per
Occurrence Limit” for that excess layer in Schedule A attached hereto, as
respects any one loss occurrence for the contract year under consideration.

B.                        The
Company shall be the sole judge of what constitutes “one risk,” except that in
no event shall a building and its contents be considered more than one risk.

C.                        The
Company shall be permitted to carry facultative reinsurance, recoveries under
which shall inure to the benefit of this Contract.

Article VI - Reinstatement

A.                      In
the event all or any portion of the reinsurance under any excess layer of
reinsurance coverage provided by this Contract is exhausted by loss, the amount
so exhausted shall be reinstated immediately from the time the loss occurs
hereon.

1.                         As
respects the First Excess Layer:

a.                          For
the first and second amount, shown as “Reinsurer’s Per Risk Limit” for that
excess layer in Schedule A attached hereto, of ultimate net loss so reinstated,
the Company shall pay no additional premium.

b.                         For
the third amount, shown as “Reinsurer’s Per Risk Limit” for that excess layer
in Schedule A attached hereto, of ultimate net loss so reinstated, the Company
agrees to pay additional premium equal to the product of the following:

The percentage of the per risk limit for the excess
layer reinstated (based on the loss paid by the Reinsurer under that excess
layer); times

ii.                         The
earned reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

2.                         As
respects the Second Excess Layer:

a.                          For
the first amount, shown as “Reinsurer’s Per Risk Limit” for that excess layer
in Schedule A attached hereto, of ultimate net loss so reinstated, the Company
shall pay no additional premium.

b.                         For
the second amount, shown as “Reinsurer’s Per Risk Limit” for that excess layer
in Schedule A attached hereto, of ultimate net loss so reinstated, the Company
agrees to pay additional premium equal to the product of the following:

The percentage of the per risk limit for the excess
layer reinstated (based on the loss paid by the Reinsurer under that excess
layer); times

 4
 

ii.                         The
earned reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

3.                         As
respects the Third Excess Layer, for each amount so reinstated, the Company
agrees to pay additional premium equal to the product of the following:

a.                          The
percentage of the per risk limit for the excess layer reinstated (based on the
loss paid by the Reinsurer under that excess layer); times

b.                         The
earned reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

B.                        Whenever
the Company requests payment by the Reinsurer of any loss under any excess
layer hereunder, the Company shall submit a statement to the Reinsurer of
reinstatement premium due the Reinsurer for that excess layer. If the earned
reinsurance premium for any excess layer for the term of this Contract has not
been finally determined as of the date of any such statement, the calculation
of reinstatement premium due for that excess layer shall be based on the annual
deposit premium for that excess layer and shall be readjusted when the earned
reinsurance premium for that excess layer for the term of this Contract has
been finally determined. Any reinstatement premium shown to be due the
Reinsurer for any excess layer as reflected by any such statement (less prior
payments, if any, for that excess layer) shall be payable by the Company
concurrently with payment by the Reinsurer of the requested loss for that
excess layer. Any return reinstatement premium shown to be due the Company
shall be remitted by the Reinsurer as promptly as possible after receipt and
verification of the Company’s statement.

C.                        Notwithstanding
anything stated herein, the liability of the Reinsurer under any excess layer
of reinsurance coverage provided by this Contract shall not exceed any of the
following:

1.                         The
amount, shown as “Reinsurer’s Per Risk Limit” for that excess layer in Schedule
A attached hereto, as respects each risk, each loss; or

2.                         The
amount, shown as “Reinsurer’s Per Occurrence Limit” for that excess layer in
Schedule A attached hereto, as respects loss or losses arising out of any one
loss occurrence; or

3.                         The
amount, shown as “Reinsurer’s Term Limit” for that excess layer in Schedule A
attached hereto, in all during the term of this Contract.

Article VII - Definitions

A.                      “Ultimate
net loss” as used herein is defined as the sum or sums (including loss in
excess of policy limits, extra contractual obligations, and all loss adjustment
expense, as hereinafter defined) paid or payable by the Company in settlement
of claims and in satisfaction of judgments rendered on account of such claims,
after deduction of all salvage, all recoveries and all claims on inuring insurance
or reinsurance, whether collectible or not. Nothing herein shall be construed
to mean that losses under this Contract are not recoverable until the Company’s
ultimate net loss has been ascertained.

 5
 

B.                        “Loss
in excess of policy limits” and “extra contractual obligations” as used herein
shall be defined as follows:

“Loss in excess of policy limits” shall mean 90.0% of
any amount paid or payable by the Company in excess of its policy limits, but
otherwise within the terms of its policy, such loss in excess of the Company’s
policy limits having been incurred because of, but not limited to, failure by
the Company to settle within the policy limits or by reason of the Company’s
alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement
or in the preparation of the defense or in the trial of an action against its
insured or reinsured or in the preparation or prosecution of an appeal
consequent upon such an action.

2                            “Extra
contractual obligations” shall mean 90.0% of any punitive, exemplary,
compensatory or consequential damages paid or payable by the Company, not
covered by any other provision of this Contract and which arise from the
handling of any claim on business subject to this Contract, such liabilities
arising because of, but not limited to, failure by the Company to settle within
the policy limits or by reason of the Company’s alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of any action against its insured or reinsured or
in the preparation or prosecution of an appeal consequent upon such an action.
An extra contractual obligation shall be deemed, in all circumstances, to have
occurred on the same date as the loss covered or alleged to be covered under
the policy.

Notwithstanding anything stated herein, this Contract shall not apply
to any loss in excess of policy limits or any extra contractual obligation
incurred by the Company as a result of any fraudulent and/or criminal act by
any officer or director of the Company acting individually or collectively or
in collusion with any individual or corporation or any other organization or
party involved in the presentation, defense or settlement of any claim covered
hereunder.

Savings Clause (Applicable only if the Subscribing Reinsurer is
domiciled in the State of New York): In no event shall coverage be provided to
the extent that such coverage is not permitted under New York law.

C.                        “Loss
adjustment expense” as used herein shall mean expenses assignable to the
investigation, appraisal, adjustment, settlement, litigation, defense and/or
appeal of specific claims, regardless of how such expenses are classified for
statutory reporting purposes. Loss adjustment expense shall include, but not be
limited to, interest on judgments, expenses of outside adjusters, and
declaratory judgment expenses or other legal expenses and costs incurred in
connection with coverage questions and legal actions connected thereto, but
shall not include office expenses or salaries of the Company’s regular
employees not classified as loss adjusters.

Article VIII - Loss Occurrence

A.                      The
term “loss occurrence” shall mean the sum of all individual losses directly
occasioned by any one disaster, accident or loss or series of disasters,
accidents or losses arising out of one event which occurs within the area of
one state of the United States or province of

 6
 

Canada and states or provinces contiguous thereto and to one another.
However, the duration and extent of any one “loss occurrence” shall be limited
to all individual losses sustained by the Company occurring during any period
of 168 consecutive hours arising out of and directly occasioned by the same
event, except that the term “loss occurrence” shall be further defined as
follows:

1.                         As
regards windstorm, hail, tornado, hurricane, cyclone, including ensuing
collapse and water damage, all individual losses sustained by the Company
occurring during any period of 72 consecutive hours arising out of and directly
occasioned by the same event. However, the event need not be limited to one
state or province or states or provinces contiguous thereto.

2.                         As
regards riot, riot attending a strike, civil commotion, vandalism and malicious
mischief, all individual losses sustained by the Company occurring during any
period of 72 consecutive hours within the area of one municipality or county
and the municipalities or counties contiguous thereto arising out of and
directly occasioned by the same event. The maximum duration of 72 consecutive
hours may be extended in respect of individual losses which occur beyond such
72 consecutive hours during the continued occupation of an assured’s premises
by strikers, provided such occupation commenced during the aforesaid period.

3.                         As
regards earthquake (the epicentre of which need not necessarily be within the
territorial confines referred to in paragraph A of this Article) and fire
following directly occasioned by the earthquake, only those individual fire
losses which commence during the period of 168 consecutive hours may be
included in the Company’s “loss occurrence.”

4.                         As
regards “freeze,” only individual losses directly occasioned by collapse,
breakage of glass and water damage (including, but not limited to, those caused
by bursting frozen pipes and tanks) may be included in the Company’s “loss
occurrence.”

5.                         As
regards firestorms, brush fires and any other fires or series of fires,
irrespective of origin (except as provided in subparagraphs 2 and 3 above),
which spread through trees, grassland or other vegetation, all individual
losses sustained by the Company which occur during any period of 168
consecutive hours within 150-mile radius of any one fixed point selected by the
Company may be included in the Company’s “loss occurrence.” However, an
individual loss subject to this subparagraph cannot be included in more than
one “loss occurrence.”

B.                        Except
for those “loss occurrences,” referred to in subparagraphs 1 and 2 of paragraph
A above, the Company may choose the date and time when any such period of
consecutive hours commences, provided that it is not earlier than the date and
time of the occurrence of the first recorded individual loss sustained by the
Company arising out of that disaster, accident or loss, and provided that only
one such period of 168 consecutive hours shall apply with respect to one event.

C.                        As
respects those “loss occurrences” referred to in subparagraphs 1 and 2 of
paragraph A above, if the disaster, accident or loss occasioned by the event is
of greater duration than 72 consecutive hours, then the Company may divide that
disaster, accident or loss into two or more “loss occurrences,” provided no two
periods overlap and no individual loss is

 7
 

included in more than one such period and provided that no period
commences earlier than the date and time of the occurrence of the first
recorded individual loss sustained by the Company arising out of that disaster,
accident or loss.

D.                       No
individual losses occasioned by an event that would be covered by 72 hours
clauses may be included in any “loss occurrence” claimed under the 168 hours
provision.

E.                         Any
date change, including leap-year calculations, shall not in and of itself be
regarded as an event for purposes of this Contract.

This includes any loss, damage, cost, claim or expense,
whether preventative, remedial or otherwise, directly or indirectly arising out
of or relating to:

a.                          The
calculation, comparison, differentiation, sequencing or processing of data
involving a date change, including leap-year calculations, by any computer
system, hardware, program or software and/or any microchip, integrated circuit
or similar device in computer equipment or non-computer equipment, whether the
property of the insured or not: or

b.                         Any
change, alteration or modification involving a date change, including leap-year
calculations, to any such computer system, hardware, program or software or any
microchip, integrated circuit or similar device in computer equipment or
non-computer equipment, whether the property of the insured or not.

This subparagraph shall apply regardless of any other
cause or event that contributes concurrently or in any sequence to the loss,
damage, cost, claim or expense.

However, this subparagraph shall not apply as respects
physical damage occurring at the insured’s premises arising out of the perils
covered under this Contract.

2.                         Notwithstanding
subparagraph 1 above, this Contract shall not cover any costs and expenses,
whether preventative, remedial or otherwise, arising out of or relating to
change, alteration or modification of any computer system, hardware, program or
software or any microchip, integrated circuit or similar device in computer or
non-computer equipment, whether the property of the insured or not.

F.                         Losses
arising, directly or indirectly, out of:

1.                         Loss
of, alteration of, or damage to;

or

2.                         A
reduction in the functionality, availability or operation of

A computer system, hardware, program, software, data,
information repository, microchip, integrated circuit or similar device in
computer equipment or non-computer equipment, whether the property of the
policyholder of the Company or not, do not in and of themselves constitute an
event unless arising out of one or more of the following perils:

 8
 

Fire, lightning, explosion, aircraft or vehicle impact,
falling objects, windstorm, hail, tornado, cyclone, hurricane, earthquake,
volcano, tsunami, flood, freeze or weight of snow.

Article IX - Loss Notices and Settlements

A.                      Whenever
a loss sustained by the Company appears likely to result in a claim hereunder,
the Company shall notify the Reinsurer, and the Reinsurer shall have the right
to participate in the adjustment of the loss at its own expense.

B.                        All
loss settlements made by the Company, provided they are 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) by the Company.

Article X - Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement
obtained or recovery made by the Company, less the actual cost, excluding
salaries of officials and employees of the Company and sums paid to attorneys
as retainer, of obtaining such reimbursement or making such recovery) on
account of claims and settlements involving reinsurance hereunder. Salvage
thereon shall always be used to reimburse the excess carriers in the reverse
order of their priority according to their participation before being used in
any way to reimburse the Company for its primary loss. The Company hereby
agrees to enforce its rights to salvage or subrogation relating to any loss, a
part of which loss was sustained by the Reinsurer, and to prosecute all claims
arising out of such rights.

Article XI - Reinsurance Premium

A.                      As
premium for each excess layer of reinsurance coverage provided by this
Contract, the Company shall pay the Reinsurer the greater of the following:

1.                         The
amount, shown as “Annual Minimum Premium” for that excess layer in Schedule A
attached hereto (or a pro rata portion thereof if a Subscribing Reinsurer’s
share under that excess layer is terminated in accordance with the provisions
of this Contract); or

2.                         The
percentage, shown as “Premium Rate” for that excess layer in Schedule A
attached hereto, of the Company’s net earned premium for the term of this
Contract.

B.                        The
Company shall pay the Reinsurer an annual deposit premium for each excess layer
of the amount, shown as “Annual Deposit Premium” for that excess layer in
Schedule A attached hereto, in four equal installments of the amount, shown as “Quarterly
Deposit Premium” for that excess layer in Schedule A attached hereto, on
January 1, April 1, July 1 and October 1 of 2006. In the event a Subscribing
Reinsurer’s share under any excess

 9
 

layer hereof is terminated, no quarterly deposit premium installment
for such layer(s) shall be due to such Subscribing Reinsurer after the
effective date of termination.

C.                        Within
60 days after the termination or 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, and any additional
premium due the Reinsurer or return premium due the Company for each such excess
layer shall be remitted promptly.

D.                       “Net
earned premium” as used herein is defined as gross earned premium of the
Company for the classes of business reinsured hereunder, less the earned
portion of premiums ceded by the Company for reinsurance which inures to the
benefit of this Contract. For purposes of calculating net earned premium, 90.0%
of Homeowners Multiple Peril and 80.0% of Commercial Multiple Peril total basic
policy premium on indivisible premium policies shall be considered subject
premium.

Article XII - 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 business days after the date of transmittal by the Intermediary
of the initial billing for each such payment.

 10
 

2.                         Any
claim or loss payment due the Company hereunder shall be deemed due 30 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 30 business
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, 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
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 XIII - Offset
(BRMA 36C)

The Company and the Reinsurer shall have the right to offset any
balance or amounts due from one party to the other under the terms of this Contract.
The party asserting the right of offset may exercise such right any time
whether the balances due are on account of premiums or losses or otherwise.

Article XIV - 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.

 11
 

Article XV - Liability of
the Reinsurer

A.                      The
liability of the Reinsurer shall follow that of the Company in every case and
be subject in all respects to all the general and specific stipulations,
clauses, waivers and modifications of the Company’s policies and any
endorsements thereon. However, in no event shall this be construed in any way
to provide coverage outside the terms and conditions set forth in this
Contract.

B.                        Nothing
herein shall in any manner create any obligations or establish any rights
against the Reinsurer in favor of any third party or any persons not parties to
this Contract.

Article XVI - Net
Retained Lines (BRMA 32B)

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

B.                        The
amount of the Reinsurer’s liability hereunder in respect of any loss or losses
shall not be increased by reason of the inability of the Company to collect
from any other reinsurer(s), whether specific or general, any amounts which may
have become due from such reinsurer(s), whether such inability arises from the
insolvency of such other reinsurer(s) or otherwise.

Article XVII - 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 XVIII - 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.

 12
 

Article XIX - 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 XX - 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 XXI -
Unauthorized Reinsurers

A.                      If
the Reinsurer is unauthorized in any state of the United States of America or the
District of Columbia, the Reinsurer agrees to fund its share of the Company’s
ceded United States outstanding loss and loss adjustment expense reserves
(including all case reserves plus any reasonable amount estimated to be
unreported from known loss occurrences) 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, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other than
cash if its method and form of funding are acceptable to the insurance
regulatory authorities involved.

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 30 days prior to said
expiration date. 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

 13
 

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 losses and/or loss adjustment
expense paid under the terms of policies reinsured hereunder, 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
outstanding loss and loss adjustment expense reserves (including all case reserves
plus any reasonable amount estimated to be unreported from known loss
occurrences) 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 outstanding loss and loss
adjustment expense reserves (including all case reserves plus any reasonable amount
estimated to be unreported from known loss occurrences), if so requested by the
Reinsurer.

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 XXII - Insolvency

A.                      In
the event of the insolvency of one or both 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.

 14
 

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
both 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 411B(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 XXIII - Arbitration

A.                      As
a condition precedent to any right of action hereunder, in the event of any
dispute or difference of opinion hereafter arising with respect to this
Contract, it is hereby mutually agreed that such dispute or difference of
opinion shall be submitted to arbitration. One Arbiter shall be chosen by the
Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters
before they enter upon arbitration, all of whom shall be active or retired
disinterested executive officers of insurance or reinsurance companies or Lloyd’s
London Underwriters. In the event that either party should fail to choose an
Arbiter within 30 days following a written request by the other party to do so,
the requesting party may choose two Arbiters who shall in turn choose an Umpire
before entering upon arbitration. If the two Arbiters fail to agree upon the
selection of an Umpire within 30 days following their appointment, the two
Arbiters shall request the American Arbitration Association to appoint the
Umpire. If the American Arbitration Association fails to appoint the Umpire
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 Umpire.

B.                        Each
party shall present its case to the Arbiters within 30 days following the date
of appointment of the Umpire. The Arbiters shall consider this Contract as an
honorable engagement rather than merely as a legal obligation and they are
relieved of all judicial formalities and may abstain from following the strict
rules of law. The decision of the Arbiters shall be final and binding on both
parties; but failing to agree, they shall call in the Umpire and the decision
of the majority shall be final and binding upon both parties. Judgment upon the
final decision of the Arbiters may be entered in any court of competent jurisdiction.

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

D.                       Each
party shall bear the expense of its own Arbiter, and shall jointly and equally
bear with the other the expense of the Umpire and of the arbitration. In the
event that the two

 15
 

Arbiters are chosen by one party, as above provided, the expense of the
Arbiters, the Umpire and the arbitration shall be equally divided between the
two parties.

E.                         Any
arbitration proceedings shall take place at a location mutually agreed upon by
the parties to this Contract, but notwithstanding the location of the
arbitration, all proceedings pursuant hereto shall be governed by the law of
the state in which the Company has its principal office.

Article XXIV - Service of Suit (BRMA 49C)

(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)

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 a 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 therefor, 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 XXV - 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 XXVI - Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.

 16
 

Article XXVII -
Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state, such
provision shall be considered void in such state, but this shall not affect the
validity or enforceability of any other provision of this Contract or the
enforceability of such provision in any other jurisdiction.

Article XXVIII -
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:

Boston, Massachusetts, this 9th day of January in the year 2006.

	
  

  	
  /s/ [Illegible]

  	
   

  
	
   

  	
  Safety Insurance Company

  
	
   

  	
  Safety Indemnity Insurance Company

  

 

 17

Schedule A

Property Excess of Loss 

Reinsurance Contract

Effective: January 1, 2006

issued to

Safety Insurance Company

and

Safety Indemnity Insurance Company 

both of Boston, Massachusetts

	
   

  	
   

  	
  First 

  Excess

  	
   

  	
  Second 

  Excess

  	
   

  	
  Third 

  Excess

  	
   

  
	
  Company’s Retention

  	
   

  	
  $

  	
  1,500,000

  	
   

  	
  $

  	
  2,500,000

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reinsurer’s Per Risk
  Limit

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  2,500,000

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reinsurer’s Per
  Occurrence Limit

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reinsurer’s Term Limit

  	
   

  	
  $

  	
  4,000,000

  	
   

  	
  $

  	
  7,500,000

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Premium Rate

  	
   

  	
  0.194

  	
  %

  	
  0.2323

  	
  %

  	
  0.3872

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Minimum and
  Deposit Premium

  	
   

  	
  $

  	
  100,000

  	
   

  	
  $

  	
  120,000

  	
   

  	
  $

  	
  200,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly Minimum and Deposit Premium

  	
   

  	
  $

  	
  25,000

  	
   

  	
  $

  	
  30,000

  	
   

  	
  $

  	
  50,000

  	
   

  

 

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.

Nuclear Incident
Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)

This Reinsurance does not cover any loss of  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:

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.

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.

Total Insured Value
Exclusion Clause

It is the mutual intention of the parties to exclude risks, other than
Offices, Hotels, Apartments, Hospitals, Educational Establishments and Public
Utilities (except Railroad Schedules), and Builders Risks on the above classes,
where at the time of cession, the Total Insured Value over all interests
exceeds $250,000,000. However, the Company shall be protected hereunder,
subject to the other terms and conditions of this Contract, if subsequent to
cession being made, the Company becomes acquainted with the true facts of the
case and discovers that the mutual intention has been inadvertently breached;
on condition that the Company shall at the first opportunity, and certainly by
next anniversary of the original policy, exclude the risk in question.

It is agreed that this mutual intention does not apply to Contingent
Business Interruption or to interests traditionally underwritten as Inland
Marine or to Stock and/or Contents written on a blanket basis except where the
Company is aware that the Total Insured Value of $250,000,000 is already
exceeded for buildings, machinery, equipment and direct use and occupancy at
the key location.

It is understood and agreed that this Clause shall not apply hereunder
where the Company writes 100% of the risk.

Terrorism Exclusion
Clause

A.                      Notwithstanding
any provision to the contrary within this Contract or any addendum thereto, it
is agreed that this Contract excludes loss, damage, cost or expense directly or
indirectly caused by, contributed to by, resulting from, arising out of or in
connection with any “act of terrorism,” as defined in the Terrorism Risk
Insurance Act of 2002, as amended by the Terrorism Risk Insurance Extension Act
of 2005 (together the “Terrorism Act”), on primary or excess property and
casualty insurance issued by the Company, regardless of any other cause or
event contributing concurrently or in any sequence to the loss.

B.                        Notwithstanding
the above and subject otherwise to the terms, conditions and limitations of
this Contract, this Contract will pay actual loss or damage caused by any act
of terrorism which does not meet the definition of “insured loss” set forth in
the Terrorism Act or meets the definition of “insured loss” as set forth in the
Terrorism Act, but results in loss under a policy that is not included in “property
and casualty insurance” as defined in the Terrorism Act, provided, in either
case, (1) such loss or damage occurs in a line of insurance otherwise covered
by this Contract, and (2) in no event will this Contract provide coverage for
loss, damage, cost or expense directly or indirectly caused by, contributed to
by, resulting from, or arising out of or in connection with biological,
chemical, radioactive or nuclear explosion, pollution, contamination and/or
fire following thereon.

Interests and Liabilities
Agreement

of

Aspen Insurance UK Limited

London, England

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Property
Excess of Loss

Reinsurance Contract

Effective: January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

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:

	
  2.5%

  	
   

  	
  of the First Property Excess of Loss Reinsurance

  
	
  2.5%

  	
   

  	
  of the Second Property Excess of Loss Reinsurance

  
	
  2.5%

  	
   

  	
  of the Third Property Excess of Loss Reinsurance

  

 

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, 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 13th day of January in the year 2006.

	
  

  	
  /s/ [Illegible]

  	
   

  
	
   

  	
  Aspen Insurance UK Limited

  

 

Interests and Liabilities
Agreement

of

Hannover
Ruckversicherungs-Aktiengesellschaft

Hannover, Germany

(hereinafter referred to as the “Subscribing
Reinsurer”)

with respect to the

Property
Excess of Loss

Reinsurance Contract

Effective: January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

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:

	
  10.0%

  	
   

  	
  of the First Property Excess of Loss Reinsurance

  
	
  10.0%

  	
   

  	
  of the Second Property Excess of Loss Reinsurance

  
	
  10.0%

  	
   

  	
  of the Third Property Excess of Loss Reinsurance

  

 

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, 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.

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

Hannover, Germany, this 20th day of January in the year 2006.

	
  

  	
  /s/ [Illegible]

  	
   

  
	
   

  	
  Hannover Ruckversicherungs - Aktiengesellschaft

  

 

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

Property
Excess of Loss

Reinsurance Contract

Effective: January 1, 2006

issued to and duly
executed by

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

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:

	
  87.5%

  	
   

  	
  of the First Property Excess of Loss Reinsurance

  
	
  87.5%

  	
   

  	
  of the Second Property Excess of Loss Reinsurance

  
	
  87.5%

  	
   

  	
  of the Third Property Excess of Loss Reinsurance

  

 

This Agreement shall become effective at 12:01 a.m., Eastern Standard
Time, January 1, 2006, and shall continue in force until 12:01 a.m., Eastern
Standard Time, January 1, 2007, 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.

Signing Schedule

attaching to and forming part of the

Interests and Liabilities
Agreement

of

Certain Underwriting Members of
Lloyd’s

with respect to the

	
  BUREAU REFERENCE

  	
   

  	
  61215 09/01/06

  	
   

  	
  BROKER NUMBER   1108

  

 

	
  PROPORTION

  %

  	
   

  	
  SYNDICATE

  	
   

  	
  UNDERWRITER’S

  REFERENCE

  
	
  23.647

  	
   

  	
   

  	
  2001

  	
   

  	
   

  	
  RAB1508806ME

  
	
  10.642

  	
   

  	
   

  	
  2791

  	
   

  	
   

  	
  R1106NG00552

  
	
  14.190

  	
   

  	
   

  	
  1414

  	
   

  	
   

  	
  XR06AB018E5X

  
	
  10.642

  	
   

  	
   

  	
  958

  	
   

  	
   

  	
  AVRAXNEN5401

  
	
   7.094

  	
   

  	
   

  	
  2020

  	
   

  	
   

  	
  P357807L0X

  
	
   7.095

  	
   

  	
   

  	
  2010

  	
   

  	
   

  	
  N06A7650A001

  
	
  14.190

  	
   

  	
   

  	
  2003

  	
   

  	
   

  	
  AF3000101515

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL LINE

  	
   

  	
  No. OF
  SYNDICATES

  	
   

  	
   

  
	
  87.500

  	
   

  	
  7

  	
   

  	
   

  

 

THE LIST OF UNDERWRITING
MEMBERS

OF LLOYDS IS IN RESPECT OF 2006

YEAR OF ACCOUNT

BUREAU USE ONLY

USE3 55 13197

 1

Signing Schedule

attaching to and forming part of the

Interests and Liabilities
Agreement

of

Certain Underwriting Members of Lloyd’s

	
  BUREAU REFERENCE

  	
   

  	
  61216 09/01/06

  	
   

  	
  BROKER NUMBER   1108

  

 

	
  PROPORTION

  %

  	
   

  	
  SYNDICATE

  	
   

  	
  UNDERWRITER’S

  REFERENCE

  
	
  17.500

  	
   

  	
   

  	
  2001

  	
   

  	
   

  	
  RAB1508906EE

  
	
  13.125

  	
   

  	
   

  	
  2791

  	
   

  	
   

  	
  R1106PG00553

  
	
  13.125

  	
   

  	
   

  	
  1414

  	
   

  	
   

  	
  XR06AB019P5X

  
	
  8.750

  	
   

  	
   

  	
  958

  	
   

  	
   

  	
  AVRAXNEN5402

  
	
  8.750

  	
   

  	
   

  	
  2010

  	
   

  	
   

  	
  N06A7660A001

  
	
  8.750

  	
   

  	
   

  	
  2020

  	
   

  	
   

  	
  P556726B0X

  
	
  17.500

  	
   

  	
   

  	
  2003

  	
   

  	
   

  	
  AF0000101516

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL LINE

  	
   

  	
  No. OF
  SYNDICATES

  	
   

  	
   

  
	
  87.500

  	
   

  	
  7

  	
   

  	
   

  

 

THE LIST OF UNDERWRITING MEMBERS

OF LLOYDS IS IN RESPECT OF 2006

YEAR OF ACCOUNT

BUREAU USE ONLY

USE3  55  
13197

 1

Signing Schedule

attaching to and forming part of the

Interests and Liabilities
Agreement

of

Certain Underwriting Members of Lloyd’s

with respect to the

	
  BUREAU REFERENCE

  	
   

  	
  61226 09/01/06

  	
   

  	
  BROKER NUMBER   1108

  

 

	
  PROPORTION

  %

  	
   

  	
  SYNDICATE

  	
   

  	
  UNDERWRITER’S

  REFERENCE

  
	
  17.949

  	
   

  	
   

  	
  2001

  	
   

  	
   

  	
  RAB1509006NE

  
	
  13.462

  	
   

  	
   

  	
  2791

  	
   

  	
   

  	
  R1106RG00554

  
	
  11.218

  	
   

  	
   

  	
  1414

  	
   

  	
   

  	
  XR06AB020N5X

  
	
  8.974

  	
   

  	
   

  	
  958

  	
   

  	
   

  	
  AVRAXNEN5403

  
	
  8.974

  	
   

  	
   

  	
  2020

  	
   

  	
   

  	
  P556727L0X

  
	
  8.974

  	
   

  	
   

  	
  2010

  	
   

  	
   

  	
  N06A7670A001

  
	
  17.949

  	
   

  	
   

  	
  2003

  	
   

  	
   

  	
  AF6000101517

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL LINE

  	
   

  	
  No. OF
  SYNDICATES

  	
   

  	
   

  
	
  87.500

  	
   

  	
  7

  	
   

  	
   

  

 

THE LIST OF UNDERWRITING MEMBERS

OF LLOYDS IS IN RESPECT OF 2006

YEAR OF ACCOUNT

BUREAU USE ONLY

USE3  55  
13197

 1

Property Excess of Loss

Reinsurance Contract

Effective: January 1, 2006

issued to

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

Table of Contents

	
  Article

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
  Classes of Business Reinsured

  	
   

  	
  1

  
	
  II

  	
   

  	
  Commencement and Termination

  	
   

  	
  1

  
	
  III

  	
   

  	
  Territory (BRMA 51A)

  	
   

  	
  2

  
	
  IV

  	
   

  	
  Exclusions

  	
   

  	
  2

  
	
  V

  	
   

  	
  Retention and Limit

  	
   

  	
  3

  
	
  VI

  	
   

  	
  Reinstatement

  	
   

  	
  4

  
	
  VII

  	
   

  	
  Definitions

  	
   

  	
  5

  
	
  VIII

  	
   

  	
  Loss Occurrence

  	
   

  	
  6

  
	
  IX

  	
   

  	
  Loss Notices and Settlements

  	
   

  	
  9

  
	
  X

  	
   

  	
  Salvage and Subrogation

  	
   

  	
  9

  
	
  XI

  	
   

  	
  Reinsurance Premium

  	
   

  	
  9

  
	
  XII

  	
   

  	
  Late Payments

  	
   

  	
  10

  
	
  XIII

  	
   

  	
  Offset (BRMA 36C)

  	
   

  	
  11

  
	
  XIV

  	
   

  	
  Access to Records (BRMA 1D)

  	
   

  	
  11

  
	
  XV

  	
   

  	
  Liability of the Reinsurer

  	
   

  	
  12

  
	
  XVI

  	
   

  	
  Net Retained Lines (BRMA 32B)

  	
   

  	
  12

  
	
  XVII

  	
   

  	
  Errors and Omissions (BRMA 14F)

  	
   

  	
  12

  
	
  XVIII

  	
   

  	
  Currency (BRMA 12A)

  	
   

  	
  12

  
	
  XIX

  	
   

  	
  Taxes (BRMA 50B)

  	
   

  	
  13

  
	
  XX

  	
   

  	
  Federal Excise Tax

  	
   

  	
  13

  
	
  XXI

  	
   

  	
  Unauthorized Reinsurers

  	
   

  	
  13

  
	
  XXII

  	
   

  	
  Insolvency

  	
   

  	
  14

  
	
  XXIII

  	
   

  	
  Arbitration

  	
   

  	
  15

  
	
  XXIV

  	
   

  	
  Service of Suit (BRMA 49C)

  	
   

  	
  16

  
	
  XXV

  	
   

  	
  Agency Agreement

  	
   

  	
  16

  
	
  XXVI

  	
   

  	
  Governing Law (BRMA 71B)

  	
   

  	
  16

  
	
  XXVII

  	
   

  	
  Severability (BRMA 72E)

  	
   

  	
  17

  
	
  XXVIII

  	
   

  	
  Intermediary (BRMA 23A)

  	
   

  	
  17

  
	
   

  	
   

  	
  Schedule A

  	
   

  	
   

  

 

Property
Excess of Loss

Reinsurance Contract

Effective: January 1, 2006

Issued to

Safety Insurance Company

and

Safety Indemnity Insurance Company

both of Boston, Massachusetts

(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 - Classes of
Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability
which may accrue to the Company under its policies, contracts and binders of
insurance or reinsurance (hereinafter called “policies”) in force on the
effective date hereof or issued or renewed on or after that date, and
classified by the Company as Fire, Allied Lines. Homeowners Multiple Peril
(Section I only). Commercial Multiple Peril (Section I only) and Inland Marine
business, subject to the terms, conditions and limitations set forth herein and
in Schedule A attached to and forming part of this Contract.

Article II - Commencement
and Termination

A.                      This
Contract shall become effective at 12:01 a.m., Eastern Standard Time, January
1, 2006 with respect to losses occurring at or after that time and date, and
shall remain in force until 12:01 a.m., Eastern Standard Time, January 1, 2007.

B.                        Notwithstanding
the provisions of paragraph A above, the Company may terminate a Subscribing
Reinsurer’s percentage share in this Contract at any time by giving written
notice to the Subscribing Reinsurer in the event any of the following circumstances
occur:

The Subscribing Reinsurer’s policyholders’ surplus at
the inception of this Contract has been reduced by more than 20.0% of the
amount of surplus 12 months prior to that date; or

2.                         The
Subscribing Reinsurer’s policyholders’ surplus at any time during the term of
this Contract has been reduced by more than 20.0% of the amount of surplus at
the date

 1
 

of the Subscribing Reinsurer’s most recent financial
statement filed with regulatory authorities and available to the public as of
the inception of this Contract; or

3.                         The
Subscribing Reinsurer’s A.M. Best’s rating has been assigned or downgraded
below A- 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 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; or

8.                         The
Subscribing Reinsurer has ceased assuming new and renewal property treaty
reinsurance business.

C.                        The
Reinsurer shall have no liability hereunder with respect to losses occurring
after the effective date of termination.

Article III - Territory
(BRMA 51A)

The territorial limits of this Contract shall be identical with those
of the Company’s policies.

Article IV - Exclusions

This Contract does not apply to and specifically excludes the
following:

1.                         Loss
or damage occasioned by war, invasion, hostilities, acts of foreign enemies,
civil war, rebellion, insurrection, military or usurped power, martial law or
confiscation by order of any government or public authority, but not excluding
loss or damage which would be covered under a standard form of policy
containing a standard war exclusion clause.

2.                         Nuclear
risks as defined in the “Nuclear Incident Exclusion Clause - Physical Damage -
Reinsurance” attached to and forming part of this Contract.

3.                         Liability
as a member, subscriber or reinsurer of any Pool, Syndicate or Association; and
any combination of insurers or reinsurers formed for the purpose of covering

 2
 

specific perils, specific classes of business or for the purpose of
insuring risks located in specific geographical areas; but this exclusion shall
not apply to FAIR Plans or to SIR Pool, Franklin Pool, Coastal Pools, Beach
Plans or similar plans, however styled. It is understood and agreed, however,
that this reinsurance does not include any increase in liability to the Company
resulting from (a) the inability of any other participant in a FAIR Plan, SIR
Pool, Franklin Pool, Coastal Pool, Beach Plan or similar plan to meet its
liability, or (b) any claim against such a FAIR Plan, SIR Pool, Franklin Pool,
Coastal Pool, Beach Plan or similar plan, or any participant therein, including
the Company, whether by way of subrogation or otherwise, brought by or on
behalf of any insolvency fund.

4.                          Financial
guarantee and insolvency.

5.                          Third
party liability.

6.                          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, however 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.

7.                          All
classes of business not specifically listed in the Classes of Business
Reinsured Article.

8.                          Reinsurance
assumed, except pro rata local agency reinsurance on specific risks

9.                          Ex-gratia
payments.

10.                    Risks
excluded under the provisions of the “Total Insured Value Clause” attached to
and forming part of this Contract.

11.                    Loss
or liability excluded under the “Terrorism Exclusion Clause” attached to and
forming part of this Contract.

12.                    Loss
and/or damage and/or costs and/or expenses arising from Seepage and/or
Pollution and/or Contamination, other than contamination from Smoke Damage.
Nevertheless, this exclusion does not preclude any payment of the cost of the
removal of debris of property damaged by a loss otherwise covered hereunder,
but subject always to a limit of 25.0% of the Company’s property loss under the
original policy.

Article V - Retention and Limit

A.                      As
respects each excess layer of reinsurance coverage provided by this Contract,
the Company shall retain and be liable for the first amount of ultimate net
loss, shown as “Company’s Retention” for that excess layer in Schedule A
attached hereto, as respects

 3
 

each risk, each loss. The Reinsurer shall then be liable, as respects
each excess layer, for the amount by which such ultimate net loss exceeds the
Company’s applicable retention, but the liability of the Reinsurer under each
excess layer shall not exceed the amount, as respects each risk, each loss,
shown as “Reinsurer’s Per Risk Limit” for that excess layer in Schedule A
attached hereto, nor shall it exceed the amount, shown as “Reinsurer’s Per
Occurrence Limit” for that excess layer in Schedule A attached hereto, as
respects any one loss occurrence for the contract year under consideration.

B.                        The
Company shall be the sole judge of what constitutes “one risk,” except that in
no event shall a building and its contents be considered more than one risk.

C.                        The
Company shall be permitted to carry facultative reinsurance, recoveries under
which shall inure to the benefit of this Contract.

Article VI -
Reinstatement

A.                      
In the event all or any portion of the reinsurance under any excess layer of
reinsurance coverage provided by this Contract is exhausted by loss, the amount
so exhausted shall be reinstated immediately from the time the loss occurs
hereon.

1.                         As
respects the First Excess Layer:

a.                          For
the first and second amount, shown as “Reinsurer’s Per Risk limit” for that
excess layer in Schedule A attached hereto, of ultimate net loss so reinstated,
the Company shall pay no additional premium.

b.                         For
the third amount, shown as “Reinsurer’s Per Risk Limit” for that excess layer
in Schedule A attached hereto, of ultimate net loss so reinstated, the Company
agrees to pay additional premium equal to the product of the following:

The percentage of the per risk limit for the excess
layer reinstated (based on the loss paid by the Reinsurer under that excess
layer); times

ii.                         The
earned reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

2.                         As
respects the Second Excess Layer:

a.                          For
the first amount, shown as “Reinsurer’s Per Risk Limit” for that excess layer
in Schedule A attached hereto, of ultimate net loss so reinstated, the Company
shall pay no additional premium.

b.                         For
the second amount, shown as “Reinsurer’s Per Risk Limit” for that excess layer
in Schedule A attached hereto, of ultimate net loss so reinstated, the Company
agrees to pay additional premium equal to the product of the following:

The percentage of the per risk limit for the excess
layer reinstated (based on the loss paid by the Reinsurer under that excess
layer); times

 4
 

ii.                         The
earned reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

3.                         As
respects the Third Excess Layer, for each amount so reinstated, the Company
agrees to pay additional premium equal to the product of the following:

a.                          The
percentage of the per risk limit for the excess layer reinstated (based on the
loss paid by the Reinsurer under that excess layer); times

b.                         The
earned reinsurance premium for the excess layer reinstated for the term of this
Contract (exclusive of reinstatement premium).

B.                        Whenever
the Company requests payment by the Reinsurer of any loss under any excess
layer hereunder, the Company shall submit a statement to the Reinsurer of
reinstatement premium due the Reinsurer for that excess layer. If the earned
reinsurance premium for any excess layer for the term of this Contract has not
been finally determined as of the date of any such statement, the calculation
of reinstatement premium due for that excess layer shall be based on the annual
deposit premium for that excess layer and shall be readjusted when the earned
reinsurance premium for that excess layer for the term of this Contract has
been finally determined. Any reinstatement premium shown to be due the
Reinsurer for any excess layer as reflected by any such statement (less prior
payments, if any, for that excess layer) shall be payable by the Company
concurrently with payment by the Reinsurer of the requested loss for that
excess layer. Any return reinstatement premium shown to be due the Company
shall be remitted by the Reinsurer as promptly as possible after receipt and
verification of the Company’s statement.

C.                        Notwithstanding
anything stated herein, the liability of the Reinsurer under any excess layer
of reinsurance coverage provided by this Contract shall not exceed any of the
following:

The amount, shown as “Reinsurer’s Per Risk Limit” for
that excess layer in Schedule A attached hereto, as respects each risk, each loss;
or

2.                         The
amount, shown as “Reinsurer’s Per Occurrence Limit” for that excess layer in
Schedule A attached hereto, as respects loss or losses arising out of any one
loss occurrence; or

3.                         The
amount, shown as “Reinsurer’s Term Limit” for that excess layer in Schedule A
attached hereto, in all during the term of this Contract.

Article VII - Definitions

A.                      “Ultimate
net loss” as used herein is defined as the sum or sums (including loss in
excess of policy limits, extra contractual obligations, and all loss adjustment
expense, as hereinafter defined) paid or payable by the Company in settlement
of claims and in satisfaction of judgments rendered on account of such claims,
after deduction of all salvage, all recoveries and all claims on inuring
insurance or reinsurance, whether collectible or not. Nothing herein shall be
construed to mean that losses under this Contract are not recoverable until the
Company’s ultimate net loss has been ascertained.

 5
 

B.                        “Loss
in excess of policy limits” and “extra contractual obligations” as used herein
shall be defined as follows:

“Loss in excess of policy limits” shall mean 90.0% of
any amount paid or payable by the Company in excess of its policy limits, but
otherwise within the terms of its policy, such loss in excess of the Company’s
policy limits having been incurred because of, but not limited to, failure by
the Company to settle within the policy limits or by reason of the Company’s
alleged or actual negligence, fraud or bad faith in rejecting an offer of
settlement or in the preparation of the defense or in the trial of an action
against its insured or reinsured or in the preparation or prosecution of an
appeal consequent upon such an action.

2.                         “Extra
contractual obligations” shall mean 90.0% of any punitive, exemplary,
compensatory or consequential damages paid or payable by the Company, not
covered by any other provision of this Contract and which arise from the
handling of any claim on business subject to this Contract, such liabilities
arising because of, but not limited to, failure by the Company to settle within
the policy limits or by reason of the Company’s alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of any action against its insured or reinsured or
in the preparation or prosecution of an appeal consequent upon such an action.
An extra contractual obligation shall be deemed, in all circumstances, to have
occurred on the same date as the loss covered or alleged to be covered under
the policy.

Notwithstanding anything stated herein, this Contract shall not apply
to any loss in excess of policy limits or any extra contractual obligation
incurred by the Company as a result of any fraudulent and/or criminal act by
any officer or director of the Company acting individually or collectively or
in collusion with any individual or corporation or any other organization or
party involved in the presentation, defense or settlement of any claim covered
hereunder.

Savings Clause (Applicable only if the Subscribing Reinsurer is
domiciled in the State of New York): In no event shall coverage be provided to
the extent that such coverage is not permitted under New York law.

C.                        “Loss
adjustment expense” as used herein shall mean expenses assignable to the
investigation, appraisal, adjustment, settlement, litigation, defense and/or
appeal of specific claims, regardless of how such expenses are classified for
statutory reporting purposes. Loss adjustment expense shall include, but not be
limited to, interest on judgments, expenses of outside adjusters, and
declaratory judgment expenses or other legal expenses and costs incurred in
connection with coverage questions and legal actions connected thereto, but
shall not include office expenses or salaries of the Company’s regular
employees not classified as loss adjusters.

Article VIII - Loss Occurrence

A.                      The
term “loss occurrence” shall mean the sum of all individual losses directly
occasioned by any one disaster, accident or loss or series of disasters,
accidents or losses arising out of one event which occurs within the area of
one state of the Untied States or province of

 6
 

Canada and states or provinces contiguous thereto and to one another.
However, the duration and extent of any one “loss occurrence” shall be limited
to all individual losses sustained by the Company occurring during any period
of 168 consecutive hours arising out of and directly occasioned by the same
event, except that the term “loss occurrence” shall be further defined as
follows:

As regards windstorm, hall, tornado, hurricane,
cyclone, including ensuing collapse and water damage, all individual losses
sustained by the Company occurring during any period of 72 consecutive hours
arising out of and directly occasioned by the same event. However, the event
need not be limited to one state or province or states or provinces contiguous
thereto.

2.                         As
regards riot, riot attending a strike, civil commotion, vandalism and malicious
mischief, all individual losses sustained by the Company occurring during any
period of 72 consecutive hours within the area of one municipality or county
and the municipalities or counties contiguous thereto arising out of and
directly occasioned by the same event. The maximum duration of 72 consecutive
hours may be extended in respect of individual losses which occur beyond such
72 consecutive hours during the continued occupation of an assured’s premises
by strikers, provided such occupation commenced during the aforesaid period.

3.                         As
regards earthquake (the epicentre of which need not necessarily be within the
territorial confines referred to in paragraph A of this Article) and fire
following directly occasioned by the earthquake, only those individual fire
losses which commence during the period of 168 consecutive hours may be
included in the Company’s “loss occurrence.”

4.                         As
regards “freeze,” only individual losses directly occasioned by collapse,
breakage of glass and water damage (including, but not limited to, those caused
by bursting frozen pipes and tanks) may be included in the Company’s “loss
occurrence.”

5.                         As
regards firestorms, brush fires and any other fires or series of fires,
irrespective of origin (except as provided in subparagraphs 2 and 3 above),
which spread through trees, grassland or other vegetation, all individual
losses sustained by the Company which occur during any period of 168
consecutive hours within 150-mile radius of any one fixed point selected by the
Company may be included in the Company’s “loss occurrence.” However, an
individual loss subject to this subparagraph cannot be included in more than
one “loss occurrence.”

B.                        Except
for those “loss occurrences,” referred to in subparagraphs 1 and 2 of paragraph
A above, the Company may choose the date and time when any such period of consecutive
hours commences, provided that it is not earlier than the date and time of the
occurrence of the first recorded individual loss sustained by the Company
arising out of that disaster, accident or loss, and provided that only one such
period of 168 consecutive hours shall apply with respect to one event.

C.                        As
respects those “loss occurrences” referred to in subparagraphs 1 and 2 of
paragraph A above, if the disaster, accident or loss occasioned by the event is
of greater duration than 72 consecutive hours, then the Company may divide that
disaster, accident or loss into two or more “loss occurrences,” provided no two
periods overlap and no individual loss is

 7
 

included in more than one such period and provided that no period
commences earlier than the date and time of the occurrence of the first
recorded individual loss sustained by the Company arising out of that disaster,
accident or loss.

D.                       No
individual losses occasioned by an event that would be covered by 72 hours
clauses may be included in any “loss occurrence” claimed under the 168 hours
provision.

E.                         Any
date change, including leap-year calculations, shall not in and of itself be
regarded as an event for purposes of this Contract.

This includes any loss, damage, cost, claim or
expense, whether preventative remedial or otherwise, directly or indirectly
arising out of or relating to:

a.                          The
calculation, comparison, differentiation, sequencing or processing of data
involving a date change, including leap-year calculations, by any computer
system, hardware, program or software and/or any microchip, integrated circuit
or similar device in computer equipment or non-computer equipment, whether the
property of the insured or not; or

b.                         Any
change, alteration or modification involving a date change, including leap-year
calculations, to any such computer system, hardware, program or software or any
microchip, integrated circuit or similar device in computer equipment or
non-computer equipment, whether the property of the insured or not.

This subparagraph shall apply regardless of any other
cause or event that contributes concurrently or in any sequence to the loss,
damage, cost, claim or expense.

However, this subparagraph shall not apply as respects
physical damage occurring at the insured’s premises arising out of the perils
covered under this Contract.

2.                         Notwithstanding
subparagraph 1 above, this Contract shall not cover any costs and expenses,
whether preventative, remedial or otherwise, arising out of or relating to
change, alteration or modification of any computer system, hardware, program or
software or any microchip, integrated circuit or similar device in computer or
non-computer equipment, whether the property of the insured or not.

F.                         Losses
arising, directly or indirectly, out of:

1                            Loss
of, alteration of, or damage to;

or

2                            A
reduction in the functionality, availability or operation of

A computer system, hardware, program, software, data,
information repository, microchip, integrated circuit or similar device in
computer equipment or non-computer equipment, whether the property of the
policyholder of the Company or not, do not in and of themselves constitute an
event unless arising out of one or more of the following perils:

 8
 

Fire, lightning, explosion, aircraft or vehicle
impact, falling objects, windstorm, hail, tornado, cyclone, hurricane,
earthquake, volcano, tsunami, flood, freeze or weight of snow.

Article IX - Loss Notices and Settlements

A.                      Whenever
a loss sustained by the Company appears likely to result in a claim hereunder,
the Company shall notify the Reinsurer, and the Reinsurer shall have the right
to participate in the adjustment of the loss at its own expense.

B.                        All
loss settlements made by the Company, provided they are 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) by the Company.

Article X - Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement
obtained or recovery made by the Company, less the actual cost, excluding
salaries of officials and employees of the Company and sums paid to attorneys
as retainer, of obtaining such reimbursement or making such recovery) on account
of claims and settlements involving reinsurance hereunder. Salvage thereon
shall always be used to reimburse the excess carriers in the reverse order of
their priority according to their participation before being used in any way to
reimburse the Company for its primary loss. The Company hereby agrees to
enforce its rights to salvage or subrogation relating to any loss, a part of
which loss was sustained by the Reinsurer, and to prosecute all claims arising
out of such rights.

Article XI - Reinsurance Premium

A.                      As
premium for each excess layer of reinsurance coverage provided by this
Contract, the Company shall pay the Reinsurer the greater of the following:

1                            The
amount, shown as “Annual Minimum Premium” for that excess layer in Schedule A
attached hereto (or a pro rata portion thereof if a Subscribing Reinsurer’s
share under that excess layer is terminated in accordance with the provisions
of this Contract); or

2                            The
percentage, shown as “Premium Rate” for that excess layer in Schedule A
attached hereto, of the Company’s net earned premium for the term of this
Contract.

B.                        The
Company shall pay the Reinsurer an annual deposit premium for each excess layer
of the amount, shown as “Annual Deposit Premium” for that excess layer in
Schedule A attached hereto, in four equal installments of the amount, shown as “Quarterly
Deposit Premium” for that excess layer in Schedule A attached hereto, on
January 1, April 1, July 1 and October 1 of 2006. In the event a Subscribing
Reinsurer’s share under any excess

 9
 

layer hereof is terminated, no quarterly deposit premium installment
for such layer(s) shall be due to such Subscribing Reinsurer after the
effective date of termination.

C.                        Within
60 days after the termination or 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, and any additional
premium due the Reinsurer or return premium due the Company for each such
excess layer shall be remitted promptly.

D.                       “Net
earned premium” as used herein is defined as gross earned premium of the
Company for the classes of business reinsured hereunder, less the earned
portion of premiums ceded by the Company for reinsurance which inures to the
benefit of this Contract. For purposes of calculating net earned premium, 90.0%
of Homeowners Multiple Peril and 80.0% of Commercial Multiple Peril total basic
policy premium on indivisible premium policies shall be considered subject
premium.

Article XII - 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:

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 business days after the date of transmittal by the
Intermediary of the initial billing for each such payment.

 10
 

2.                         Any
claim or loss payment due the Company hereunder shall be deemed due 30 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 30 business
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, 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
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 XIII - Offset (BRMA 36C)

The Company and the Reinsurer shall have the right to offset any
balance or amounts due from one party to the other under the terms of this
Contract. The party asserting the right of offset may exercise such right any
time whether the balances due are on account of premiums or losses or
otherwise.

Article XIV - 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.

 11
 

Article XV - Liability of the Reinsurer

A.                      The
liability of the Reinsurer shall follow that of the Company in every case and
be subject in all respects to all the general and specific stipulations,
clauses, waivers and modifications of the Company’s policies and any
endorsements thereon. However, in no event shall this be construed in any way
to provide coverage outside the terms and conditions set forth in this Contract.

B.                        Nothing
herein shall in any manner create any obligations or establish any rights
against the Reinsurer in favor of any third party or any persons not parties to
this Contract.

Article XVI - Net Retained Lines (BRMA 32B)

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

B.                        The
amount of the Reinsurer’s liability hereunder in respect of any loss or losses
shall not be increased by reason of the inability of the Company to collect
from any other reinsurer(s), whether specific or general, any amounts which may
have become due from such reinsurer(s), whether such inability arises from the
insolvency of such other reinsurer(s) or otherwise.

Article XVII - 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 XVIII - 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.

 12
 

Article XIX - 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 XX - 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 XXI - Unauthorized Reinsurers

A.                      If
the Reinsurer is unauthorized in any state of the United States of America or
the District of Columbia, the Reinsurer agrees to fund its share of the Company’s
ceded United States outstanding loss and loss adjustment expense reserves
(including all case reserves plus any reasonable amount estimated to be
unreported from known loss occurrences) 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, without such funding, a penalty would accrue to the Company on any
financial statement it is required to file with the insurance regulatory
authorities involved. The Reinsurer, at its sole option, may fund in other than
cash if its method and form of funding are acceptable to the insurance
regulatory authorities involved.

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 30 days prior to said
expiration date. 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

 13
 

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:

To reimburse itself for the Reinsurer’s share of
losses and/or loss adjustment expense paid under the terms of policies
reinsured hereunder, 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
outstanding loss and loss adjustment expense reserves (including all case
reserves plus any reasonable amount estimated to be unreported from known loss
occurrences) 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 outstanding loss and loss
adjustment expense reserves (including all case reserves plus any reasonable
amount estimated to be unreported from known loss occurrences), if so requested
by the Reinsurer.

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 XXII - Insolvency

A.                      In
the event of the insolvency of one or both 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.

 14
 

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
both 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 XXIII - Arbitration

A.                      As
a condition precedent to any right of action hereunder, in the event of any
dispute or difference of opinion hereafter arising with respect to this Contract,
it is hereby mutually agreed that such dispute or difference of opinion shall
be submitted to arbitration. One Arbiter shall be chosen by the Company, the
other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters
before they enter upon arbitration, all of whom shall be active or retired
disinterested executive officers of insurance or reinsurance companies or Lloyd’s
London Underwriters. In the event that either party should fall to choose an
Arbiter within 30 days following a written request by the other party to do so,
the requesting party may choose two Arbiters who shall in turn choose an Umpire
before entering upon arbitration. If the two Arbiters fall to agree upon the
selection of an Umpire within 30 days following their appointment, the two
Arbiters shall request the American Arbitration Association to appoint the
Umpire. If the American Arbitration Association fails to appoint the Umpire
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 Umpire.

B.                        Each
party shall present its case to the Arbiters within 30 days following the date
of appointment of the Umpire. The Arbiters shall consider this Contract as an
honorable engagement rather than merely as a legal obligation and they are
relieved of all judicial formalities and may abstain from following the strict
rules of law. The decision of the Arbiters shall be final and binding on both
parties; but falling to agree, they shall call in the Umpire and the decision
of the majority shall be final and binding upon both parties. Judgment upon the
final decision of the Arbiters may be entered in any court of competent
jurisdiction.

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

D.                       Each
party shall bear the expense of its own Arbiter, and shall jointly and equally
bear with the other the expense of the Umpire and of the arbitration. In the
event that the two

 15
 

Arbiters are chosen by one party, as above provided, the expense of the
Arbiters, the Umpire and the arbitration shall be equally divided between the
two parties.

E.                         Any
arbitration proceedings shall take place at a location mutually agreed upon by
the parties to this Contract, but notwithstanding the location of the
arbitration, all proceedings pursuant hereto shall be governed by the law of
the state in which the Company has its principal office.

Article XXIV - Service of Suit (BRMA 49C)

(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)

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 a 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 therefor, 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 XXV - 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 XXVI - Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.

 16
 

Article XXVII - Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any state, such
provision shall be considered void in such state, but this shall not affect the
validity or enforceability of any other provision of this Contract or the
enforceability of such provision in any other jurisdiction.

Article XXVIII - 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:

Boston, Massachusetts, this 9th day of Jan in the year 2006.

	
  

  	
   

  	
   

  	
   

  	
  /s/ Illegible

  
	
   

  	
   

  	
   

  	
   

  	
  Safety Insurance Company

  
	
   

  	
   

  	
   

  	
   

  	
  Safety Indemnity Insurance Company

  

 

 17

Schedule
A

Property
Excess of Loss

Reinsurance
Contract

Effective:
January 1, 2006

issued to

Safety Insurance
Company

and

Safety Indemnity
Insurance Company

both of Boston,
Massachusetts

	
   

  	
   

  	
  First

  Excess

  	
   

  	
  Second

  Excess

  	
   

  	
  Third

  Excess

  	
   

  
	
  Company’s Retention

  	
   

  	
  $

  	
  1,500,000

  	
   

  	
  $

  	
  2,500,000

  	
   

  	
  $

  	
  5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reinsurer’s Per Risk
  Limit

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
  $

  	
  2,500,000

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reinsurer’s Per
  Occurrence Limit

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  $

  	
  10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reinsurer’s Term Limit

  	
   

  	
  $

  	
  4,000,000

  	
   

  	
  $

  	
  7,500,000

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Premium Rate

  	
   

  	
  0.194

  	
  %

  	
  0.2323

  	
  %

  	
  0.3872

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Minimum and
  Deposit Premium

  	
   

  	
  $

  	
  100,000

  	
   

  	
  $

  	
  120,000

  	
   

  	
  $

  	
  200,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quarterly Minimum and Deposit Premium

  	
   

  	
  $

  	
  25,000

  	
   

  	
  $

  	
  30,000

  	
   

  	
  $

  	
  50,000

  	
   

  

 

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.

Nuclear
Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)

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:

Nuclear reactor power plants including all auxilliary
property on the site, or

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.

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.

12/12/57

N.M.A. 1119

BRMA 36B

Total
Insured Value Exclusion Clause

It is the mutual intention of the parties to exclude risks, other than
Offices, Hotels, Apartments, Hospitals, Educational Establishments and Public
Utilities (except Railroad Schedules), and Builders Risks on the above classes,
where at the time of cession, the Total Insured Value over all interests exceeds
$250,000,000. However, the Company shall be protected hereunder, subject to the
other terms and conditions of this Contract, if subsequent to cession being
made, the Company becomes acquainted with the true facts of the case and
discovers that the mutual intention has been inadvertently breached; on
condition that the Company shall at the first opportunity, and certainly by
next anniversary of the original policy, exclude the risk in question.

It is agreed that this mutual intention does not apply to Contingent
Business Interruption or to interests traditionally underwritten as Inland
Marine or to Stock and/or Contents written on a blanket basis except where the
Company is aware that the Total Insured Value of $250,000,000 is already
exceeded for buildings, machinery, equipment and direct use and occupancy at
the key location.

It is understood and agreed that this Clause shall not apply hereunder
where the Company writes 100% of the risk.

BRMA 53B

Terrorism
Exclusion Clause

A.                      Notwithstanding
any provision to the contrary within this Contract or any addendum thereto, it
is agreed that this Contract excludes loss, damage, cost or expense directly or
indirectly caused by, contributed to by, resulting from, arising out of or in
connection with any “act of terrorism,” as defined in the Terrorism Risk
Insurance Act of 2002, as amended by the Terrorism Risk Insurance Extension Act
of 2005 (together the “Terrorism Act”), on primary or excess property and
casualty insurance issued by the Company, regardless of any other cause or
event contributing concurrently or in any sequence to the loss.

B.                        Notwithstanding
the above and subject otherwise to the terms, conditions and limitations of
this Contract, this Contract will pay actual loss or damage caused by any act
of terrorism which does not meet the definition of “insured loss” set forth in
the Terrorism Act or meets the definition of “insured loss” as set forth in the
Terrorism Act, but results in loss under a policy that is not included in “property
and casualty insurance” as defined in the Terrorism Act, provided, in either
case, (1) such loss or damage occurs in a line of insurance otherwise covered
by this Contract, and (2) in no event will this Contract provide coverage for
loss, damage, cost or expense directly or indirectly caused by, contributed to
by, resulting from, or arising out of or in connection with biological,
chemical, radioactive or nuclear explosion, pollution, contamination and/or
fire following thereon.Exhibit 10.31

CASUALTY EXCESS OF LOSS

REINSURANCE AGREEMENT

NO. POR327454

EFFECTIVE January l, 2006

between

SAFETY INSURANCE COMPANY

SAFETY INDEMNITY INSURANCE COMPANY

Boston, Massachusetts

and

SWISS REINSURANCE AMERICA CORPORATION

Armonk, New York

CASUALTY EXCESS OF LOSS
REINSURANCE AGREEMENT NO POR327454

	
  ARTICLE

  	
   

  	
  CONTENTS

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PREAMBLE

  	
   

  	
  1

  
	
  I

  	
   

  	
  BUSINESS COVERED

  	
   

  	
  1

  
	
  II

  	
   

  	
  EFFECTIVE DATE AND TERMINATION

  	
   

  	
  2

  
	
  III

  	
   

  	
  TERRITORY

  	
   

  	
  2

  
	
  IV

  	
   

  	
  LIMIT AND RETENTION

  	
   

  	
  2

  
	
  V

  	
   

  	
  ULTIMATE NET LOSS

  	
   

  	
  3

  
	
  VI

  	
   

  	
  LOSS IN EXCESS OF POLICY LIMITS

  	
   

  	
  4

  
	
  VII

  	
   

  	
  EXTRA CONTRACTUAL OBLIGATIONS

  	
   

  	
  5

  
	
  VIII

  	
   

  	
  EXCLUSIONS

  	
   

  	
  6

  
	
  IX

  	
   

  	
  SPECIAL ACCEPTANCE

  	
   

  	
  7

  
	
  X

  	
   

  	
  LOSS OCCURRENCE

  	
   

  	
  8

  
	
  XI

  	
   

  	
  REINSURANCE PREMIUM

  	
   

  	
  9

  
	
  XII

  	
   

  	
  CONTINGENT COMMISSION

  	
   

  	
  10

  
	
  XIII

  	
   

  	
  REPORTS AND REMITTANCES

  	
   

  	
  10

  
	
  XIV

  	
   

  	
  CLAIMS

  	
   

  	
  11

  
	
  XV

  	
   

  	
  SALVAGE AND SUBROGATION

  	
   

  	
  12

  
	
  XVI

  	
   

  	
  ACCESS TO RECORDS

  	
   

  	
  13

  
	
  XVII

  	
   

  	
  TAXES

  	
   

  	
  13

  
	
  XVIII

  	
   

  	
  CURRENCY

  	
   

  	
  13

  
	
  XIX

  	
   

  	
  OFFSET

  	
   

  	
  13

  
	
  XX

  	
   

  	
  ERRORS OR OMISSIONS

  	
   

  	
  14

  
	
  XXI

  	
   

  	
  DISPUTE RESOLUTION

  	
   

  	
  14

  
	
  XXII

  	
   

  	
  INSOLVENCY

  	
   

  	
  16

  
	
  XXIII

  	
   

  	
  SPECIAL TERMINATION

  	
   

  	
  16

  
	
  XXIV

  	
   

  	
  AMENDMENTS

  	
   

  	
  18

  
	
   

  	
   

  	
  SIGNATURES

  	
   

  	
  19

  

 

	
  ATTACHMENTS:

  	
   

  	
  POLLUTION
  LIABILITY EXCLUSION CLAUSE - REINSURANCE INSOLVENCY FUNDS EXCLUSION CLAUSE

  
	
   

  	
   

  	
  NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
  REINSURANCE - U.S.A.

  
	
   

  	
   

  	
  NUCLEAR INCIDENT
  EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA

  
	
   

  	
   

  	
  NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE -
  NO. 4

  
	
   

  	
   

  	
  PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING

  

 

CASUALTY EXCESS OF
LOSS

REINSURANCE AGREEMENT

NO. POR327454

(hereinafter referred to as the “Agreement”)

between

SAFETY INSURANCE
COMPANY

SAFETY INDEMNITY INSURANCE COMPANY

Boston, Massachusetts

(hereinafter
referred to as the “Company”)

and

SWISS REINSURANCE AMERICA CORPORATION

Armonk, New York

(hereinafter referred to
as the “Reinsurer”)

ARTICLE I - BUSINESS COVERED

A                         The
Reinsurer shall indemnify the Company on an excess of loss basis in respect of
the Company’s Ultimate Net Loss paid by the Company as a result of losses
occurring during the term of this Agreement, for Policies in force as of
January 1, 2006, and new and renewal Policies becoming effective on or after
said date, subject to the terms and conditions contained herein.

B.                        This
Agreement is solely between the Company and the Reinsurer, and nothing
contained in this Agreement shall create any obligations or establish any
rights against the Reinsurer in favor of any person or entity not a party
hereto.

C                         The
performance of obligations by both parties under this Agreement shall be in
accordance with a fiduciary standard of good faith and fair dealing.

D.                       The
term “Policies” shall mean each of the Company’s binders, policies and
contracts of insurance on the business covered hereunder.

E.                         Under
this Agreement, the indemnity for reinsured loss applies solely to the
following Classes of Insurance as respects voluntary automobile business
written by the Company, except as excluded under Article VIII - Exclusions of
this Agreement. However, as respects Automobile Liability and Automobile
Collision coverage added to the Commonwealth Automobile Facility, the Reinsurer
shall provide 80% recovery as respects Extra Contractual Obligations resulting
from losses arising and covered under said facility.

 1
 

CLASSES OF INSURANCE

1.                         Automobile
Liability

Bodily Injury Liability, Property Damage Liability,
Medical Payments, Uninsured Motorists, Underinsured Motorists and No-Fault
Coverage.

2                            Automobile
Collision

3                            Homeowners
(Section II only)

4                            Commercial
and Personal Umbrella Liability

5                            Businessowners
(Section II only)

ARTICLE II - EFFECTIVE DATE AND
TERMINATION

A                         This
Agreement shall become effective with respect to losses occurring on and after
12:01 a.m., Eastern Standard Time, January 1, 2006, and shall remain in full
force until terminated. This Agreement may be terminated at the close of any
calendar quarter by either party giving to the other 90 days prior written
notice by certified mail of its intention to do so.

B.                        During
the running of such notice as stipulated in Paragraph A. above, the Reinsurer
shall participate in business coming within the terms of this Agreement until
the date of termination of this Agreement.

C.                        In
the event of termination of this Agreement, the Reinsurer shall be liable for
losses occurring prior to the date of termination; however, the Reinsurer shall
have no liability for losses occurring subsequent to the termination of this
Agreement.

ARTICLE III - TERRITORY

This Agreement applies to Policies issued by the
Company within the Commonwealth of Massachusetts and shall apply to losses
covered hereunder wherever occurring.

ARTICLE IV - LIMIT AND RETENTION

A.                      The
Company shall retain the first $1,000,000 of Ultimate Net Loss as respects any
one Loss Occurrence. The Reinsurer shall then be liable for the amount by which
the Company’s Ultimate Net Loss exceeds the Company’s retention of $1,000,000,
but the liability of

 2
 

the Reinsurer shall never exceed $5,000,000 with
respect to any one Loss Occurrence.

B                           The
addition to the Company’s retention set forth in Paragraph A. above, the
Company shall be subject to an annual aggregate deductible of $500,000. Each
loss paid by the Company in excess of $1,000,000 retention shall be accumulated
and retained by the Company until the total accumulated excess amount totals
$500,000. Thereafter, losses in excess of the $1,000,000 retention shall be
recovered from the Reinsurer for the balance of the calendar year.

C                           The
Company’s retention and the Reinsurer’s limit of liability for each Loss
Occurrence, set forth in Paragraph A. above, shall apply irrespective of the
number of Policies affected or number of hazards in one Policy and regardless
of the number of Classes of Insurance involved.

D                          Reinsurance
of the Company’s retention, set forth above, shall not be deducted in arriving
at the Company’s Ultimate Net Loss herein.

E                            It
is understood that as respects Commercial and Personal Umbrella Liability
business, this Agreement shall apply to the Company’s retention under the
Umbrella Liability Quota Share Reinsurance Agreement No. POR327548.

F                            The
Company warrants that the maximum limit of liability, per occurrence set forth
under each Policy subject to this Agreement shall not exceed $1,000,000.

ARTICLE V - ULTIMATE NET LOSS

A                         The
term “Ultimate Net Loss” shall mean the actual sum paid by the Company in
settlement of losses or liability including interest accrued prior to judgment
after making deductions for all recoveries, including subrogation, salvages,
and claims upon other reinsurances, whether collectible or not, which inure to
the benefit of the Reinsurer under this Agreement, and shall exclude all
expenses incurred by the Company; provided, however, that in the event of the
insolvency of the Company, Ultimate Net Loss shall mean the amount of loss for
which the Company is liable, and payment by the Reinsurer shall be made to the
liquidator, receiver, conservator or statutory successor of the Company in
accordance with the provisions of Article 13 - Insolvency of this Agreement.

B                           The
term “Ultimate Net Loss” shall include 80% of Loss In Excess of Policy Limits
and 80% of Extra Contractual Obligations, as defined herein, but only as
respects business covered under this Agreement.

All Loss Adjustment Expenses defined below shall be
apportioned in the same proportion that each party’s interest bears to the

 3
 

Company’s Ultimate Net Loss. The Reinsurer shall not
be liable for any portion of the Company’s Loss Adjustment Expenses, unless the
Company’s Ultimate Net Loss exceeds its retention.

D                          In
the event a verdict, award or judgment is ultimately compromised, reduced or
reversed on appeal, the Reinsurer shall indemnify the Company for the Loss
Adjustment Expenses incurred in obtaining such reduction or reversal in the
ratio that the benefit each party derives from such reduction, reversal or
compromise bears to the total benefit derived therefrom. However, all Loss
Adjustment Expenses incurred up to the time of the original verdict or judgment
shall be considered separate and apart from appeal expenses and shall be prorated
in proportion to each party’s interests in such original verdict or judgment.

E.                         The
term “Loss Adjustment Expenses” shall mean all expenses incurred by the Company
in connection with the investigation, settlement, defense or litigation,
including court costs and post-judgment interest, of any claim or loss covered
by the Policies reinsured under this Agreement, but shall exclude the salaries
and expenses of Company employees, office expenses, Declaratory Judgment
Expenses and other overhead expenses.

F                            The
term “Declaratory Judgment Expenses” shall mean all legal expenses, incurred in
the representation of the Company in litigation brought to determine the
Company’s defense and/or indemnification obligations.

G.                        All
recoveries, salvages or payments recovered or received subsequent to a loss
settlement under this Agreement shall be applied as if recovered or received
prior to the aforesaid settlement and all necessary adjustments to the loss
settlement shall be made by the parties hereto.

H.                       Nothing
in this Article shall be construed to mean that losses are not recoverable
hereunder until the Ultimate Net Loss of the Company has been ascertained.

ARTICLE VI - LOSS IN EXCESS OF POLICY
LIMITS

A                         “Loss
in Excess of Policy Limits” is defined as loss in excess of the limit of the
original Policy, such loss in excess of the limit having been incurred because
of failure by the Company to settle within the Policy, limit or by reason of
alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement
or in the preparation of the defense or in the trial of any action against its
insured or in the preparation or prosecution of an appeal consequent upon such
action.

 4
 

B                           However,
this Article shall not apply where the loss has been incurred due to fraud by a
member of the Board of Directors or a corporate officer of the Company acting
individually or collectively or in collusion with any individual or corporation
or any other organization or party involved in the presentation, defense or
settlement of any claim covered hereunder.

C                           For
the purposes of this Article, the word “loss” shall mean any amounts which the
Company would have been contractually liable to pay had it not been for the
limit of the original Policy.

D                          With
respect to coverage provided under this Article, recoveries from any insurance
or reinsurance other than this Agreement, whether collectible or not, shall be
deducted to arrive at the amount of the Company’s Ultimate Net Loss.

ARTICLE VII - EXTRA CONTRACTUAL OBLIGATIONS

A                         “Extra
Contractual Obligations” are defined as those liabilities not covered under any
other provision of this Agreement and which arise from the handling of any
claim on business covered hereunder, such liabilities arising because of, but
not limited to, the following: failure by the Company to settle within the
Policy limit, or by reason of alleged or actual negligence, fraud or bad faith
in rejecting an offer of settlement or in the preparation of the defense or in
the trial of any action against its insured or in the preparation or
prosecution of an appeal consequent upon such action.

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

C                           However,
coverage hereunder as respects Extra Contractual Obligations shall not apply
where the loss has been incurred due to the fraud of a member of the Board of
Directors or a corporate officer of the Company acting individually or collectively
or in collusion with any individual or corporation or any other organization or
party involved in the presentation, defense or settlement of any claim covered
hereunder.

D                          Recoveries,
collectible or retention from any other form of insurance or reinsurance
including deductibles or self-insured retention which protect the Company
against Extra Contractual Obligations, whether collectible or not, shall inure
to the benefit of the Reinsurer and shall be deducted from the total amount of
Extra contractual obligation for purposes of determining the loss hereunder.

 5
 

E                            If
any provision of this Article shall be rendered illegal or unenforceable by the
laws, regulations or public policy of any state, such provision shall be
considered void in such state, but this shall not affect the validity or
enforceability of any other provision of this Article or the enforceability of
such provision in any other jurisdiction.

ARTICLE VIII - EXCLUSIONS

THIS AGREEMENT DOES NOT COVER

A.                      THE FOLLOWING GENERAL CATEGORIES

1                            Ex-gratia
payments

2                            Risks
subject to a deductible or a self-insured retention excess of $25,000.

3                            Loss
or damage caused directly or indirectly by: (a) enemy attack by armed forces
including action taken by military, naval or air forces in resisting an actual
or an immediately impending enemy attack; (b) invasion; (c) insurrection; (d) rebellion;
(e) revolution; (f) intervention; (g) civil war; and (h) usurped power.

4                            Reinsurance
assumed by the Company

5                            Business
derived from any Pool, Association, including Joint Underwriting Association,
Syndicate, Exchange, Plan, Fund or other facility directly as a member,
subscriber or participant, or indirectly by way of reinsurance or assessments;
provided this exclusion shall not apply to Automobile or Workers Compensation
assigned risks which may be currently or subsequently covered hereunder.

6                            Pollution
Liability as per the attached Pollution Liability Exclusion Clause -
Reinsurance

7                            Insolvency
Funds as per the attached Insolvency Funds Exclusion Clause.

8                            Nuclear
Incident Exclusion Clauses which are attached and made part of this Agreement:

a                     Nuclear
Incident Exclusion Clause - Liability - Reinsurance - U.S.A.

b                    Nuclear
Incident Exclusion Clause - Liability - Reinsurance - Canada.

c                     Nuclear
Incident Exclusion Clause - Reinsurance - No. 4.

 6
 

9                            Any
actual or alleged liability whatsoever for any claim or claims in respect of
loss or losses, directly or indirectly arising out of, resulting from, or in
consequence of asbestos, in whatever form or quantity.

B                           THE
FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY AND AUTOMOBILE COLLISION

1                            Vehicles
used in or while in practice or preparation for, a prearranged racing, speed,
exhibition or demolition contest.

2                            All
vehicles classified as “Public Automobiles” except church buses, social service
agency automobiles, van pools and vehicles used for the transportation of
employees.

3                            Fire,
police emergency or municipal vehicles

The rental or leasing of vehicles to others

5                            Logging
trucks

6                            Vehicles
engaged in the transportation or distribution of fireworks, fuses, explosives,
ammunitions, natural or artificial fuel, gas, or liquefied petroleum gases or
gasoline.

C                           In
the event the Company is inadvertently bound on any risk which is excluded
under this Agreement and identified below, the reinsurance provided under this
Agreement shall apply to such risk until discovery by the Company within its
Home Office of the existence of such risk and for 30 days thereafter, and shall
then cease unless within the 30 day period, the Company has received from the
Reinsurer written notice of its approval of such risk:

As respects Automobile Liability And Collision.

Items 2. through 6. of Section B. of this Article

ARTICLE IX - SPECIAL ACCEPTANCE

Policies which are beyond the terms, conditions or limitations
of this Agreement may be submitted to the Reinsurer for special acceptance
hereunder; and such Policies, if accepted in writing by the Reinsurer, shall be
subject to all of the terms, conditions and limitations of this Agreement,
except as modified by the special acceptance. Premiums and losses derived from
any special acceptance shall be included with other data for rating purposes
under this Agreement.

 7
 

ARTICLE X - LOSS OCCURRENCE

The term “Loss Occurrence” shall mean any accident or occurrence or
series of accidents or occurrences arising out of any one event and happening
within the term and scope of this Agreement. Without limiting the generality of
the foregoing, the term “Loss Occurrence” shall be held to include:

A                         As
respects Products Bodily Injury and Products Property Damage Liability,
injuries to all persons and all damage to property of others occurring during a
Policy Period and proceeding from or traceable to the same causative agency
shall be deemed to arise out of one Loss Occurrence, and the date of such Loss
Occurrence shall be deemed to be the commencing date of the Policy Period. For
the purpose of this provision, each annual period of a Policy which continues
in force for more than one year shall be deemed to be a separate Policy Period.

B.                        As
respects Bodily Injury Liability (other than Automobile and Products), said
term shall also be understood to mean, as regards each original assured,
injuries to one or more than one person resulting from infection, contagion,
poisoning, or contamination proceeding from or traceable to the same causative
agency.

C.                        As
respects Property Damage Liability (other than Automobile and Products), said
term shall also, subject to Provisions 1. and 2. below, be understood to mean
loss or losses caused by a series of operations, events, or occurrences arising
out of operations at one specific site and which cannot be attributed to any
single one of such operations, events or occurrences, but rather to the
cumulative effect of the same. In assessing each and every Loss Occurrence
within the foregoing definition, it is understood and agreed that:

the series of operations, events or occurrences shall
not extend over a period longer than 12 consecutive months; and

2                            the
Company may elect the date on which the period of not exceeding 12 consecutive
months shall be deemed to have commenced.

In the event that the series of operations, events or occurrences
extend over a period longer than 12 consecutive months, then each consecutive
period of 12 months, the first of which commences on the date elected under 2.
above, shall form the basis of claim under this Agreement.

 8
 

ARTICLE XI - REINSURANCE PREMIUM

A                         The
Company shall pay to the Reinsurer a premium for the reinsurance provided
hereunder a rate of .12%. Such rate shall be applied to the Company’s Subject
Earned Premium for the quarterly period being reported.

B                           The
term “Subject Earned Premium” as used herein is equal to the sum of the Net
Premium Written on the business covered hereunder during the period under
consideration, plus the unearned premium reserve as respects premiums in force
at the beginning of such period, less the unearned premium reserve as respects
premiums in force at the end of the period, said unearned premium is to be
calculated on an actual daily basis or in accordance with the Company’s
methodology, as agreed.

C                           The
term “Net Premiums Written” shall mean gross premiums written less returns,
allowances and reinsurances which inure to the benefit of the Reinsurer.

ARTICLE XII - CONTINGENT COMMISSION

A                         The
Reinsurer shall allow the Company a contingent commission of 15% of the profit,
if any, accruing to the Reinsurer hereunder, such profit to be computed on the
following formula:

CONTINGENT COMMISSION COMPUTATION FOR THE PERIOD

INCOME

1                            Premiums
received by the Reinsurer, as determined under Article XI - Reinsurance Premium
of this Agreement, for the Period.

OUTGO

2                            Incurred
Losses of the Reinsurer during the Period

3                            Deficit,
if any, brought forward from the preceding Period.

The amount by which Income exceeds Outgo is profit

The amount by which Outgo exceeds Income is deficit.

C                           The
term “Incurred Losses” means all losses and Loss Adjustment Expenses paid less
recoveries, including salvage and subrogation, during the current Period as
respects losses which occurred during the period for which computation is being
made plus the reserve for all unpaid losses and Loss Adjustment Expenses
outstanding at the end of the current Period.

 9
 

D                          The
term “Period” means the actual time covered by each adjustment of commission.

E                            The
Company shall calculate the commission adjustment for each Period, 36 months
after the close of such Period. The first calculation of commission adjustment
shall cover the Period January 1, 2006  through
December 31, 2006, and thereafter adjustments shall be made for each subsequent
Period commencing January 1 and ending the following December 31.

F                            If,
for any Period, the Income of the plan exceeds the total of the Items shown
under Outgo of the plan, the Reinsurer shall pay to the Company, within 30 days
after verification of the Company’s calculations, 15% of the difference. If,
for any Period, the total of the Items shown under Outgo of the plan exceeds
the Income of the plan, the difference shall be carried forward to the next Period’s
calculation of commission adjustment as a deficit.

G                           In
case notice of termination has been given

1                            By
the Company, no further adjustments of commission shall be made.

2                            By
the Reinsurer, no further adjustments of commission shall be made until the
expiration of all liability and the settlement of all losses covered under this
Agreement.

ARTICLE XIII - REPORTS AND
REMITTANCES

A                         The
Company shall furnish the Reinsurer with all necessary data respecting premiums
and losses for as long as one of the parties hereto has a claim against the
other arising from this Agreement.

B                           Within
30 days after the close of each calendar quarter, the Company shall submit an
account to the Reinsurer summarizing Subject Earned Premium by Line of
Business, and the reinsurance premium due. Such reinsurance premium shall be
remitted within 45 days after the close of each calendar quarter.

C                           In
respect of Paragraph B above

All quarterly account statements shall be sent to the
Reinsure at:

a                             E-Mail/XML
or EDI Formats reaccount_[Illegible].com, or

b                            Standard
Mail

Swiss Reinsurance America Corporation Accounting
Department

 10
 

175 King Street

Armonk, NY 10504

Telephone: 914-828-8000

Facsimile: 914-828-5919

2.                          All
checks and supporting documentation shall be sent to the Reinsurer through one
of the options set forth below:

a.                         WIRE
TRANSFER

i)                            All
wires should be sent to

The Bank of New York

1 Wall Street

New York, NY 10286

Account Name: Swiss Reinsurance America Corporation

Account Number: 

ABA Number:

(ii                                                          All
supporting documentation should be sent to

Swiss Reinsurance America Corporation

Accounting Department

175 King Street

Armonk, NY 10504

b                           LOCK
BOX

Both checks and supporting documentation shall be sent
to

Swiss Reinsurance America Corporation

P.O. Box 7247-[Illegible]

Philadelphia, PA 19170-[Illegible]

D.                       Payment
by the Reinsurer of its portion of loss and Loss Adjustment Expenses paid by
the Company shall be made by the Reinsurer to the Company within 15 days after
proof of payment is received by the Reinsurer.

ARTICLE XIV - CLAIMS

A.                      The
Company shall promptly notify the Reinsurer of each claim which may involve the
reinsurance provided hereunder and of all subsequent developments relating
thereto, stating the amount claimed and estimate of the Company’s Ultimate Net
Loss and Loss Adjustment Expenses. Notwithstanding the provisions set forth in
any other Article herein, prompt notification of loss shall be considered a
condition precedent to liability under this Agreement.

 11
 

B                           The
Company shall advise the Reinsurer of all Claims which:

1                            Are
reserved by the Company for an amount in excess of 50% of its retention;

2                            Originate
from fatal injuries;

3                            Originate
from the following kinds of bodily injury:

a.                          Brain
injuries resulting in impairment of physical function;

b.                         Spinal
injuries resulting in a partial or total paralysis of upper or lower
extremities;

c.                          Amputation
or permanent loss of use of upper or lower extremities;

d.                         Severe
burn injuries;

e.                          Loss
of sight in one or both eyes;

f.                            All
other injuries likely to result in a permanent disability rate of 50% or more.

C.                        The
Company shall have the responsibility to investigate, defend or negotiate
settlements of all claims and lawsuits related to Policies written by the
Company and reinsured under this Agreement. The Reinsurer, at its own expense,
may associate with the Company in the defense or control of any claim, suit or
other proceeding which involves or is likely to involve the reinsurance
provided under this Agreement, and the Company shall cooperate in every respect
in the defense of any such claim, suit or proceeding.

ARTICLE XV - SALVAGE AND SUBROGATION

A                         In
the event of the payment of any indemnity by the Reinsurer under this
Agreement, the Reinsurer shall be subrogated, to the extent of such payment, to
all of the rights of the Company against any person or entity legally
responsible for damages of the loss. The Company agrees to enforce such rights;
but, in case the Company refuses or neglects to do so, the Reinsurer is hereby
authorized and empowered to bring any appropriate action in the name of the
Company or their policyholders or otherwise to enforce such rights.

B                           From
any amount recovered by subrogation, salvage or other means, there shall first
be deducted the expenses incurred in effecting the recovery. The balance shall
then be used to reimburse the excess carriers in the inverse order to that in
which their respective liabilities attached, before being used to reimburse the
Company for its primary loss.

 12
 

ARTICLE XVI - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives
shall have the right to examine, at the offices of the Company at a reasonable
time, during the currency of this Agreement or anytime thereafter, all books
and records of the company relating to business which is the subject of this Agreement.

ARTICLE XVII - TAXES

The Company shall be liable for all taxes on premiums
paid to the Reinsurer under this Agreement, except income or profit taxes of
the Reinsurer, and shall indemnify and hold the Reinsurer harmless for any such
taxes which the Reinsurer may become obligated to pay to any local, state or
federal taxing authority.

ARTICLE XVIII - CURRENCY

Wherever the word “dollars” or the “$” symbol is used
in this Agreement, it shall mean dollars of the United States of America,
excepting in those cases where the Policy is issued by the Company in Canadian
dollars, in which case it shall mean dollars of Canada. In the event the
Company is involved in a loss requiring payment in United States and Canadian
currency, the Company’s retention and the limit of liability of the Reinsurer
shall be apportioned between the two currencies in the same proportion as the
amount of net loss in each currency bears to the total amount of net loss paid
by the Company. For the purposes of this Agreement, where the Company receives
premiums or pays losses in currencies other than United States or Canadian
currency, such premiums and losses shall be converted into United States
dollars at the actual rates of exchange at which the premiums and losses are
entered in the Company’s books.

ARTICLE XIX - OFFSET

Each party to this Agreement together with their
successors or assigns shall have and may exercise, at any time, the right to
offset any balance or balances due the other (or, if more than one, any other).
Such offset may include balances due under this Agreement and any other
agreements heretofore or hereafter entered into between the parties regardless
of whether such balances arise from premiums, losses or otherwise, and
regardless of capacity of any party, whether as assuming insurer and/or coding
insurer, under the various agreements involved, provided however, that in the
event of insolvency of a party hereto, offsets shall only be allowed in
accordance with the provisions of Section 7427 of the Insurance Law of the
State of New York to the extent such statute or any other applicable law,
statute or regulation governing such offset shall apply.

 13
 

ARTICLE XX - ERRORS OR OMISSIONS

Errors or omissions of an administrative nature on the
part of the Company shall not invalidate the reinsurance under this Agreement,
provided such errors or omissions are corrected promptly after discovery
thereof; but the liability of the Reinsurer under this Agreement or any
exhibits, addenda, or endorsement attached hereto shall in no event exceed the
limits specified herein nor be extended to cover any risks, perils, lines of
business or classes of insurance generally or specifically excluded herein.

ARTICLE XXI - DISPUTE RESOLUTION

Part I - Choice Of Law And Forum

Any dispute arising under this Agreement shall be
resolved in the Commonwealth of Massachusetts, and the laws of the State of
Commonwealth of Massachusetts shall govern the interpretation and application
of this Agreement.

Part II - Mediation

If a dispute between the Company and the Reinsurer,
arising out of the provisions of this Agreement or concerning its
interpretation or validity and whether arising before or after termination of
this Agreement has not been settled through negotiation, both parties agree to
try in good faith to settle such dispute by nonbinding mediation, before
resorting to arbitration.

Part III - Arbitration

A.                      Resolution
of Disputes - As a condition precedent to any right of action arising
hereunder, any dispute not resolved by mediation between the Company and the
Reinsurer arising out of the provisions of this Agreement or concerning its
interpretation or validity, whether arising before or after termination of this
Agreement, shall be submitted to arbitration in the manner hereinafter set
forth.

B.                        Composition
of Panel - Unless the parties agree upon a single arbitrator within 15 days
after the receipt of a notice of intention to arbitrate, all disputes shall be
submitted to an arbitration panel composed of two arbitrators and an umpire
chosen in accordance with Paragraph C. hereof.

C.                        Appointment
of Arbitrators - The members of the arbitration panel shall be chosen from
disinterested persons with at least 10 years experience in the insurance and
reinsurance business. Unless a single arbitrator is agreed upon, the party
requesting arbitration (hereinafter referred to as the “claimant”) shall
appoint an arbitrator and give written notice thereof by certified mail, to the

 14
 

other party (hereinafter referred to as the “respondent”)
together with its notice of intention to arbitrate. Within 30 days after
receiving such notice, the respondent shall also appoint an arbitrator and
notify the claimant thereof by certified mail. Before instituting a hearing,
the two arbitrators so appointed shall choose an umpire. If, within 20 days
after the appointment of the arbitrator chosen by the respondent, the two
arbitrators fail to agree upon the appointment of an umpire, each of them shall
nominate three individuals to serve as umpire, of whom the other shall decline
two and the umpire shall be chosen from the remaining two by drawing lots. The
name of the individual first drawn shall be the umpire.

D.                       Failure
of Party to Appoint an Arbitrator - If the respondent fails to appoint an
arbitrator within 30 days after receiving a notice of intention to arbitrate,
the claimant’s arbitrator shall appoint an arbitrator on behalf of the
respondent, such arbitrator shall then, together with the claimant’s
arbitrator, choose an umpire as provided in Paragraph C. of Part III of this
Article.

E.                         Submission
of Dispute to Panel - Unless otherwise extended by the arbitration panel or
agreed to by the parties, each party shall submit its case to the panel within
30 days after the selection of the umpire.

F.                         Procedure
Governing Arbitration - All proceedings before the panel shall be informal and
the panel shall not be bound by the formal rules of evidence. The panel shall
have the power to fix all procedural rules relating to the arbitration
proceedings. In reaching any decision, the panel shall give due consideration
to the customs and usages of the insurance and reinsurance business.

G.                        Arbitration
Award - The arbitration panel shall render its decision within 60 days after
termination of the proceeding, which decision shall be in writing, stating the
reasons therefor. The decision of the majority of the panel shall be final and
binding on the parties to the proceeding. In no event, however, will the panel
be authorized to award punitive, exemplary or consequential damages of
whatsoever nature in connection with any arbitration proceeding concerning this
Agreement.

H.                       Cost of
Arbitration - Unless otherwise allocated by the panel, each party shall bear
the expense of its own arbitrator and shall jointly and equally bear with the
other parties the expense of the umpire and the arbitration.

 15

ARTICLE XXII - INSOLVENCY

A                         In
the event of insolvency of the Company, the reinsurance provided by this
Agreement shall be payable by the Reinsurer on the basis of the liability of
the Company as respects Policies covered hereunder, without diminution because
of such insolvency, directly to the Company or its liquidator, receiver,
conservator or statutory successor except as provided in Sections 4118 (a) (1)
(A) and 1114 (c) of the New York Insurance Law.

B                           The
Reinsurer shall be given written notice of the pendency of each claim or loss
which may involve the reinsurance provided by this Agreement within a
reasonable time after such claim or loss is filed in the insolvency
proceedings. The Reinsurer shall have the right to investigate each such claim
or loss and interpose, at its own expense, in the proceedings where the claim
or loss is to be adjudicated, any defense which it may deem available to the
Company, its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the Reinsurer shall be chargeable, subject to court
approval, against the insolvent Company as part of the expense of liquidation
to the extent of a proportionate share of the benefit which may accrue to the
Company solely as a result of the defense undertaken by the Reinsurer.

C                           In
addition to the offset provisions set forth in Article XVIII Offset, any debts
or credits, liquidated or unliquidated, in favor of or against either party on
the date of the receivership or liquidation order (except where the obligation
was purchased by or transferred to be used as an offset) are deemed mutual
debts or credits and shall be set off with the balance only to be allowed or
paid. Although such claim on the part of either party against the other may be
unliquidated or undetermined in amount of the date of entry of the receivership
or liquidation order, such claim will be regarded as being in existence as of
such date and any claims then in existence and held by the other party may be
offset against it.

D                          Nothing
contained in this Article is intended to change the relationship or status of
the parties to this Agreement or to enlarge upon the rights or obligations of
either party hereunder except as provided herein.

ARTICLE XXIII - SPECIAL TERMINATION

Notwithstanding the
termination provisions set forth in Article II - Effective Date and
Termination, this Agreement shall be:

1                            Terminated
automatically and simultaneously upon the happening of any of the following
events:

 16
 

a                             Entry
of an order of liquidation, rehabilitation, receivership or conservatorship
with respect to the Company or the Reinsurer by any court or regulatory
authority;

b                            Assignment
of this Agreement by either party;

c                             General
reinsurance of any portion of the Company’s business it retains net for its own
account, as determined under the provisions of this Agreement without prior
consent of the Reinsurer.

2                            Terminated
by either party giving not less than 30 days prior written notice to the other
party upon the happening of the following event:

Any transfer of control of either party by change in
ownership or otherwise.

3                            Terminated
by the Reinsurer by giving not less than 30 days prior written notice to the
Company upon the happening of the following event:

Failure of the Company to remit premiums in accordance
with the provisions set forth in this Agreement.

4                            Terminated
in accordance with the provisions set forth in this Paragraph, upon the
discovery of the following event:

A reduction of 50% or more of the Company’s
policyholders surplus during any calendar year. Such reduction shall be
determined by calculating the difference between the Company’s prior year
annual statement and each subsequent quarterly statutory statement within such
current calendar year.

As respects the event set forth in this Paragraph
A.4., the Company shall be obligated to notify the Reinsurer in writing within
30 days after the filing of its quarterly statement. Upon receipt of such
notification the Reinsurer shall have the right to terminate this Agreement, by
giving not less than 30 days notice of its intention to do so.

B                           Any
notice of termination pursuant to the provisions set forth in Paragraphs A.2.,
A.3. and A.4. above shall be sent by certified mail, return receipt requested.
Such notice period shall commence upon the other party’s receipt of the notice
of termination.

C                           In
the event of termination, as provided under the provisions of this Article, the
Reinsurer shall not be liable for losses occurring subsequent to the date of
termination.

 17
 

ARTICLE XXIV - AMENDMENTS

This Agreement may be amended by mutual consent of the
parties expressed in an addendum; and such addendum, when executed by both
parties, shall be deemed to be an integral part of this Agreement and binding
on the parties hereto.

 18
 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed in duplicate, by their
duly authorized representatives as of the following dates:

In Boston, MA, this 5th day of September,
2006

	
  ATTEST:

  	
   

  	
   

  	
   

  	
  SAFETY INSURANCE COMPANY

  SAFETY INDEMNITY INSURANCE COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Illegible

  	
   

  	
   

  	
   

  	
  /s/ Illegible

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Illegible

  	
   

  	
   

  	
   

  	
  Illegible

  
	
  Name

  	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Illegible

  	
   

  	
   

  	
   

  	
  Illegible

  
	
  Title

  	
   

  	
   

  	
   

  	
  Title

  

 

And in Armonk, New York,
this 3rd day of March, 2006

	
  ATTEST:

  	
   

  	
   

  	
   

  	
  SWISS REINSURANCE AMERICA CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Illegible

  	
   

  	
   

  	
   

  	
  /s/ Illegible

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Illegible

  	
   

  	
   

  	
   

  	
  Illegible

  
	
  Name

  	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Vice President

  Member of Senior Management

  	
   

  	
   

  	
   

  	
  Vice President

  Member of Senior Management

  
	
  Title

  	
   

  	
   

  	
   

  	
  Title

  

 

 19
 

SUPPLEMENT TO THE ATTACHMENTS

DEFINITION OF
IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS

A.                      Wherever
the term “Company” or “Reinsured” to “Reassured” or whatever other term is used
to designate the reinsured company or companies within the various attachments
to the reinsurance agreement, the term shall be understood to mean Company or
Reinsured or Reassured or whatever other term is used in the attached
reinsurance agreement to designate the reinsured company or companies.

B.                        Wherever
the term “Agreement” or “Contract” or “Policy” or whatever other term is used
to designate the attached reinsurance agreement within the various attachments
to the reinsurance agreement, the term shall be understood to mean Agreement or
Contract or Policy or whatever other term is used to designate the attached
reinsurance agreement.

C.                        Wherever
the term “Reinsurer” or “ Reinsurers” or “Underwriters” or whatever other term
is used to designate the reinsurer or reinsurers in the various attachments to
the reinsurance agreement, the term shall be understood to mean Reinsurer or
Reinsurers or Underwriters or whatever other term is used to designate the
reinsuring company or companies.

 20
 

POLLUTION LIABILITY
EXCLUSION CLAUSE - REINSURANCE

This Reinsurance excludes :

(1                        Any
loss occurrence arising out of the actual, alleged or threatened discharge,
dispersal, release or escape of pollutants

a)                         At
or from premises owned, rented or occupied by an original assured; or

b)        At or
from any site or location used for the handling, storage, disposal, processing
or treatment of waste; or

c)        Which
are at any time transported, handled, stored, treated disposed of, or processed
as waste; or

d)        At or
from any site or location on which any original assured is performing
operation:

(i                           If
the pollutants are brought on or to the site or location in connection with
such operations; or

(ii                        If
the operations are to test for, monitor, clean up, remove, contain, treat,
detoxify or neutralise the pollutants.

2)                        Any
liability, loss, cost or expense arising out of any governmental direction or
request to test for, monitor, clean up, remove, contain, treat, detoxify or
neutralize the pollutants.

“Pollutants” means any solid, liquid, gaseous or
thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids,
alkalis, chemicals and waste. Waste includes materials to be recycled,
reconditioned or reclaimed.

Subparagraphs a) and d) (i) of paragraph (1) of this
exclusion do not apply to loss occurrences caused by heat, smoke or fumes from
a hostile fire. As used herein, “hostile fire” means one which becomes
uncontrollable or breaks out from where it was intended to be.

“Original assured” as used herein means all insureds
as defined in the policy issued by the Company.

 21
 

INSOLVENCY FUNDS
EXCLUSION CLAUSE

This Agreement excludes 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 or from reimbursement
of any person for any such liability. “Insolvency fund” includes any guaranty
fund, insolvency fund, plan, pool, association, fund or other arrangement,
however denominated, established or governed, which provides for any assessment
of or payment or assumption by any person 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.

 22

NUCLEAR INCIDENT
EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A

N.M.A
1590

1                             This
reinsurance does not cover any loss or liability accruing to the Reassured as a
member of, or subscriber to, any association of insurers of 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. in 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 Liabilities
Policies (liability only), Comprehensive Personal Liability Policies (liability
only) or policies of a similar nature; and the liability portion of combination
forms related to the four classes of policies stated above, such as the Comprehensive
Dwelling Policy and the applicable types of Homeowners Policies.

III.                    The
inception dates and thereafter of all original policies as described in II.
above, whether new, renewal or replacement, being policies which either

 1
 

(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 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

 2
 

(b)         resulting from the
hazardous properties of nuclear material and with respect to which (1) any
person or organization is required to maintain financial protection pursuant to
the Atomic Energy Act of 1954, or any law amendatory thereof, or (2) the
insured is, or had this policy not been issued would be, entitled to indemnity
from the United States of America, or any agency thereof, under any agreement
entered into by the United States of America, or any agency thereof, with any
person or organization.

II                           Under
any Medical Payments Coverage, or under any Supplementary Payments Provision
relating to immediate medical or surgical relief, first aid, to expenses
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 therefrom;

(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.

 3
 

IV                      As
used in this endorsement:

“hazardous properties” include radioactive, toxic or
explosive properties; “nuclear material” means source material, special nuclear
material or byproduct material; “source material,” “special nuclear material,”
and “byproduct material” have the meanings given them in the Atomic Energy Act
of 1954 or in any law amendatory thereof; “spent fuel” means any fuel element
or fuel component, solid or liquid, which has been used or exposed to radiation
in a nuclear reactor; “waste” means any waste material (1) containing byproduct
material other than the tailings or wastes produced by the extraction or
concentration of uranium or thorium from any ore processed for its source
material content and (2) resulting from the operation by any person or
organization of any nuclear facility included within the definition of nuclear
facility under paragraph (a) or (b) thereof ; “nuclear facility” means

(a)                     any
nuclear reactor

(b)                    any
equipment or device designed or used for (1) separating the isotopes of uranium
or plutonium, (2) processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,

(c)                     any
equipment or device used for the processing, fabricating or alloying of special
nuclear material if at any time the total amount of such material in the
custody of the insured at the premises where such equipment or device is
located consists of or contains more than 25 grams of plutonium or uranium 233
or any combination thereof, or more than 250 grams of uranium 235,

(d)                    any
structure, basin, excavation, premises or place prepared or used for the
storage or disposal of waste

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

 4
 

V                          The
inception dates and thereafter of all original policies affording coverages
specified in this paragraph 3., whether new, renewal or replacement, being
policies which 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 operations 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 or the Independent Insurance Conference of Canada.

* Note                    The words
printed in BOLD TYPE in the Limited Exclusion Provision and in the Broad
Exclusion Provision shall apply only in relation to original liability policies
which include a Limited Exclusion Provision or a Broad Exclusion Provision
containing those words.

 5

NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
REINSURANCE - CANADA

M.M.A 1979a

2                             This
Agreement does not cover any loss or liability accruing to the Company as a
member of, or subscriber to, any association of insurers or reinsurers formed
for the purpose of covering nuclear energy risks or as a direct or indirect
reinsurer of any such member, subscriber or association.

Without in any way restricting the operation of
Paragraph 1. of this Clause, it is agreed that for all purposes of this
Agreement all the original liability contracts of the Company, whether new,
renewal or replacement, of the following classes, namely,

Personal Liability 

Farmers’ Liability

Storekeepers’ Liability

which become effective on or after 31st December 1992,
shall be deemed to include, from their inception dates and thereafter, the
following provision:

Limited Exclusion Provision -

This Policy does not apply to bodily injury or
property damage with respect to which the Insured is also insured under a
contract of nuclear energy liability insurance (whether the Insured is unnamed
in such contract and whether or not it is legally enforceable by the Insured)
issued by the Nuclear Insurance Association of Canada or any other group or
pool of insurers or would be an Insured under any such policy but for its
termination upon exhaustion of its limits of liability.

With respect to property, loss of use of such property
shall be deemed to be property damage.

3                             Without
in any way restricting the operation of Paragraph 1. of this Clause, it is agreed
that for all purposes of this Agreement all the original liability contracts of
the Company, whether new, renewal or replacement, of any class whatsoever
(other than Personal Liability, Farmers’ Liability, Storekeepers’ Liability or
Automobile Liability contracts), which become effective on or after 31st
December 1992, shall be deemed to include, from their inception dates and
thereafter, the following provision:

 1
 

Broad Exclusion Provision

It is agreed that this Policy does not apply

(a)                     to
liability imposed by or arising from any nuclear liability act, law or statute
or any law amendatory thereof; nor

(b)                    to
bodily injury or property damage with respect to which an Insured under this
Policy is also insured under a contract of nuclear energy liability insurance
(whether the Insured is unnamed in such contract and whether or not it is
legally enforceable by the Insured) issued by the Nuclear Insurance Association
of Canada or any other insurer or group or pool of insurers or would be an
Insured under any such policy but for its termination upon exhaustion of its
limit of liability; nor

(c)                     to
bodily injury or property damage resulting directly or indirectly from the
nuclear energy hazard arising from:

the ownership, maintenance, operation or use of a nuclear
facility by or on behalf of an Insured;

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; and

iii                         the
possession, consumption, use, handling, disposal or transportation of
fissionable substances, or of other radioactive material (except radioactive
isotopes, away from a nuclear facility, which have reached the final stage of
fabrication so as to be usable for any scientific, medical, agricultural,
commercial or industrial purpose) used, distributed, handled or sold by an
Insured.

As used in this Policy

The term “nuclear energy hazard” means the radioactive, toxic,
explosive, or other hazardous properties of radioactive material;

(2)                     The
term “radioactive material” means uranium, thorium, plutonium, neptunium, their
respective derivatives and compounds, radioactive isotopes of other elements
and any other substances which may be designated by or pursuant to any law, act
or statute, or law amendatory thereof as being prescribed substances capable of
releasing atomic energy, or as being requisite for the production, use or
application of atomic energy;

 2
 

(3)                     The
term “nuclear facility” means

(a)                    any
apparatus designed or used to sustain nuclear fission in a self-supporting
chain reaction or to contain a critical mass of plutonium, thorium and uranium
or any one or more of them;

(b)                   any
equipment or device designed or used for (i) separating the isotopes of
plutonium, thorium and uranium or any one or more of them, (ii) processing or
utilizing spent fuel, or (iii) handling, processing or packaging waste;

(c)                    any
equipment or device used for the processing, fabricating or alloying of
plutonium, thorium and uranium enriched in the isotope uranium 233 or in the
isotope uranium 235, or any one or more of them 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 radioactive material;

and includes the site on which any of the foregoing is located,
together with all operations conducted thereon and all premises used for such
operations.

(4)                     The
term “fissionable substances” means any prescribed substance that is, or from
which can be obtained, a substance capable of releasing atomic energy by
nuclear fission.

(5)                     With
respect to property, loss of use of such property shall be deemed to be
property damage.

 3
 

NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO.
4

1.                          This
Reinsurance does not cover any loss or liability accruing to the Reassured as a
member of, or subscriber to, any association of insurers or reinsurers formed
for the purpose of covering nuclear energy risks or as a direct or indirect
reinsurer of any such member, subscriber or association.

Without in any way restricting the operations of
Nuclear Incident Exclusion Clauses, - Liability, - Physical Damage, - Boiler
and Machinery and paragraph 1. of this Clause, it is understood and agreed that
for all purposes of the reinsurance assumed by the Reinsurer from the Reinsured,
all original insurance policies or contracts of the Reinsured (new, renewal and
replacement) shall be deemed to include the applicable existing Nuclear Clause
and/or Nuclear Exclusion Clause(s) in effect at the time and any subsequent
revisions thereto as agreed upon and approved by the Insurance Industry and/or
a qualified Advisory or Rating Bureau

 4

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