Document:

exv10w180

EXHIBIT
10.180

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

WORKER’S COMPENSATION AND GENERAL LIABILITY

FOURTH EXCESS OF LOSS REINSURANCE CONTRACT

PREAMBLE

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

ARTICLE 1 — EXHIBITS COVERED

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

     Exhibit “A” Excess of Loss Reinsurance of General Liability.

     Exhibit “B” Excess of Loss Reinsurance of Worker’s Compensation.

ARTICLE 2 — RETENTION BY COMPANY

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

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

ARTICLE 3 — REINSURANCE PREMIUM

	 	(a)	 	The Reinsurers’ premium for the reinsurance provided under this Contract shall be a
flat annual premium of $45,000 for the combined Fourth Excess of loss layers provided
for under Exhibits “A” and “B”.
	 
	 	(b)	 	The Reinsurers’ annual premium as provided above shall be payable to the
Reinsurers at the beginning of each contract year.
	 
	 	(c)	 	In addition to the premium stated above, additional premiums shall be paid
under the following circumstances:

 

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In the event that the Company insures through pools or assigned risk plans risks
of the character described in sub-divisions 3,4 and 5 of Paragraph B of Section 4
of Exhibit “B”, additional premium, if any, shall be determined upon submission
of underwriting data to the Reinsurers. As soon as practicable after such time
as the fact of insurance of an occupation, employment or risk listed in Paragraph
B of Section 4 of Exhibit “B” is disclosed to the Company, the Company shall
notify the Reinsurers and will provide sufficient underwriting data so as to
permit the application of the commensurate reinsurance rate or premium from
inception of such hazardous risk.

It is understood that failure on the part of the Company to comply with this
requirement due to oversight or error shall not prejudice the reinsurance
provided by this Contract. The Company, shall, however, as soon as such
oversight or error comes to its attention, take prompt steps to contact the
Reinsurers and proceed to the correction of the oversight or error as
provided in this Contract.

ARTICLE 4 — SUBROGATION

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

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

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

The Company shall have the right, before the happening of the accident or occurrence to
waive its right of subrogation.

 

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ARTICLE 5 — TAX CLAUSE

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

ARTICLE 6 — PAYMENTS UNDER THIS CONTRACT

All payments under this Contract by either party hereto shall be made in New York or Boston in
United States’ currency.

ARTICLE 7 — ACCESS TO COMPANY’S RECORDS

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

ARTICLE 8 — INSOLVENCY CLAUSE

The reinsurance provided by this Contract shall be payable by the Reinsurers directly to the
Company or to its liquidator, receiver or statutory successor on the basis of the liability of the
Company under the contracts reinsured without diminution because of the insolvency of the Company.
In the event of the insolvency of the Company, the liquidator or receiver or statutory successor of
the Company shall give written notice of the pendency of each claim against the Company on a policy
or bond reinsured within a reasonable time after such claim is filed in the insolvency proceeding;
and during the pendency of such claim, the Reinsurers may investigate such claim and interpose, at
their own expense, in the proceeding where such claim is to be adjudicated any defense or defenses
which it may deem available to the Company, its liquidator or receiver or statutory successor. The
expense thus incurred by the Reinsurers shall be chargeable, subject to court approval, against the
Company as part of the expense of liquidation to the extent of such proportionate share of the
benefit as shall accrue to the Company solely as a result of the defense undertaken by the
Reinsurers. This reinsurance shall be payable as hereinbefore in this paragraph provided except as
otherwise provided by Section 315 (relating to Fidelity and Surety Risks) of the Insurance Law of
New York or except {a) where the Contract specifically provides another payee of such reinsurance
in the event of the insolvency of the Company and (b) where the Reinsurers with the consent of the
direct insured or insureds have assumed such policy obligations of the Reinsurers to the payees
under such policies and in substitution for the obligations of the Company to such payees.

ARTICLE 9 — ARBITRATION

In the event of any dispute or difference of opinion, arising with respect to this Contract, it is
hereby agreed that such dispute or difference of opinion shall be submitted to arbitration, under
Massachusetts General Law (Ter. Ed.), Chapter 251, one arbiter to be chosen by the Company, one by
the Reinsurers, and a third arbiter

 

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to be chosen by the two arbiters before they enter upon arbitration. The arbiters are relieved of
all judicial formalities and may abstain from following strict rules of evidence. The award of a
majority of the arbiters shall be reported to the Superior Court, County of Suffolk, Commonwealth
of Massachusetts, within one year after the submission or within such further time as the court may
allow, and final judgement thereon shall be binding upon both parties. Each party shall bear the
expense of its own arbiter and shall jointly and equally bear with the other the expense of the
third arbiter and of the arbitration. Any such arbitration shall take place at Boston,
Massachusetts, unless some other location is mutually agreed upon.

ARTICLE 10 — OFFSET CLAUSE

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

ARTICLE 11 — LOSS RESERVES

(Applies only to those Reinsurers who do not qualify for credit by any State or any other
governmental authority having jurisdiction over the Company’s loss reserves.)

As regards policies or bonds issued by the Company coming within the scope of this Agreement, the
Company agrees that when it shall file with the Insurance Department or set up on its books
reserves for losses which it shall be required to set up by law it will forward to the Reinsurers a
statement showing the proportion of such loss reserves which is applicable to them. The Reinsurers
hereby agreed that they will apply for and secure delivery to the Company a clean irrevocable
Letter of Credit issued by any bank in the United States acceptable to the governmental authority
having jurisdiction over the Company’s loss reserves in an amount equal to Reinsurers’ proportion
of said loss reserves.

The Company agrees to use and apply any amounts which it may draw upon such credit for the
following purposes only:

	 	(a)	 	To pay Reinsurers’ share or to reimburse the Company for the
Reinsurers’ share of any liability for loss reinsured by this Agreement.
	 
	 	(b)	 	To make refund of any sum which is in excess of the actual amount required
to pay Reinsurers’ share of any liability reinsured by this Agreement.

 

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ARTICLE 12 — ERRORS AND OMISSIONS

Any inadvertent delay, omission or error shall not be held to relieve either party hereto from
any liability which would attach to it hereunder if such delay, omission or error had not been
made, provided such delay, omission or error is rectified upon discovery.

ARTICLE 13 — COMMENCEMENT AND TERMINATION

This Contract applies only to accidents or occurrences happening during its effective period. This
Contract is effective at Midnight, December 31, 1975 Standard Time at Boston, Massachusetts and
shall remain in force continuously unless terminated at Midnight on any subsequent December 31 by
either party giving the other at least three months prior notice of cancellation. Otherwise, this
Contract may be cancelled only by mutual consent, or if required by law or by administrative order.

ARTICLE 14 — REINSURANCE INTERMEDIARY DESIGNATION

Holborn Agency Corporation is hereby recognized as the broker negotiating this Contract. All
communications relating to this Contract transmitted by the Company to Holborn Agency
Corporation at 90 John Street, New York, New York 10038 shall be deemed to have been
transmitted to the Reinsurer.

ARTICLE 15 — INTERPRETATION

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

 

EXHIBIT A

EXCESS OF LOSS REINSURANCE OF GENERAL LIABILITY

SECTION 1 — COVERAGE

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

Worker’s Compensation and Employers’ Liability insurance, but this exclusion shall not apply
to Worker’s Compensation or Employers’ Liability coverage given under public liability
policies written by the Company.

Bankers’ and Brokers’ insurances or reinsurances issued by the Company meaning contracts
issued to banks, trust companies, building and loan companies, safe deposit companies,
investment companies, including investment trusts, finance companies, credit unions, stock or
security brokers, or to similar financial institutions, insuring them against loss from the
following hazards:

Infidelity of employees and/or partners

Unfaithful performance of duties by employees and/or partners

Loss of property in transit

Forgery or alteration of negotiable or other paper

Burglary, robbery, theft, false pretenses or fraud

Mysterious disappearance or misplacement of property

Loss of property from safe deposit boxes or other depositories

Damage to or destruction of money or securities

Counterfeiting of currencies or securities

Motor Vehicle Physical Damage Insurance, but this exclusion shall not apply to motor vehicle
property damage liability insurance.

Credit Insurance and/or Financial Guarantee.

Fire Insurance, including the coverages ordinarily written under Extended Coverage
Endorsements.

Group Health, Disability, Hospital or Surgical Insurance, but this exclusion shall not apply
to any loss due to two or more persons insured under one or more Group policies suffering
bodily injuries, including death resulting therefrom, as a result of one accident or series of
accidents arising out of one event.

Livestock Mortality Insurance.

Surety business, but this exclusion shall not apply to faithful performance bonds or public
official bonds; provided; however, that the Reinsurers shall not be liable for any loss
resulting from the insolvency of any firm, company, corporation or bank with which a
guaranteed official has deposited funds in the course of his duties.

 

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Insurance covering the liability of owners or operators of aircraft carrying passengers
for hire for injuries to such passengers.

Contracts of insurance written on any cost-plus plan which provides for payment of the
full amount of all losses, however great, by the policyholder. This exclusion shall not
apply to contracts of insurance, premiums for which are determined by a retrospective
rating plan which provides for a specific maximum premium or a formula for determination
of a maximum premium.

Contracts of liability insurance covering injuries to persons or property issued
directly to Class I railroads; but this exclusion shall not apply to railroad Protective
Liability policies issued at the request of the Company’s policyholders doing work for
or on the premises of such railroads.

Liability under any Insolvency Fund arising by contract, operation of law or otherwise,
whether voluntary or involuntary. “Insolvency Fund” includes any guaranty fund, insolvency
fund, plan, pool, association, fund or other arrangement, howsoever denominated, established
or governed; which provides for any assessment of or payment or assumption by the Company of
part or all of any claim, debt, charge, fee, or other obligation of an insurer, or its
successors, or assigns, which has been declared by any competent authority to be insolvent,
or which has been otherwise deemed unable to meet any claim, debt, charge, fee or other
obligation in whole or in part.

Excess of Loss Reinsurance Contracts.

This Contract is subject to the Nuclear Incident Exclusion Clause — Liability —
Reinsurance and the Nuclear Incident Exclusion Clause — Physical Damage — Reinsurance
attached hereto.

SECTION 2 — LIMIT OF LIABILITY

The Reinsurer shall be liable for ultimate loss in excess of the sum
of:

	 	(a)	 	$8,000,000 of ultimate net loss each and every accident or occurrence in
respect of business the subject matter of this Exhibit, and
	 
	 	(b)	 	$1,000,000 in the aggregate each calendar year of ultimate net loss the excess
of $750,000 each accident or occurrence in respect of business the subject matter
of the Company’s Excess Worker’s Compensation and/or Excess General Liability
Reinsurance Contracts (it being agreed that such $1,000,000 aggregate shall apply,
in each calendar year, in order by date of accident or occurrence which, with
respect to disease including death resulting therefrom, shall be deemed to be the
date assigned to the first claim of a series of claims in a calendar year)

subject to a limit of $2,500,000 on account of each and every accident or occurrence.

 

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

For purposes of this Exhibit it is agreed that the Company’s limit of liability under any and all
policies of personal accident insurances (individual and group) covering any one individual shall
be considered as not exceeding $125,000. Subject to this agreement and subject to the limits set
forth in this Section 2 it is agreed that the Company is reinsured hereunder for the excess of the
amounts set forth in this Section 2 of ultimate net loss any one accident, or series of accidents
arising out of one event involving more than one person covered under such policies issued by
the Company.

SECTION 3 — ULTIMATE NET LOSS

The term “Ultimate Net Loss” as used in this Exhibit shall mean the amount actually paid by the
Company (including loss adjustment expenses, attorneys’ fees and other costs of investigation or
litigation) in settlement of or payment of claims or judgements arising from each and every loss
for which the Company is or may be found liable under its contracts of insurance or reinsurance,
less salvage and subrogation recoveries and amounts recovered or recoverable under pooling
agreements or other reinsurances, whether collectible or not; provided, however, that in the event
of the insolvency of the Company, “Ultimate Net Loss” shall mean the amount of loss (including
loss adjustment expenses, attorneys’ fees and other costs of investigation or litigation) which
the Company has incurred or for which it is liable, and payment by the Reinsurers shall be made to
the liquidator, receiver or statutory successor of the Company in accordance with the provisions
of Article 8 of this Contract. Salaries and expenses of employees of the Company shall not be
included in ascertaining ultimate net loss.

This Contract shall protect the Company within the limit hereof, in connection with any loss for
which the Company may be legally liable to pay in excess of the limit of its original policy, where
loss in excess of the limit has been incurred because of its failure to settle within the policy
limit or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of
settlement or in the preparation of the defense or in the trial of any action against its insured
or in the preparation of prosecution of an appeal consequent upon such action.

It is further agreed that amounts recoverable under the following reinsurance shall be
disregarded in ascertaining ultimate net loss:

	 	1.	 	Any reinsurance providing a retention below $750,000 but only as regards the
difference between the retention under such reinsurance and $750,000.
	 
	 	2.	 	The reinsurance provided in the Company’s underlying layers of excess
reinsurance as respects the subject matter of this Exhibit plus $1,000,000 in
the aggregate each calendar year of ultimate net loss the excess of $750,000
each accident or occurrence in respect of business the subject matter of this
Exhibit and/or Exhibit B.

 

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SECTION 4 — DEFINITION OF “EACH AND EVERY ACCIDENT OR OCCURRENCE”

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

	 	A.	 	Products Public Liability (Excluding Completed Operations)
	 
	 	 	 	All injury or damage caused to persons or property by any manufactured,
prepared or acquired lot of goods or products.
	 
	 	B.	 	Fidelity and Forgery
	 
	 	 	 	All losses resulting from any fraudulent or dishonest act or omission or series
thereof on the part of any one person or of several persons acting in collusion
(whether employees or not) and irrespective of the number of the Company’s
obligations involved; provided, that in the case of any loss involving two or more
persons acting in collusion, losses resulting from separate acts or omissions on
the part of each such person shall be included as part of such loss.

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

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

For the purposes of the foregoing the date of first discovery of a “loss” or the date
the claim is first made against an insured or first notified to the Company shall be
the date applicable to the to the entire loss and/or claim and the Reinsurers shall be
liable for their proportion of the entire loss and/or claim irrespective of the expiry
date of this Contract and provided that such first discovery date or first date such
claim is made or notified falls within the period of this Contract.

 

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	 	C.	 	Liability Insurance Written Subject to an Aggregate Limit
	 
	 	 	 	As respects each and every liability insurance policy issued by the Company which
contains one or more aggregate limits of liability on a policy year basis, and as
respects each such aggregate limit under each policy year, the aggregate amount of all
losses occurring during one policy year. Where the Company issues more than one such
policy to the same policyholder such policies shall together be treated as though they
were one policy. Losses under such policies shall for the purposes of this reinsurance
contract be deemed to have occurred in the calendar year in which the inception date of
the policy falls, except that as respects such policies issued for a period in excess
of twelve months, losses for the first twelve month period shall be deemed to have
occurred in the calendar year in which the inception date of the policy falls and
losses for each succeeding twelve month period or part thereof shall be deemed to have
occurred in the calendar year in which the anniversary date of the policy starting such
period falls.
	 
	 	D.	 	All other classes or risks covered hereunder (including completed operations),
all injuries to persons and all losses of, injury to or destruction of property
resulting from each accident or loss, or from each series of accidents or losses
proximately arising out of or following on any one cause or event.

SECTION 5 — CLAIMS AGAINST REINSURERS

The Company shall be the sole judge as to what claims are covered under its policies, and all loss
settlements made and all judgements paid by the Company, provided they are within the terms and
conditions of this Exhibit, shall be unconditionally binding upon the Reinsurers and amounts
falling to the share of the Reinsurers shall be immediately due and payable by them upon reasonable
evidence of the amount paid being given by the Company. Nevertheless, it is understood and agreed
that in the event of a loss hereunder, or of an event or happening likely to result in a loss
hereunder, the Reinsurers shall have the right, if they so elect, to cooperate with the Company in
the defense or settlement of original losses under its obligations.

All settlements of losses effected by the Company shall be binding upon the Reinsurers, and the
Reinsurers shall be liable for their proportion thereof.

This Exhibit A is attached to and forms part of the Worker’s Compensation and General Liability
Fourth Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY
MUTUAL FIRE INSURANCE COMPANY.

 

EXHIBIT B

EXCESS OF LOSS REINSURANCE OF WORKER’S COMPENSATION

SECTION 1 — COVERAGE

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

SECTION 2 — LIMITS OF LIABILITY

The Reinsurers shall be liable for ultimate net loss in excess of the sum of:

	 	(a)	 	$8,000,000 of ultimate net loss each and every accident or occurrence
in respect of business the subject matter of this Exhibit, and
	 
	 	(b)	 	$1,000,000 in the aggregate each calendar year of ultimate net loss the
excess of $750,000 each accident or occurrence in respect of business the subject
matter of the Company’s Excess Worker’s Compensation and/or Excess General Liability
Reinsurance Contracts
(it being agreed that such $1,000,000 aggregate shall apply, in each calendar year,
in order by date of accident or occurrence which, with respect to disease including
death resulting therefrom, shall be deemed to be the date assigned to the first
claim of a series of claims in a calendar year)

subject to a limit of $2,500,000 on account of each and every accident or occurrence.

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

SECTION 3 — ULTIMATE NET LOSS

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

 

 

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Provisions of Article 8 of this Contract. Expenses for salaried employees of the Company incurred
in litigation and the investigation or adjustment of claims or suits and subrogation expense
referred to in Article 4 shall be disregarded in ascertaining ultimate net loss. This Contract
shall protect the Company within the limit hereof in connection with any loss for which the Company
may be legally liable to pay in excess of the limit of its original policy, where loss in excess of
the limit has been incurred because of its failure to settle within the policy limit or by reason
of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the
preparation of the defense or in the trial of any action against its insured or in the preparation
of prosecution of an appeal consequent upon such action.

It is further agreed that amounts recoverable under the following reinsurances shall be disregarded
in ascertaining ultimate net loss.

	 	1.	 	Any reinsurance providing a retention below $750,000 but only as regards the
difference between the retention under such reinsurance and $750,000.
	 
	 	2.	 	The reinsurance provided in the Company’s underlying layers of excess reinsurance
as respects the subject matter of this Exhibit plus $1,000,000 in the aggregate each
calendar year of ultimate net loss the excess of $750,000 each accident or occurrence in
respect of business the subject matter of this Exhibit and/or Exhibit A, and, as regards
“Special Group Risks” $2,250,000 (plus a further indeterminate amount not to exceed
$1,000,000 in any (calendar year) the excess of $250,000 in respect of each and every
accident or occurrence.

SECTION 4 — EXCLUSIONS

This Exhibit does not apply:

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

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

	 	(a)	 	Manufacture of any explosive substance intended
for use as an explosive;
	 
	 	(b)	 	Manufacture of any product, other than Fireworks
and Fuses, in which any such explosive substance is an ingredient;

 

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	 	(c)	 	The loading of any such explosive substance into
containers for use as explosive objects, propellant charges
or detonating devices, and the incidental storage thereof;
	 
	 	(d)	 	Handling transportation or storage of any
such explosive substance intended solely for war purposes.

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

SECTION 5 — DEFINITIONS

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

	 	A.	 	“Policies”. Policies, contracts, endorsements or binders, including
but not limited to those by which the Company undertakes to offer and pay
“voluntary compensation” benefits, those by which the Company undertakes to make
payments to augment compensation benefits those by which the Company affords
reinsurance or excess insurance to Worker’s Compensation or Employers’ Liability
risks and those
by which the Company undertakes to participate in voluntary or statutory
Pools or assigned-risk plans.
	 
	 	B.	 	“Explosive Substance”. Any substance manufactured for the express
purpose of exploding as differentiated from commodities used industrially and which
are only incidentally explosive — such as gasoline, celluloid, fuel gases and
dyestuffs.
	 
	 	C.	 	“Accident or Occurrence”. Any one accident or occurrence or, if a
series of accidents or occurrences arising out of one event, such series of
accidents or occurrences provided, however, that with respect to disease, including
death resulting therefrom, the terms “accident or occurrence” and “series of
accidents or occurrences” shall mean the claim or series of claims for which the
Company may be liable, on account of diseases or deaths resulting therefrom,
assigned by the Company to each calendar year of coverage under any one policy or
renewals thereof. In making such assignments the Company will be bound by the
following principles:

 

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	 	1.	 	If liability is placed solely upon the employer or insurer
as of the date the claimant’s disability commences or becomes manifest and
that date is within a period of coverage under an applicable policy issued
by the Company, the claim is to be assigned to the calendar year of such
date;
	 
	 	2.	 	If assignment is not made on the basis stated in the
preceding subparagraph the claim is to be assigned to the calendar year of
the date of the claimant’s last injurious exposure during a period of
coverage under an applicable policy issued by the Company.
	 
	 	 	 	It is also agreed that disease cases which are not chargeable to this
Contract under the above principles and which are not chargeable to a
previous reinsurance contract shall be charged to this Contract and be
treated as an accident occurring during 1976.
	 
	 	 	 	Notwithstanding anything to the contrary above set forth it is agreed that
as to any policyholder to whom the Company issues disease coverage which is
in effect for only twelve consecutive months or less all of the Company’s
losses on account of disease claims will be charged for the purpose of this
reinsurance to the calendar year which includes the date the Company’s
disease coverage became effective.
	 
	 	 	 	Notwithstanding the foregoing, where a policyholder requests that it be
issued two or more policies in circumstances where applicable manual rules
permit the issuance of a single policy, such policies shall be regarded as a
single policy for purposes of assigning disease claims to calendar year
coverage.

SECTION 6 — NOTICE TO REINSURERS

As soon as practicable after it appears probable that the Company’s ultimate net loss on account of
any one accident or occurrence will exceed the amount above which the Reinsurers are liable under
this Exhibit, the Company shall notify the Reinsurers and provide them full information relative
thereto, and copies of all papers that may be desired by them, and the Reinsurers shall be given
every opportunity to participate in the defense of any such suit, proceeding or claim at their own
expense.

SECTION 7 — PAYMENT BY THE COMPANY

The Company shall be the sole judge as to what claims are covered under its policies, as to the
liability of the Company therefor and as to the amounts which the Company should pay thereon, and
the Reinsurers shall be bound by the judgement of the Company as to such matters.

All settlements of losses effected by the Company shall be binding upon the Reinsurers, and
the Reinsurers shall be liable for their proportion thereof.

 

-5-

SECTION 8 — CLAIMS AGAINST REINSURERS

The Company shall, within twelve months after it has paid any amount of ultimate net loss for which
the Reinsurers may be liable under this Exhibit, submit to the Reinsurers a definite claim for such
amount. If any subsequent losses shall be paid by the Company on account of the same accident or
occurrence, additional claims hereunder shall be similarly made from time to time. Losses shall be
due and payable by the Reinsurers within fifteen days after claim hereunder is proved.

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

SECTION 9 — COMMUTATION

	A.	 	At any time subsequent to two years after the date of notice to the Reinsurers of an
accident or occurrence which may involve this Exhibit, representatives of the parties
shall, at the request of either of them, meet in Boston, Massachusetts, for the purpose
of appraising the Reinsurers’ ultimate liability to the Company under this Exhibit on
account of the claims resulting from such accident or occurrence. The value of the
Company’s incurred losses from such claims shall be calculated as of a date certain not
more than 45 days after the date the appraisal begins. In such calculation, the value of
each case as of such date shall be determined based upon a rate of discount to be
mutually agreed and by the use of the latest available remarriage, survivorship, and
mortality tables to determine probabilities of remarriage and normal life expectancies.

	B.	 	If the parties agree as to the amount of the Reinsurers’ ultimate liability to the
Company on acccount of the claims resulting from such accident or occurrence, the
Reinsurers shall, on or before the date as
of which the claims were valued, redeem their liability hereunder by the payment of such
amount to the Company.

	C.	 	If the parties cannot, at such first appraisal, reach an agreement as to the amount of
the Reinsurers’ ultimate liability to the Company on account of such accident or
occurrence, settlement hereunder shall be deferred for one year, when a second appraisal
of the amount due
the Company from the Reinsurers shall be made in accordance with the provisions of
Paragraph A of this Section. If the parties then agree as to the amount of the
Reinsurers’ ultimate liability to the Company on account of such accident or occurrence,
settlement shall be made as outlined in Paragraph B of this Section.

 

-6-

	D.	 	If the parties do not reach an agreement as a result of the second
appraisal, settlement hereunder shall be deferred for another year, at the end of which a
third and last such appraisal of the Reinsurers’ ultimate liability to the Company shall be
made. If, as a result of such appraisal, the parties agree on the amount of the Reinsurers’
ultimate liability to the Company, settlement will be made as provided in Paragraph B of this
Section. If they do not reach an agreement as a result of such third appraisal, the amount
of the Reinsurers’ liability to the Company on account of such accident or occurrence shall
promptly be determined by arbitration, in accordance with Article 9 of the Contract. The
arbitrators, in determining the value of the claims against the Company on account of such
accident or occurrence, shall follow the provisions of Paragraph A of this Section. The
amount, if any, determined by the arbitration to be due the Company from the Reinsurers shall
be paid in the manner provided in Paragraph B of this Section.

This Exhibit B is attached to and forms part of the Worker’s Compensation and General Liability
Fourth Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY
MUTUAL FIRE INSURANCE COMPANY.

 

NUCLEAR INCIDENT EXCLUSION CLAUSE — PHYSICAL DAMAGE — REINSURANCE

(Wherever the word “Reassured” appears in this clause, it shall be deemed to
read “Reassured”, “Reinsured”, “Company”, or whatever other word is employed
throughout the text of the reinsurance agreement to which this clause is attached
to designate the company or companies reinsured)

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

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

	 	I.	 	Nuclear reactor power plants including all auxiliary property on the site, or
	 
	 	II.	 	Any other nuclear reactor installation, including laboratories handling
radioactive materials in connection with reactor installations, and “critical
facilities” as such, or
	 
	 	III.	 	Installations for fabricating complete fuel elements or for processing
substantial quantities of “special nuclear material,” and for reprocessing, salvaging,
chemically separating, storing or disposing of “spent” nuclear fuel or waste materials,
or
	 
	 	IV.	 	Installations other than those listed in paragraph (2) III above using substantial
quantities of radio-active 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.

12/12/57

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE

(1) 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 in direct reinsurer of any such member, subscriber or association.

(2) Without in any way restricting the operation of paragraph (1) of this Clause it is understood
and agreed that for all purposes of this Agreement all the original policies of the Company (new,
renewal and replacement) of the classes specified in clause II of this paragraph (2) from the time
specificed in clause III in this paragraph (2) shall be deemed to include the following provision
(specified as the Limited Exclusion Provision):

     Limited Exclusion Provision.

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

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

provided this paragraph (2) shall not be applicable to Family Automobile
Policies, Special Automobile Policies, or policies or combination policies of
a similar nature, issued by the Company on New York risks, until 90 days
following approval of the Limited Exclusion Provision by the Governmental
Authority haying 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 Agreement the original liability policies of the Company (new, renewal and
replacement) affording the following coverages:

 

 

-2-

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

shall be deemed to include, with respect to such coverages, from the time specified in Clause V
of this paragraph (3), the following provision (specified as the Broad Exclusion Provision):

     Broad Exclusion Provision.

     It is agreed that the policy does not apply:

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

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

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

	 	(a)	 	the nuclear material (1) is at any nuclear facility owned by, or
operated by or on behalf of, an insured or (2) has been discharged or dispersed
therefrom;
	 
	 	(b)	 	the nuclear material is contained in spent fuel or waste at any
time possessed, handled, used processed, stored, transported or disposed of by
or on behalf of an insured; or
	 
	 	(c)	 	the injury, sickness, disease, death or destruction arises out of
the furnishing by an insured of services, materials,

 

-3-

	 	 	 	parts or equipment in connection with the planning, construction, maintenance,
operation or use of any nuclear facility, but if such facility is located
within the United States of America, its territories or possessions or Canada,
this exclusion (c) applies only to  injury to or destruction of property at
such nuclear facility.

	 	IV.	 	As used in this endorsement:
	 
	 	 	 	“hazardous properties” include radioactive, toxic or explosive properties; “nuclear
material” means source material, special nuclear material or byproduct material; “source
material”, “special nuclear material”, and “byproduct material” have the meanings given
them in the Atomic Energy Act of 1954 or in any law amendatory thereof; “spent fuel” means
any fuel element or fuel component, solid or liquid, which has been used or exposed to
radiation in a nuclear reactor; “waste” means any waste material (1) containing byproduct
material 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 packagaing 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.

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

	 	(a)	 	become effective on or after 1st May, 1960, or

 

-4-

	 	(b)	 	become effective before that date and contain the Broad
Exclusion Provision set out above;

provided this paragraph (3) shall not be applicable to

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

until 90 days following approval of the Broad Exclusion Provision by the
Governmental Authority having jurisdiction thereof.

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

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

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

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

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

JNG jr:ss 3/3/71

 

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

WORKER’S COMPENSATION AND GENERAL LIABILITY

FOURTH EXCESS OF LOSS REINSURANCE CONTRACT

INTERESTS AND LIABILITIES AGREEMENT

IT IS HEREBY MUTUALLY AGREED, by and between LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY MUTUAL
FIRE INSURANCE COMPANY, Boston, Massachusetts (hereinafter called the “Company”) of the one part,
and the undersigned Reinsurer (hereinafter called the “Reinsurer”) of the other part, that the
Reinsurer shall have a 3.50% share in the interests and liabilities of the “Reinsurers” as set
forth in the document attached hereto. The share of the Reinsurer shall be separate and apart from
the shares of the other reinsurers, and shall not be joint with those of the other reinsurers, and
the Reinsurer shall in no event participate in the interests and liabilities of the other
reinsurers.

The premium for this reinsurance shall be the Reinsurer’s percentage share of the premium provided
under Article 3 of the attached document, and shall be payable as therein provided.

This Agreement shall be effective December 31, 1976 and shall remain in full force unless
terminated in accordance with the termination provisions of Article 13 of the attached document.

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

At Boston, Massachusetts this 18th day of August, 1977

	 	 	 	 	 
	 	LIBERTY MUTUAL INSURANCE COMPANY

and LIBERTY MUTUAL FIRE INSURANCE COMPANY
(herein called the “Company”)

 	 
	 	BY:  	/s/ 	 
	 	 	TITLE: VICE PRESIDENT 	 
	 	 	 	 
	 

and at Indianapolis, Indiana this 31st day of May, 1977

	 	 	 	 	 
	 	AMERICAN UNION INSURANCE COMPANY OF NEW
YORK

 	 
	 	BY:  	/s/ 	 
	 	 	TITLE: ASS’T. SECRETARY 	 
	 	 	 	 
	 

JNGjr/jb — 4/4/77exv10w181

EXHIBIT
10.181

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

WORKER’S COMPENSATION AND GENERAL LIABILITY

SEVENTH EXCESS OF LOSS REINSURANCE CONTRACT

PREAMBLE

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

ARTICLE 1 — EXHIBITS COVERED

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

     Exhibit “A”     Excess of Loss Reinsurance of General Liability.

     Exhibit “B”     Excess of Loss Reinsurance of Worker’s Compensation.

ARTICLE 2 — RETENTION BY COMPANY

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

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

ARTICLE 3 — REINSURANCE PREMIUM

	(a)	 	The Reinsurers’ premium for the reinsurance provided under this Contract
shall be computed by the application of a rate of .0015% to the Company’s net
premium written on the business covered under Exhibits “A” and “B” subject to an
annual minimum and deposit premium of $24,000 for the combined Seventh Excess of
Loss layers provided under Exhibits “A” and “B”.

	(b)	 	The minimum and deposit premium as provided for in (a) above shall be
payable to Reinsurers in four equal quarterly installments at the beginning of
each calendar quarter. The Company shall undertake to furnish to the Reinsurers at
the conclusion of each year a report of the net premiums written during such year.
If the Reinsurers’ annual premium for the Seventh Excess of Loss reinsurance under
Exhibits “A” and “B”, computed in accordance with the provisions of (a) above is
more than the annual minimum and deposit premium of $24,000, the Company shall
promptly pay the difference to the Reinsurers.

 

 

-2-

	 	 	The term “net premiums written” shall mean gross premiums written by the Company on
business covered hereunder less return premiums for cancellations and reductions and
less premiums on reinsurance which inure to the benefit of the Reinsurers. No deduction
shall be made for dividends declared, paid or credited to policyholders of the Company.
	 
	(c)	 	In addition to the premium stated above, additional premiums shall be paid
under the following circumstances:
	 
	 	 	In the event that the Company insures through pools or assigned risk plans risks of the
character described in sub-divisions 3, 4 and 5 of Paragraph B. of Section 4 of Exhibit
“B”, additional premium, if any, shall be determined upon submission of underwriting
data to the Reinsurers. As soon as practicable after such time as the fact of insurance
of an occupation, employment or risk listed in Paragraph B. of Section 4 of Exhibit “B”
is disclosed to the Company, the Company shall notify the Reinsurers and will provide
sufficient underwriting data so as to permit the application of the commensurate
reinsurance rate or premium from inception of such hazardous risk.
	 
	 	 	It is understood that failure on the part of the Company to comply with this
requirement due to oversight or error shall not prejudice the reinsurance provided
by this Contract. The Company, shall, however, as soon as such oversight or error
comes to its attention, take prompt steps to contact the Reinsurers and proceed to
the correction of the oversight or error as provided in this Contract.

ARTICLE 4 — SUBROGATION

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

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

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

The Company shall have the right, before the happening of the accident or occurrence
to waive its right of subrogation.

 

-3-

ARTICLE 5 — TAX CLAUSE

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

ARTICLE 6 — PAYMENTS UNDER THIS CONTRACT

All payments under this Contract by either party hereto shall be made in New York or Boston in
United States currency.

ARTICLE 7 — ACCESS TO COMPANY’S RECORDS

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

ARTICLE 8 — INSOLVENCY CLAUSE

The reinsurance provided by this Contract shall be payable by the Reinsurers directly to the
Company or to its liquidator, receiver or statutory successor on the basis of the liability of the
Company under the contracts reinsured without diminution because of the insolvency of the Company.
In the event of the insolvency of the Company, the liquidator or receiver or statutory successor
of the Company shall give written notice of the pendency of each claim against the Company on a
policy or bond reinsured within a reasonable time after such claim is filed in the insolvency
proceeding; and during the pendency of such claim, the Reinsurers may investigate such claim and
interpose, at their own expense, in the proceeding where such claim is to be adjudicated any
defense or defenses which it may deem available to the Company, its liquidator or receiver or
statutory successor. The expense thus incurred by the Reinsurers shall be chargeable, subject to
court approval, against the Company as part of the expense of liquidation to the extent of such
proportionate share of the benefit as shall accrue to the Company solely as a result of the
defense undertaken by the Reinsurers. This reinsurance shall be payable as hereinbefore in this
paragraph provided except as otherwise provided by Section 315 (relating to Fidelity and Surety
Risks) of the Insurance Law of New York or except (a) where the Contract specifically provides
another payee of such reinsurance in the event of the insolvency of the Company and (b) where the
Reinsurers with the consent of the direct insured or insureds have assumed such policy obligations
of the Reinsurers to the payees under such policies and in substitution for the obligations of the
Company to such payees.

ARTICLE 9 — ARBITRATION

In the event of any dispute or difference of opinion, arising with respect to this Contract, it is
hereby agreed that such dispute or difference of opinion shall be submitted to arbitration, under
Massachusetts General Law (Ter. Ed.), Chapter 251, one arbiter to be chosen by the Company, one by
the Reinsurers, and a third arbiter

 

-4-

to be chosen by the two arbiters before they enter upon arbitration. The arbiters are
relieved of all judicial formalities and may abstain from following strict rules of evidence.
The award of a majority of the arbiters shall be reported to the Superior Court, County of
Suffolk, Commonwealth of Massachusetts, within one year after the submission or within such
further time as the court may allow, and final judgement thereon shall be binding upon both
parties. Each party shall bear the expense of its own arbiter and shall jointly and equally bear
with the other the expense of the third arbiter and of the arbitration. Any such arbitration
shall take place at Boston, Massachusetts, unless some other location is mutually agreed upon.

ARTICLE 10 — OFFSET CLAUSE

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

ARTICLE 11 — LOSS RESERVES

(Applies only to those Reinsurers who do not qualify for credit by any State or any other
governmental authority having jurisdiction over the Company’s loss reserves.)

As regards policies or bonds issued by the Company coming within the scope of this Agreement,
the Company agrees that when it shall file with the Insurance Department or set up on its books
reserves for losses which it shall be required to set up by law it will forward to the
Reinsurers a statement showing the proportion of such loss reserves which is applicable to them.
The Reinsurers hereby agreed that they will apply for and secure delivery to the Company a clean
irrevocable Letter of Credit issued by any bank in the United States acceptable to the
governmental authority having jurisdiction over the Company’s loss reserves in an amount equal
to Reinsurers’ proportion of said loss reserves.

The Company agrees to use and apply any amounts which it may draw upon such credit for
the following purposes only:

	 	(a)	 	To pay Reinsurers’ share or to reimburse the Company for the
Reinsurers’ share of any liability for loss reinsured by this
Agreement.
	 
	 	(b)	 	To make refund of any sum which is in excess of the actual amount
required to pay Reinsurers’ share of any liability reinsured by this Agreement.

 

-5-

ARTICLE 12 — ERRORS AND OMISSIONS

Any inadvertent delay, omission or error shall not be held to relieve either party hereto from
any liability which would attach to it hereunder if such delay, omission or error had not been
made, provided such delay, omission or error is rectified upon discovery.

ARTICLE 13 — COMMENCEMENT AND TERMINATION

This Contract applies only to accidents or occurrences happening during its effective period. This
Contract is effective at Midnight, December 31, 1977 Standard Time at Boston, Massachusetts and
shall remain in force continuously unless terminated at Midnight on any subsequent December 31 by
either party giving the other at least three months prior notice of cancellation. Otherwise, this
Contract may be cancelled only by mutual consent, or if required by law or by administrative order.

ARTICLE 14 — REINSURANCE INTERMEDIARY DESIGNATION

Holborn Agency Corporation, 90 John Street, New York, New York 10038 is hereby recognized as the
Intermediary negotiating this Agreement for all business hereunder. All communications (including
but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss
adjustment expense, salvages, and loss settlements) relating thereto shall be transmitted to the
Company or the Reinsurer through Holborn Agency Corporation. 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 such
payments are actually received by the Company.

ARTICLE 15 — INTERPRETATION

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

 

EXHIBIT A

EXCESS OF LOSS REINSURANCE OF GENERAL LIABILITY

SECTION 1 — COVERAGE

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

Worker’s Compensation and Employers’ Liability insurance, but this exclusion shall not apply
to Worker’s Compensation or Employers’ Liability coverage given under public liability
policies written by the Company.

Bankers’ and Brokers’ insurances or reinsurances issued by the Company meaning contracts
issued to banks, trust companies, building and loan companies, safe deposit companies,
investment companies, including investment trusts, finance companies, credit unions, stock
or security brokers, or to similar financial institutions, insuring them against loss from
the following hazards:

Infidelity of employees and/or partners

Unfaithful performance of duties by employees and/or partners

Loss of property in transit

Forgery or alteration of negotiable or other paper

Burglary, robbery, theft, false pretenses or fraud

Mysterious disappearance or misplacement of property

Loss of property from safe deposit boxes or other depositories

Damage to or destruction of money or securities

Counterfeiting of currencies or securities

Motor Vehicle Physical Damage Insurance, but this exclusion shall not apply to motor vehicle
property damage liability insurance.

Credit Insurance and/or Financial Guarantee.

Fire Insurance, including the coverages ordinarily written under Extended Coverage
Endorsements.

Group Health, Disability, Hospital or Surgical Insurance, but this exclusion shall not
apply to any loss due to two or more persons insured under one or more Group policies
suffering bodily injuries, including death resulting therefrom, as a result of one accident
or series of accidents arising out of one event.

Livestock Mortality Insurance.

Surety business, but this exclusion shall not apply to faithful performance bonds or public
official bonds; provided; however, that the Reinsurers shall not be liable for any loss
resulting from the insolvency of any firm, company, corporation or bank with which a guaranteed
official has deposited funds in the course of his duties.

 

 

-2-

Insurance covering the liability of owners or operators of aircraft carrying passengers for
hire for injuries to such passengers.

Contracts of insurance written on any cost-plus plan which provides for payment of the full amount
of all losses, however great, by the policyholder. This exclusion shall not apply to contracts of
insurance, premiums for which are determined by a retrospective rating plan which provides for a
specific maximum premium or a formula for determination of a maximum premium.

Contracts of liability insurance covering injuries to persons or property issued directly to Class
I railroads; but this exclusion shall not apply to railroad Protective Liability policies issued at
the request of the Company’s policyholders doing work for or on the premises of such railroads.

Liability under any Involvency Fund arising by contract, operation of law or otherwise, whether
voluntary or involuntary. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan,
pool, association, fund or other arrangement, howsoever denominated, established or governed; which
provides for any assessment of or payment or assumption by the Company of part or all of any claim,
debt, charge, fee, or other obligation of an insurer, or its successors, or assigns, which has been
declared by any competent authority to be insolvent, or which has been otherwise deemed unable to
meet any claim, debt, charge, fee or other obligation in whole or in part.

Excess of Loss Reinsurance Contracts.

This Contract is subject to the Nuclear Incident Exclusion Clause -Liability -
Reinsurance and the Nuclear Incident Exclusion Clause -Physical Damage -
Reinsurance attached hereto.

SECTION 2 — LIMIT OF LIABILITY

The Reinsurer shall be liable for ultimate loss in excess of the sum of:

	 	(a)	 	$15,500,000 of ultimate net loss each and every accident or
occurrence in respect of business the subject matter of this Exhibit, and
	 
	 	(b)	 	$1,000,000 in the aggregate each calendar year of ultimate net loss the
excess of $1,000,000 each accident or occurrence in respect of business the subject
matter of the Company’s Excess Worker’s Compensation and/or Excess General
Liability Reinsurance Contracts (it being agreed that such $1,000,000 aggregate
shall apply, in each calendar year, in order by date of accident or occurrence
which, with respect to disease including death resulting therefrom, shall be deemed
to be the date assigned to the first claim of a series of claims in a calendar
year)

subject to a limit of $5,000,000 on account of each and every accident or occurrence.

 

-3-

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

For purposes of this Exhibit it is agreed that the Company’s limit of liability under any and all
policies of personal accident insurances (individual and group) covering any one individual shall
be considered as not exceeding $125,000. Subject to this agreement and subject to the limits set
forth in this Section 2 it is agreed that the Company is reinsured hereunder for the excess of the
amounts set forth in this Section 2 of ultimate net loss any one accident, or series of accidents
arising out of one event involving more than one person covered under such policies issued by the
Company.

SECTION 3 — ULTIMATE NET LOSS

The term “Ultimate Net Loss” as used in this Exhibit shall mean the amount actually paid by the
Company (including loss adjustment expenses, attorneys’ fees and other costs of investigation or
litigation) in settlement of or payment of claims or judgements arising from each and every loss
for which the Company is or may be found liable under its contracts of insurance or reinsurance,
less salvage and subrogation recoveries and amounts recovered or recoverable under pooling
agreements or other reinsurances, whether collectible or not; provided, however, that in the event
of the insolvency of the Company, “Ultimate Net Loss” shall mean the amount of loss (including loss
adjustment expenses, attorneys’ fees and other costs of investigation or litigation) which the
Company has incurred or for which it is liable, and payment by the Reinsurers shall be made to the
liquidator, receiver or statutory successor of the Company in accordance with the provisions of
Article 8 of this Contract. Salaries and expenses of employees of the Company shall not be included
in ascertaining ultimate net loss.

This Contract shall protect the Company within the limit hereof, in connection with any loss for
which the Company may be legally liable to pay in excess of the limit of its original policy, where
loss in excess of the limit has been incurred because of its failure to settle within the policy
limit or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of
settlement or in the preparation of the defense or in the trial of any action against its insured
or in the preparation of prosecution of an appeal consequent upon such action.

It is further agreed that amounts recoverable under the following reinsurance shall be
disregarded in ascertaining ultimate net loss:

	 	1.	 	Any reinsurance providing a retention below $1,000,000 but only as regards
the difference between the retention under such reinsurance and $1,000,000.
	 
	 	2.	 	The reinsuance provided in the Company’s underlying layers of excess
reinsurance as respects the subject matter of this Exhibit plus $1,000,000 in the
aggregate each calendar year of ultimate net loss the excess of $1,000,000 each
accident or occurrence in respect of business the subject matter of this Exhibit
and/or Exhibit B.

 

-4-

SECTION 4 — DEFINITION OF “EACH AND EVERY ACCIDENT OR OCCURRENCE”

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

	 	A.	 	Products Public Liability (Excluding Completed Operations)
	 
	 	 	 	All injury or damage caused to persons or property by any manufactured,
prepared or acquired lot of goods or products.
	 
	 	B.	 	Fidelity and Forgery
	 
	 	 	 	All losses resulting from any fraudulent or dishonest act or omission or series
thereof on the part of any one person or of several persons acting in collusion
(whether employees or not) and irrespective of the number of the Company’s obligations
involved; provided, that in the case of any loss involving two or more persons acting
in collusion, losses resulting from separate acts or omissions on the part of each
such person shall be included as part of such loss.

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

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

For the purposes of the foregoing the date of first discovery of a “loss” or the date
the claim is first made against an insured or first notified to the Company shall be the
date applicable to the to the entire loss and/or claim and the Reinsurers shall be
liable for their proportion of the entire loss and/or claim irrespective of the
expiry date of this Contract and provided that such first discovery date or first date such
claim is made or notified falls within the period of this Contract.

 

-5-

	 	C.	 	Liability Insurance Written Subject to an Aggregate Limit
	 
	 	 	 	As respects each and every liability insurance policy issued by the Company which
contains one or more aggregate limits of liability on a policy year basis, and as
respects each such aggregate limit under each policy year, the aggregate amount of all
losses occurring during one policy year. Where the Company issues more than one such
policy to the same policyholder such policies shall together be treated as though they
were one policy. Losses under such policies shall for the purposes of this reinsurance
contract be deemed to have occurred in the calendar year in which the inception date of
the policy falls, except that as respects such policies issued for a period in excess
of twelve months, losses for the first twelve month period shall be deemed to have
occurred in the calendar year in which the inception date of the policy falls and
losses for each succeeding twelve month period or part thereof shall be deemed to have
occurred in the calendar year in which the anniversary date of the policy starting such
period falls.
	 
	 	D.	 	All other classes or risks covered hereunder (including completed operations),
all injuries to persons and all losses of, injury to or destruction of property
resulting from each accident or loss, or from each series of accidents or losses
proximately arising out of or following on any one cause or event.

SECTION 5 — CLAIMS AGAINST REINSURERS

The Company shall be the sole judge as to what claims are covered under its policies, and all loss
settlements made and all judgements paid by the Company, provided they are within the terms and
conditions of this Exhibit, shall be unconditionally binding upon the Reinsurers and amounts
falling to the share of the Reinsurers shall be immediately due and payable by them upon reasonable
evidence of the amount paid being given by the Company. Nevertheless, it is understood and agreed
that in the event of a loss hereunder, or of an event or happening likely to result in a loss
hereunder, the Reinsurers shall have the right, if they so elect, to cooperate with the Company in
the defense or settlement of original losses under its obligations.

All settlements of losses effected by the Company shall be binding upon the Reinsurers, and the
Reinsurers shall be liable for their proportion thereof.

This Exhibit A is attached to and forms part of the Worker’s Compensation and General Liability
Seventh Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY AND LIBERTY
MUTUAL FIRE INSURANCE COMPANY.

 

EXHIBIT B

EXCESS OF LOSS REINSURANCE OF WORKER’S COMPENSATION

SECTION 1 — COVERAGE

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

SECTION 2 — LIMITS OF LIABILITY

The Reinsurers shall be liable for ultimate net loss in excess of the sum of:

	 	(a)	 	$15,500,000 of ultimate net loss each and every accident or occurrence
in respect of business the subject matter of this Exhibit, and
	 
	 	(b)	 	$1,000,000 in the aggregate each calendar year of ultimate net
loss the excess of $1,000,000 each accident or occurrence in respect of business the
subject matter of the Company’s Excess Worker’s Compensation and/or Excess General
Liability Reinsurance Contracts (it being agreed that such $1,000,000 aggregate shall
apply, in each calendar year, in order by date of accident or occurrence which, with
respect to disease including death resulting therefrom, shall be deemed to be the date
assigned to the first claim of a series of claims in a calendar year)

subject to a limit of $5,000,000 on account of each and every accident or occurrence.

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

SECTION 3 — ULTIMATE NET LOSS

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

 

-2-

Article 8 of this Contract. Expenses for salaried employees of the Company incurred in
litigation and the investigation or adjustment of claims or suits and subrogation expense referred
to in Article 4 shall be disregarded in ascertaining ultimate net loss. This Contract shall protect
the Company within the limit hereof in connection with any loss for which the Company may be
legally liable to pay in excess of the limit of its original policy, where loss in excess of the
limit has been incurred because of its failure to settle within the policy limit or by reason of
alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the
preparation of the defense or in the trial of any action against its insured or in the preparation
of prosecution of an appeal consequent upon such action.

It is further agreed that amounts
recoverable under the following reinsurances shall be disregarded in ascertaining ultimate net
loss.

	 	1.	 	Any reinsurance providing a retention below $1,000,000 but only as regards the
difference between the retention under such reinsurance and $1,000,000.
	 
	 	2.	 	The reinsurance provided in the Company’s underlying layers of excess reinsurance
as respects the subject matter of this Exhibit plus $1,000,000 in the aggregate each
calendar year of ultimate net loss the excess of $1,000,000 each accident or occurrence
in respect of business the subject matter of this Exhibit and/or Exhibit A, and,
as regards “Special Group Risks” $2,250,000 (plus a further indeterminate amount not to
exceed $1,000,000 in any (calendar year) the excess of $250,000 in respect of each and
every accident or occurrence.

SECTION 4 — EXCLUSIONS

This Exhibit does not apply:

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

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

	 	(a)	 	Manufacture of any explosive substance
intended for use as an explosive;
	 
	 	(b)	 	Manufacture of any product, other than
Fireworks and Fuses, in which any such explosive substance is an
ingredient;

 

 

-3-

	 	(c)	 	The loading of any such explosive substance into
containers for use as explosive objects, propellant charges
or detonating devices, and the incidental storage thereof;
	 
	 	(d)	 	Handling transportation or storage of any
such explosive substance intended solely for war purposes.

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

SECTION 5 — DEFINITIONS

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

	 	A.	 	“Policies”. Policies, contracts, endorsements or binders, including
but not limited to those by which the Company undertakes to offer and pay
“voluntary compensation” benefits, those by which the Company undertakes to make
payments to augment compensation benefits those by which the Company affords
reinsurance or excess insurance to Worker’s Compensation or Employers’ Liability
risks and those
by which the Company undertakes to participate in voluntary or statutory
Pools or assigned-risk plans.
	 
	 	B.	 	“Explosive Substance”. Any substance manufactured for the express
purpose of exploding as differentiated from commodities used industrially and
which are only incidentally explosive — such as gasoline, celluloid, fuel gases
and dyestuffs.
	 
	 	C.	 	“Accident or Occurrence”. Any one accident or occurrence or, if a
series of accidents or occurrences arising out of one event, such series of
accidents or occurrences provided, however, that with respect to disease,
including death resulting therefrom, the terms
“accident or occurrence” and “series of accidents or occurrences”
shall mean the claim or series of claims for which the Company may
be liable, on account of diseases or deaths resulting therefrom,
assigned by the Company to each calendar year of coverage under any
one policy or renewals thereof. In making such assignments the
Company will be bound by the following principles:

 

 

-4-

	 	1.	 	If liability is placed solely upon the employer or insurer
as of the date the claimant’s disability commences or becomes manifest
and that date is within a period of coverage under an applicable policy
issued by the Company, the claim is to be assigned to the calendar year
of such date;
	 
	 	2.	 	If assignment is not made on the basis stated in the
preceding subparagraph the claim is to be assigned to the calendar year of
the date of the claimant’s last injurious exposure during a period of
coverage under an applicable policy issued by the Company.
	 
	 	 	 	It is also agreed that disease cases which are not chargeable to this
Contract under the above principles and which are not chargeable to a
previous reinsurance contract shall be charged to this Contract and be
treated as an accident occurring during 1978.
	 
	 	 	 	Notwithstanding anything to the contrary above set forth it is agreed that
as to any policyholder to whom the Company issues disease coverage which is
in effect for only twelve consecutive months or less all of the Company’s
losses on account of disease claims will be charged for the purpose of this
reinsurance to the calendar year which includes the date the Company’s
disease coverage became effective.
	 
	 	 	 	Notwithstanding the foregoing, where a policyholder requests that it be
issued two or more policies in circumstances where applicable manual rules
permit the issuance of a single policy. such policies shall be regarded as a
single policy for purposes of assigning disease claims to calendar year
coverage.

SECTION 6 — NOTICE TO REINSURERS

As soon as practicable after it appears probable that the Company’s ultimate net loss on account of
any one accident or occurrence will exceed the amount above which the Reinsurers are liable under
this Exhibit, the Company shall notify the Reinsurers and provide them full information relative
thereto, and copies of all papers that may be desired by them, and the Reinsurers shall be given
every opportunity to participate in the defense of any such suit, proceeding or claim at their own
expense.

SECTION 7 — PAYMENT BY THE COMPANY

The Company shall be the sole judge as to what claims are covered under its policies, as to the
liability of the Company therefor and as to the amounts which the Company should pay thereon, and
the Reinsurers shall be bound by the judgement of the Company as to such matters.

All settlements of losses effected by the Company shall be binding upon the Reinsurers, and
the Reinsurers shall be liable for their proportion thereof.

 

 

-5-

SECTION 8 — CLAIMS AGAINST REINSURERS

The Company shall, within twelve months after it has paid any amount of ultimate net loss
for which the Reinsurers may be liable under this Exhibit, submit to the Reinsurers a definite
claim for such amount. If any subsequent losses shall be paid by the Company on account of the
same accident or occurrence, additional claims hereunder shall be similarly made from time to
time. Losses shall be due and payable by the Reinsurers within fifteen days after claim
hereunder is proved.

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

SECTION 9 — COMMUTATION

	A.	 	At any time subsequent to two years after the date of notice to the Reinsurers
of an accident or occurrence which may involve this Exhibit, representatives of the
parties shall, at the request of either of them, meet in Boston, Massachusetts, for
the purpose of appraising the Reinsurers’ ultimate liability to the Company under
this Exhibit on account of the claims resulting from such accident or occurrence. The
value of the Company’s incurred losses from such claims shall be calculated as of a
date certain not more than 45 days after the date the appraisal begins. In such
calculation, the value of each case as of such date shall be determined based upon a
rate of discount to be mutually agreed and by the use of the latest available
remarriage, survivorship, and mortality tables to determine probabilities of
remarriage and normal life expectancies.
	 
	B.	 	If the parties agree as to the amount of the Reinsurers’ ultimate liability to
the Company on acccount of the claims resulting from such accident or occurrence, the
Reinsurers shall, on or before the date as
of which the claims were valued, redeem their liability hereunder by the payment of
such amount to the Company.
	 
	C.	 	If the parties cannot, at such first appraisal, reach an agreement as to the
amount of the Reinsurers ultimate liability to the Company on account of such
accident or occurrence, settlement hereunder shall be deferred for one year, when a
second appraisal of the amount due
the Company from the Reinsurers shall be made in accordance with the provisions of
Paragraph A of this Section. If the parties then agree as to the amount of the
Reinsurers’ ultimate liability to the Company on account of such accident or
occurrence, settlement shall be made as outlined in Paragraph B of this Section.

 

 

-6-

	D.	 	If the parties do not reach an agreement as a result of the second
appraisal, settlement hereunder shall be deferred for another year, at the end of which
a third and last such appraisal of the Reinsurers’ ultimate liability to the Company
shall be made. If, as a result of such appraisal, the parties agree on the amount of
the Reinsurers’ ultimate liability to the Company, settlement will be made as provided
in Paragraph B of this Section. If they do not reach an agreement as a result of such
third appraisal, the amount of the Reinsurers’ liability to the Company on account of
such accident or occurrence shall promptly be determined by arbitration, in accordance
with Article 9 of the Contract. The arbitrators, in determining the value of the claims
against the Company on account of such accident or occurrence, shall follow the
provision of Paragraph A of this Section. The amount, if any determined by the
arbitration to be due the Copmpany from the Reinsurers shall be paid in the manner
provided in Paragraph B of this Section.

This Exhibit B is attached to and forms part of the Worker’s Compensation and General
Liability Seventh Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE
COMPANY and LIBERTY MUTUAL FIRE INSURANCE COMPANY.

 

 

MEMBERS’ LIST

Attached to and forming part 
of
Agreement No. C-652

     The list of Members constituting the “Reinsurer” and the respective proportions of
the liability assumed severally and not jointly by them under this Agreement shall be as follows:

MEMBERS of EXCESS AND CASUALTY REINSURANCE ASSOCIATION

	 	 	 	 	 
	 	 	PROPORTIONS
	THE AETNA CASUALTY AND SURETY COMPANY
	 	 	102/971	 
	AETNA INSURANCE COMPANY
	 	 	39/971	 
	ALABAMA FARM BUREAU MUTUAL INSURANCE SERVICE, INC.**
	 	 	3/971	 
	ALLENDALE MUTUAL INSURANCE COMPANY
	 	 	13/971	 
	AMERICAN HOME ASSURANCE COMPANY
	 	 	42/971	 
	AMERICAN MOTORISTS INSURANCE COMPANY
	 	 	8/971	 
	AMERICAN MUTUAL LIABILITY INSURANCE COMPANY
	 	 	13/971	 
	AMERICAN OVERSEAS REINSURANCE COMPANY
	 	 	6/971	 
	ATLAS ASSURANCE COMPANY OF AMERICA
	 	 	9/971	 
	BELLEFONTE INSURANCE COMPANY
	 	 	7/971	 
	BUFFALO REINSURANCE COMPANY
	 	 	4/971	 
	THE CINCINNATI INSURANCE COMPANY**
	 	 	3/971	 
	COMMERCIAL UNION INSURANCE COMPANY
	 	 	40/971	 
	CONTINENTAL CASUALTY COMPANY
	 	 	12/971	 
	THE CONTINENTAL INSURANCE COMPANY
	 	 	80/971	 
	ELKHORN INSURANCE COMPANY
	 	 	11/971	 
	EMPLOYERS MUTUAL CASUALTY COMPANY
	 	 	3/971	 
	EMPLOYERS MUTUAL LIABILITY INSURANCE COMPANY OF WISCONSIN
	 	 	9/971	 
	EQUITABLE GENERAL INSURANCE COMPANY
	 	 	10/971	 
	EXCESS AND TREATY REINSURANCE CORPORATION
	 	 	49/971	 
	FARMERS HOME MUTUAL INSURANCE COMPANY
	 	 	3/971	 
	FEDERATED REINSURANCE COMPANY
	 	 	97/971	 
	GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORP. LTD*
	 	 	17/971	 
	GENERAL INSURANCE COMPANY OF AMERICA
	 	 	10/971	 
	GREAT AMERICAN INSURANCE COMPANY
	 	 	24/971	 
	GREATER NEW YORK MUTUAL INSURANCE COMPANY
	 	 	3/971	 
	THE HANOVER INSURANCE COMPANY
	 	 	20/971	 
	THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
	 	 	5/971	 
	HIGHLANDS INSURANCE COMPANY
	 	 	16/971	 
	THE HOME INSURANCE COMPANY
	 	 	33/971	 
	INLAND INSURANCE COMPANY**
	 	 	3/971	 
	INSURANCE COMPANY OF NORTH AMERICA
	 	 	51/971	 
	INTEGON INDEMNITY CORPORATION**
	 	 	4/971	 
	LIBERTY MUTUAL INSURANCE COMPANY
	 	 	35/971	 
	MERRIMACK MUTUAL FIRE INSURANCE COMPANY
	 	 	10/971	 
	METROPOLITAN PROPERTY & LIABILITY INSURANCE COMPANY
	 	 	15/971	 
	MOTORISTS MUTUAL INSURANCE COMPANY
	 	 	5/971	 
	THE MUTUAL FIRE, MARINE AND INLAND INSURANCE COMPANY
	 	 	11/971	 
	NEW ENGLAND REINSURANCE CORPORATION
	 	 	3/971	 
	NORTHEASTERN INSURANCE COMPANY OF HARTFORD
	 	 	19/971	 
	PHILADELPHIA MANUFACTURERS MUTUAL INSURANCE COMPANY
	 	 	4/971	 
	PROVIDENCE WASHINGTON INSURANCE COMPANY
	 	 	6/971	 
	PURITAN INSURANCE COMPANY
	 	 	5/971	 
	REPUBLIC INSURANCE COMPANY
	 	 	9/971	 
	ROYAL GLOBE INSURANCE COMPANY
	 	 	30/971	 
	SECURITY INSURANCE COMPANY OF HARTFORD
	 	 	24/971	 
	SENTRY INSURANCE A MUTUAL COMPANY
	 	 	4/971	 
	STATE FARM FIRE AND CASUALTY COMPANY
	 	 	5/971	 
	TOKIO MARINE AND FIRE INSURANCE COMPANY, LTD.*
	 	 	3/971	 
	UNIGARD MUTUAL INSURANCE COMPANY
	 	 	5/971	 
	UNIVERSAL REINSURANCE CORPORATION
	 	 	17/971	 
	ZURICH INSURANCE COMPANY*
	 	 	12/971	 

 

			
	*	 	U. S. Branch 
	**	 	Not licensed or accredited in New York

In the event of any change in this List, the Reinsurer will send to the Company an
AMENDED MEMBERS’ LIST to be attached hereto.

1-78

Excess and Treaty Management Corporation — Underwriting Manager 

 

 

ENDORSEMENT A

Non-Admitted Reinsurers Clause — Each of the Members of Excess and
Casualty Reinsurance Association (“ECRA”) designated on the Members’ List
attached to this Agreement as not being licensed or accredited by the
Insurance Department of the State of New York, will fund outstanding
losses under this Agreement, including an allowance for IBNR as
recommended by Excess and Treaty Management Corporation, the Underwriting
Manager of ECRA, and unearned premium reserves, in an amount equal to such
Member’s proportion of liability under this Agreement. Such security shall
be held for the benefit of the Reinsured and may be in the form of cash
advances, escrow or trust accounts, clean irrevocable letters of credit,
or a combination thereof, acceptable to said Insurance Department.

Excess and Treaty Management Corporation — Underwriting Manager

 

 

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

WORKER’S COMPENSATION AND GENERAL LIABILITY

SEVENTH EXCESS OF LOSS REINSURANCE CONTRACT

INTERESTS AND LIABILITIES AGREEMENT

IT IS HEREBY MUTUALLY AGREED, by and between LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY
MUTUAL FIRE INSURANCE COMPANY, Boston, Massachusetts (hereinafter called the “Company”) of
the one part, and the undersigned Reinsurer (hereinafter called the “Reinsurer”) of the other
part, that the Reinsurer shall have a 7.50% share in the interests and liabilities of the
“Reinsurers” as set forth in the document attached hereto. The share of the Reinsurer shall
be separate and apart from the shares of the other Reinsurers, and shall not be joint with
those of the other Reinsurers, and the Reinsurer shall in no event participate in the
interests and liabilities of the other Reinsurers.

The premium for this reinsurance shall be the Reinsurer’s percentage share of the premium
provided under Article 3 of the attached document, and shall be payable as herein provided.

This Agreement shall be effective December 31, 1977 and shall remain in full force unless
terminated in accordance with the termination provisions of Article 13 of the attached
document.

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

At Boston, Massachusetts this 27th day of June, 1978

	 	 	 	 	 
	 	LIBERTY MUTUAL INSURANCE COMPANY and

LIBERTY MUTUAL FIRE INSURANCE COMPANY

(herein called the “Company”)

 	 
	 	BY:  	/s/ 	 
	 	 	TITLE: Vice President 	 
	 	 	 	 
	 

and at
Indianapolis, Indiana this
18th day
of JULY, 1978

	 	 	 	 	 
	 	AMERICAN UNION INSURANCE CO. OF NEW YORK

 	 
	 	BY:  	/s/ 	 
	 	 	TITLE: ASS’T. SECRETARY 	 
	 	 	 	 
	 

EE/jb — 4/25/78

 

 

LIBERTY MUTUAL INSURANCE COMPANY

LIBERTY MUTUAL FIRE INSURANCE COMPANY

WORKER’S COMPENSATION AND GENERAL LIABILITY

SEVENTH EXCESS OF LOSS REINSURANCE CONTRACT

INTERESTS AND LIABILITIES AGREEMENT

IT IS HEREBY MUTUALLY AGREED, by and between LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY
MUTUAL FIRE INSURANCE COMPANY, Boston, Massachusetts (hereinafter called the “Company”) of
the one part, and the undersigned Reinsurer (hereinafter called the “Reinsurer”) of the
other part, that the Reinsurer shall have a 5.00% share in the interests and liabilities
of the “Reinsurers” as set forth in the document attached hereto. The share of the
Reinsurer shall be separate and apart from the shares of the other Reinsurers, and shall
not be joint with those of the other Reinsurers, and the Reinsurer shall in no event
participate in the interests and liabilities of the other Reinsurers.

The premium for this reinsurance shall be the Reinsurer’s percentage share of the premium
provided under Article 3 of the attached document, and shall be payable as herein provided.

This Agreement shall be effective December 31, 1977 and shall remain in full force
unless terminated in accordance with the termination provisions of Article 13 of the
attached document.

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

At Boston, Massachusetts this 27th day of June, 1978

	 	 	 	 	 
	 	LIBERTY MUTUAL INSURANCE COMPANY and 

LIBERTY MUTUAL FIRE INSURANCE COMPANY

(herein called the “Company”)

 	 
	 	BY:  	/s/ 	 
	 	 	TITLE: Vice President 	 

and at New York, New York this 17th day of August, 1978

	 	 	 	 	 
	 	EXCESS & TREATY MANAGEMENT CORPORATION

Underwriting Manager

 	 
	 	BY:  	/s/ 	 
	 	 	TITLE: 	 

For and on behalf of Members’ of EXCESS AND CASUALTY REINSURANCE
ASSOCIATION as their interests may appear in this Agreement.

EE/jb — 4/25/78

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