Document:

exv10w5

 

Exhibit 10.5

TERRORISM CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

EFFECTIVE MARCH 1, 2007

between

PHILADELPHIA INSURANCE COMPANY 

And

PHILADELPHIA INDEMNITY INSURANCE COMPANY

BALA CYNWYD, PENNSYLVANIA, USA

(hereinafter called the “Reinsured”)

by

VALIDUS REINSURANCE, LTD.

HAMILTON, BERMUDA

(hereinafter called the “Reinsurers”)

Under the terms of this Contract, the above
 Reinsurers agree to
assume severally and not jointly
 with other participants

a 20.00% share

of the liability described in the attached Contract and, as

consideration, the above Reinsurers shall receive a 20.00% share

of the premium named therein.

Signed in Hamilton, Bermuda, this 18th day of September, 2007,

	 	 	 	 	 
	 	VALIDUS REINSURANCE, LTD.

 	 
	 	BY:  	/s/
JEFF A. CLEMENTS
 	 
	 	 	TITLE:  EXECUTIVE VICE PRESIDENT 	 
	 	 	 	 
	 

 

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and signed in Bala Cynwyd, Pennsylvania, this 24th day of August, 2007.

	 	 	 	 	 
	 	PHILADELPHIA INSURANCE COMPANY

And

PHILADELPHIA INDEMNITY INSURANCE COMPANY

 	 
	 	BY:  	/s/
CHRISTOPHER MAGUIRE
 	 
	 	 	TITLE:  EXECUTIVE VICE PRESIDENT 
AND CHIEF UNDERWRITING OFFICER 	 

TERRORISM CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

EFFECTIVE MARCH 1, 2007

between

PHILADELPHIA INSURANCE COMPANY 

And

PHILADELPHIA INDEMNITY INSURANCE COMPANY

BALA CYNWYD, PENNSYLVANIA, USA

 

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Final

 

 

PHILADELPHIA INSURANCE COMPANY

And

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania, USA

TERRORISM CATASTROPHE EXCESS OF LOSS

REINSURANCE CONTRACT

INDEX

	 	 	 	 	 
	Article I
	 	BUSINESS COVERED	 	PAGE 1
	Article II
	 	COMMENCEMENT AND TERMINATION	 	PAGE 2
	Article III
	 	REINSURANCE COVERAGE	 	PAGE 2
	Article IV
	 	EXCLUSIONS	 	PAGE 5
	Article V
	 	REINSURANCE PREMIUM	 	PAGE 7
	Article VI
	 	DEFINITION  OF LOSS OCCURRENCE	 	PAGE 8
	Article VII
	 	NET RETAINED LINES	 	PAGE 8
	Article VIII
	 	REVIEW	 	PAGE 9
	Article IX
	 	REPORTS, LOSS AND LOSS SETTLEMENTS	 	PAGE 11
	Article X
	 	ORIGINAL CONDITIONS	 	PAGE 12
	Article XI
	 	ERRORS AND OMISSIONS	 	PAGE 12
	Article XII
	 	CURRENCY	 	PAGE 13
	Article XIII
	 	FEDERAL EXCISE TAX AND OTHER TAXES	 	PAGE 13
	Article XlV
	 	ACCESS TO RECORDS	 	PAGE 13
	Article XV
	 	RESERVES	 	PAGE 14
	Article XVI
	 	SERVICE OF SUIT	 	PAGE 17
	Article XVIl
	 	ARBITRATION	 	PAGE 18
	Article XVIll
	 	INSOLVENCY	 	PAGE 22
	Article XlX
	 	CLAIMS COOPERATION	 	PAGE 23
	Article XX
	 	CONFIDENTIALITY	 	PAGE 23
	Article XXI
	 	LATE PAYMENTS	 	PAGE 24
	Article XXIl
	 	OFFSET	 	PAGE 25
	Article XXIll
	 	SPECIAL TERMINATION	 	PAGE 25
	Article XXlV
	 	TERRORISM RECOVERY — TERRORISM RISK INSURANCE ACT OF 2002	 	PAGE 28
	Article XXV
	 	VARIOUS OTHER TERMS	 	PAGE 28
	Article XXVI
	 	INTERMEDIARY	 	PAGE 30

 

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1.

PHILADELPHIA INSURANCE COMPANY

And

PHILADELPHIA INDEMNITY INSURANCE COMPANY

Bala Cynwyd, Pennsylvania, USA

(hereinafter referred to as the “Reinsured”)

TERRORISM CATASTROPHE EXCESS OF LOSS REINSURANCE CONTRACT

(hereinafter referred to as the “Contract”)

ARTICLE I — BUSINESS COVERED

A. This Contract applies to losses occurring during its term on all Covered Policies, except as
hereinafter excluded, classified by the Reinsured as Property or Casualty, that are in force at the
inception of, or written with a Policy period (new or renewal) that is effective during the term of
this Contract.

B. The term “Covered Policies”, whenever used herein, shall mean all binders, policies, contracts,
certificates and other obligations, whether oral or written, of insurance or reinsurance written
and classified for the annual statement lines as indicated:

	 	 	 	 	 	 	 	 	 	 	 
	Check	 	Line of Business	 	Check	 	Line of Business	 	Check	 	 
	 

	 	Inland Marine
	 	 	 	Other Casualty	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Commercial Property
	 	x
	 	Professional

Liability
	 	x	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Personal Lines;
	 	 	 	Wet Marine	 	 	 	 
	 

	 	however, Personal	 	 	 	 	 	 	 	 
	 

	 	Automobile shall be	 	 	 	 	 	 	 	 
	 

	 	excluded	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Liability
	 	x
	 	Other lines of
	 	 	 	Line of Business
	 

	 	 	 	 	 	business
	 	 	 	(to be filled in as
	 

	 	 	 	 	 	 	 	 	 	applicable)
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Umbrella Liability
	 	x	 	 	 	 	 	 

Covered Policies hereunder shall be written on standard industry policy forms of the line(s) of
business indicated and which include cover for Acts of Terrorism. Forms substantially similar to
ISO forms shall be deemed approved. Policy forms broader than the forms customarily used for the
lines of business written by the Reinsured will be submitted for the Reinsurers’ prior review and
approval. Any material changes made to such forms shall be subject to prior notice as set forth in
the Article entitled “Review”.

 

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2.

ARTICLE II — COMMENCEMENT AND TERMINATION

     A. This Contract shall incept at 12:01 a.m., Eastern Standard Time, March 1, 2007 and shall
remain in force until 12:01 a.m., Eastern Standard Time, March 1, 2008 (“Contract Term”). Should
this Contract terminate while a Loss Occurrence is in progress, the entire loss arising out of the
Loss Occurrence shall be subject to this Contract.

     B. If the Reinsurer has a genuine interest in renewing this Contract for one additional 12
month contract period at the Contract’s then current prevailing terms, it shall give the Reinsured,
at least 180 days prior to the expiration date of this Contract, written notice of that intention
and request and the parties shall execute an endorsement to that effect no later than 150 days
prior to the scheduled expiration date of this Contract (the “deadline”). If no endorsement is
executed by the deadline, the Reinsurer shall have no right to any such renewal.

ARTICLE III — REINSURANCE COVERAGE 

Part One — Acts of Terrorism

Section I (applicable to Loss Occurrence covered in conjunction with TRIA/ TRIEA)

     A. With respect to losses occurring during the Contract Term on Covered Policies that are
Business Covered (including, for the avoidance of doubt, lines of business that are Covered
Policies hereunder, but not covered lines under TRIA/TRIEA), the Reinsurers shall be liable to,
indemnify and reinsure the Reinsured for each and every Loss Occurrence that is a Certified Act of
Terrorism, as defined and certified in accordance with TRIA, and as amended by TRIEA, for 100% of
the excess Net Loss above an initial Net Loss to the Reinsured of USD10,000,000 each and every Loss
Occurrence; but the Reinsurers shall not be liable for more than USD50,000,000 of Net Loss for each
and every such Loss Occurrence.

     B. “Certified Act(s) of Terrorism” means any act that is certified by the Secretary of the
Treasury in concurrence with the Secretary of State and the Attorney General of the United States
pursuant to the Federal Terrorism Risk Insurance Act (“TRIA”) as amended by the Terrorism Risk
Insurance Extension Act (“TRIEA”):

 

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3.

Section II (applicable to Loss Occurrence not covered in conjunction with TRIA/ TRIEA)

     A. With respect to losses occurring during the Contract Term on Covered Policies that are
Business Covered, the Reinsurers shall be liable to indemnify and reinsure the Reinsured for each
and every Loss Occurrence that results from an Act of Terrorism that is not a Certified Act of
Terrorism (“Non-Certified Act of Terrorism”), for 100% of the excess Net Loss above an initial Net
Loss to the Reinsured of USD10,000,000 each and every Loss Occurrence; but the Reinsurers shall not
be liable for more than USD50,000,000 of Net Loss for each and every such Loss Occurrence.

     B. For the purposes of this Section, an “Act of Terrorism” shall be any act or preparation in
respect of action, designed to influence the government de jure or de facto of any nation or any
political division thereof, or in pursuit of any political, religious, ideological, or similar
purpose to intimidate the public or a section of the public of any nation by any person or group(s)
of persons whether acting alone or on behalf of or in connection with any organization(s) or
government(s) de jure or de facto, and which:

	 	(i)	 	involves violence against one or more persons; or

	 
	 	(ii)	 	involves damage to property; or
	 
	 	(iii)	 	endangers life other than that of the person committing the
action; or
	 
	 	(iv)	 	creates a risk to health or safety of the public or a section
of the public; or
	 
	 	(v)	 	involves physical loss, damage, cost, or expense caused by,
contributed to by, resulting from, or arising out of or in connection with any
action in directly responding to any Act of Terrorism; or
	 
	 	(vi)	 	are defined as such in any of the Reinsured’s policy forms
that have been the subject of the Reinsurers’ express written prior review and
approval.

     C. Loss or damage occasioned by riot, strikes, civil commotion, vandalism or malicious
mischief as those terms have been interpreted by United States Courts to apply to insurance
policies shall not be construed to be an “Act of Terrorism”.

 

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4.

Section III (Applicable to both Section I and Section II)

     A. The Reinsurers’ liability in respect of excess Net Loss hereunder for losses occurring
during the Contract Term shall be limited to USD100,000,000 in the aggregate as respects all Net
Loss on Covered Policies that are Business Covered hereunder as a result of all Loss Occurrences
taking place during the Contract Term in respect of both Section I and Section II combined.

     B. In the event that the Terrorism Insurance Program, (“TIP”) as established by TRIA and TRIEA
terminates, the parties will endeavor to continue to employ the definitions of “Act of Terrorism”
as set forth in Section 1 above, but for the certification by the Secretary of the Treasury. In the
event that the parties cannot agree on whether such Loss Occurrence is subject to coverage under
Section I or Section II, the decision shall be subject to the Article entitled “Arbitration” in
this Contract and the payment due date shall be determined by the date of the Panel’s reasoned
decision.

Part Two — Reinsurance Loss 

     A. “Net Loss” shall mean the actual loss incurred by the Reinsured under Business Covered
hereunder including (i) sums paid in settlement of claims and suits and in satisfaction of
judgments, (ii) prejudgment interest when added to a judgment, (iii) all expenses incurred in
connection with adjustment, defense, settlement and litigation of claims and suits, satisfaction of
judgments, resistance to or negotiations concerning a loss (excluding the normal office expenses of
the Reinsured and salaries of the Reinsured) and (iv) any interest on judgments other than
prejudgment interest when added to a judgment.

     B. All salvages, recoveries, payments and reversals or reductions of verdicts or judgments
(net of the cost of obtaining such salvage, recovery, payment or reversal or reduction of a verdict
or judgment) whether recovered, received or obtained prior or subsequent to loss settlement under
this Contract, including amounts recoverable under other reinsurance, whether collected or not,
shall be applied as if recovered, received or obtained prior to the aforesaid settlement and shall
be deducted from the actual losses sustained to arrive at the amount of the Net Loss. Nothing in
this Article shall be construed to mean losses are not recoverable until the final Net Loss to the
Reinsured finally has been ascertained.

     C. The Reinsurers shall be subrogated, as respects any loss for which the Reinsurers shall
actually pay or become liable, but only to the extent of the amount of payment by or the amount of
liability to the Reinsurers, to all the rights of the Reinsured against any person or other entity
who may be legally responsible for damages as a result of said loss. Should the Reinsured elect
not to enforce such rights, the Reinsurers are hereby authorized and empowered to bring any
appropriate action in the name of the Reinsured or its policyholders, or otherwise to enforce such
rights. The Reinsurers shall promptly remit to the Reinsured the amount of any judgment awarded in
such an action in excess of the amount of payment by, or the amount of liability to, the Reinsurers
hereunder.

 

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5.

ARTICLE IV — EXCLUSIONS 

     A. This Contract shall not cover any Net Loss arising from Certified Acts of Terrorism or
Non-Certified Acts of Terrorism that results from:

	 	1.	 	An act committed as part of the course of a war declared by
the Congress of the United States of America as set forth in Section
102(1)(B)(i) of TRIA as amended by TREIA; or
	 
	 	2.	 	Seizure or illegal occupation; or
	 
	 	3.	 	Confiscation, requisition, detention, legal or illegal
occupation, embargo, quarantine, or an order of public or governmental
authority which deprives the insured of the use or value of the property, or
arising from acts of contraband or illegal transportation or illegal trade; or
	 
	 	4.	 	Contingent Business Interruption, written as such, unless
specially accepted by the Reinsurers hereon; or
	 
	 	5.	 	Workers Compensation and Employers Liability, written as
such; or
	 
	 	6.	 	Pollutants or contaminants whether directly or indirectly
arising from or as consequence of the discharge of pollutants or contaminants,
which pollutants and contaminants shall include but not be limited to any
solid, liquid, gaseous or thermal irritant, contaminant or toxic or hazardous
substance or any substance the presence, existence or release of which
endangers or threatens to endanger the health, safety or welfare of persons or
the environment; or
	 
	 	7.	 	Electronic attack, including computer hacking or the
introduction of any form of computer virus. Notwithstanding the foregoing,
this Contract will respond to a Loss Occurrence arising from attacks involving
the use of a mobile telephone, remote control, or radio controlled device or
any other electronic device or system or such like in the launch and/or
guidance system and/or firing mechanism and/or detonation of any explosive
bomb, weapon or missile subject always to the other terms and conditions of
this Contract; or
	 
	 	8.	 	Increased cost occasioned by any Public or Civil Authority’s
enforcement of any ordinance or law regulating the reconstruction, repair or
demolition of any property; or

 

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6.

	 	9	 	Cessation, fluctuation or variation in, or insufficiency of,
water, gas or electricity supplies and telecommunications of any type or
service; or
	 
	 	10.	 	Threat or hoax, in the absence of physical damage due to an
act or series of Acts of Terrorism; or
	 
	 	11.	 	Burglary, house — breaking, theft or larceny or caused by any
person taking part therein; or
	 
	 	12.	 	Extra Contractual Obligation. “Extra Contractual Obligation”
means liabilities, including Loss Excess of Policy Limits, that are not
covered under any other provision of this Contract and which arise from the
handling of any claim on Business Covered hereunder by reason of alleged or
actual negligence, gross negligence, fraud, or bad faith on the part of the
Company. As used herein, “Loss Excess of Policy Limits” means any amount of
loss, together with any legal costs and expenses incurred in connection
therewith, paid as damages or in settlement by the Reinsured in excess of its
Policy Limits, but otherwise within the coverage terms of the Policy, arising
from an allegation or claim of its insured, its insured’s assignee, or other
third party, which alleges negligence, gross negligence, bad faith or other
tortuous conduct on the part of the Reinsured in the handling of a claim under
a Policy subject to this Contract, in rejecting a settlement within the Policy
Limits, in discharging a duty to defend or prepare the defense in the trial of
an action against its insured, or in discharging its duty to prepare or
prosecute an appeal consequent upon such an action. For the avoidance of
doubt, the decision by the Reinsured to settle a claim for an amount within
the coverage of the Policy but not within the Policy limit when the Reinsured
has reasonable basis to believe that it may have liability to its insured or
assignee or other third party on the claim will be deemed a Loss Excess of
Policy Limits.

 

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7.

     B. This Contract shall not cover any Net Loss arising from any part of Non-Certified Acts of
Terrorism that results from a loss occasioned directly or indirectly by war or invasion (whether
war be declared or not), hostile acts of sovereign or government entities, civil war, rebellion,
revolution, insurrection, civil commotion assuming the proportions of or amounting to an uprising,
military or usurped power or martial law or confiscation by order of any government or public
authority.

ARTICLE V — REINSURANCE PREMIUM 

Part One — Premium

     A. As premium for the reinsurance provided hereunder, the Reinsured shall pay the Reinsurers a
flat premium of USD3,625,000 in two equal installments of USD1,812,500 on March 1, 2007 and
September 1, 2007.

Part Two — Reinstatement Premium 

     A. Each claim hereunder shall reduce the amount of the Reinsurers’ liability from the time of
the Loss Occurrence by the sum paid, but the sum so reduced shall be reinstated immediately from
the time of the Loss Occurrence.

     B. For each amount so reinstated, the Reinsured agrees to pay an additional premium calculated
by multiplying 100% of the annual reinsurance premium earned hereon by the percentage that the
amount reinstated bears to the limit (i.e., USD50,000,000) of this Contract. Nevertheless, the
liability of the Reinsurers shall never be more than USD50,000,000 Net Loss in respect of any one
Loss Occurrence, nor more than USD100,000,000 of Net Loss in all in respect of all Loss Occurrences
during the Contract Term.

     C. A statement of reinstatement premium due the Reinsurers shall be prepared by the Reinsured
and submitted to the Reinsurers with each loss payment request hereunder. The reinstatement
premium shall be based upon 100% of the annual reinsurance premium earned by the Reinsurer
hereunder. The amount of reinstatement premium due Reinsurers shall be offset against the loss
payment due the Reinsured with only the net amount due to be remitted by the debtor party.

Part Three — No Claims Bonus

     A. In the event that no claims arise under this Contract then the Reinsurers will allow to the
Reinsured a return premium equal to their participation in this Contract multiplied by USD250,000
payable effective March 1, 2008.

 

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8.

     B. The return premium payment by the Reinsurers to the Reinsured shall constitute the
commutation of this Contract and such payment once effected shall be regarded as a full and final
release of the Reinsurers from all liability hereunder.

ARTICLE VI — DEFINITION OF LOSS OCCURRENCE 

     A. The term “Loss Occurrence” shall mean any one loss and/or series of losses arising out of
and directly caused by one Act or series of Acts of Terrorism for the same apparent purpose or
cause. The duration and extent of any one Loss Occurrence shall be limited to all losses sustained
by the Reinsured during any period of seventy-two (72) consecutive hours arising out of the same
apparent purpose or cause. However, no such period of seventy-two (72) consecutive hours may extend
beyond the expiration of this Contract unless direct physical damage by an Act of Terrorism occurs
prior to the expiration and within said period of seventy-two (72) consecutive hours, nor shall any
period of seventy-two (72) consecutive hours commence prior to the attachment of this reinsurance.

     B. As respects coverage provided in Section I of the Article entitled “Reinsurance Coverage”,
Loss Occurrence shall be consistent with the determination of the Secretary of the Treasury of a
Certified Act of Terrorism. As respects coverage provided in Section II of the Article entitled
“Reinsurance Coverage”, all losses flowing from an apparently coordinated plan of attack shall be
deemed a single Loss Occurrence even though they may be separate in time or space subject always to
the above seventy-two (72) hour period.

ARTICLE VII — NET RETAINED LINES

     A. This Contract applies only to that portion of the exposure to loss from Acts of Terrorism
on any Policy which the Reinsured retains net for its own account, and in calculating the amount of
any loss hereunder and also in computing the amount or amounts in excess of which this Contract
attaches, only loss or losses in respect of that portion of the exposure to loss from Acts of
Terrorism on any Policy which the Reinsured retains net for its own account shall be included.
Recoveries under TRIA and TRIEA referenced in Article entitle “Terrorism Recovery” shall be
disregarded in calculating the Net Loss to which this reinsurance applies.

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

 

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9.

     C. Where the Reinsured comprises more than one insurance company, reinsurance among the companies
collectively called the “Reinsured” hereunder or between any of them and any of their affiliates
under common control with the Reinsured shall be entirely disregarded for all purposes of this
Contract.

     D. Permission is hereby granted to the Reinsured to carry underlying Terrorism reinsurance
below the attachment of this Contract and recoveries made thereunder shall be disregarded for all
purposes of this Contract and shall inure to the sole benefit of the Reinsured.

ARTICLE VIII — REVIEW

     A. The Reinsured has provided the Reinsurers, prior to the commencement of this Contract, with
information concerning its Policy forms and Underwriting Practices and Covered Policies in respect
to coverage for Acts of Terrorism. The Reinsured shall report to the Reinsurers as soon as
practically possible upon the happening of any of the following:

	 	1.	 	Change in control of the Reinsured via a closing upon a
definitive agreement to sell or merge approved by the applicable regulatory
authorities including but not limited to (a) become merged with, acquired or
controlled by any company, corporation or individual(s) not controlling the
party’s operations previously (though excluding transactions among entities
under common control); or
	 
	 	2.	 	a transfer by portfolio transfer of the Business Covered; or
	 
	 	3.	 	Material Change in the Reinsured’s Underwriting Practices
that materially increases the Reinsured’s underwriting exposure to a Loss
Occurrence arising from an Act of Terrorism. For the purpose of this
condition, a material change shall mean the following: (i) from inception, an
increase of 20% or USD20,000,000, whichever is greater, or more in the Total
Insured Values covered in those zip codes set forth in Schedule A, Target Area
zip codes (“Target Area TIV Increase”) or (ii) any material change to the
Reinsured’s coverage forms concerning terrorism (“Material Change”), or (iii)
the commencement of the Reinsured offering terrorism coverage on a stand-alone
basis (“Offering of Stand-Alone Terrorism”).

 

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10.

	 	 	 	As used herein, the reference to a “zip code” or a “Target Area zip code”
shall mean that entire area encompassed by all zip codes within an area
described by reference only to the first three digits of a zip code.
	 
	 	 	 	For example, an area made up of zip codes 89712, 89713, and 89714 will
be considered for the purposes of this Contract the “zip code” or “Target
Area zip code” of “897”

     B. In the event of a failure to timely report to the Reinsurers in sub-paragraphs A1. or A2.
above, the Reinsurer shall have a right to cancel the Contract with 15 days advance notice.

     C. In the event of A3. above,

	 	1.	 	The Reinsurer shall have the right to review the impact of
any Material Change in the Reinsured’s Underwriting Practices and either
accept the change or propose a modification to the terms of this Contract;
	 
	 	2.	 	In the event that: (i) the Material Change in the Reinsured’s
Underwriting Practices is not reported to the Reinsurer in a timely fashion or
(ii) the Reinsured does not accept the Reinsurer’s proposal to modify the
terms of this Contract per sub-paragraph C1. above, then the following
conditions shall apply:

	 	a.	 	In respect of a Material Change or Offering
of Stand-Alone Terrorism, no coverage shall be afforded hereunder for
that portion of Net Loss from a Loss Occurrence that occurs after the
date of the Material Change/Offering of Stand-Alone Terrorism that
directly results from such Material Change and/or Offering of
Stand-Alone Terrorism.
	 
	 	b.	 	In respect of a Target Area TIV Increase,
the Reinsurer shall have the option to reduce the contribution to Net
Loss in a Loss Occurrence from a Target Area according to the
following fraction:

 

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11.

(Total Insured Value in applicable Target Area at the inception of this
Contract * 1.20)* divided by actual Total Insured Value in
applicable Target Area at the date of the Loss Occurrence.

 

			
	*	 	In the event that USD20,000,000 is greater than 1.2 times
the Total Insured Value in the applicable Target Area at the inception of
this Contract, such amount shall be utilized rather than 1.2 times the
Total Insured Value in the applicable Target Area at the inception of this
Contract.

ARTICLE IX — REPORTS, LOSS AND LOSS SETTLEMENTS 

Part One — Reinsured Exposures

     A. The Reinsured has provided the Reinsurers a statement of Reinsured Exposure prior to the
Contract Term, (“Statement”), reflecting the Reinsured’s Total Insured Values for terrorism
coverage at the date of that report (“Gross TIV”) plus the Total Insured Values for Terrorism
coverage in the Target Area zip codes at the same date. The Reinsured shall provide the Reinsurers
an updated Statement each calendar quarter thereafter during the Contract Term, reflecting the
Gross TIV and the subtotal for the Total Insured Values for Terrorism coverage in the Target Area
zip codes at the same date. Such report shall be due within ninety (90) days following the end of
each calendar quarter.

     B. The term “Reinsured Exposure” shall mean the difference between the Gross TIV and the Total
Insured Values for Terrorism coverage in the Target Area zip codes on the date of the report.

Part Two — Claim Reporting

     A. The Reinsured shall advise the Reinsurers promptly of all losses which, in the opinion of
the Reinsured, are likely to result in a claim hereunder or are incurred in the Reinsured’s books
at 50% of the retention hereunder and of all subsequent developments thereto that may materially
affect the position of the Reinsurers. Inadvertent omission or oversight in giving such notice
shall in no way affect the liability of the Reinsurers. However, the Reinsurers shall be informed
of such omission or oversight promptly upon its discovery.

     B. The Reinsured shall have the right to settle all claims under its Policies. All loss
settlements made by the Reinsured, within the terms and conditions of this Contract, and provided
that such settlement is not an ex-gratia settlement made without the prior approval of the
Reinsurers, shall be binding upon the Reinsurers, and the Reinsurers agree to pay or allow, as the
case may be, their share of each such settlement in accordance with this Contract all amounts for
which it is obligated immediately upon being furnished by the Reinsured with

 

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12.

Reasonable Evidence of the Amount Due. Reasonable Evidence of the Amount Due shall consist of
a notarized certification by an Officer of the Reinsured that the amount requested to be paid and
submitted by the certification is due and payable to the Reinsured by the Reinsurers under the
terms and conditions of this Contract.

     C. “Ex-gratia settlements”, as used in this Contract, will mean all settlements of losses not
covered under the express terms of the policies that are primarily motivated by the customer
business relationship. “Ex-gratia settlements” will not include settlements of losses which (1)
arise from court decisions or other judicial acts or orders, (2) arise from the good faith position
of the Reinsured of probable coverage under the Policies, nor (3) settlements made to avoid costs
that could be incurred in connection with potential or actual litigation relating to coverage
issues arising under the Policies subject to this Contract.

     D. In addition, the Reinsured shall furnish the Reinsurers a periodic statement showing the
unearned premium, the total reserves for outstanding Net Losses including loss adjustment expense,
and such other information as may be required by the Reinsurers for completion of their NAIC annual
statements.

ARTICLE X — ORIGINAL CONDITIONS

          The Reinsurer’s liability to the Reinsured shall be subject in all respects to the same risks,
terms, clauses, conditions, interpretations, alterations, modifications cancellations and waivers
as the respective insurances of the Reinsured’s Policies and the Reinsurer shall pay losses as may
be paid thereon, the true intent of this Contract being that in each and every case to which this
Contract applies, the Reinsurer shall follow the settlements of the Reinsured, subject always to
the limits, terms and conditions of this Contract.

ARTICLE XI — ERRORS AND OMISSIONS

          Inadvertent delays, errors or omissions made by the Reinsured in connection with this Contract
(including the reporting of claims) shall not relieve the Reinsurer from any liability which would
have attached had such delay, error or omission not occurred, provided always that such delay,
error or omission shall be rectified as soon as possible after discovery by the Reinsured’s Home
Office. Nothing in this Article shall, however, be held to override the provisions of the Article
entitled “Review”.

 

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ARTICLE XII — CURRENCY 

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

ARTICLE XIII — FEDERAL EXCISE TAX AND OTHER TAXES

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

     B. In consideration of the terms under which this Contract is issued, the Reinsured undertakes
not to claim any deduction of the premium hereon when making Canadian Tax returns or when making
tax returns, other than Income or Profits Tax returns, to any State or Territory of the United
States of America or to the District of Columbia.

ARTICLE XIV — ACCESS TO RECORDS 

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

 

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ARTICLE XV — RESERVES

(Unless otherwise required by law to obtain full credit for this Contract, in recognition of the
security in place under the Lloyd’s Credit for Reinsurance Trust, the provisions of this Article
shall not apply to participating Lloyd’s syndicates.)

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

     B. The Reinsurer shall secure such Obligations, within thirty (30) days after the receipt of
the Reinsured’s written request regarding the Reinsurer’s share of Obligations under this Contract
(but not later than December 31) of each year by either:

	 	1.	 	Clean, irrevocable, and unconditional evergreen letter(s) of
credit issued and confirmed, if confirmation is required by the applicable
insurance regulatory authorities, by a qualified United States financial
institution as defined under the Insurance Law of the Reinsured’s domiciliary
state and acceptable to the Reinsured and to insurance regulatory authorities;
	 
	 	2.	 	A trust account meeting at least the standards of New York’s
Insurance Regulation 114 and the Insurance Law of the Reinsured’s domiciliary
state; or
	 
	 	3.	 	Cash advances or funds withheld or a combination of both,
which will be under the exclusive control of the Reinsured (“Funds Deposit”).

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

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

 

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	 	2.	 	The amount of Net Loss and other amounts paid by the Reinsured for which
the Reinsurer is responsible to the Reinsured but has not yet paid;
	 
	 	3.	 	The amount of ceded reserves for Net Loss for which the
Reinsurer is responsible to the Reinsured;
	 
	 	4.	 	The amount of return and refund premiums paid by the
Reinsured for which the Reinsurer is responsible to the Reinsured but has not
yet paid.

     D. The Reinsured, or its successors in interest, may draw, at any time and from time to time,
upon the:

	 	1.	 	Established letter of credit (or subsequent cash deposit);
	 
	 	2.	 	Established trust account (or subsequent cash deposit); or
	 
	 	3.	 	Funds Deposit;

without diminution or restriction because of the insolvency of either the Reinsured or the
Reinsurer for one or more of the following purposes set forth below:

     E. Draws shall be made only for the following purposes:

	 	1.	 	To make payment to and reimburse the Reinsured for the
Reinsurer’s share of Net Loss and other amounts paid by the Reinsured under
its Policies and for which the Reinsurer is responsible under this Contract
that is due to the Reinsured but unpaid by the Reinsurer including but not
limited to the Reinsurer’s share of premium refunds and returns; and
	 
	 	2.	 	To obtain a cash advance of the entire amount of the
remaining balance under any letter of credit in the event that the Reinsured:

	 	a)	 	has received notice of non-renewal or
expiration of the letter of credit or trust account;
	 
	 	b)	 	has not received assurances satisfactory to
the Reinsured of any required increase in the amount of the letter of
credit or trust account, or its replacement or other continuation of
the letter of credit or trust account at least thirty (30) days
before its stated expiration date;

 

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	 	c)	 	has been made aware that others may attempt to attach or otherwise
place in jeopardy the security represented by the letter of credit
or trust account; or
	 
	 	d)	 	has concluded that the trustee or issuing
(or confirming) bank’s financial condition is such that the security
represented by the letter of credit or trust account may be in
jeopardy;

	 	 	 	and under any of those circumstances where the Reinsurer’s entire Obligations, or
part thereof, under this Contract remain un-liquidated and un-discharged at least
thirty (30) days prior to the stated expiration date or at the time the Reinsured
learns of the possible jeopardy to the security represented by the letter of credit
or trust account.

     F. If the Reinsured draws on the letter of credit or trust account to obtain a cash advance,
the Reinsured will hold the amount of the cash advance so obtained in the name of the Reinsured in
any qualified United States financial institution as defined under the Insurance Law of the
Reinsured’s domiciliary state in trust solely to secure the Obligations referred to above and for
the use and purposes enumerated above and to return any balance thereof to the Reinsurer:

	 	1.	 	Upon the complete and final liquidation and discharge of all
of the Reinsurer’s Obligations to the Reinsured under this Contract; or
	 
	 	2.	 	In the event the Reinsurer subsequently provides alternate or
replacement security consistent with the terms hereof and acceptable to the
Reinsured.

     G. The Reinsured will prepare and forward at annual intervals or more frequently as determined
by the Reinsured, but not more frequently than quarterly to the Reinsurer a statement for the
purposes of this Article, showing the Reinsurer’s share of Obligations as set forth above. If the
Reinsurer’s share thereof exceeds the then existing balance of the security provided, the Reinsurer
will, within fifteen (15) days of receipt of the Reinsured’s statement, but never later than
December 31 of any year, increase the amount of the letter of credit, (or subsequent cash deposit),
trust account or Funds Deposit to the required amount of the Reinsurer’s share of Obligations set
forth in the Reinsured’s statement, but never later than December 31 of any year. If the
Reinsurer’s share thereof is less

 

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than the then existing balance of the cash advance, the Reinsured will release the excess
thereof to the Reinsurer upon the Reinsurer’s written request. The Reinsurer will not attempt to
prevent the Reinsured from holding the cash advance or Funds Deposit so long as the Reinsured is
acting in accordance with this Article.

     H. Any assets deposited to a trust account will be valued according to their current fair
market value and will consist only of cash (U.S. legal tender), certificates of deposit issued by a
qualified United States financial institution as defined under the Insurance Law of the Reinsured’s
domiciliary state and payable in cash, and investments of the types no less conservative than those
specified in Section 1404 (a)(1)(2)(3) (8) and (10) of the New York Insurance Law and which are
admitted assets under the Insurance Law of the Reinsured’s domiciliary state. Investments issued
by the parent, subsidiary, or affiliate of either the Reinsured or the Reinsurer will not be
eligible investments. All assets so deposited will be accompanied by all necessary assignments,
endorsements in blank, or transfer of legal title to the trustee in order that the Reinsured may
negotiate any such assets without the requirement of consent or signature from the Reinsurer or any
other entity.

     I. All settlements of account between the Reinsured and the Reinsurer will be made in cash or
its equivalent. All income earned and received by the amount held in an established trust account
will be added to the principal.

     J. The Reinsured’s “successors in interest” will include those by operation of law, including
without limitation, any liquidator, rehabilitator, receiver, or conservator.

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

ARTICLE XVI — SERVICE OF SUIT

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

 

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

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

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

     E. Further, as required by and pursuant to any statute of any state, territory or district of
the United States which makes provision therefore, the Reinsurer hereby designates the
Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose
in the statute, or his successor or successors in office, as their true and lawful attorney upon
whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf
of the Reinsured or any beneficiary hereunder arising out of this Contract, and hereby designates
the above-named as the person to whom the said officer is authorized to mail such process or a true
copy thereof.

ARTICLE XVII — ARBITRATION

     A. Any and all disputes between the Reinsured and the Reinsurer arising out of, relating to,
or concerning this Contract, whether sounding in contract or tort and whether arising during or
after termination of this Contract, shall be submitted to the decision of a board of arbitration
composed of two arbitrators and an umpire (“Board”) meeting at a site in the city in which the
principal headquarters of the Reinsured are located. The arbitration shall be conducted under the
Federal Arbitration Act and shall proceed as set forth below.

 

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     B. A notice requesting arbitration, or any other notice made in connection therewith, shall be
in writing and be sent certified or registered mail, return receipt requested to the affected
parties. The notice requesting arbitration shall state in particulars all issues to be resolved in
the view of the claimant, shall appoint the arbitrator selected by the claimant and shall set a
tentative date for the hearing, which date shall be no sooner than ninety (90) days and no later
than one hundred fifty (150) days from the date that the notice requesting arbitration is mailed.
Within thirty (30) days of receipt of claimant’s notice, the respondent shall notify claimant of
any additional issues to be resolved in the arbitration and of the name of its appointed
arbitrator.

     C. Unless otherwise mutually agreed, the members of the Board shall be impartial and
disinterested and shall be current or former senior officers of property-casualty insurance
companies, reinsurance companies, or Lloyds Underwriters or active or inactive lawyers with at
least twenty (20) years of experience in insurance and reinsurance not currently representing any
party participating in the arbitration. The Reinsured and the Reinsurer as aforesaid shall each
appoint an arbitrator and the two (2) arbitrators shall choose a third arbitrator before
instituting the hearing. As time is of the essence, if the respondent fails to appoint its
arbitrator within thirty (30) days after having received claimant’s written request for
arbitration, the claimant is authorized to and shall appoint the second arbitrator. If the two (2)
arbitrators fail to agree upon the appointment of an umpire within thirty (30) days after
notification of the appointment of the second arbitrator, within ten (10) days thereof, the two (2)
arbitrators shall request ARIAS U. S. (“ARIAS”) to apply its procedures to appoint a third
arbitrator for the arbitration with the qualifications set forth above in this Article. If the use
of ARIAS procedures fails to name an umpire, either party may apply to the court named below to
appoint an umpire with the above required qualifications. The third arbitrator shall promptly
notify in writing all parties to the arbitration of his selection and of the scheduled date for the
hearing. Upon resignation or death of any member of the Board, a replacement shall be appointed in
the same fashion as the resigning or deceased member was appointed.

     D. The claimant and respondent shall each submit initial briefs to the Board outlining the
facts, the issues in dispute and the basis, authority, and reasons for their respective positions
within thirty (30) days of the date of notice of appointment of the umpire. The claimant and the
respondent may submit a reply brief to the Board within ten (10) days after filing of the initial
brief(s). Initial and reply briefs may be amended by the submitting party at any time, but not
later than ten (10) days prior to the date of commencement of the arbitration hearing. Reasonable
responses shall be allowed at the arbitration hearing to new material contained in any amendments
filed to the briefs but not previously responded to.

 

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     E. The Board shall consider this Contract as an honorable engagement and shall make a decision
and award with regard to the terms expressed in this Contract, the original intentions of the
parties to the extent reasonably ascertainable, and the custom and usage of the property and
casualty insurance and reinsurance business.

     F. The Board shall be relieved of all judicial formalities and the decision and award shall be
based upon a hearing in which evidence shall be allowed though the formal rules of evidence shall
not strictly apply. Cross examination and rebuttal shall be allowed. At its own election or at
the request of the Board, either party may submit a post-hearing brief for consideration of the
Board within twenty (20) days of the close of the hearing.

     G. The Board shall render its decision and award in writing within thirty (30) days following
the close of the hearing or the submission of post-hearing briefs, whichever is later, unless the
parties consent to an extension. Every decision by the Board shall be by a majority of the members
of the Board and each decision and award by the majority of the members of the Board shall be final
and binding upon all parties to the proceeding.

     H. The Board may award (i) interest at a rate of up to four hundred (400) basis points above
the prime rate as published in the Wall Street Journal (eastern edition), but not less than five
percent (5%) per annum, on the date of the award calculated from the date the Board determines that
any amounts due the prevailing party should have been paid to the prevailing party, (ii) attorney
fees and punitive, exemplary, or treble damages if the actions of either party in prosecuting,
defending or causing the arbitration are made in bad faith and constitute outrageous behavior in
the opinion of the Board.

     I. Either party may apply to a court of competent jurisdiction for an order confirming any
decision and the award; a judgment of that Court shall thereupon be entered on any decision or
award. If such an order is issued, the attorneys’ fees of the party so applying and court costs
will be paid by the party against whom confirmation is sought.

     J. Except in the event of a consolidated arbitration, each party shall bear the expense of the
one arbitrator appointed by it and shall jointly and equally bear with the other party the expense
of any stenographer requested, and of the umpire. The remaining costs of the arbitration
proceedings shall be finally allocated by the Board.

 

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     K. Subject to customary and recognized legal rules of privilege, each party participating in
the arbitration shall have the obligation to produce those documents and as witnesses at the
arbitration those of its employees, those of its affiliates as any other participating party
reasonably requests which are relevant providing always that the same witnesses and documents be
obtainable and relevant to the issues before the arbitration and not be unduly burdensome or
excessive.

     L. The parties may mutually agree as to pre-hearing discovery prior to the arbitration hearing
and in the absence of agreement, upon the request of any party, pre-hearing discovery may be
conducted as the Board shall determine in its sole discretion to be in the interest of fairness,
full disclosure, and a prompt hearing, decision and award by the Board.

     M. The Board shall be the final judge of the procedures of the Board, the conduct of the
arbitration, of the rules of evidence, the rules of privilege and production and of excessiveness
and relevancy of any witnesses and documents upon the petition of any participating party. To the
extent permitted by law, the Board shall have the authority to issue subpoenas and other orders to
enforce their decisions. The Board shall also have the authority to issue interim decisions or
awards in the interest of fairness, full disclosure, and a prompt and orderly hearing and decision
and award by the Board.

     N. Upon request of the Reinsured made to the affected Reinsurers and to the Board not later
than ten (10) days after the third arbitrator’s appointment, the Board may order a consolidated
hearing between the Reinsured and all affected Reinsurers participating in this Contract if the
Board is satisfied in its discretion that the issues in dispute affect more than one Reinsurer and
a consolidated hearing would be in the interest of fairness, and a prompt and cost effective
resolution of the issues in dispute.

     O. If the parties mutually agree to or the Board orders a consolidated hearing, all other
affected participating Reinsurers shall join and participate in the arbitration under time frames
established by the Board and will be bound by the Board’s decision and award unless excused by the
Board in its discretion.

     P. Any Reinsurer may decline to actively participate in a consolidated arbitration if in
advance of the hearing, that Reinsurer shall file with the Board a written agreement in form
satisfactory to the Board to be bound by the decision and award of the Board in the same fashion
and to the same degree as if it actively participated in the arbitration.

 

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     Q. In the event of an order of consolidation by the Board, the arbitrator appointed by the
original Reinsurer shall be subject to being and may be replaced within thirty (30) days of the
decision to have a consolidated arbitration by an arbitrator named collectively by the Reinsurers
or in the absence of agreement, by the Lead Reinsurer, or if there is no Lead Reinsurer, the
Reinsurer with the largest participation in this Contract affected by the dispute. In the event
two or more Reinsurers affected by the dispute each have the same largest participation, they shall
agree among themselves as to the replacement arbitrator, if any, to be appointed. The third
arbitrator shall be the final determiner in the event of any dispute over replacement of that
arbitrator. All other aspects of the arbitration shall be conducted as provided for in this
Article provided that (1) each party actively participating in the consolidated arbitration will
have the right to its own attorney, position, and related claims and defenses; (2) each party will
not, in presenting its position, be prevented from presenting its position by the position set
forth by any other party; and (3) the cost and expense of the arbitration, exclusive of attorney’s
fees (which will be borne exclusively by the respective retaining party) but including the expense
of any stenographer by each party actively participating in the consolidated arbitration or as the
Board shall determine to be fair and appropriate under the circumstances.

ARTICLE XVIII — INSOLVENCY 

     A. In the event of insolvency and the appointment of a conservator, liquidator, or statutory
successor of the Reinsured, the portion of any risk or obligation assumed by the Reinsurer shall be
payable to the conservator, liquidator, or statutory successor on the basis of claims allowed
against the insolvent Reinsured by any court of competent jurisdiction or by any conservator,
liquidator, or statutory successor of the Reinsured having authority to allow such claims, without
diminution because of that insolvency, or because the conservator, liquidator, or statutory
successor has failed to pay all or a portion of any claims.

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

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

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

ARTICLE XIX — CLAIMS COOPERATION

     When so requested in writing, the Reinsured shall afford the Reinsurer or its representatives
an opportunity to be associated with the Reinsured, at the expense of the Reinsurer, in the defense
of any claim, suit or proceeding involving this Contract, and the Reinsured and the Reinsurer shall
cooperate in every respect in the defense of such claim, suit or proceeding, provided the Reinsured
shall have the right to make any decision in the event of disagreement over any matter of defense
or settlement subject always to the conditions of the Article entitled “Original Conditions”.

ARTICLE XX — CONFIDENTIALITY

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

 

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

ARTICLE XXI — LATE PAYMENTS 

     A. Payments from the Reinsurer to the Reinsured shall have as a due date the date on which the
Reinsured Reasonable Evidence of Amount Due is received by the Reinsurer, and shall be overdue
sixty (60) days thereafter. Payments due from the Reinsurer to the Reinsured will not be considered
overdue if the Reinsurer requests, in writing, that such payment be made by drawing on a letter of
credit or other similar method of funding that has been established for this Contract, provided
that there is an adequate balance in place, and further provided that such advice to draw is
received by the Reinsured within the sixty (60) day deadline set forth above. Payments from the
Reinsured to the Reinsurer will have a due date as the date specified in this Contract and will be
overdue sixty (60) days thereafter. Premium adjustments will be overdue sixty (60) days from the
Contract due date or one hundred (120) days after the expiration or renewal date, whichever is
greater.

     B. The Reinsured will provide the Reinsurer with reasonable evidence of amount Due,
supplemented by copies of any proof of loss and a copy of the claim adjuster’s report(s) or any
other reasonable evidence of indemnification. If subsequent to receipt of this evidence, the
information contained therein is unreasonably insufficient or not in substantial accordance with
the contractual conditions of this Contract, then the payment due date as specified above will be
deemed to be the date upon which the Reinsurer received the additional information necessary to
approve payment of the claim and the claim is presented in a reasonably acceptable manner. This
paragraph is only for the purpose of establishing when a claim payment is overdue, and will not
alter the provisions of the Article entitled “Reports, Loss and Loss Settlements” or other
pertinent contractual stipulations of this Contract.

 

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     C. If payment is made of overdue amounts within thirty (30) days of the due date, overdue
amounts will bear simple interest from the overdue date at a rate determined by the one-month
London Interbank Offered Rate for the first business day of the calendar month in which the amount
becomes overdue, as published in The Wall Street Journal, plus four hundred (400) basis points to
be calculated weekly. If payment is made of overdue amounts more than thirty (30) days after the
due date, overdue amounts will bear simple interest from the overdue date at a rate determined by
the one-month London Interbank Offered Rate for the first business day of the calendar month in
which the amount becomes overdue, as published in The Wall Street Journal, plus four hundred basis
(400) points to be calculated weekly but in no event less than five percent (5%) simple interest.
If the sum of the compensating additional amount computed in respect of any overdue payment is less
than 0.25% of the amount overdue, or $1,000, whichever is greater, and/or the overdue period is one
week or less, then the interest amount shall be waived. The basis point standards referred to above
shall be doubled if the late payment is due from a Reinsurer who is no longer an active reinsurance
market.

ARTICLE XXII — OFFSET 

     The Reinsured and the Reinsurer shall have the right to offset any balance or amounts due from
one party to the other under the terms of this Contract. The party asserting the right of offset
may exercise such right any time whether the balances due are on account of premiums or losses or
otherwise and immediately inform the Intermediary accordingly. In the event of the insolvency of
any party, offset shall be as permitted by applicable law.

ARTICLE XXIII — SPECIAL TERMINATION

     A. The Reinsured may terminate or commute this Contract upon the happening of any one of the
following circumstances at any time by the giving of fifteen (15) days prior written notice to the
Reinsurer:

	 	1.	 	The Reinsurer ceases active underwriting operations or a
State Insurance Department or other legal authority orders the Reinsurer to
cease writing business in all jurisdictions; or
	 
	 	2.	 	The Reinsurer has: a) become insolvent, b) been placed under
supervision (voluntarily or involuntarily), c) been placed into liquidation or
receivership, or d) had instituted against it proceedings for the appointment
of a supervisor, receiver, liquidator, rehabilitator, conservator or trustee
in bankruptcy, or other agent known by whatever name, to take possession of
its assets or control of its operations; or
	 
	 	3.	 	The Reinsurer’s (a) policyholders’ surplus (“PHS”) has been

 

Towers Perrin No. G26004.07

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26.

	 	 	 	reduced by whichever is greater, (i) twenty percent (20%) of the amount of
PHS at the inception of this Contract or (ii) twenty percent (20%) of the
amount of PHS stated in its last filed quarterly or annual statutory
statement with its state of domicile; or (b) AM Best’s insurer financial
strength rating becomes less than A- (N.B. as respects alien Reinsurers, a
Standard & Poor’s Insurance Rating of less than “BBB” will apply; as
respects Lloyd’s Syndicates where an AM Best insurer financial strength
rating is not available, a reduction of the Reinsurer’s S&P Lloyd’s
Syndicate Assessment (LSA) ranking from the LSA ranking that was in effect
at the inception of this Contract); or
	 
	 	4.	 	The Reinsurer has entered into a definitive agreement to (a)
become merged with, acquired or controlled by any company, corporation or
individual(s) not affiliated with or controlling the party’s operations
previously; or (b) directly or indirectly assign all or essentially all of its
entire liability for Obligations (as defined in the Article entitled
“Reserves”) under this Contract to another party without the Reinsured’s prior
written consent; or
	 
	 	5.	 	There is either (a) a severance or obstruction of free and
unfettered communication and/or normal commercial or financial intercourse
between the United States of America and the country in which the Reinsurer is
incorporated or has its principal office as a result of war, currency
regulations or any circumstances arising out of political, financial or
economic uncertainty; or (b) a severance (of any kind) of any two or more of
the following executives of the Reinsurer from active employment of the
Reinsurer during the most recent sixty (60) day period: President, Chief
Underwriting Officer, Chief Actuary, Chief Claims Officer or Chief Financial
Officer.

     B. In the event that notice of termination is given by reason of an event described in A3
above (the “Termination Notice”) and prior to the effective date of the termination (the
“Termination Date”), the Chief Financial Officer of the Reinsurer represents and certifies in
writing to the Reinsured that (i) the deterioration of the Reinsurer’s financial condition is the
direct and sole result of a recent major property catastrophe(s) or the result of an Act(s) of
Terrorism (either the “Event”) and (ii) that it is actively seeking and has a high probability of
successfully obtaining additional capital to substantially replace the capital loss because of the
Event (the “Extension Notice”), the Termination Date shall be extended an additional thirty (30)
days from the Termination Date (the “Extended Termination Date”). If prior to the Extended
Termination Date, the Chief Financial

 

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27.

Officer of the Reinsurer represents and certifies in writing to the Reinsured that (a) it has
raised sufficient capital so as to return its PHS to within five percent (5%) of the Reinsurer’s
PHS last filed with its domiciliary regulatory authorities prior to the Event, (b) obtained
reinstatement of its rating agency grade(s) to the level as existed immediately prior to the Event,
the Termination Notice shall be null and void. Otherwise, this Contract shall terminate on the
Extended Termination Date in the manner described in the Termination Notice.

     C. In the event the Reinsured elects termination, the Reinsured shall with the notice of
termination specify that termination will be on a cut-off basis and thus relieve the Reinsurer for
losses occurring subsequent to the Reinsurer’s specified termination date. The Reinsurer shall
within fifteen (15) days of the termination date return the liability for the unearned portion of
any ceded premium paid hereunder, calculated as of the termination date, and cash in that amount
and the minimum premium provisions, if any, shall be waived.

     D. In the event the Reinsured elects to commute, the Reinsurer shall return the sum total of
the net present value (“capitalized”) of the ceded (1) Reserves for Net Loss outstanding, (2)
Reserves for Net Loss incurred but not reported, and (3) unearned premium reserves. In the event
the parties are unable to agree on the capitalized value of the reserves to be returned to the
Reinsured, the Reinsured and the Reinsurer shall jointly appoint an independent and neutral actuary
experienced in such matters and the mutually agreed actuary shall render a decision. In the event
that the Reinsured and the Reinsurer are unable to agree upon a single actuary within thirty (30)
days, the parties shall ask the then current President of the Casualty Actuarial Society to appoint
an actuary with those qualifications within another thirty (30) days. The decision of the actuary
will be final and binding on both parties. The Reinsured and the Reinsurer shall share equally the
fees and expenses of the actuary. Upon payment of the amount so agreed or determined by the actuary
to the Reinsured, the Reinsurer and the Reinsured shall each be completely released from all
liability to each other under this Contract.

     E. If the Reinsurer is not otherwise obligated under the Article entitled “Reserves” of this
Contract, to provide the Reinsured security in order for the Reinsured to obtain credit for the
reinsurance provided by this Contract and the Reinsurer has not cured the conditions described
above, other than as expressed in conditions 4 and 5 above, the Reinsured shall also have the
option, if it does not elect the commutation option described above, to require the Reinsurer to
provide the Reinsured with collateral funding as if the Reinsurer were otherwise obligated to
provided security for the Reinsurer’s obligations under this Contract in an amount and manner and
as provided for under the Reserves Article of this Contract. The Reinsured shall have the option
to require the Reinsurer to provide collateral funding but, provided it is reasonably acceptable to
the Reinsured and any insurance regulatory authorities involved, the Reinsurer shall have the sole
option of determining the method of funding referred to above. In recognition of

 

Towers Perrin No. G26004.07

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28.

security a participating Reinsurer or Lloyd’s Syndicate may place under the terms of a master
trust agreement, such as the US Lloyd’s Credit for Reinsurance Trust, the provisions of this
Paragraph shall not apply to that participating Reinsurer or Lloyd’s Syndicate that has fully
funded 100% of the Obligations to the Reinsured, as the term Obligations is defined in the Article
entitled “Reserves”, pursuant to the terms of that trust agreement and the applicable funding
requirements and procedures.

ARTICLE XXIV — TERRORISM RECOVERY — TERRORISM RISK INSURANCE ACT OF 2002

     A. As respects the Insured Losses of the Reinsured, to the extent the Reinsured’s total
reinsurance recoverables for Insured Losses, whether collected or not, when combined with the
financial assistance available to the Reinsured under the Act exceeds the aggregate amount of
Insured Losses paid by the Reinsured, less any other recoveries or reimbursements, (the “Excess
Recovery”), a share of the Excess Recovery shall be allocated to the Reinsured and the Reinsurer.
The Reinsured’s share of the Excess Recovery shall be deemed to be an amount equal to the
proportion that the Reinsured’s Insured Losses bear to the Insurer’s total Insured Losses. The
Reinsurer’s share of the Excess Recovery shall be deemed to be an amount equal to the proportion
that the Reinsurer’s payment of Insured Losses under this Contract bears to the Reinsured’s total
collected reinsurance recoverables for Insured Losses. The Reinsured shall provide the Reinsurer
with all necessary data respecting the transactions covered under this Article.

     B. The method set forth herein for determining an Excess Recovery is intended to be consistent
with the United States Treasury Department’s construction and application of Section 103 (g)(2) of
the Act. To the extent it is inconsistent, it shall be amended to conform with such construction
and application, nevertheless the Reinsured shall be the sole judge as to the allocation of TRIA
Recoveries to this or to other reinsurance Contracts.

     C. “Act” as used herein shall mean the Terrorism Risk Insurance Act of 2002 and any subsequent
amendment thereof or any regulations promulgated thereunder. “Reinsured” shall have the same
meaning as “Insurer” under the Act and “Insured Losses”, and “Program Year” shall follow the
definitions as provided in the Act.

ARTICLE XXV — VARIOUS OTHER TERMS 

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

 

Towers Perrin No. G26004.07

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29.

assignment by the Reinsured of reinsurance recoverables to another party for collection.

     B. The territorial limits of this Contract shall be identical with those of the Reinsured’s
Policies.

     C. This Contract shall constitute the entire agreement between the parties with respect to the
Business Covered hereunder. There are no understandings between the parties other than as expressed
in this Contract or any amendment thereto. Any change or modification of this Contract shall be
null and void unless made by amendment to the Contract and signed by both parties or otherwise
clearly and unequivocally amended by exchange of letters or electronic mail. Nothing in this
Article shall act to preclude the introduction of submission-related documents in any dispute
between the parties.

     D. Except as may be provided in the Article entitled “Arbitration”, this Contract shall be
governed by and construed according to the laws of the Commonwealth of Pennsylvania, exclusive of
that state’s rules with respect to conflicts of law.

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

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

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

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

     I. Each party shall be excused for any reasonable failure or delay in performing any of its
respective obligations under this Contract, if such failure or delay is caused by Force Majeure.
“Force Majeure” shall mean any act of God, strike, lockout, act of public enemy, any accident,
explosion, fire, storm, earthquake, flood, drought, peril of sea, riot, embargo, war or foreign,
federal, state or municipal order or directive issued by a court or other authorized official,
seizure, requisition or allocation, any failure or delay of transportation, shortage of or

 

Towers Perrin No. G26004.07

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30.

inability to obtain supplies, equipment, fuel or labor or any other circumstance or event beyond
the reasonable control of the party relying upon such circumstance or event; provided, however,
that no such Force Majeure circumstance or event shall excuse any failure or delay beyond a period
exceeding ten (10) days from the date such performance would have been due but for such
circumstance or event.

     J. The obligations of each Reinsurer with respect to this Contract are several and not joint
and in the event of any failure or default by any Reinsurer to perform any of its obligations
hereunder, no other Reinsurer shall have any obligation with respect to such failure or default.

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

ARTICLE XXVI — INTERMEDIARY 

     A. Towers Perrin Forster & Crosby, Inc. is hereby recognized as the Intermediary negotiating
this Contract for all business hereunder. All communications (including but not limited to
notices, statements, premium, return premium, commissions, taxes, losses, loss adjustment expense,
salvages and loss settlements) relating thereto shall be transmitted to the Reinsured or the
Reinsurer through Towers Perrin, 1500 Market Street, Centre Square East, Philadelphia, PA
19102-4790. Payments by the Reinsured 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 Reinsured only to the extent that such payments are actually received by the Reinsured.

     B. Whenever notice is required within this Contract, such notice may be given by certified
mail, registered mail, or overnight express mail. Notice shall be deemed to be given on the date
received by the receiving party.

 

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SCHEDULE A

TARGET AREA ZIP CODES

	 	 	 	 	 
	ZIP CODE	 	US STATE	 	US COUNTY
	10022
	 	NEW YORK	 	NEW YORK
	89109
	 	NEVADA	 	CLARK
	10017
	 	NEW YORK	 	NEW YORK
	10036
	 	NEW YORK	 	NEW YORK
	10019
	 	NEW YORK	 	NEW YORK
	10020
	 	NEW YORK	 	NEW YORK
	60606
	 	ILLINOIS	 	COOK
	10001
	 	NEW YORK	 	NEW YORK
	10038
	 	NEW YORK	 	NEW YORK
	22102
	 	VIRGINIA	 	FAIRFAX
	10004
	 	NEW YORK	 	NEW YORK
	10021
	 	NEW YORK	 	NEW YORK
	60603
	 	ILLINOIS	 	COOK
	55402
	 	MINNESOTA	 	HENNEPIN
	92618
	 	CALIFORNIA	 	ORANGE
	23607
	 	VIRGINIA	 	NEWPORT NEWS CITY
	90245
	 	CALIFORNIA	 	LOS ANGELES (REST OF)
	60611
	 	ILLINOIS	 	COOK
	94104
	 	CALIFORNIA	 	SAN FRANCISCO
	90278
	 	CALIFORNIA	 	LOS ANGELES (REST OF)
	92101
	 	CALIFORNIA	 	SAN DIEGO

Doc#: 212081 10/17/2007

 

Towers Perrin No. G26004.07

FINALexv10w6

 

Exhibit 10.6

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

			
	 	 	 
	07\P2Z1059
	 	

 

 

Table of Contents

	 	 	 	 	 	 	 
	Article	 	 	 	Page
	I

	 	Classes of Business Reinsured
	 	 	1	 
	II

	 	Commencement and Termination
	 	 	1	 
	III

	 	Special Commutation
	 	 	3	 
	IV

	 	Territory (BRMA 51A)
	 	 	5	 
	V

	 	Exclusions
	 	 	5	 
	VI

	 	Retention and Limit
	 	 	8	 
	VII

	 	Reinstatement
	 	 	8	 
	VIII

	 	Premium
	 	 	8	 
	IX

	 	Definitions
	 	 	10	 
	X

	 	Other Reinsurance
	 	 	11	 
	XI

	 	Loss Occurrence
	 	 	11	 
	XII

	 	Loss Notices and Settlements
	 	 	13	 
	XIII

	 	Salvage and Subrogation
	 	 	13	 
	XIV

	 	Offset (BRMA 36D)
	 	 	13	 
	XV

	 	Access to Records (BRMA 1D)
	 	 	13	 
	XVI

	 	Liability of the Reinsurer
	 	 	14	 
	XVII

	 	Net Retained Lines (BRMA 32B)
	 	 	14	 
	XVIII

	 	Errors and Omissions (BRMA 14F)
	 	 	14	 
	XIX

	 	Currency (BRMA 12A)
	 	 	14	 
	XX

	 	Taxes (BRMA 50B)
	 	 	14	 
	XXI

	 	Federal Excise Tax
	 	 	15	 
	XXII

	 	Funding Requirements
	 	 	15	 
	XXIII

	 	Insolvency
	 	 	16	 
	XXIV

	 	Arbitration
	 	 	17	 
	XXV

	 	Service of Suit
	 	 	18	 
	XXVI

	 	Agency Agreement
	 	 	19	 
	XXVII

	 	Governing Law
	 	 	19	 
	XXVIII

	 	Confidentiality
	 	 	19	 
	XXIX

	 	Severability
	 	 	19	 
	XXX

	 	Intermediary (BRMA 23A)
	 	 	19	 
	 

	 	Schedule A	 	 	 	 

			
	 	 	 
	07\P2Z1059
	 	

 

 

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

(hereinafter referred to collectively as the “Company”)

by

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the “Reinsurer7#148;)

Article I — Classes of Business Reinsured

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

Article II — Commencement and Termination

	A.	 	This Contract shall become effective at 12:01 a.m., Local Standard Time at the location where
the loss occurrence commences, June 1, 2007, with respect to losses arising out of loss
occurrences commencing at or after that time and date, and shall remain in force until 12:01
a.m., Local Standard Time at the location where the loss occurrence commences, June 1, 2008.
	 
	B.	 	Notwithstanding the provisions of paragraph A above, if any of the following events occur on
or after the date lines are bound and, with the timing exceptions as qualified by
subparagraphs 1 and 2 below, before the termination of the Contract, the Company may terminate
a Subscribing Reinsurer’s percentage share in this Contract:

			
	 	 	 
	07\P2Z1059

Page 1
	 	

 

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

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

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

			
	 	 	 
	07\P2Z1059

Page 2
	 	

 

 

	 	d.	 	The date of the Company’s written notice to the Subscribing Reinsurer
advising of the termination; or
	 
	 	e.	 	The date of notice provided by the Subscribing Reinsurer (should the
Subscribing Reinsurer elect to provide one).

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

Article III — Special Commutation

	A.	 	In the event a Subscribing Reinsurer meets one or both of the following criteria, the Company
may require a commutation of that portion of any excess loss hereunder represented by any
outstanding claim or claims, including any related loss adjustment expense.

	 	1.	 	The Subscribing Reinsurer’s A.M. Best’s rating is assigned or downgraded below A-
(inclusive of “Not Rated” ratings) and/or Standard & Poor’s rating is assigned or
downgraded below BBB+; or
	 
	 	2.	 	The Subscribing Reinsurer ceases assuming new or renewal property treaty
reinsurance business.

Notwithstanding the foregoing, the provisions of this Article shall not apply to Subscribing
Reinsurers that (at the inception hereof) are rated A+ or higher by A.M. Best and have a
policyholders’ surplus (or the foreign equivalent thereto) of $2,000,000,000 or more.

“Outstanding claim or claims” shall be defined as known or unknown claims, including any billed
yet unpaid claims.

	B.	 	If the Company elects to require commutation as provided in paragraph A above, the Company
shall submit a Statement of Valuation of the outstanding claim or claims as of the last day of
the month immediately preceding the month in which the Company elects to require commutation,
as determined by the Company. Such Statement of Valuation shall include the elements
considered reasonable to establish the excess loss, including, but not limited to, paid
losses, paid loss adjustment expenses, outstanding losses, outstanding loss adjustment
expenses, incurred but not reported loss reserves established by the Company’s internal
division or the appropriate actuarial firm under external contract to the Company, salvage and
subrogation, and unearned reinsurance deposits, if any, and shall set forth or attach the
information relied upon by the Company and the methodology, including, but not limited to, the
present value calculation employed to calculate the excess loss. The Subscribing Reinsurer
shall then pay the amount requested within 30 calendar days of receipt of such Statement of
Valuation, unless the Subscribing Reinsurer needs additional information from the Company to
assess the Company’s Statement of Valuation or contests such amount.

			
	 	 	 
	07\P2Z1059

Page 3
	 	

 

 

	C.	 	If the Subscribing Reinsurer needs additional information from the Company to assess the
Company’s Statement of Valuation or contests the amount requested, the Subscribing Reinsurer
shall so notify the Company within 30 calendar days of receipt of the Company’s Statement of
Valuation. The Company shall supply any reasonably requested information to the Subscribing
Reinsurer within 30 calendar days of receipt of the notification. Within 45 calendar days of
the date of the notification or of the receipt of the information, whichever is later, the
Subscribing Reinsurer shall provide the Company with its Statement of Valuation of the
outstanding claim or claims as of the last day of the month immediately preceding the month in
which the Company elects to require commutation, as determined by the Subscribing Reinsurer.
Such Statement of Valuation shall include the elements considered reasonable to establish the
excess loss, including, but not limited to, paid losses, paid loss adjustment expenses,
outstanding losses, outstanding loss adjustment expenses, incurred but not reported loss
reserves established by the Subscribing Reinsurer’s internal division or the appropriate
actuarial firm under external contract to the Subscribing Reinsurer, salvage and subrogation,
and unearned reinsurance deposits, if any, and shall set forth or attach the information
relied upon by the Subscribing Reinsurer and the methodology, including, but not limited to,
the present value calculation employed to calculate the excess loss.
	 
	D.	 	In the event the Subscribing Reinsurer’s Statement of Valuation of the outstanding claim or
claims is viewed as unacceptable to the Company, the Company may either abandon the
commutation effort, or may seek to settle any difference by using an independent actuary
agreed to by the parties.
	 
	E.	 	If the parties cannot agree on an acceptable independent actuary within 30 calendar days of
the date of the Subscribing Reinsurer’s Statement of Valuation, then each party shall appoint
an actuary as party arbitrators for the limited and sole purpose of selecting an independent
actuary. If the actuaries cannot agree on an acceptable independent actuary within 30
calendar days of the date of the Subscribing Reinsurer’s Statement of Valuation, the Company
shall supply the Subscribing Reinsurer with a list of at least three proposed independent
actuaries, and the Subscribing Reinsurer shall select the independent actuary from that list.
	 
	F.	 	Upon selection of the independent actuary, both parties shall present their respective
written submissions to the independent actuary. The independent actuary may, at his or her
discretion, request additional information. The independent actuary shall issue his or her
decision within 45 calendar days after the written submissions have been filed and any
additional information has been provided.
	 
	G.	 	The decision of the independent actuary shall be final and binding. The expense of the
independent actuary shall be equally divided between the two parties. For the purposes of
this Article, unless mutually agreed otherwise, an “independent actuary” shall be an actuary
who satisfies each of the following criteria:

	 	1.	 	Is regularly engaged in the valuation of claims resulting from lines of business
subject to this Contract; and
	 
	 	2.	 	Is either a Fellow of the Casualty Actuarial Society or of the American Academy of
Actuaries; and
	 
	 	3.	 	Is disinterested and impartial regarding this commutation.

			
	 	 	 
	07\P2Z1059

Page 4
	 	

 

 

	H.	 	Notwithstanding paragraphs A, B and C above, in the event that the Subscribing Reinsurer no
longer meets the criteria set forth in subparagraphs 1 and 2 of paragraph A above, this
commutation may continue on a mutually agreed basis.
	 
	I.	 	Payment by the Subscribing Reinsurer of the amount requested in accordance with paragraph B,
C or F above, shall release the Subscribing Reinsurer from all further liability for any
outstanding claim or claims, known or unknown, under this Contract and shall release the
Company from all further liability for payments of salvage or subrogation amounts, known or
unknown, to the Subscribing Reinsurer under this Contract.
	 
	J.	 	In the event of any conflict between this Article and any other Article of this Contract, the
terms of this Article shall control.
	 
	K.	 	This Article shall survive the termination or expiration of this Contract.

Article IV — Territory (BRMA 51A)

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

Article V — Exclusions

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

	 	1.	 	Workers’ Compensation, Directors and Officers Liability, and Employers Liability
business.
	 
	 	2.	 	Product integrity and/or product tampering losses.
	 
	 	3.	 	Space and space related risks such as satellites, spacecraft, launch vehicles and
major components thereof from the beginning of transit to launch site.
	 
	 	4.	 	Offshore risks.
	 
	 	5.	 	Financial guarantee and insolvency.
	 
	 	6.	 	Assumed reinsurance.
	 
	 	7.	 	Mortgage Impairment insurances and similar kinds of insurances, however styled.
	 
	 	8.	 	Nuclear risks as defined in the “Nuclear Incident Exclusion Clause — Physical
Damage — Reinsurance” attached to and forming part of this Contract.
	 
	 	9.	 	Loss or damage caused by or resulting from war, invasion, hostilities, acts of
foreign enemies, civil war, rebellion, insurrection, military or usurped power, or
martial law or confiscation by order of any government or public authority.
	 
	 	10.	 	Loss or liability excluded under the provisions of the “Pools, Associations and
Syndicates Exclusion Clause” attached to and forming part of this Contract.

			
	 	 	 
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	11.	 	All liability of the Company arising by contract, operation of law, or otherwise,
from its participation or membership, whether voluntary or involuntary, in any insolvency
fund. “Insolvency fund” includes any guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, however denominated, established or governed,
which provides for any assessment of or payment or assumption by the Company of part or
all of any claim, debt, charge, fee or other obligation of an insurer, or its successors
or assigns, which has been declared by any competent authority to be insolvent, or which
is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in
whole or in part.
	 
	12.	 	Losses in respect of overhead transmission and distribution lines and their
supporting structures other than those on or within 1,000 feet of the insured premises.
It is understood and agreed that public utilities extension and/or suppliers extension
and/or contingent business interruption coverages are not subject to this exclusion,
provided that these are not part of a transmitters’ or distributors’ policy.
	 
	13.	 	Accident and Health, Casualty, Fidelity and/or Surety business.
	 
	14.	 	Loss, damage, cost or expense arising from seepage and/or pollution and/or
contamination, other than contamination from smoke. Nevertheless, this exclusion does not
preclude payment of the cost of removing debris of property damaged by a loss otherwise
covered hereunder, subject always to a limit of 25.0% of the Company’s property loss under
the applicable original policy.
	 
	15.	 	Notwithstanding any other provision to the contrary within this Contract or any
amendment thereto, loss, damage, cost or expense directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with any act of
terrorism, as defined herein, regardless of any other cause or event contributing
concurrently or in any other sequence to the loss.

An “act of terrorism” includes any act, or preparation in respect of action, or threat of
action, designed to influence the government de jure or de facto of any nation or any
political division thereof, or in pursuit of political, religious, ideological or similar
purposes to intimidate the public or a section of the public of any nation by any person
or group(s) of persons whether acting alone or on behalf of or in connection with any
organization(s) or government(s) de jure or de facto, and which:

	 	a.	 	Involves violence against one or more persons; or
	 
	 	b.	 	Involves damage to property; or
	 
	 	c.	 	Endangers life other than that of the person committing the action; or
	 
	 	d.	 	Creates a risk to health or safety of the public or a section of the
public; or
	 
	 	e.	 	Is designed to interfere with or to disrupt an electronic system.

Loss, damage, cost or expense directly or indirectly caused by, contributed to by,
resulting from, or arising out of or in connection with any action in controlling,
preventing, suppressing, retaliating against or responding to any act of terrorism.

			
	 	 	 
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Notwithstanding the above and subject otherwise to the terms, conditions and limitations
of this Contract, in respect only of personal lines this Contract will pay actual loss or
damage (but not related cost or expense) caused by any act of terrorism provided such act
is not directly or indirectly caused by, contributed to by, resulting from, or arising
out of or in connection with biological, chemical, radioactive, or nuclear pollution or
contamination or explosion.

	16.	 	Loss or liability in any way or to any extent arising out of the actual or alleged
presence or actual, alleged or threatened presence of fungi including, but not limited to,
mold, mildew, mycotoxins, microbial volatile organic compounds or other “microbial
contamination,” including:

	 	a.	 	Any supervision, instruction, recommendations, warnings, or advice given
or which should have been given in connection with the above; and
	 
	 	b.	 	Any obligation to share damages with or repay someone who must pay
damages because of such injury or damage.

For purposes of this exclusion, “microbial contamination” means any contamination, either
airborne or surface, which arises out of or is related to the presence of fungi, mold,
mildew, mycotoxins, microbial volatile organic compounds or spores, including, without
limitation, Penicillium, Aspergillus, Fusarium, Aspergillus Flavus and Stachybotrys
chartarum.

Losses resulting from the above causes do not in and of themselves constitute an event
unless arising out of one or more of the following perils, in which case this exclusion
does not apply:

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

Notice of any claims for mold-related losses must be given by the Company to the
Reinsurer, in writing, within 24 months after the commencement date of the loss
occurrence to which such claims relate.

	17.	 	Loss or liability excluded under the provisions of the “Electronic Data Endorsement B
(NMA 2915)” attached to and forming part of this Contract.
	 
	18.	 	Assessments made against the Company by the Florida Hurricane Catastrophe Fund
(FHCF).
	 
	19.	 	Assessments made against the Company by the Citizens Property Insurance Corporation
(CPIC).
	 
	20.	 	Business written under the United States National Flood Insurance Program.

			
	 	 	 
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Article VI — Retention and Limit

	A.	 	As respects each excess layer of reinsurance coverage provided by this Contract, the Company
shall retain and be liable for the first amount of ultimate net loss, shown as “Company’s
Retention” for that excess layer in Schedule A attached hereto, arising out of each loss
occurrence. The Reinsurer shall then be liable, as respects each excess layer, for the amount
by which such ultimate net loss exceeds the Company’s applicable retention, but the liability
of the Reinsurer under each excess layer shall not exceed the amount, shown as “Reinsurer’s
Per Occurrence Limit” for that excess layer in Schedule A attached hereto, as respects any one
loss occurrence.
	 
	B.	 	No claim shall be made under any excess layer of reinsurance coverage provided by this
Contract as respects any one loss occurrence unless at least two risks insured by the Company
are involved in such loss occurrence. For purposes of this Contract, the Company shall be the
sole judge of what constitutes one risk.

Article VII — Reinstatement

	A.	 	In the event all or any portion of the reinsurance under any excess layer of reinsurance
coverage provided by this Contract is exhausted by loss, the amount so exhausted shall be
reinstated immediately from the time the loss occurrence commences hereon. For each amount so
reinstated, the Company agrees to pay additional premium in accordance with the provisions of
the Premium Article.
	 
	B.	 	Notwithstanding anything stated herein, the liability of the Reinsurer under any excess layer
of reinsurance coverage provided by this Contract shall not exceed either of the following:

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

Article VIII — Premium

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

	 	1.	 	The amount shown as “Minimum Premium” for that excess layer in Schedule A attached
hereto if there has been no loss hereunder; or
	 
	 	2.	 	The percentage, shown as “Premium Rate” for that excess layer in Schedule A
attached hereto, of the Company’s gross earned premium during the term of this Contract.

	B.	 	The Company shall pay the Reinsurer a deposit premium for each excess layer of the amount,
shown as “Deposit Premium” for that excess layer in Schedule A attached hereto, in four equal
installments of the amount, shown as “Quarterly Deposit Premium” for that

			
	 	 	 
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excess layer in Schedule A attached hereto, on June 1, September 1 and December 1 of 2007 and March
1, 2008.

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

	D.	 	For each amount of limit reinstated for each excess layer in accordance with the
Reinstatement Article, the Company agrees to pay additional premium equal to the product of
the following:

	 	1.	 	The percentage of the occurrence limit for the excess layer reinstated (based
on the loss paid by the Reinsurer under that excess layer); times
	 
	 	2.	 	The final adjusted reinsurance premium, as calculated in accordance with
paragraph A above, for the excess layer reinstated for the term of this Contract
(exclusive of reinstatement premium).

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

	F.	 	In the event a Subscribing Reinsurer’s participation in this Contract is terminated under the
provisions of paragraph B of the Commencement and Termination Article, no deposit premium
shall be due after the effective date of termination, the minimum premium shall be waived, and
the reinsurance premium and reinstatement premium, if applicable, will be calculated in
accordance with the following formulas:

	 	1.	 	Reinsurance premium shall be the number of days the Subscribing Reinsurer
participates on this Contract divided by the number of days of the original term of this
Contract and the quotient thereof shall be multiplied by the Subscribing Reinsurer’s
percentage share of the final adjusted premium reported in accordance with paragraph C
above.
	 
	 	2.	 	Reinstatement premium shall be the product of the percentage determined in
accordance with the provisions of subparagraph 1 of paragraph D above and the amount
determined in accordance with the provisions of subparagraph 1 of paragraph F above.

			
	 	 	 
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	 	3.	 	In the event the incurred loss for any excess layer is greater than the sum of the
amounts from subparagraphs 1 and 2 of this paragraph F that are applicable to the same
excess layer, in lieu of the provisions of subparagraphs 1 and 2 of this paragraph F, the
Subscribing Reinsurer will receive premium equal to the lesser of:

	 	a.	 	An amount equal to the Subscribing Reinsurer’s percentage share of the
full reinsurance premium calculated in accordance with paragraph A (without regard
to the termination of the Subscribing Reinsurer’s share in accordance with the
provisions of paragraph B of the Commencement and Termination Article) plus any
reinstatement premium calculated in accordance with paragraph D; or
	 
	 	b.	 	The Subscribing Reinsurer’s percentage share of the incurred loss for the
same excess layer.

	G.	 	“Gross earned premium” as used herein is defined as earned premium of the Company for the
classes of business reinsured hereunder, before the deduction of any premiums ceded by the
Company for reinsurance which inures to the benefit of this Contract.

	H.	 	“Incurred loss” as used herein shall mean the Company’s ceded ultimate net loss plus the
Company’s ceded outstanding loss and loss adjustment expense reserves (including incurred but
not reported loss reserves) established by the Company’s internal division or the appropriate
actuarial firm under external contract to the Company.

Article IX — Definitions

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

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

	 	1.	 	“Loss in excess of policy limits” shall mean 90.0% of any amount paid or payable by
the Company in excess of its policy limits, but otherwise within the terms of its policy,
such loss in excess of the Company’s policy limits having been incurred because of, but
not limited to, failure by the Company to settle within the policy limits or by reason of
the Company’s alleged or actual negligence, fraud or bad faith in rejecting an offer of
settlement or in the preparation of the defense or in the trial of any action against its
insured or in the preparation or prosecution of an appeal consequent upon such an action.
	 
	 	2.	 	“Extra contractual obligations” shall mean 90.0% of any punitive, exemplary,
compensatory or consequential damages paid or payable by the Company, not covered by
any other provision of this Contract and which arise from the handling of any claim on
business subject to this Contract, such liabilities arising because of, but not limited
to, failure by the Company to settle within the policy limits or by reason of

			
	 	 	 
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the Company’s alleged or actual negligence, fraud or bad faith in rejecting an offer of
settlement or in the preparation of the defense or in the trial of any action against
its insured or in the preparation or prosecution of an appeal consequent upon such an
action. An extra contractual obligation shall be deemed, in all circumstances, to have
occurred on the same date as the loss covered or alleged to be covered under the policy.

Notwithstanding anything stated herein, the amount included in the ultimate net loss for any
one loss occurrence as respects loss in excess of policy limits and extra contractual
obligations shall not exceed 25.0% of the Company’s indemnity loss hereunder arising out of
that loss occurrence.

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

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

	C.	 	“Loss adjustment expense” as used herein shall mean expenses assignable to the investigation,
appraisal, adjustment, settlement, litigation, defense and/or appeal of specific claims,
regardless of how such expenses are classified for statutory reporting purposes. Loss
adjustment expense shall include, but not be limited to, declaratory judgments, interest on
judgments, expenses of outside adjusters, and a pro rata share of the salaries and expenses of
the Company’s field employees according to the time occupied adjusting such losses and
expenses of the Company’s officials incurred in connection with the losses, but shall not
include office expenses or salaries of the Company’s regular employees.

Article X — Other Reinsurance

	A.	 	The Company shall be permitted to carry excess per risk treaty reinsurance and facultative
reinsurance, recoveries under which shall inure to the benefit of this Contract.

	B.	 	Any loss reimbursement paid or payable to the Company under coverage provided by the Florida
Hurricane Catastrophe Fund shall inure to the benefit of this Contract.

Article XI — Loss Occurrence

	A.	 	The term “loss occurrence” shall mean the sum of all individual losses directly occasioned by
any one disaster, accident or loss or series of disasters, accidents or losses arising out of
one event which occurs within the area of one state of the United States or province of Canada
and states or provinces contiguous thereto and to one another. However, the duration and
extent of any one “loss occurrence” shall be limited to all individual losses sustained by the
Company occurring during any period of 168 consecutive hours arising out

			
	 	 	 
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of and directly occasioned by the same event, except that the term “loss occurrence” shall be
further defined as follows:

	 	1.	 	As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse
and water damage, all individual losses sustained by the Company occurring during any
period of 72 consecutive hours arising out of and directly occasioned by the same event.
However, the event need not be limited to one state or province or states or provinces
contiguous thereto.
	 
	 	2.	 	As regards riot, riot attending a strike, civil commotion, vandalism and malicious
mischief, all individual losses sustained by the Company occurring during any period of
72 consecutive hours within the area of one municipality or county and the municipalities
or counties contiguous thereto arising out of and directly occasioned by the same event.
The maximum duration of 72 consecutive hours may be extended in respect of individual
losses which occur beyond such 72 consecutive hours during the continued occupation of an
insured’s premises by strikers, provided such occupation commenced during the aforesaid
period.
	 
	 	3.	 	As regards earthquake (the epicenter of which need not necessarily be within the
territorial confines referred to in the introductory portion of this paragraph A) and
fire following directly occasioned by the earthquake, only those individual fire losses
which commence during the period of 168 consecutive hours may be included in the
Company’s “loss occurrence.”
	 
	 	4.	 	As regards “freeze,” only individual losses directly occasioned by collapse,
breakage of glass and water damage (caused by bursting frozen pipes and tanks) may be
included in the Company’s “loss occurrence.”
	 
	 	5.	 	As regards firestorms, brush fires, and any other fires or series of fires,
irrespective of origin (except as provided in subparagraphs 2 and 3 above), which spread
through trees, grassland or other vegetation, all individual losses sustained by the
Company which occur during any period of 168 consecutive hours within a 50-mile radius of
any fixed point selected by the Company may be included in the Company’s “loss
occurrence.” However, an individual loss subject to this subparagraph cannot be included
in more than one “loss occurrence.”

	B.	 	For all those “loss occurrences,” other than those referred to in subparagraph 2 of paragraph
A above, the Company may choose the date and time when any such period of consecutive hours
commences, provided that it is not earlier than the date and time of the occurrence of the
first recorded individual loss sustained by the Company arising out of that disaster, accident
or loss, and provided that only one such period of 168 consecutive hours shall apply with
respect to one event, except for any “loss occurrence” referred to in subparagraph 1 of
paragraph A above where only one such period of 72 consecutive hours shall apply with respect
to one event, regardless of the duration of the event.

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

			
	 	 	 
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the date and time of the occurrence of the first recorded individual loss sustained by the
Company arising out of that disaster, accident or loss.

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

Article XII — Loss Notices and Settlements

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

	B.	 	All loss settlements made by the Company, provided they are within the terms of this Contract
and the terms of the Company’s policies (except as respects loss in excess of policy limits
and extra contractual obligations) shall be binding upon the Reinsurer, and the Reinsurer
agrees to pay all amounts for which it may be liable upon receipt of reasonable evidence of
the amount paid (or scheduled to be paid within 14 days) by the Company.

Article XIII — Salvage and Subrogation

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

Article XIV — Offset (BRMA 36D)

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

Article XV — Access to Records (BRMA 1D)

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

			
	 	 	 
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Article XVI — Liability of the Reinsurer

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

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

Article XVII — Net Retained Lines (BRMA 32B)

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

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

Article XVIII — Errors and Omissions (BRMA 14F)

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

Article XIX — Currency (BRMA 12A)

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

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

Article XX — Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a
deduction in respect of the premium hereon when making tax returns, other than income or

			
	 	 	 
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profits tax returns, to any state or territory of the United States of America or the District of
Columbia.

Article XXI — Federal Excise Tax

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

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

Article XXII — Funding Requirements

	A.	 	The Reinsurer agrees to fund, within 30 days of the Company’s request, subject to receipt of
satisfactory information from the Company, its share of the unearned portion of any deposit
premium (determined as of the date that this paragraph A first applies to the Reinsurer
according to the provisions of subparagraph (a) and/or (b) below) and the Company’s ceded
outstanding loss and loss adjustment expense reserves (including incurred but not reported
loss reserves for known loss occurrences established by the Company) by:

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

if the Reinsurer:

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

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

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

	B.	 	With regard to funding in whole or in part by letters of credit, it is agreed that each
letter of credit will be in a form acceptable to insurance regulatory authorities involved,
will be issued for a term of at least one year and will include an “evergreen clause,” which
automatically extends the term for at least one additional year at each expiration date unless
written notice of non-renewal is given to the Company not less than 30 days prior to said
expiration date or longer where required by insurance regulatory authorities. The Company and
the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that
said letters of credit may be drawn upon by the Company or its successors in interest at any
time, without diminution because of the insolvency of the Company or the Reinsurer, but only
for one or more of the following purposes:

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

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

Article XXIII — Insolvency

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

			
	 	 	 
	07\P2Z1059

Page 16
	 	

 

 

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

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

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

Article XXIV — Arbitration

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

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

	C.	 	Upon written request of any party, each party shall choose an arbitrator and the two chosen
shall select a third arbitrator. If either party refuses or neglects to appoint an arbitrator
within 30 days after receipt of the written request for arbitration, the requesting party may
appoint a second arbitrator. If the two arbitrators fail to agree on the selection of a third
arbitrator within 30 days of their appointment, the Company shall petition the American
Arbitration Association to appoint the third arbitrator. If the American Arbitration
Association fails to appoint the third arbitrator within 30 days after it has been requested
to do so, either party may request a justice of a court of general jurisdiction of the state
in which the arbitration is to be held to appoint the third arbitrator. All arbitrators shall be active or
retired officers of insurance or reinsurance companies, or Lloyd’s London Underwriters, and

			
	 	 	 
	07\P2Z1059

Page 17	 	

 

 

disinterested in the outcome of the arbitration. Each party shall submit its case to the
arbitrators within 30 days of the appointment of the third arbitrator.

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

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

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

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

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

Article XXV — Service of Suit

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

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

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

			
	 	 	 
	07\P2Z1059

Page 18
	 	

 

 

Article XXVI — Agency Agreement

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

Article XXVII — Governing Law

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

Article XXVIII — Confidentiality

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

Article XXIX — Severability

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

Article XXX — Intermediary (BRMA 23A)

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

			
	 	 	 
	07\P2Z1059

Page 19
	 	

 

 

constitute payment to the Company only to the extent that such payments are actually received by
the Company.

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

Bala Cynwyd, Pennsylvania, this
17th day of July in the year 2007.

	 	 	 	 	 
	 	 	 
	 	Philadelphia Insurance Companies (for and on behalf of the “Company”) 	 
	 	 	 
	 	                        /s/ Christopher J. Maguire 	 
	 	CHRISTOPHER J. MAGUIRE, EVP & CUO
 	 
	 	(Print name and title) 	 
	 	 	 
	 

			
	 	 	 
	07\P2Z1059

Page 20	 	

 

 

Schedule A

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	First	 	Second	 	Third	 	Fourth	 	Fifth	 	Sixth
	 	 	Excess	 	Excess	 	Excess	 	Excess	 	Excess	 	Excess
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Company’s Retention
	 	$	10,000,000	 	 	$	20,000,000	 	 	$	50,000,000	 	 	$	100,000,000	 	 	$	150,000,000	 	 	$	205,000,000	 
	Reinsurer’s Per Occurrence Limit
	 	$	10,000,000	 	 	$	30,000,000	 	 	$	50,000,000	 	 	$	50,000,000	 	 	$	55,000,000	 	 	$	50,000,000	 
	Reinsurer’s Term Limit
	 	$	20,000,000	 	 	$	60,000,000	 	 	$	100,000,000	 	 	$	100,000,000	 	 	$	110,000,000	 	 	$	100,000,000	 
	Minimum Premium
	 	$	3,200,000	 	 	$	6,480,000	 	 	$	5,600,000	 	 	$	4,000,000	 	 	$	3,190,000	 	 	$	2,500,000	 
	Premium Rate
	 	 	0.8764856	%	 	 	1.7748834	%	 	 	1.5338499	%	 	 	1.0956071	%	 	 	0.8737466	%	 	 	0.6847544	%
	Deposit Premium
	 	$	4,000,000	 	 	$	8,100,000	 	 	$	7,000,000	 	 	$	5,000,000	 	 	$	3,987,500	 	 	$	3,125,000	 
	Quarterly Deposit Premium
	 	$	1,000,000	 	 	$	2,025,000	 	 	$	1,750,000	 	 	$	1,250,000	 	 	$	996,875	 	 	$	781,250	 

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

			
	 	 	 
	07\P2Z1059

Schedule A
	 	

 

 

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

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

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

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

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

	 	(a)	 	where Reassured does not have knowledge of such nuclear reactor power plant or
nuclear installation, or
	 
	 	(b)	 	where said insurance contains a provision excluding coverage for damage to property
caused by or resulting from radioactive contamination, however caused. However on and
after 1st January 1960 this sub-paragraph (b) shall only apply provided the said
radioactive contamination exclusion provision has been approved by the Governmental
Authority having jurisdiction thereof.

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

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

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

	7.	 	Reassured to be sole judge of what constitutes:

	 	(a)	 	substantial quantities, and
	 
	 	(b)	 	the extent of installation, plant or site.

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

	 	(a)	 	all policies issued by the Reassured on or before 31st December 1957 shall be free
from the application of the other provisions of this Clause until expiry date or 31st
December 1960 whichever first occurs whereupon all the provisions of this Clause shall
apply.
	 
	 	(b)	 	with respect to any risk located in Canada policies issued by the Reassured on or
before 31st December 1958 shall be free from the application of the other provisions of
this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all
the provisions of this Clause shall apply.

12/12/57

N.M.A. 1119

BRMA 35B

			
	 	 	 
	07\P2Z1059
	 	 

 

 

Pools, Associations and Syndicates Exclusion Clause

Section A:

Excluding:

	 	(a)	 	All business derived directly or indirectly from any Pool, Association or Syndicate
which maintains its own reinsurance facilities.
	 
	 	(b)	 	Any Pool or Scheme (whether voluntary or mandatory) formed after March 1, 1968 for
the purpose of insuring property whether on a country-wide basis or in respect of
designated areas. This exclusion shall not apply to so-called Automobile Insurance Plans
or other Pools formed to provide coverage for Automobile Physical Damage.

Section B:

It is agreed that business written by the Company for the same perils, which is known at the time
to be insured by, or in excess of underlying amounts placed in the following Pools, Associations or
Syndicates, whether by way of insurance or reinsurance, is excluded hereunder:

Industrial Risk Insurers,

Associated Factory Mutuals,

Improved Risk Mutuals,

Any Pool, Association or Syndicate formed for the purpose of writing

Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,

United States Aircraft Insurance Group,

Canadian Aircraft Insurance Group,

Associated Aviation Underwriters,

American Aviation Underwriters.

Section B does not apply:

	 	(a)	 	Where The Total Insured Value over all interests of the risk in question is less than
$250,000,000.
	 
	 	(b)	 	To interests traditionally underwritten as Inland Marine or stock and/or contents
written on a blanket basis.
	 
	 	(c)	 	To Contingent Business Interruption, except when the Company is aware that the key
location is known at the time to be insured in any Pool, Association or Syndicate named
above, other than as provided for under Section B(a).
	 
	 	(d)	 	To risks as follows:

Offices, Hotels, Apartments, Hospitals, Educational Establishments, Public Utilities
(other than railroad schedules) and builder’s risks on the classes of risks specified in
this subsection (d) only.

Where this clause attaches to Catastrophe Excesses, the following Section C is added:

Section C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the Company from its
participation in residual market mechanisms including but not limited to:

	 	(1)	 	The following so-called “Coastal Pools”:

Alabama Insurance Underwriting Association

Louisiana Citizens Property Insurance Corporation

Mississippi Windstorm Underwriting Association

North Carolina Insurance Underwriting Association

South Carolina Windstorm and Hail Underwriting Association

Texas Windstorm Insurance Association

AND

	 	(2)	 	All “Fair Plan” and “Rural Risk Plan” business

			
	 	 	 
	07\P2Z1059

Page 1 of 2
	 	 

 

 

AND

	 	(3)	 	The California Earthquake Authority (“CEA”)

for all perils otherwise protected hereunder shall not be excluded, except, however, that this
reinsurance does not include any increase in such liability resulting from:

	 	(i)	 	The inability of any other participant in such “Coastal Pool” and/or “Fair Plan”
and/or “Rural Risk Plan” and/or Residual Market Mechanisms to meet its liability.
	 
	 	(ii)	 	Any claim against such “Coastal Pool” and/or “Fair Plan” and/or “Rural Risk Plan”
and/or Residual Market Mechanisms, or any participant therein, including the Company,
whether by way of subrogation or otherwise, brought by or on behalf of any insolvency fund
(as defined in the Insolvency Fund Exclusion Clause incorporated in this Contract).

Section D:

Notwithstanding Section C above, in respect of the CEA, where an assessment is made against the
Company by the CEA, the Company may include in its Ultimate Net Loss only that assessment directly
attributable to each separate loss occurrence covered hereunder. The Company’s initial capital
contribution to the CEA shall not be included in the Ultimate Net Loss.

 

	 	 	 	 	 
	NOTES:	 	Wherever used herein the terms:
	 
	 

	 	“Company”
	 	shall be understood to mean “Company,”
“Reinsured,” “Reassured” or whatever other
term is used in the attached reinsurance
document to designate the reinsured company
or companies.
	 
	 

	 	“Agreement”
	 	shall be understood to mean “Agreement,”
“Contract,” “Policy” or whatever other term
is used to designate the attached reinsurance
document.
	 
	 

	 	“Reinsurers”
	 	shall be understood to mean “Reinsurers,”
“Underwriters” or whatever other term is used
in the attached reinsurance document to
designate the reinsurer or reinsurers.

			
	 	 	 
	07\P2Z1059

Page 2 of 2
	 	 

 

 

\

Electronic Data Endorsement B

	1.	 	Electronic Data Exclusion
	 
	 	 	Notwithstanding any provision to the contrary within the Contract or any endorsement thereto,
it is understood and agreed as follows:-

	 	a)	 	This Contract does not insure loss, damage, destruction, distortion, erasure,
corruption or alteration of ELECTRONIC DATA from any cause whatsoever (including but not
limited to COMPUTER VIRUS) or loss of use, reduction in functionality, cost, expense of
whatsoever nature resulting therefrom, regardless of any other cause or event contributing
concurrently or in any other sequence to the loss.
	 
	 	 	 	ELECTRONIC DATA means facts, concepts and information converted to a form useable for
communications, interpretation or processing by electronic and electromechanical data
processing or electronically controlled equipment and includes programs, software and
other coded instructions for the processing and manipulation of data or the direction and
manipulation of such equipment.
	 
	 	 	 	COMPUTER VIRUS means a set of corrupting, harmful or otherwise unauthorized instructions
or code including a set of maliciously introduced unauthorized instructions or code,
programmatic or otherwise, that propagate themselves through a computer system or network
of whatsoever nature. COMPUTER VIRUS includes but is not limited to “Trojan Horses,”
“worms” and “time or logic bombs.”
	 
	 	b)	 	However, in the event that a peril listed below results from any of the matters
described in paragraph a) above, this Contract, subject to all its terms, conditions and
exclusions, will cover physical damage occurring during the Contract period to property
insured by this Contract directly caused by such listed peril.
	 
	 	 	 	Listed Perils
	 
	 	 	 	Fire

Explosion

	2.	 	Electronic Data Processing Media Valuation
	 
	 	 	Notwithstanding any provision to the contrary within the Contract or any endorsement thereto,
it is understood and agreed as follows:-
	 
	 	 	Should electronic data processing media insured by this Contract suffer physical loss or damage
insured by this Contract, then the basis of valuation shall be the cost of the blank media plus
the costs of copying the ELECTRONIC DATA from back-up or from originals of a previous
generation. These costs will not include research and engineering nor any costs of recreating,
gathering or assembling such ELECTRONIC DATA. If the media is not repaired, replaced or
restored the basis of valuation shall be the cost of the blank media. However this Contract
does not insure any amount pertaining to the value of such ELECTRONIC DATA to the Assured or
any other party, even if such ELECTRONIC DATA cannot be recreated, gathered or assembled.

			
	 	 	 
	NMA 2915 (25.1.01)
	 	 
	 	 	 
	07IL\P2Z1059
	 	 

 

 

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

First Excess Catastrophe Reinsurance

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	Ariel Reinsurance Company Limited
	 	 	10.00	%
	Everest Reinsurance Company
	 	 	56.00	 
	Flagstone Reinsurance Limited
	 	 	14.00	 
	Swiss Reinsurance America Corporation
	 	 	7.00	 
	Validus Reinsurance, Ltd.
	 	 	10.00	 
	 
	 	 	 	 
	Through Benfield Limited
	 	 	 	 
	Lloyd’s Underwriters Per Signing Schedule
	 	 	3.00	 
	 
	 	 	 	 
	Total
	 	 	100.00	%

			
	 	 	 
	07IL\P2Z1059

Page 1 of 6
	 	

 

 

Second Excess Catastrophe Reinsurance

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	ACE Tempest Reinsurance Ltd.
	 	 	5.00	%
	Ariel Reinsurance Company Limited
	 	 	10.00	 
	Aspen Insurance Limited
	 	 	10.00	 
	AXIS Specialty Limited
	 	 	2.00	 
	Everest Reinsurance Company
	 	 	20.00	 
	Flagstone Reinsurance Limited
	 	 	10.00	 
	General Reinsurance Corporation
	 	 	7.50	 
	GMAC Re Corporation
(for Motors Insurance Corporation)
	 	 	3.50	 
	Hannover Re (Bermuda), Ltd.
	 	 	2.50	 
	Swiss Reinsurance America Corporation
	 	 	7.00	 
	Transatlantic Reinsurance Company
	 	 	7.50	 
	Validus Reinsurance, Ltd.
	 	 	10.00	 
	 
	 	 	 	 
	Through Benfield Limited (Placement Only)
	 	 	 	 
	AXA RE
	 	 	2.00	 
	 
	 	 	 	 
	Through Benfield Limited
	 	 	 	 
	Lloyd’s Underwriters Per Signing Schedule
	 	 	3.00	 
	 
	 	 	 	 
	Total
	 	 	100.00	%

			
	 	 	 
	07IL\P2Z1059

Page 2 of 6
	 	

 

 

Third Excess Catastrophe Reinsurance

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	Allied World Assurance Company Limited
	 	 	6.00	%
	American Agricultural Insurance Company
	 	 	1.00	 
	Ariel Reinsurance Company Limited
	 	 	10.00	 
	Aspen Insurance Limited
	 	 	5.00	 
	AXIS Specialty Limited
	 	 	2.00	 
	Flagstone Reinsurance Limited
	 	 	14.00	 
	General Reinsurance Corporation
	 	 	10.00	 
	Hannover Re (Bermuda), Ltd.
	 	 	2.50	 
	Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation)
	 	 	5.00	 
	Swiss Reinsurance America Corporation
	 	 	10.00	 
	Transatlantic Reinsurance Company
	 	 	14.00	 
	Validus Reinsurance, Ltd.
	 	 	10.00	 
	XL Re Ltd
	 	 	5.00	 
	 
	 	 	 	 
	Through Benfield Limited (Placement Only)
	 	 	 	 
	AXA RE
	 	 	4.00	 
	 
	 	 	 	 
	Through Benfield Limited
	 	 	 	 
	Lloyd’s Underwriters Per Signing Schedule
	 	 	1.50	 
	 
	 	 	 	 
	Total
	 	 	100.00	%

 
			
	 	 	 
	07IL\P2Z1059

Page 3 of 6
	 	

 

 

Fourth Excess Catastrophe Reinsurance

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	American Agricultural Insurance Company
	 	 	1.50	%
	Ariel Reinsurance Company Limited
	 	 	10.00	 
	AXIS Specialty Limited
	 	 	2.00	 
	Flagstone Reinsurance Limited
	 	 	10.00	 
	General Reinsurance Corporation
	 	 	10.00	 
	GMAC Re Corporation
(for Motors Insurance Corporation)
	 	 	6.00	 
	Hannover Re (Bermuda), Ltd.
	 	 	2.50	 
	Montpelier Reinsurance Limited
	 	 	7.50	 
	Partner Reinsurance Company Ltd.
	 	 	6.50	 
	Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation)
	 	 	5.00	 
	Swiss Reinsurance America Corporation
	 	 	10.00	 
	Transatlantic Reinsurance Company
	 	 	20.00	 
	XL Re Ltd
	 	 	5.00	 
	 
	 	 	 	 
	Through Benfield Limited (Placement Only)
	 	 	 	 
	AXA RE
	 	 	4.00	 
	 
	 	 	 	 
	Total
	 	 	100.00	%

			
	 	 	 
	07IL\P2Z1059

Page 4 of 6
	 	

 

 

Fifth Excess Catastrophe Reinsurance

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	Allied World Assurance Company Limited
	 	 	7.50	%
	American Agricultural Insurance Company
	 	 	2.00	 
	Ariel Reinsurance Company Limited
	 	 	10.00	 
	AXIS Specialty Limited
	 	 	2.00	 
	General Reinsurance Corporation
	 	 	10.00	 
	Hannover Re (Bermuda), Ltd.
	 	 	2.50	 
	Montpelier Reinsurance Limited
	 	 	10.75	 
	Partner Reinsurance Company Ltd.
	 	 	6.50	 
	Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation)
	 	 	10.00	 
	Swiss Reinsurance America Corporation
	 	 	10.00	 
	Transatlantic Reinsurance Company
	 	 	20.00	 
	XL Re Ltd
	 	 	5.00	 
	 
	 	 	 	 
	Through Benfield Limited (Placement Only)
	 	 	 	 
	AXA RE
	 	 	1.00	 
	 
	 	 	 	 
	Through Benfield Limited
	 	 	 	 
	Lloyd’s Underwriters and Companies
Per Signing Schedule(s)
	 	 	2.75	 
	 
	 	 	 	 
	Total
	 	 	100.00	%

			
	 	 	 
	07IL\P2Z1059

Page 5 of 6
	 	

 

 

Sixth Excess Catastrophe Reinsurance

	 	 	 	 	 
	Reinsurers	 	Participations
	 
	 	 	 	 
	Allied World Assurance Company Limited
	 	 	7.00	%
	American Agricultural Insurance Company
	 	 	1.00	 
	Ariel Reinsurance Company Limited
	 	 	12.00	 
	AXIS Specialty Limited
	 	 	7.50	 
	Flagstone Reinsurance Limited
	 	 	7.00	 
	Hannover Re (Bermuda), Ltd.
	 	 	5.00	 
	Montpelier Reinsurance Limited
	 	 	3.00	 
	Partner Reinsurance Company Ltd.
	 	 	8.00	 
	QBE Reinsurance Corporation
	 	 	2.00	 
	Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation)
	 	 	10.00	 
	Transatlantic Reinsurance Company
	 	 	20.00	 
	Validus Reinsurance, Ltd.
	 	 	3.00	 
	XL Re Ltd
	 	 	4.00	 
	 
	 	 	 	 
	Through Benfield Limited
	 	 	 	 
	Lloyd’s Underwriters Per Signing Schedule
	 	 	10.50	 
	 
	 	 	 	 
	Total
	 	 	100.00	%

 
			
	 	 	 
	07IL\P2Z1059

Page 6 of 6
	 	

 

 

Interests and Liabilities Agreement

of

ACE Tempest Reinsurance Ltd.

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	5.00%

	 	of the Second Excess Catastrophe Reinsurance
	0%

	 	of the Third Excess Catastrophe Reinsurance
	0%

	 	of the Fourth Excess Catastrophe Reinsurance
	0%

	 	of the Fifth Excess Catastrophe Reinsurance
	0%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

 
			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Hamilton,
Bermuda, this
23rd day of July in the year 2007.

	 	 	 	 	 
	 

	 	ACE Tempest Reinsurance Ltd.	 	 
	 
	 	 	 	 
	 

	 	/s/ Paula Lewin
	 	 
	 

	 	Paula Lewin, CUO Specialty Desk	 	 
	 
	 	(Print name and title)	 	 

 
			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Allied World Assurance Company Limited

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	0%

	 	of the Second Excess Catastrophe Reinsurance
	6.00%

	 	of the Third Excess Catastrophe Reinsurance
	0%

	 	of the Fourth Excess Catastrophe Reinsurance
	7.50%

	 	of the Fifth Excess Catastrophe Reinsurance
	7.00%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

 
			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

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

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Allied World Assurance Company Limited	 	 
	 
	 	 	 	 
	 

	 	/s/ Stephen T Michel 	 	 
	 

	 	 	 	 
	 

	 	Stephen T Michel, AVP	 	 
	 

	 	(Print name and title)	 	 

 
			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

American Agricultural Insurance Company

Indianapolis, Indiana

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	0%

	 	of the Second Excess Catastrophe Reinsurance
	1.00%

	 	of the Third Excess Catastrophe Reinsurance
	1.50%

	 	of the Fourth Excess Catastrophe Reinsurance
	2.00%

	 	of the Fifth Excess Catastrophe Reinsurance
	1.00%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

 
			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Columbus,
Ohio, this
23rd day of July in the year 2007.

	 	 	 	 	 
	 

	 	American Agricultural Insurance Company	 	 
	 
	 	 	 	 
	 

	 	/s/ Kevin W. Scarlett
	 	 
	 

	 	 	 	 
	 

	 	Kevin W. Scarlett, Underwriting Manager	 	 
	 

	 	(Print name and title)	 	 

 
			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Ariel Reinsurance Company Ltd.

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	10.00%

	 	of the First Excess Catastrophe Reinsurance
	10.00%

	 	of the Second Excess Catastrophe Reinsurance
	10.00%

	 	of the Third Excess Catastrophe Reinsurance
	10.00%

	 	of the Fourth Excess Catastrophe Reinsurance
	10.00%

	 	of the Fifth Excess Catastrophe Reinsurance
	12.00%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

 
			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Hamilton,
Bermuda, this
26th day of July in the year 2007.

	 	 	 	 	 
	 

	 	Ariel Reinsurance Company Ltd.	 	 
	 
	 	 	 	 
	 

	 	/s/ Stephen Velotti
	 	 
	 

	 	 	 	 
	 

	 	Stephen Velotti, SVP	 	 
	 

	 	(Print name and title)	 	 

 
			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Aspen Insurance Limited

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	10.00%

	 	of the Second Excess Catastrophe Reinsurance
	5.00%

	 	of the Third Excess Catastrophe Reinsurance
	0%

	 	of the Fourth Excess Catastrophe Reinsurance
	0%

	 	of the Fifth Excess Catastrophe Reinsurance
	0%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

 
			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Hamilton,
Bermuda, this
19th day of July in the year 2007.

	 	 	 	 	 
	 

	 	Aspen Insurance Limited	 	 
	 
	 	 	 	 
	 

	 	/s/ R P Vacher
	 	 
	 

	 	 	 	 
	 

	 	R P Vacher, U/W.	 	 
	 

	 	(Print name and title)	 	 

 
			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

AXIS Specialty Limited

Pembroke, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	2.00%

	 	of the Second Excess Catastrophe Reinsurance
	2.00%

	 	of the Third Excess Catastrophe Reinsurance
	2.00%

	 	of the Fourth Excess Catastrophe Reinsurance
	2.00%

	 	of the Fifth Excess Catastrophe Reinsurance
	7.50%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

 
			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Pembroke,
Bermuda, this
11th day of September in the year 2007.

	 	 	 	 	 
	 

	 	AXIS Specialty Limited	 	 
	 
	 	 	 	 
	 

	 	/s/ Christian Dunleavy
	 	 
	 

	 	 	 	 
	 

	 	Christian Dunleavy, SVP	 	 
	 

	 	(Print name and title)	 	 

 
			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Everest Reinsurance Company

A Delaware Corporation

(hereinafter referred to as the “Subscribing Reinsurer")

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	56.00%

	 	of the First Excess Catastrophe Reinsurance
	20.00%

	 	of the Second Excess Catastrophe Reinsurance
	0%

	 	of the Third Excess Catastrophe Reinsurance
	0%

	 	of the Fourth Excess Catastrophe Reinsurance
	0%

	 	of the Fifth Excess Catastrophe Reinsurance
	0%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Liberty Corner, New Jersey, this 13th day of August in the year 2007.

	 	 	 	 	 
	 	Everest Reinsurance Company 	 
	 	 	 
	 	                                    /s/ Charles Volker
 	 
	 	Charles Volker, VP

 
(Print name and title)

 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Flagstone Reinsurance Limited

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer")

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	14.00%

	 	of the First Excess Catastrophe Reinsurance
	10.00%

	 	of the Second Excess Catastrophe Reinsurance
	14.00%

	 	of the Third Excess Catastrophe Reinsurance
	10.00%

	 	of the Fourth Excess Catastrophe Reinsurance
	0%

	 	of the Fifth Excess Catastrophe Reinsurance
	7.00%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Hamilton, Bermuda, this 20th day of July in the year 2007.

	 	 	 	 	 
	 	Flagstone Reinsurance Limited 	 
	 	 	 
	 	                              /s/ Kevin M. Madigan
 	 
	 	 Kevin M. Madigan, Deputy Underwriting Officer NA

 
(Print name and title)

 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

General Reinsurance Corporation

Wilmington, Delaware

(hereinafter referred to as the “Subscribing Reinsurer")

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

(hereinafter referred to collectively as the “Company”)

It Is Hereby Agreed that the Subscribing Reinsurer hereby accepts the following percentage shares
in the interests and liabilities of the “Reinsurer” as set forth in the attached Contract captioned
above:

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	7.50%

	 	of the Second Excess Catastrophe Reinsurance
	10.00%

	 	of the Third Excess Catastrophe Reinsurance
	10.00%

	 	of the Fourth Excess Catastrophe Reinsurance
	10.00%

	 	of the Fifth Excess Catastrophe Reinsurance
	0%

	 	of the Sixth Excess Catastrophe Reinsurance

It Is Further Agreed that this Agreement shall become effective at 12:01 a.m., Local Standard Time
at the location where the loss occurrence commences, June 1, 2007, and shall continue in force
until 12:01 a.m., Local Standard Time at the location where the loss occurrence commences, June 1,
2008, unless earlier terminated in accordance with the provisions of the attached Contract.

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

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

It Is Also Agreed that the following Article shall apply to the Subscribing Reinsurer’s
participation share in the attached Contract, in lieu of the provisions of Article XXX —
Intermediary (BRMA 23A) — of the Contract:

“Article XXX — Intermediary

Benfield Inc. is hereby recognized as the Intermediary for purposes of premium payment,
including reinstatements and all adjustments hereunder. Loss billings will be handled through
the Intermediary; however, loss payments, including any portion related to loss adjustment
expense shall be paid directly by the Reinsurer to the Company.”

In Witness Whereof, the parties hereto by their respective duly authorized representatives have
executed this Agreement as of the dates undermentioned at:

Bala Cynwyd, Pennsylvania, this 17th day of July in the year 2007.

	 	 	 	 	 
	 	Philadelphia Insurance Companies (for and on behalf of the "Company") 	 
	 	 	 
	 	/s/ Christopher J. Maguire
 	 
	 	Christopher J. Maguire, EVP & CUO 

 
(Print name and title)

 	 
	 

Stamford, Connecticut, this 1st day of August in the year 2007.

	 	 	 	 	 
	 	General Reinsurance Corporation 	 
	 	 	 
	 	                        /s/ Joan LaFrance
 	 
	 	 Joan LaFrance, SVP

 
(Print name and title)

 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Motors Insurance Corporation

Detroit, Michigan

by

GMAC Re Corporation

Mt. Laurel, New Jersey

(hereinafter referred to as the “Subscribing Reinsurer")

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	3.50%

	 	of the Second Excess Catastrophe Reinsurance
	0%

	 	of the Third Excess Catastrophe Reinsurance
	6.00%

	 	of the Fourth Excess Catastrophe Reinsurance
	0%

	 	of the Fifth Excess Catastrophe Reinsurance
	0%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Mt. Laurel, New Jersey, this 23rd day of July in the year 2007.

	 	 	 	 	 
	 	GMAC Re Corporation 
(for and on behalf of Motors Insurance Corporation)
 	 
	 	 	 
	 	/s/ Stacy C. Armstrong 	 
	 	Stacy C. Armstrong, Senior Vice President	 
	 	 (Print name and title) 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Hannover Re (Bermuda), Ltd.

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer")

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	2.50%

	 	of the Second Excess Catastrophe Reinsurance
	2.50%

	 	of the Third Excess Catastrophe Reinsurance
	2.50%

	 	of the Fourth Excess Catastrophe Reinsurance
	2.50%

	 	of the Fifth Excess Catastrophe Reinsurance
	5.00%

	 	of the Sixth Excess Catastrophe Reinsurance

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

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

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

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

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

Hamilton, Bermuda, this 20th day of August in the year 2007.

	 	 	 	 	 
	 	 	Hannover Re (Bermuda), Ltd.
 	 
	 
	 	 	/s/ Schlie	 

	 
	 
	 	 	 
	 
	 	 	Schlie (VP)	 

	 
	 	 	(Print name and title)	 

	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	/s/ Duesterhaus 	 

	 
	 
	 	 	 
	 
	 	 	Duesterhaus (AVP)	 

	 
	 	 	(Print name and title)	 

	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Montpelier Reinsurance Limited

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer")

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%

	 	of the First Excess Catastrophe Reinsurance
	0%

	 	of the Second Excess Catastrophe Reinsurance
	0%

	 	of the Third Excess Catastrophe Reinsurance
	7.50%

	 	of the Fourth Excess Catastrophe Reinsurance
	10.75%

	 	of the Fifth Excess Catastrophe Reinsurance
	3.00%

	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

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

	 	 	 	 	 
	 	Montpelier Reinsurance ltd. 
 	 
	 	 	 
	 	/s/ Paul Hopwood
 	 
	 	Paul Hopwood, SVP & N.A. Treaty Underwriter 	 
	 	 (Print name and title) 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Partner Reinsurance Company Ltd.

Pembroke, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%
	 	of the First Excess Catastrophe Reinsurance
	0%
	 	of the Second Excess Catastrophe Reinsurance
	0%
	 	of the Third Excess Catastrophe Reinsurance
	6.50%
	 	of the Fourth Excess Catastrophe Reinsurance
	6.50%
	 	of the Fifth Excess Catastrophe Reinsurance
	8.00%
	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Pembroke, Bermuda, this 8th day of August in the year 2007.

	 	 	 	 	 
	 	 	Partner Reinsurance Company Ltd.
 	 
	 
	 	 	/s/ Jesse Decouto	 

	 
	 	 	 	 
	 
	 	 	Jesse Decouto, VP	 

	 
	 	 	(Print name and title)	 

	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	/s/ Catherine Sousa Lombardi	 

	 
	 
	 	 	 
	 
	 	 	Catherine Sousa Lombardi, Asst Underwriter 	 

	 
	 	 	(Print name and title)	 

	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

QBE Reinsurance Corporation

Philadelphia, Pennsylvania

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%
	 	of the First Excess Catastrophe Reinsurance
	0%
	 	of the Second Excess Catastrophe Reinsurance
	0%
	 	of the Third Excess Catastrophe Reinsurance
	0%
	 	of the Fourth Excess Catastrophe Reinsurance
	0%
	 	of the Fifth Excess Catastrophe Reinsurance
	2.00%
	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

New York, New York, this 30th day of July in the year 2007.

	 	 	 	 	 
	 
	 	QBE Reinsurance Corporation	 	 
	 
	 	 	 	 
	 

	 	/s/ Gregory R. Cuilwik	 	 
	 

	 	Gregory R. Cuilwik, Vice President	 	 
	 

	 	 	 	 
	 

	 	(Print name and title)	 	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Swiss Reinsurance America Corporation

Armonk, New York

through

Swiss Re Underwriters Agency, Inc.

Calabasas, California

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%
	 	of the First Excess Catastrophe Reinsurance
	0%
	 	of the Second Excess Catastrophe Reinsurance
	5.00%
	 	of the Third Excess Catastrophe Reinsurance
	5.00%
	 	of the Fourth Excess Catastrophe Reinsurance
	10.00%
	 	of the Fifth Excess Catastrophe Reinsurance
	10.00%
	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Calabasas, California, this 24th day of July in the year
2007.

	 	 	 	 	 
	 	 	Swiss Re Underwriters Agency, Inc.
(for Swiss Reinsurance America Corporation)

 	 
	 
	 	 	/s/ Daniel S. McElvany	 

	 
	 	 	 	 
	 
	 	 	Daniel S. McElvany, SVP	 

	 
	 	 	(Print name and title)	 

	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Swiss Reinsurance America Corporation

Armonk, New York

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

(hereinafter referred to collectively as the “Company”)

It Is Hereby Agreed that the Subscribing Reinsurer shall have the following percentage shares in
the interests and liabilities of the “Reinsurer” as set forth in the attached Contract captioned
above:

	 	 	 
	7.00%
	 	of the First Excess Catastrophe Reinsurance
	7.00%
	 	of the Second Excess Catastrophe Reinsurance
	10.00%
	 	of the Third Excess Catastrophe Reinsurance
	10.00%
	 	of the Fourth Excess Catastrophe Reinsurance
	10.00%
	 	of the Fifth Excess Catastrophe Reinsurance
	0%
	 	of the Sixth Excess Catastrophe Reinsurance

It Is Further Agreed that this Agreement shall become effective at 12:01 a.m., Local Standard Time
at the location where the loss occurrence commences, June 1, 2007, and shall continue in force
until 12:01 a.m., Local Standard Time at the location where the loss occurrence commences, June 1,
2008, unless earlier terminated in accordance with the provisions of the attached Contract.

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

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

It Is Also Agreed that the following Article shall apply to the Subscribing Reinsurer’s
participation share in the attached Contract, in lieu of the provisions of Article XXX -
Intermediary (BRMA 23A) — of the Contract:

     “Article XXX — Servicing

Benfield Inc. is the Servicing Agent providing services for the Company in connection with this
Contract. There is no Intermediary of record for this Contract. These services shall include
but not be limited to notices, statements, premium, return premium, taxes, losses, loss
adjustment expense, salvages and loss settlements. However, such services shall in no way be
construed as providing Benfield Inc. with the authority to negotiate or otherwise act on behalf
of the Reinsurer.”

In Witness Whereof, the parties hereto by their respective duly authorized representatives have
executed this Agreement as of the dates undermentioned at:

Bala Cynwyd, Pennsylvania, this 17th day of July in the year
2007.

	 	 	 	 	 
	 

	 	 

Philadelphia Insurance Companies (for and on behalf of the “Company”)
	 	 
	 
	 	 	 	 
	 

	 	Christopher J. Maguire, EVP & CUO	 	 
	 

	 	 	 	 
	 

	 	(Print name and title)	 	 

Armonk, New York, this 23rd day of October in the year 2007.

	 	 	 	 	 
	 

	 	 

Swiss Reinsurance America Corporation
	 	 
	 
	 	 	 	 
	 

	 	M. JosephCook, VP William J. O’Donnell, Managing Director	 	 
	 

	 	 	 	 
	 

	 	(Print name and title)	 	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Transatlantic Reinsurance Company

New York, New York

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 
	0%
	 	of the First Excess Catastrophe Reinsurance
	7.50%
	 	of the Second Excess Catastrophe Reinsurance
	14.00%
	 	of the Third Excess Catastrophe Reinsurance
	20.00%
	 	of the Fourth Excess Catastrophe Reinsurance
	20.00%
	 	of the Fifth Excess Catastrophe Reinsurance
	20.00%
	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

New York, New York, this 30th day of August in the year
2007.

	 	 	 	 	 
	 	Transatlantic Reinsurance Company 
 	 
	 	 	 
	 	/s/ William Orendorf 	 
	 	William Orendorf, Senior Underwriter	 
	 	 (Print name and title) 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	

 

 

Interests and Liabilities Agreement

of

Validus Reinsurance, Ltd.

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 	 	 
	 	10.00	%	 	of the First Excess Catastrophe Reinsurance

	 	10.00	%	 	of the Second Excess Catastrophe Reinsurance

	 	10.00	%	 	of the Third Excess Catastrophe Reinsurance

	 	0	%	 	of the Fourth Excess Catastrophe Reinsurance

	 	0	%	 	of the Fifth Excess Catastrophe Reinsurance

	 	3.00	%	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

     Hamilton, Bermuda,
this 10th  day of August  in the year
2007.

	 	 	 	 	 
	 	Validus Reinsurance, Ltd. 	 
	 	 	 
	 	/s/ C. Silvester
 	 
	 	C. Silvester - Vice President
 	 
	 	(Print name and title) 	 
	 	 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	 

 

 

Interests and Liabilities Agreement

of

XL Re Ltd

Hamilton, Bermuda

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 	 	 
	 	0	%	 	of the First Excess Catastrophe Reinsurance

	 	0	%	 	of the Second Excess Catastrophe Reinsurance

	 	5.00	%	 	of the Third Excess Catastrophe Reinsurance

	 	5.00	%	 	of the Fourth Excess Catastrophe Reinsurance

	 	5.00	%	 	of the Fifth Excess Catastrophe Reinsurance

	 	4.00	%	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	 

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

     Hamilton, Bermuda, this 28th  day of September in the year 2007.

	 	 	 	 	 
	 	 	 
	 	XL Re Ltd 	 
	 	 	 
	 	/s/ Gino Z. Smith
 	 
	 	Gino Z. Smith, AVP
 	 
	 	(Print name and title) 	 
	 	 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	 

 

 

Interests and Liabilities Agreement

of

AXA RE

Paris, France

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 	 	 
	 	0	%	 	of the First Excess Catastrophe Reinsurance

	 	2.00	%	 	of the Second Excess Catastrophe Reinsurance

	 	4.00	%	 	of the Third Excess Catastrophe Reinsurance

	 	4.00	%	 	of the Fourth Excess Catastrophe Reinsurance

	 	1.00	%	 	of the Fifth Excess Catastrophe Reinsurance

	 	0	%	 	of the Sixth Excess Catastrophe Reinsurance

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

The Subscribing Reinsurer’s share in the attached Contract shall be separate and apart from the
shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers,

			
	 	 	 
	07IL\P2Z1059

Page 1 of 2
	 	 

 

 

it being understood that the Subscribing Reinsurer shall in no event participate in the interests
and liabilities of the other reinsurers.

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

Paris, France, this 17th day of October  in the year 2007.

	 	 	 	 	 
	 	AXA RE 	 
	 	 	 
	 	/s/ Antoine Gomot
 	 
	 	Antoine Gomot, Treaty Underwriter
 	 
	 	(Print name and title) 	 
	 	 	 
	 

			
	 	 	 
	07IL\P2Z1059

Page 2 of 2
	 	 

 

 

Interests and Liabilities Agreement

of

Certain Underwriting Members of Lloyd’s

shown in the Signing Schedules attached hereto

(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Excess Catastrophe Reinsurance Contract

Effective: June 1, 2007

issued to and duly executed by

Philadelphia Insurance Company

Bala Cynwyd, Pennsylvania

Philadelphia Indemnity Insurance Company

Bala Cynwyd, Pennsylvania

and

any and all other companies which are now

or may hereafter become member companies of

Philadelphia Insurance Companies

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

	 	 	 	 	 
	 	3.00	%	 	of the First Excess Catastrophe Reinsurance

	 	3.00	%	 	of the Second Excess Catastrophe Reinsurance

	 	1.50	%	 	of the Third Excess Catastrophe Reinsurance

	 	0	%	 	of the Fourth Excess Catastrophe Reinsurance

	 	2.75	%	 	of the Fifth Excess Catastrophe Reinsurance

	 	10.50	%	 	of the Sixth Excess Catastrophe Reinsurance

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

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

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

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

Signed by Manager at Lloyds of London

			
	 	 	 
	07IL\P2Z1059

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