Document:

exv10w142

EXHIBIT
10.142

QUOTA SHARE 

REINSURANCE AGREEMENT

EFFECTIVE DECEMBER 1, 2002

between

LIBERTY MUTUAL INSURANCE COMPANY

Boston, Massachusetts

(with and on behalf of THE FIRST LIBERTY INSURANCE CORPORATION,

West Des Moines, Iowa

LIBERTY MUTUAL FIRE INSURANCE COMPANY

Boston, Massachusetts

LM INSURANCE CORPORATION

West Des Moines, Iowa

LIBERTY INSURANCE CORPORATION

South Burlington, Vermont

for business classified as Small Business Group, only)

and

PEERLESS INSURANCE COMPANY

Keene, New Hampshire

 

 

QUOTA SHARE REINSURANCE AGREEMENT

	 	 	 	 	 	 	 
	ARTICLE	 	CONTENTS	 	PAGE	 
	 	 	PREAMBLE
	 	 	1	 
	I	 	CLASSES OF BUSINESS REINSURED
	 	 	1	 
	II	 	EFFECTIVE DATE AND TERMINATION
	 	 	1	 
	III	 	TERRITORY
	 	 	2	 
	IV	 	EXCLUSIONS
	 	 	2	 
	V	 	RETENTION AND LIMIT
	 	 	7	 
	VI	 	LOSS IN EXCESS OF POLICY LIMITS/EXTRA CONTRACTUAL OBLIGATIONS
	 	 	7	 
	VII	 	LOSS AND LOSS ADJUSTMENT EXPENSE
	 	 	8	 
	VIII	 	SALVAGE AND SUBROGATION
	 	 	8	 
	IX	 	SPECIAL TERMINATION
	 	 	8	 
	X	 	REPORTS AND REMITTANCES
	 	 	9	 
	XI	 	PREMIUM AND CEDING COMMISSION
	 	 	9	 
	XII	 	OFFSET
	 	 	10	 
	XIII	 	ACCESS TO RECORDS
	 	 	10	 
	XIV	 	ERRORS OR OMISSIONS
	 	 	10	 
	XV	 	CURRENCY
	 	 	10	 
	XVI	 	TAXES
	 	 	10	 
	XVII	 	INSOLVENCY
	 	 	10	 
	XVIII	 	ARBITRATION
	 	 	11	 
	XIX	 	AMENDMENTS
	 	 	12	 
	XX	 	ENTIRE AGREEMENT
	 	 	12	 
	XXI	 	CONFIDENTIALITY CLAUSE
	 	 	12	 
	XXII	 	DEFINITION OF RISK
	 	 	12	 
	ATTACHMENTS:	 	 
	 	 	 	 
	 	 	EXHIBIT A — ASSIGNMENT CODES
	 	 	 	 
	 	 	INSOLVENCY FUNDS EXCLUSION CLAUSE.
	 	 	 	 
	 	 	POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE
TOTAL INSURED VALUE EXCLUSION CLAUSE
	 	 	 	 
	 	 	NUCLEAR INCIDENT EXCLUSION CLAUSE — PHYSICAL DAMAGE —
REINSURANCE — U.S.A.
	 	 	 	 
	 	 	NUCLEAR INCIDENT EXCLUSION CLAUSE — PHYSICAL DAMAGE —
REINSURANCE — CANADA.
	 	 	 	 
	 	 	NUCLEAR INCIDENT EXCLUSION CLAUSE — REINSURANCE — NO. 4.
	 	 	 	 
	 	 	TERRORISM EXCLUSION CLAUSE REINSURANCE (PROPERTY)
	 	 	 	 
	 	 	APPENDIX A — GLOBAL FORTUNE 500 COMPANIES.
	 	 	 	 
	 	 	APPENDIX B — PHARMACEUTICAL/MEDICAL RISKS
	 	 	 	 
	 	 	NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY —
REINSURANCE — U.S.A.
	 	 	 	 
	 	 	NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY —
REINSURANCE — CANADA.
	 	 	 	 

 

 

QUOTA SHARE

REINSURANCE CONTRACT

between

LIBERTY MUTUAL INSURANCE COMPANY

Boston, Massachusetts 

(with and on behalf of THE FIRST LIBERTY INSURANCE CORPORATION,

West Des Moines, Iowa

LIBERTY MUTUAL FIRE INSURANCE COMPANY

Boston, Massachusetts

LM INSURANCE CORPORATION

West Des Moines, Iowa

LIBERTY INSURANCE CORPORATION

South Burlington, Vermont

for business classified as Small Business Group, only)

(hereinafter referred to as the “Company”)

and

PEERLESS INSURANCE COMPANY

Keene, New Hampshire

(hereinafter referred to as the “Reinsurer”)

This reinsurance contract (“Contract”) is entered into between the Company with its principal
place of business at Boston, Massachusetts, writing Classes of Business Reinsured as defined in
Article I below, and the Reinsurer with its principal place of business at Keene, New Hampshire.

ARTICLE I — CLASSES OF BUSINESS REINSURED

	A.	 	By this Contract the Company obligates itself to cede to the Reinsurer and the Reinsurer
obligates itself to accept quota share reinsurance of the Company’s net liability under
policies, contracts and binders of insurance (hereinafter called “Policies”) having an
effective date during the term of this Contract, written by the Small Business Group profit
center, for Policies classified
by SBG as multi-state business, with assigned codes as shown in Exhibit A.
	 
	B.	 	“Net liability” as used herein is defined as the Company’s gross liability remaining
after cessions, if any, to other pro rata and excess of loss reinsurers.
	 
	D.	 	The liability of the Reinsurer with respect to each cession hereunder shall
commence obligatorily and simultaneously with that of the Company, subject to the terms,
conditions and limitations hereinafter set forth.

ARTICLE II — EFFECTIVE DATE AND TERMINATION

	A.	 	This Contract shall become effective on 12:01 AM Eastern Standard Time, December 1, 2002,
for new and renewal policies effective on or after that date.
	 
	B.	 	Either party may terminate this Contract at the end of any calendar quarter by giving
the other party not less than 90 days prior written notice by certified mail or other
receipt acknowledged method.
	 
	C.	 	Unless the Company elects to reassume the ceded unearned premium in force on the
effective date of termination, and so notifies the Reinsurer prior to or as promptly as
possible after the effective date of termination, reinsurance hereunder on business in force
on the effective date of termination shall remain in full force and effect until expiration,
cancellation or next premium anniversary of such business, whichever first occurs but in
no event beyond 18 months following the effective date of termination.

Quota Share Reinsurance Agreement — SBG

1

 

ARTICLE III — TERRITORY

This Agreement applies to risks located in the United States of America, its territories and
possessions, and Canada, except that with respect to Inland Marine and Multiple Peril Policies
covered hereunder, the territorial limits of this Agreement shall be those of the original Policies
when such Policies are written to cover risks primarily located in the United States of America,
its territories and possessions, and Canada.

ARTICLE IV — EXCLUSIONS

THIS AGREEMENT DOES NOT COVER:

	A.	 	THE FOLLOWING GENERAL CATEGORIES (PROPERTY)

	 	1.	 	Policies issued with a deductible of $250,000 or more, provided this exclusion
shall not apply to Policies which customarily provide a percentage deductible on the
perils of earthquake or windstorm.
	 
	 	2.	 	Reinsurance assumed by the Company, except intercompany reinsurance.
	 
	 	3.	 	Ex-gratia payments.
	 
	 	4.	 	Loss or damage occasioned by war, Invasion, revolution, bombardment, hostilities,
acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power,
martial law, or confiscation by order of any government or public authority, but not
excluding loss or damage which would be covered under a standard form of Policy
containing a standard war exclusion clause.
	 
	 	5.	 	Insolvency Funds as per the attached Insolvency Funds Exclusion Clause, which is
made part of this Agreement.
	 
	 	6.	 	Pool, Syndicate and Association business as per the attached Pools, Associations
and Syndicates Exclusion Clause, which is made part of this Agreement.
	 
	 	7.	 	Risks where the Total Insured Value, per risk, exceeds the figure specified as per
the attached Total Insured Value Exclusion Clause, which is made part of this
Agreement.

	B.	 	THE FOLLOWING CLASSES OF BUSINESS AND TYPES OF RISKS (PROPERTY)

	 	1.	 	Mortgage Impairment.
	 
	 	2.	 	Growing and/or standing crops.
	 
	 	3.	 	Mortality and Health covering birds, animals or fish.
	 
	 	4.	 	All onshore and offshore gas and oil drilling rigs.
	 
	 	5.	 	Petrochemical operations engaged in the production, refining or upgrading of
petroleum or petroleum derivatives or natural gas.
	 
	 	6.	 	Satellites.
	 
	 	7.	 	All railroad business.
	 
	 	8.	 	Space and Space related risks.
	 
	 	9.	 	As respects Inland Marine business:

	 	a.	 	Registered Mail and Armored Car Policies.
	 
	 	b.	 	Rolling Stock.

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	 	c.	 	Commercial Negative Film Insurance.
	 
	 	d.	 	Mining Equipment while underground.
	 
	 	e.	 	Cargo transported by lake and inland waterway watercraft.
	 
	 	f.	 	Furrier’s Customers Policies written for a limit greater than $2,000,000.

	 	10.	 	Overhead and underground transmission and distribution lines other than those
within 1000 feet of an insured’s 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
transmitter’s or distributor’s Policy.
	 
	 	11.	 	Entertainment business defined as Feature Film and Major Motion Picture studios,
Commercial Negative Film Coverage, Cast Coverage, Completion Bond Coverage, and
Television Productions.
	 
	 	12.	 	Credit and Surety liability
	 
	 	13.	 	Ocean Marine except pleasure craft

	 
	 	14.	 	Bridges, dams and tunnels over 50 feet

	C.	 	THE FOLLOWING PERILS (PROPERTY)

	 	1.	 	Pollution and Seepage as per the Company’s original Policies and endorsements.
	 
	 	2.	 	Nuclear Incident Exclusion Clauses which are attached and made part of this Agreement:

	 	a.	 	Nuclear Incident Exclusion Clause —
Physical Damage — Reinsurance — U.S.A.
	 
	 	b.	 	Nuclear Incident Exclusion Clause —
Physical Damage — Reinsurance — Canada.
	 
	 	c.	 	Nuclear Incident Exclusion Clause — Reinsurance — No. 4.

	 	3.	 	Terrorism as per the attached Terrorism Exclusion Clause — Reinsurance (Property),
which is made part of this Agreement.
	 
	 	4.	 	Loss, damage or expense of whatsoever nature caused directly or indirectly by any of the
following, regardless of any other cause or event contributing concurrently or in any
sequence to the loss:

	 	a.	 	Nuclear reaction or radiation, or radioactive contamination, however caused.
	 
	 	b.	 	However, if nuclear reaction or radiation, or radioactive contamination
results in fire it is specifically agreed herewith that this Agreement will pay for
such fire loss or damage subject to all of the terms, conditions and limitations of
this Agreement.
	 
	 	c.	 	This exclusion shall not apply to loss, damage or expense originating
from and occurring at risks using radioactive isotopes in any form where the
nuclear exposure is not considered by the Company to be the primary hazard.

	D.	 	The exclusions set forth in A, B or C above shall not apply if the exposure is incidental to
the regular operations of the insured covered hereunder.
	 
	E.	 	THE FOLLOWING GENERAL CATEGORIES (CASUALTY)

	 	1.	 	Ex-gratia payments.
	 
	 	2.	 	Loss or damage caused directly or indirectly by: (a) enemy attack by armed forces
including action taken by military, naval or air forces in resisting an actual or an
immediately impending

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	 	 	 	enemy attack; (b) invasion; (c) insurrection; (d) rebellion; (e) revolution; (f)
intervention; (g) civil war; and (h) usurped power.
	 
	 	3.	 	Reinsurance assumed by the Company, except intercompany reinsurance.
	 
	 	4.	 	Business derived from any Pool, Association, including Joint Underwriting
Association, Syndicate, Exchange, Plan, Fund or other facility directly as a member,
subscriber or participant, or indirectly by way of reinsurance or assessments; provided
this exclusion shall not apply to Automobile or Workers Compensation assigned risks
which may be currently or subsequently covered hereunder.
	 
	 	5.	 	Pollution Liability as per the Company’s original Policies and endorsements except
when a judicial entity invalidates the Company’s exclusion or in any jurisdiction whose
regulatory authorities have prohibited the exclusion.
	 
	 	6.	 	Insolvency Funds as per the attached Insolvency Funds Exclusion Clause.
	 
	 	7.	 	Global Fortune 500 Risks as per the attached Appendix A.
	 
	 	8.	 	Pharmaceutical Risks per the attached Appendix B.
	 
	 	9.	 	Nuclear Incident Exclusion Clauses which are attached end made part of this Agreement:

	 	a.	 	Nuclear Incident Exclusion Clause — Liability — Reinsurance — U.S.A.
	 
	 	b.	 	Nuclear Incident Exclusion Clause — Liability — Reinsurance — Canada.
	 
	 	c.	 	Nuclear Incident Exclusion Clause — Reinsurance — No. 4.

	 	10.	 	Risks with umbrella coverage in excess of $200,000,000.
	 
	 	11.	 	Any actual or alleged liability whatsoever for any claim or claims in respect of
loss or losses directly or Indirectly arising out of, resulting from or in consequence
of, or in any way involving asbestos, or any materials containing asbestos in whatever
form or quantity.

	F.	 	THE FOLLOWING INSURANCE COVERAGES (CASUALTY)

	 	1.	 	Fiduciary Liability.
	 
	 	2.	 	Surety and Credit insurance.
	 
	 	3.	 	Fidelity Bonds.
	 
	 	4.	 	Credit and Financial Guarantee.
	 
	 	5.	 	Securities and Exchange Liability.
	 
	 	6.	 	Malpractice insurance, Directors and Officers Liability insurance or any form of
Errors and Omissions or Professional Liability insurance, except as provided for under
the Company’s Underwriting Guidelines.
	 
	 	7.	 	Advertisers’, Broadcasters’ and Telecasters’ Liability as respects Personal Injury
Liability except as provided for under the Company’s Underwriting Guidelines.
	 
	 	8.	 	Kidnap, Extortion and Ransom Liability.
	 
	 	9.	 	Protection and indemnity (Ocean Marine) except for hulls under 50 feet.
	 
	 	10.	 	Entertainment Business, defined as Feature Film and Major Motion Picture Studios,
Commercial Negative Film Coverages, Cast Coverage, Completion Bond and Television
Productions.

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	 	11.	 	Asbestos liability to the extent excluded in the Company’s original policies and
endorsements except when a judicial entity invalidates the Company’s exclusion or in
any jurisdiction whose regulatory authorities have prohibited the exclusion.

	G.	 	THE FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY AND AUTOMOBILE
COLLISION (CASUALTY)

	 	1.	 	Autos as used in or being prepared for, any professional or organized racing
or demolition contest or stunting activity except as provided for under ISO’s
Business Auto and Garage Policy.
	 
	 	2.	 	All vehicles classified as “Public Automobiles” except school buses, church
buses, social service agency automobiles, van pools, vehicles used for the
transportation of employees and courtesy vans and buses.
	 
	 	3.	 	All rental operations. An exception for rental vehicles shall apply as
respects auto dealerships when customer’s vehicle is being serviced.
	 
	 	4.	 	Vehicles regularly used to haul property of others and operating beyond a 500 mile
radius.
	 
	 	5.	 	Newspaper delivery trucks except in non-metropolitan locations with a
population of less than 50,000.
	 
	 	6.	 	Vehicles engaged in the transportation or distribution of fireworks, fuses, explosives,
ammunitions, natural or artificial fuel gas, or liquefied petroleum gases or gasoline, except
when written as incidental coverage, as defined in the Company’s Underwriting
Guidelines. This exclusion shall not apply to vehicles engaged in the transportation
of natural or artificial fuel gas or liquefied petroleum gases or gasoline when
operations are within a 500 mile radius.

	H.	 	THE FOLLOWING AS RESPECTS LIABILITY OTHER THAN AUTOMOBILE (CASUALTY)

	 	1.	 	Liability as respects Products and Completed Operations:

	 	a.	 	The manufacture, importation, labeling or
re-labeling of:

	 	(i)	 	Drugs or pharmaceuticals.
	 
	 	(ii)	 	Cosmetics.
	 
	 	(iii)	 	Herbicides, insecticides or pesticides, except as
respects risks involved in a farming operation.

	 	b.	 	The manufacture or importing of motorized or self-propelled vehicles and equipment.
	 
	 	c.	 	The manufacture, sale, distribution, handling, servicing or
maintenance of aircraft, aerospacecraft, missiles, satellites or any component or
components thereof.

	 	2.	 	All railway operations except Railroad Protective Liability coverage as
respects jobs which do not involve track work or service disruptions.
	 
	 	3.	 	Amusement parks, carnivals or circuses, except county or country fairs.
	 
	 	4.	 	Public assembly exposure in excess of 5,000 except for schools and
colleges.
	 
	 	5.	 	Gas or electric companies.
	 
	 	6.	 	Subaqueous operations.
	 
	 	7.	 	Mining.
	 
	 	8.	 	Demolition of buildings or structures in excess of three stories or 50 feet in height.
	 
	 	9.	 	Shoring, underpinning or moving of buildings or structures.

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	 	10.	 	Manufacture, sale, rental, lease or repair of scaffolds.
	 
	 	11.	 	Construction of bridges over 50 feet, and tunnels or dams.
	 
	 	12.	a. 	      Manufacturers or importers of fireworks, fuses, or any substance, as defined and
noted
below, intended for use as an explosive.

	               	b.	 	Loading of fireworks, fuses, or any explosive substance
defined below into containers for use as explosive objects,
propellant charges or detonation devices and the storage
thereof.
	 
	 	c.	 	Manufacturers or importers of any
product in which
fireworks, fuses, or any explosive substance defined below
is an ingredient.
	 
	 	d.	 	Handling, storage,
transportation or use of fireworks,
fuses, or any explosive substance defined below.

NOTE: An explosive substance is defined as any substance manufactured for the express
purpose of exploding as differentiated from commodities used industrially and which are
only incidentally explosive.

	 	13.	 	Manufacture, production, refining, storage, wholesale distribution or
transportation of natural or artificial fuel gas, butane, propane or liquefied
petroleum gases or gasoline, except when written as incidental coverage, as defined in
the Company’s Underwriting Guidelines, or when operations are within a 500 mile radius.
	 
	 	14.	 	Onshore and offshore gas and oil drilling operations.
	 
	 	15.	 	Ownership, maintenance or use of any aircraft, including fueling, or any device or
machine intended for and/or aiding in the achievement of atmospheric flight, projection
or orbit.
	 
	 	16.	 	Municipalities except for those with a population less than 25,000.

	I.	 	THE FOLLOWING RISKS AS RESPECTS WORKERS COMPENSATION AND EMPLOYERS LIABILITY (CASUALTY)

	 	1.	 	Operations under the jurisdiction of the U.S. Longshoremen’s and Harbor Workers’
Act, the Jones Act and the Maritime Employers Liability Act except when written
as incidental coverages as defined in the Company’s Underwriting Guidelines.
	 
	 	2.	 	Operation of docks or wharves, other than small marinas or pleasure docks.
	 
	 	3.	 	The manufacturing, mining, refining, processing, distribution, installation,
removal or encapsulment of asbestos.
	 
	 	4.	 	Risks involving known exposure to asbestos.
	 
	 	5.	 	All railway operations except sidetrack agreements.
	 
	 	6.	 	Amusement parks, carnivals or circuses, except county or country fairs.
	 
	 	7.	 	Subaqueous operations.
	 
	 	8.	 	Mining.
	 
	 	9.	 	Demolition of buildings or structures in excess of three stories or 50 feet in
height.
	 
	 	10.	 	Shoring, underpinning or moving of buildings or structures.
	 
	 	11.	 	Manufacture, sale rental, lease, erection or repair of scaffolds.

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	 	12.	 	Construction of bridges over 50 feet, and tunnels or dams.
	 
	 	13.	 	a.         Manufacturers or importers of fireworks, fuses, or any substance, as defined and
noted
below, intended for use as an explosive.

	 	b.	 	Loading of
fireworks, fuses, or any explosive substance defined below into
containers for use as explosive objects, propellant charges or
detonation devices and the storage thereof.
	 
	 	c.	 	Manufacturers or importers of any product in which
fireworks, fuses, or any explosive substance defined below
is an ingredient.
	 
	 	d.	 	Handling, storage, transportation or use of fireworks, fuses, or any
explosive substance defined below.

NOTE: An explosive substance is defined as any substance manufactured for the express
purpose of exploding as differentiated from commodities used industrially and which are
only incidentally explosive.

	 	14.	 	Manufacture, production, refining, storage, wholesale distribution or
transportation of natural or artificial fuel gas, butane, propane or liquefied petroleum
gases or gasoline, except when written as incidental coverages as defined in the
Company’s Underwriting Guidelines.
	 
	 	15.	 	Onshore and offshore gas and oil drilling operations.
	 
	 	16.	 	Ownership, maintenance or use of any airport or aircraft, including fueling, or
any device or machine intended for and/or aiding in the achievement of atmospheric
flight, projection or orbit except as respects corporate owned aircraft up to four
passengers.
	 
	 	17.	 	Municipalities, except for those with a population less than 25,000.

	J.	 	THE FOLLOWING RISKS AS RESPECTS TERRORISM (CASUALTY)
	 
	 	 	Terrorism losses arising from Airports, Bridges, Government Buildings, Nuclear Facilities,
Office Buildings over 25 stories, Security Services, Stadiums and Tunnels, Nuclear,
Biological and Chemical exposures, Explosive Manufacturing risks, Fertilizer mixing plants,
Railroads, Amusement/Theme parks with greater than 5,000 person capacity. Distribution and
manufacturing of weapons/munitions.
	 
	K.	 	The Company and the Reinsurer have agreed on the Company’s Underwriting Guidelines, as
respects policies covered under this Agreement. The Company shall advise the Reinsurer of any
change in such Underwriting Guidelines.
	 
	L.	 	In the event the Company is inadvertently bound on any risk which is excluded under this
Agreement, the reinsurance provided under this Agreement shall apply to such risk until
discovery by the Company within its Home Office of the existence of such risk and for 45 days
thereafter or for the period required by statutes, and shall then cease unless within such
period, the Company has received from the Reinsurer written notice of its approval of such
risk.

ARTICLE V — RETENTION AND LIMIT

As respects business subject to this Contract the Company shall cede to the Reinsurer and the
Reinsurer agrees to accept 100% of the Company’s net liability.

ARTICLE VI — LOSS IN EXCESS OF POLICY LIMITS/EXTRA CONTRACTUAL OBLIGATIONS

	A.	 	In the event the Company pays or is held liable to pay an amount of loss in excess of its policy
limit, but otherwise within the terms of its policy (hereinafter called “loss in excess of
policy limits”) or any punitive, exemplary, compensatory or consequential damages, other
than loss in excess of policy limits (hereinafter called “extra contractual obligations”)
because of alleged or

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7

 

	 	 	actual bad faith or negligence on its part in rejecting a settlement within policy limits,
or in discharging its duty to defend or prepare the defense in the trial of an action
against its policyholder, or in discharging its duty to prepare or prosecute an appeal
consequent upon such an action, or in otherwise handling a claim under a policy subject to
this Contract, 100% of the loss in excess of policy limits and/or 100% of the extra
contractual obligations shall be covered hereunder.
	 
	B.	 	An extra contractual obligation shall be deemed to have occurred on the same date as the
loss covered or alleged to be covered under the policy.
	 
	C.	 	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.

ARTICLE VII — LOSS AND LOSS ADJUSTMENT EXPENSE

	A.	 	Losses shall be reported by the Company in summary form as hereinafter provided. The
Reinsurer shall have the right to participate, at its own expense, in the defense or control
of any claim or suit or proceeding involving this reinsurance.
	 
	B.	 	All loss settlements made by the Company, whether under strict policy conditions or by way of
compromise, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or allow, as
the case may be, its proportion of each such settlement in accordance with Article V.
	 
	C.	 	In the event of a claim under a policy subject hereto, the Reinsurer shall be liable for loss
adjustment expense incurred by the Company in connection therewith (including declaratory
judgment expenses, litigation expenses, and interest on judgments, but not including office
expenses or salaries of the Company’s regular employees), and shall be credited with its
proportionate share of any recoveries of such expense. Expenses charged by the Company for
staff attorneys on an hourly basis in respect of claims under Policies reinsured hereunder are
deemed not to be office expenses or salaries for purposes of this Contract.

ARTICLE VIII — SALVAGE AND SUBROGATION

The Reinsurer shall be credited with its proportionate share of 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. The
Company hereby agrees to enforce its right 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 IX — SPECIAL TERMINATION

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

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

	 	a.	 	Entry of an order of liquidation, rehabilitation, receiver-ship or
conservatorship with respect to the Company or the Reinsurer by any court or
regulatory authority;
	 
	 	b.	 	Assignment of this Agreement by either party;
	 
	 	c.	 	Any transfer of control of either party by change in owner-ship or otherwise;

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8

 

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

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

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

As respects the event set forth in this Paragraph A.2.a., the Company shall be
obligated to notify the Reinsurer in writing within 30 days after the filing of its
quarterly statement. Upon receipt of such notification the Reinsurer shall have the
right to terminate this Agreement, by giving not less than 30 days notice of its
Intention to do so.

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

as respects the event set forth in this Paragraph A.2.b., the Reinsurer shall be
obligated to notify the Company in writing within 30 days after the filing of its
quarterly statement. Upon receipt of such notification the Company shall have the
right to terminate this Agreement, by giving not less than 30 days notice of its
Intention to do so.

	 	3.	 	Terminated by either party by giving not less than 30 days notice of its
intention to do so upon any transfer of control of either party by charge of
ownership or otherwise.

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

	C.	 	In the event of termination, the Reinsurer shall not be liable for losses occurring
subsequent to the date of termination.

ARTICLE X — REPORTS AND REMITTANCES

	A.	 	Within 45 days after the end of each calendar quarter, the Company shall
report to the Reinsurer:

	 	1.	 	Ceded net written premium for the quarter;
	 
	 	2.	 	Unearned premium on policies ceded in the quarter;
	 
	 	3.	 	Ceding commission thereon;
	 
	 	4.	 	Ceded losses and loss adjustment expense paid during the quarter.

The positive balance of (1) less (3) less (4) shall be remitted by the Company with its
report. Any balance shown to be due the Company shall be remitted by the Reinsurer as
promptly as possible after  receipt and verification of the Company’s report.

	B.	 	Annually, the Company shall furnish the Reinsurer with such information as the
Reinsurer may require to complete its Annual Convention Statement.

ARTICLE XI — PREMIUM AND CEDING COMMISSION

The premiums payable to the Reinsurer shall be calculated at the same gross rates and on
the same basis as the premiums received by the company on its original policies. The
Reinsurer shall allow the Company a commission equal to the commission paid to the Agents
on its original policies.

Quota Share Reinsurance Agreement — SBG

9

 

ARTICLE XII — OFFSET (BRMA 36C)

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

ARTICLE XIII — ACCESS TO RECORDS

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

ARTICLE XIV — ERRORS OR OMISSIONS

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

ARTICLE XV — CURRENCY

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

ARTICLE XVI — TAXES

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

ARTICLE XVII — INSOLVENCY

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

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

Quota Share Reinsurance Agreement — SBG

10

 

	 	 	liquidation to the extent of a proportionate share of the benefit which may accrue to
the Company solely as a result of the defense undertaken by the Reinsurer.
	 
	C.	 	In addition to the offset provisions set forth in Article XII — Offset, any debts or credits,
liquidated or unliquidated, in favor of or against either party on the date of the
receivership or liquidation order (except where the obligation was purchased by or transferred
to be used as an offset) are deemed mutual debts or credits and shall be set off with the
balance only to be allowed or paid. Although such claim on the part of either party against
the other may be unliquidated or undetermined in amount on the date of the entry of the
receivership or liquidation order, such claim will be regarded as being in existence as of
such date and any claims then in existence and held by the other party may be offset against
it.
	 
	D.	 	Nothing contained in this Article is intended to change the relationship or status of the
parties to this Agreement or to enlarge upon the rights or obligations of either party
hereunder except as provided herein.

ARTICLE XVIII — ARBITRATION

	A.	 	As a condition precedent to any right of action hereunder, in the event of any dispute or
difference of opinion hereafter arising with respect to this Contract, it is hereby mutually
agreed that such dispute or difference of opinion shall be submitted to arbitration. One
Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be
chosen by two Arbiters before they enter upon arbitration, all of whom shall be active or
retired disinterested executive officers of insurance or reinsurance companies or Lloyd’s
London Underwriters. In the event that either party shall fail to choose an Arbiter within 30
days following a written request by the other party to do so, the requesting party may choose
two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two
Arbiters fail to agree upon the selection of an umpire within 30 days following their
appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of
whom the other shall decline, and the decision shall be made by drawing lots.

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

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

	D.	 	Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with
the other the expense of the Umpire and of the arbitration. In the event that the two
Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire
and the arbitration shall be equally divided between the two parties.

	E.	 	Any arbitration proceedings shall take place in Unionville, Ontario unless otherwise mutually
agreed upon by the parties to this Contract. Notwithstanding the location of the arbitration,
all proceedings pursuant hereto shall be governed by the law of the province in which the
Company has its principal office.

Quota Share Reinsurance Agreement — SBG

11

 

ARTICLE XIX — AMENDMENTS

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

ARTICLE XX  — ENTIRE AGREEMENT

This Agreement represents the entire agreement and understanding among the parties, and may not be
changed except in writing, signed by the parties. No other oral or written agreements or contracts
relating to the risks reinsured hereunder currently exist and/or are contemplated between the
parties.

ARTICLE XXI  — CONFIDENTIALITY CLAUSE

All terms and conditions of this Agreement and any materials provided in the course of inspection
shall be kept confidential by the Reinsurer as against third parties, unless the disclosure is
required pursuant to process of law or unless the disclosure is to Reinsurer’s retrocessionaires,
financial auditors or governing regulatory bodies. Disclosing or using this information for any
purpose beyond the scope of this Agreement, or beyond the exceptions set forth above, is expressly
forbidden without the prior consent of the Company.

ARTICLE XXII — DEFINITION OF RISK

The Company shall be the sole judge of what constitutes one risk.

Quota Share Reinsurance Agreement — SBG

12

 

In Witness Whereof, the parties hereto by their duly authorized representatives have executed
this Contract at:

Boston, Massachusetts this 15th day of August.

	 	 	 	 	 
	 	LIBERTY MUTUAL INSURANCE COMPANY

(with and on behalf of THE FIRST LIBERTY INSURANCE CORPORATION, LIBERTY
MUTUAL FIRE INSURANCE COMPANY, LM INSURANCE
CORPORATION, LIBERTY INSURANCE CORPORATION for
Business Classified as Small Business Group only)

 	 
	 	By:  	/s/ Robert C. Andrews
 	 
	 	 	Its:      Vice President 	 
	 	 	 	 
	 

and at Keene, New Hampshire this 15th day of July.

	 	 	 	 	 
	 	PEERLESS INSURANCE COMPANY

 	 
	 	By:  	/s/ Nancy C. Callender
 	 
	 	 	Its: AVP — Team Risk Management 	 
	 	 	 	 
	 

 

 

EXHIBIT A — Small Business Group Profit Center

Assigned Codes For Multi-State Business Written

	 	 	 	 	 
	Business Group Indicator	 	Distribution Code
	0042 — Peerless
	 	 	0510	 
	0043 — Indiana
	 	 	0511	 
	0044 — Golden Eagle
	 	 	0512	 
	0045 — Montgomery
	 	 	0513	 
	0047 — Colorado Casualty
	 	 	0515	 
	0048 — Hawkeye
	 	 	0516	 
	0049 — America First
	 	 	0517	 

 

 

INSOLVENCY FUNDS EXCLUSION CLAUSE

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

 

 

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 (successor to Factory Insurance Association and Oil Insurance
Association); 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
$500,000,000.

	(b)	 	To interests traditionally underwritten as Inland Marine of 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.

	(d)	 	To risks as follows: Offices, Hotels, Apartments, Hospitals, Educational Establishments,
Public Utilities (other than Railroad Schedules) and Builders Risks on the classes of risks
specified in this subsection (d) only.

 

 

TOTAL INSURED VALUE EXCLUSION CLAUSE

It is the mutual intention of the parties to exclude risks, other than Offices, Hotels,
Apartments, Hospitals, Educational Establishments, Public Utilities (except Railroad schedules) and
Builders Risk on the above classes where, at the time of the cession, the Total Insured Value over
all interests exceeds $500,000,000. However, the Company shall be protected hereunder, subject to
the other terms and conditions of this Agreement, if subsequently to cession being made the
Company becomes acquainted with the true facts of the case and discovers that the mutual intention
has been inadvertently breached, the Company shall at the first opportunity, and certainly by next
anniversary of the original policy, exclude the risk in question.

It is agreed that this mutual intention does not apply to Contingent Business Interruption or to
interest traditionally underwritten as Inland Marine or to Stock and/or Contents written on a
blanket basis except where the Company is aware that the Total Insured Value of $500,000,000 is
already exceeded for buildings, machinery, equipment and direct use and occupancy at the key
location.

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

Notwithstanding anything contained herein to the contrary, it is the mutual intention of the
parties in respect of bridges and tunnels to exclude such risks where the Total Insured Value over
all interests exceeds $500,000,000.

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE — PHYSICAL DAMAGE — REINSURANCE — U.S.A.

N.M.A. 1119.

	1.	 	This Reinsurance does not cover any loss or liability accruing to the Company, 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 Company, 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 operation of paragraphs 1. and 2. of this Clause, this
Reinsurance does not cover any loss or liability by radioactive contamination accruing to the
Company, 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 the Company does not have knowledge of such nuclear reactor power
plant or nuclear installation, or
	 
	 	(b)	 	where the 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 operation of paragraphs 1., 2. and 3. of this Clause, this
Reinsurance does not cover any loss or liability by radioactive contamination accruing to the
Company, 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 this Clause shall not extend to risks using radioactive isotopes
in any form where the nuclear exposure is not considered by the Company to be the primary
hazard.

	6.	 	The term “special nuclear material” shall have the meaning given to it by 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

-1-

 

	 	(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 Company 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 Company 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.

N.M.A. 1119

-2-

 

NUCLEAR INCIDENT EXCLUSION CLAUSE — PHYSICAL DAMAGE — REINSURANCE — CANADA

N.M.A. 1980

	1.	 	This Agreement does not cover any loss or liability accruing to the Company 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 Agreement
does not cover any loss or liability accruing to the Company, 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:

	 	a.	 	Nuclear reactor power plants including all auxiliary property on the site, or
	 
	 	b.	 	Any other nuclear reactor installation, including laboratories handling
radioactive materials in connection with reactor installations, and critical facilities
as such, or
	 
	 	c.	 	Installations for fabricating complete fuel elements or for processing substantial
quantities of prescribed substances, and for reprocessing, salvaging, chemically
separating, storing or disposing of spent nuclear fuel or waste materials, or
	 
	 	d.	 	Installations other than those listed in c. above using substantial quantities of
radioactive isotopes or other products of nuclear fission.

	3.	 	Without in any way restricting the operation of paragraphs 1. and 2. of this clause, this
Agreement does not cover any loss or liability by radioactive contamination accruing to the
Company, 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 the Company does not have knowledge of such nuclear reactor power plant or
nuclear installation, or
	 
	 	b.	 	where the said insurance contains a provision excluding coverage for damage to
property caused by or resulting from radioactive contamination, however caused.

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

	5.	 	This clause shall not extend to risks using radioactive isotopes in any form where the
nuclear exposure is not considered by the Company to be the primary hazard.

	6.	 	The term “prescribed substances” shall have the meaning given to it by the Atomic Energy
Control Act R.S.C. 1974 or by any law amendatory thereof.

	7.	 	Company to be sole judge of what constitutes:

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

 

 

	8.	 	Without in any way restricting the operation of paragraphs 1., 2., 3. and 4. of this
clause, this Agreement does not cover any loss or liability accruing to the Company,
directly or indirectly, and whether as Insurer or Reinsurer, caused by any nuclear incident
as defined in The Nuclear Liability Act, nuclear explosion or contamination by radioactive
material.

			
	NOTE:	 	Without in any way restricting the operation of paragraphs 1., 2., 3. and 4. of this clause,
paragraph 8. of this clause shall apply to all original contracts of the Company whether new,
renewal or replacement which become effective on or after December 31, 1984.

N.M.A. 1980

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE — REINSURANCE — NO. 4

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

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

 

 

TERRORISM EXCLUSION CLAUSE — REINSURANCE (PROPERTY)

Notwithstanding any provision to the contrary within this Agreement or any endorsement thereto,
this reinsurance Agreement does not cover any loss, damage or expense of whatsoever nature directly
or indirectly caused by, resulting from, arising out of or in connection with any act of terrorism,
regardless of any other cause contributing concurrently or in any other sequence to the loss,
damage or expense.

For the purpose of this exclusion, terrorism means any actual or threatened violent act or act
harmful to human life, tangible or intangible property or infrastructure, directed towards or
having the effect of (a) influencing or protesting against any de jure or de facto government or
policy thereof or (b) intimidating, coercing or putting in fear a civilian population or section
thereof.

In any action suit or other proceedings where the reinsurer alleges that by reason of this
exclusion a loss, damage or expense is not covered by this reinsurance Agreement, the burden of
proving that such loss, damage or expense is covered shall be upon the reinsured.

 

 

APPENDIX A — Fortune’s Global 500” list

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	3M
	 	 	316	 	 	 	16 079	 
	ABB
	 	 	194	 	 	 	23 726	 
	Abbey National
	 	 	280	 	 	 	17 798	 
	Abbott Laboratories
	 	 	309	 	 	 	16 285	 
	ABN AMRO Holding
	 	 	90	 	 	 	39 703	 
	Accenture
	 	 	380	 	 	 	13 348	 
	Adecco
	 	 	313	 	 	 	16 147	 
	AdvancePCS
	 	 	387	 	 	 	13 107	 
	Aegon
	 	 	146	 	 	 	28 562	 
	AEON
	 	 	196	 	 	 	23 621	 
	Aetna
	 	 	178	 	 	 	25 191	 
	Agricultural Bank of China
	 	 	471	 	 	 	10 657	 
	Air France Group
	 	 	454	 	 	 	11 076	 
	Akzo Nobel
	 	 	407	 	 	 	12 636	 
	Albertson’s
	 	 	100	 	 	 	37 931	 
	Alcan
	 	 	408	 	 	 	12 626	 
	Alcatel
	 	 	207	 	 	 	22 704	 
	Alcoa
	 	 	205	 	 	 	22 859	 
	Allegheny Energy
	 	 	488	 	 	 	10 379	 
	Alliance Unichem
	 	 	478	 	 	 	10 533	 
	Allianz
	 	 	18	 	 	 	85 929	 
	Allstate
	 	 	144	 	 	 	28 865	 
	Almanij
	 	 	272	 	 	 	18 055	 
	Alstom
	 	 	228	 	 	 	20 734	 
	Amerada Hess
	 	 	376	 	 	 	13 413	 
	American Electric Power
	 	 	36	 	 	 	61 257	 
	American Express
	 	 	209	 	 	 	22 582	 
	American Intl. Group
	 	 	34	 	 	 	62 402	 
	AmerisourceBergen
	 	 	319	 	 	 	15 823	 
	AMR
	 	 	258	 	 	 	18 963	 
	Anglo American
	 	 	341	 	 	 	14 786	 
	Anheuser-Busch
	 	 	397	 	 	 	12 912	 
	Anthem
	 	 	486	 	 	 	10 445	 
	AOL Time Warner
	 	 	98	 	 	 	38 234	 
	Aquila
	 	 	87	 	 	 	40 377	 
	Arbed
	 	 	448	 	 	 	11 195	 
	Arcelor
	 	 	391	 	 	 	13 005	 
	Archer Daniels Midland
	 	 	240	 	 	 	20 051	 
	Arrow Electronics
	 	 	498	 	 	 	10 128	 
	Asahi Glass
	 	 	499	 	 	 	10 103	 
	Asahi Mutual Life Insurance
	 	 	119	 	 	 	33 143	 
	Assicurazionl Generall
	 	 	50	 	 	 	51 394	 
	AstraZeneca
	 	 	301	 	 	 	16 480	 
	AT&T
	 	 	40	 	 	 	59 142	 
	AutoNation
	 	 	241	 	 	 	19 989	 
	Avantis
	 	 	230	 	 	 	20 544	 
	Aviva
	 	 	48	 	 	 	52 318	 
	Avnet
	 	 	402	 	 	 	12 814	 
	AXA
	 	 	30	 	 	 	65 580	 
	BAE Systems
	 	 	390	 	 	 	13 020	 
	Banco Bilbao Vizcaya Argentaria
	 	 	192	 	 	 	23 848	 

A-1

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	Banco Bradesco
	 	 	337	 	 	 	14 953	 
	Banco Do Brasil
	 	 	437	 	 	 	11 685	 
	Bank of America Corp.
	 	 	47	 	 	 	52 641	 
	Bank Of China
	 	 	277	 	 	 	17 869	 
	Bank of Montreal
	 	 	449	 	 	 	11 155	 
	Bank of Nova Scotia
	 	 	366	 	 	 	13 673	 
	Bank One Corp.
	 	 	186	 	 	 	24 527	 
	Bankgesellschaft Berlin
	 	 	473	 	 	 	10 618	 
	Barclays
	 	 	154	 	 	 	27 569	 
	BASF
	 	 	142	 	 	 	29 103	 
	Bayer
	 	 	158	 	 	 	27 111	 
	Bayorische Landesbank
	 	 	320	 	 	 	15 795	 
	BGE
	 	 	339	 	 	 	14 873	 
	BellSouth
	 	 	189	 	 	 	24 130	 
	Berkshire Hathaway
	 	 	101	 	 	 	37 668	 
	Bertelsmann
	 	 	276	 	 	 	17 887	 
	Best Buy
	 	 	247	 	 	 	19 597	 
	BHP Billiton
	 	 	281	 	 	 	17 789	 
	BMW
	 	 	112	 	 	 	34 444	 
	BNP Paribas
	 	 	44	 	 	 	55 044	 
	Boeing
	 	 	42	 	 	 	58 108	 
	Bombardier
	 	 	360	 	 	 	13 896	 
	Bouygues
	 	 	266	 	 	 	18 334	 
	BP
	 	 	4	 	 	 	174 218	 
	Bridgestone
	 	 	285	 	 	 	17 568	 
	Bristol-Myers Squibb
	 	 	218	 	 	 	21 717	 
	British Airways
	 	 	428	 	 	 	11 943	 
	British American Tobacco
	 	 	271	 	 	 	18 144	 
	BT
	 	 	139	 	 	 	29 958	 
	Canadian Imperial Bank of Commerce
	 	 	361	 	 	 	13 889	 
	Canon
	 	 	190	 	 	 	23 936	 
	Cardinal Health
	 	 	61	 	 	 	47 948	 
	Carrefour
	 	 	35	 	 	 	62 225	 
	Carso Global Telecom
	 	 	430	 	 	 	11 890	 
	Caterpillar
	 	 	232	 	 	 	20 450	 
	Cathay Life
	 	 	440	 	 	 	11 591	 
	Central Japan Railway
	 	 	460	 	 	 	10 933	 
	Centrica
	 	 	270	 	 	 	18 181	 
	ChevronTexaco
	 	 	14	 	 	 	99 699	 
	China Construction Bank
	 	 	389	 	 	 	13 083	 
	China Mobile Communications
	 	 	287	 	 	 	17 406	 
	China National Petroleum
	 	 	81	 	 	 	41 499	 
	China Telecommunications
	 	 	214	 	 	 	22 272	 
	Chinese Petroleum
	 	 	467	 	 	 	10 781	 
	Chubu Electric Power
	 	 	279	 	 	 	17 826	 
	Cigna
	 	 	254	 	 	 	19 115	 
	Cinergy
	 	 	396	 	 	 	12 923	 
	Circuit City Stores
	 	 	403	 	 	 	12 792	 
	Cisco Systems
	 	 	213	 	 	 	22 293	 
	Citigroup
	 	 	11	 	 	 	112 022	 
	CMS Energy
	 	 	383	 	 	 	12 977	 
	CNP Assurances
	 	 	238	 	 	 	20 099	 
	Coca-Cola
	 	 	239	 	 	 	20 092	 
	Coca-Cola Enterprises
	 	 	322	 	 	 	15 700	 
	COFCO
	 	 	392	 	 	 	13 004	 

A-2

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	Coles Myer
	 	 	406	 	 	 	12 643	 
	Commerzbank
	 	 	193	 	 	 	23 778	 
	Compaq Computer
	 	 	117	 	 	 	33 554	 
	Compass Group
	 	 	409	 	 	 	12 552	 
	Computer Sciences
	 	 	443	 	 	 	11 426	 
	ConAgra
	 	 	156	 	 	 	27 194	 
	Conoco
	 	 	122	 	 	 	32 795	 
	Consignia
	 	 	425	 	 	 	12 040	 
	Corus Group
	 	 	452	 	 	 	11 087	 
	Cosmo Oil
	 	 	474	 	 	 	10 612	 
	Costco Wholesale
	 	 	111	 	 	 	34 797	 
	Credit Agricole
	 	 	107	 	 	 	35 669	 
	Credit Lyonnais
	 	 	259	 	 	 	18 848	 
	Credit Suisse
	 	 	31	 	 	 	64 205	 
	CVS
	 	 	215	 	 	 	22 241	 
	Dai Nippon Printing
	 	 	480	 	 	 	10 492	 
	Daido Life Insurance
	 	 	479	 	 	 	10 527	 
	Daiel
	 	 	237	 	 	 	20 113	 
	Dai-ichi Mutual Life Insurance
	 	 	76	 	 	 	43 145	 
	DaimterChrysler
	 	 	7	 	 	 	136 897	 
	Daiwa Bank Holdings
	 	 	463	 	 	 	10 888	 
	Dana
	 	 	484	 	 	 	10 469	 
	Danske Bank Group
	 	 	461	 	 	 	10 912	 
	Deere
	 	 	382	 	 	 	13 293	 
	Delhaize ‘Le Lion’
	 	 	245	 	 	 	19 629	 
	Dell Computer
	 	 	131	 	 	 	31 168	 
	Delphi
	 	 	166	 	 	 	26 088	 
	Delta Air Lines
	 	 	362	 	 	 	13 879	 
	Denso
	 	 	252	 	 	 	19 203	 
	Dentsu
	 	 	348	 	 	 	14 311	 
	Deutsche Bahn
	 	 	356	 	 	 	14 079	 
	Deutsche Bank
	 	 	27	 	 	 	66 840	 
	Deutsche Post
	 	 	130	 	 	 	31 302	 
	Deutsche Telekom
	 	 	75	 	 	 	43 261	 
	Dexia Group
	 	 	256	 	 	 	19 050	 
	Diageo
	 	 	262	 	 	 	18 605	 
	Dior (Christian)
	 	 	446	 	 	 	11 254	 
	Dominion Resources
	 	 	477	 	 	 	10 553	 
	Dow Chemical
	 	 	152	 	 	 	27 805	 
	Duke Energy
	 	 	39	 	 	 	59 503	 
	DuPont de Nemours (E.I.)
	 	 	172	 	 	 	25 370	 
	Dynegy
	 	 	78	 	 	 	42 242	 
	DZ Bank
	 	 	168	 	 	 	25 987	 
	E. ON
	 	 	28	 	 	 	66 453	 
	EADS
	 	 	153	 	 	 	27 580	 
	East Japan Railway
	 	 	233	 	 	 	20 341	 
	Eastman Kodak
	 	 	383	 	 	 	13 234	 
	Edison
	 	 	353	 	 	 	14 140	 
	Edison International
	 	 	420	 	 	 	12 184	 
	El Paso
	 	 	43	 	 	 	57 475	 
	Electricité De France
	 	 	102	 	 	 	36 461	 
	Electrolux
	 	 	386	 	 	 	13 131	 
	Electronic Data Systems
	 	 	221	 	 	 	21 543	 
	Eli Lilly
	 	 	441	 	 	 	11 543	 
	Emerson Electric
	 	 	326	 	 	 	15 480	 

A-3

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	Endesa
	 	 	358	 	 	 	13 948	 
	Enel
	 	 	169	 	 	 	25 773	 
	ENI
	 	 	71	 	 	 	44 637	 
	Enron
	 	 	6	 	 	 	138 718	 
	Exolon
	 	 	333	 	 	 	15 140	 
	Exxon Mobil
	 	 	2	 	 	 	191 581	 
	Fannie Mae
	 	 	52	 	 	 	50 803	 
	Farmland Industries
	 	 	434	 	 	 	11 763	 
	Federated Dept. Stores
	 	 	292	 	 	 	16 895	 
	FedEx
	 	 	246	 	 	 	19 629	 
	Fiat
	 	 	49	 	 	 	51 944	 
	FleetBoston
	 	 	253	 	 	 	19 190	 
	Fleming
	 	 	325	 	 	 	15 628	 
	Flextronics International
	 	 	388	 	 	 	13 105	 
	Fonclere Euris
	 	 	231	 	 	 	20 490	 
	Ford Motor
	 	 	5	 	 	 	162 412	 
	Fortis
	 	 	85	 	 	 	40 529	 
	France Telecom
	 	 	97	 	 	 	38 530	 
	Franz Haniel
	 	 	269	 	 	 	18 213	 
	Freddie Mac
	 	 	108	 	 	 	35 523	 
	Fuji Heavy Industries
	 	 	462	 	 	 	10 897	 
	Fuji Photo Film
	 	 	251	 	 	 	19 203	 
	Fujitsu
	 	 	88	 	 	 	40 044	 
	Gap
	 	 	363	 	 	 	13 848	 
	Gaz de France
	 	 	400	 	 	 	12 857	 
	Gazprom
	 	 	236	 	 	 	20 148	 
	General Dynamics
	 	 	421	 	 	 	12 163	 
	General Electric
	 	 	9	 	 	 	125 913	 
	General Motors
	 	 	3	 	 	 	177 260	 
	George Weston
	 	 	318	 	 	 	15 923	 
	Georgia-Pacific
	 	 	173	 	 	 	25 309	 
	GlaxoSmithKline
	 	 	140	 	 	 	29 508	 
	Goldman Sachs Group
	 	 	132	 	 	 	31 138	 
	Goodyear Tire & Rubber
	 	 	352	 	 	 	14 147	 
	Great Atl. & Pacific Tea
	 	 	458	 	 	 	10 973	 
	Groupama
	 	 	417	 	 	 	12 264	 
	Groupe Auchan
	 	 	199	 	 	 	23 450	 
	Groupe Calsse d’Epargne
	 	 	297	 	 	 	16 693	 
	Groupe Danone
	 	 	394	 	 	 	12 958	 
	Groupe Pinault-Printemps
	 	 	181	 	 	 	24 894	 
	Halliburton
	 	 	377	 	 	 	13 405	 
	Hartford Fin. Services
	 	 	332	 	 	 	15 147	 
	HBOS
	 	 	150	 	 	 	27 839	 
	HCA
	 	 	275	 	 	 	17 953	 
	Henkel
	 	 	436	 	 	 	11 695	 
	Hewlett-Packard
	 	 	70	 	 	 	45 226	 
	Hitachi
	 	 	32	 	 	 	63 931	 
	Home Depot
	 	 	46	 	 	 	53 553	 
	Honda Motor
	 	 	41	 	 	 	58 882	 
	Honeywell Intl.
	 	 	195	 	 	 	23 652	 
	Household International
	 	 	359	 	 	 	13 916	 
	HSBC Holding PLC
	 	 	64	 	 	 	46 424	 
	Humana
	 	 	493	 	 	 	10 195	 
	HypoVereinsbank
	 	 	91	 	 	 	39 405	 
	Hyundai
	 	 	219	 	 	 	21 702	 

A-4

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	Hyundai Motor
	 	 	133	 	 	 	30 864	 
	Idemitsu Kosan
	 	 	323	 	 	 	15 679	 
	Indian Oil
	 	 	226	 	 	 	20 916	 
	Industrial & Commercial Bank of China
	 	 	243	 	 	 	19 828	 
	ING Group
	 	 	20	 	 	 	87 999	 
	Ingram Micro
	 	 	179	 	 	 	25 187	 
	Intel
	 	 	162	 	 	 	26 539	 
	International Paper
	 	 	163	 	 	 	26 363	 
	IntesaBci
	 	 	242	 	 	 	19 946	 
	Intl. Business Machines
	 	 	19	 	 	 	85 866	 
	Isuzu Motors
	 	 	404	 	 	 	12 778	 
	llausa
	 	 	492	 	 	 	10 239	 
	Itochu
	 	 	17	 	 	 	91 177	 
	Ito-Yokado
	 	 	161	 	 	 	26 823	 
	J. Salnsbury
	 	 	184	 	 	 	24 575	 
	J.C. Penney
	 	 	124	 	 	 	32 557	 
	J.P. Morgan Chase
	 	 	54	 	 	 	50 429	 
	Japan Airlines
	 	 	399	 	 	 	12 866	 
	Japan Energy
	 	 	385	 	 	 	13 203	 
	Japan Postal Service
	 	 	234	 	 	 	20 281	 
	Japan Telecom
	 	 	368	 	 	 	13 628	 
	Japan Tobacco
	 	 	307	 	 	 	16 331	 
	Johnson & Johnson
	 	 	121	 	 	 	33 004	 
	Johnson Controls
	 	 	264	 	 	 	18 427	 
	Kajima
	 	 	302	 	 	 	16 478	 
	Kansal Electric Power
	 	 	224	 	 	 	21 207	 
	KarstadtQuelle
	 	 	347	 	 	 	14 388	 
	KDDI
	 	 	208	 	 	 	22 664	 
	Kimberly-Clark
	 	 	345	 	 	 	14 524	 
	Kingfisher
	 	 	314	 	 	 	16 142	 
	Kmart
	 	 	104	 	 	 	36 151	 
	Korea Electric Power
	 	 	324	 	 	 	15 674	 
	Kreditanstalt fur Wiederaufbau
	 	 	481	 	 	 	10 484	 
	Kroger
	 	 	56	 	 	 	50 098	 
	KT
	 	 	413	 	 	 	12 349	 
	Kyushu Electric Power
	 	 	438	 	 	 	11 661	 
	L.M. Ericsson
	 	 	210	 	 	 	22 416	 
	La Poste
	 	 	329	 	 	 	15 249	 
	Lafarge
	 	 	416	 	 	 	12 267	 
	Lagardere Groupe
	 	 	429	 	 	 	11 906	 
	Landesbank Baden-Wurttemberg
	 	 	294	 	 	 	16 877	 
	Lear
	 	 	369	 	 	 	13 625	 
	Legal & General
	 	 	374	 	 	 	13 541	 
	Lehman Brothers Hldgs.
	 	 	212	 	 	 	22 392	 
	LG Electronics
	 	 	202	 	 	 	23 137	 
	LG international
	 	 	248	 	 	 	19 516	 
	Liberty Mutual Group
	 	 	349	 	 	 	14 256	 
	Lloyds TSB Group
	 	 	206	 	 	 	22 823	 
	Lockheed Martin
	 	 	182	 	 	 	24 793	 
	Loews
	 	 	260	 	 	 	18 799	 
	L’Oreal
	 	 	415	 	 	 	12 305	 
	Lowe’s
	 	 	216	 	 	 	22 111	 
	Lucent Technologies
	 	 	180	 	 	 	25 132	 
	Lufthansa Group
	 	 	338	 	 	 	14 946	 
	Lukoil
	 	 	422	 	 	 	12 106	 

A-5

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	LVMH
	 	 	459	 	 	 	10 951	 
	Magna International
	 	 	456	 	 	 	11 026	 
	Man Group
	 	 	343	 	 	 	14 552	 
	Manpower
	 	 	482	 	 	 	10 484	 
	Manulife Financial
	 	 	483	 	 	 	10 480	 
	Marathon Oil
	 	 	110	 	 	 	35 041	 
	Marks & Spencer
	 	 	439	 	 	 	11 650	 
	Marriott International
	 	 	496	 	 	 	10 152	 
	Marubeni
	 	 	25	 	 	 	71 757	 
	Mass. Mutual Life Ins.
	 	 	249	 	 	 	19 340	 
	Matsushita Electric Industrial
	 	 	45	 	 	 	54 997	 
	May Dept. Stores
	 	 	351	 	 	 	14 175	 
	Mazda Motor
	 	 	296	 	 	 	16 754	 
	MBNA
	 	 	497	 	 	 	10 145	 
	McDonald’s
	 	 	340	 	 	 	14 870	 
	McKesson
	 	 	57	 	 	 	50 006	 
	Meljl Life Insurance
	 	 	176	 	 	 	25 296	 
	Merck
	 	 	62	 	 	 	47 716	 
	Merrill Lynch
	 	 	95	 	 	 	38 793	 
	MetLife
	 	 	128	 	 	 	31 928	 
	Metro
	 	 	72	 	 	 	44 347	 
	Michelln
	 	 	342	 	 	 	14 566	 
	Microsoft
	 	 	175	 	 	 	25 298	 
	Migros
	 	 	427	 	 	 	11 955	 
	Mirant
	 	 	129	 	 	 	31 502	 
	Mitsubishi
	 	 	12	 	 	 	105 814	 
	Mitsubishi Chemical
	 	 	350	 	 	 	14 239	 
	Mitsubishi Electric
	 	 	141	 	 	 	29 183	 
	Mitsubishi Heavy Industries
	 	 	204	 	 	 	22 905	 
	Mitsubishi Motors
	 	 	171	 	 	 	25 598	 
	Mitsubishi Tokyo Financial Group
	 	 	165	 	 	 	26 091	 
	Mitsui
	 	 	13	 	 	 	101 206	 
	Mitsui Mutual Life insurance
	 	 	220	 	 	 	21 658	 
	Mitsui Sumitomo Insurance
	 	 	330	 	 	 	15 206	 
	Mizuho Holdings
	 	 	82	 	 	 	41 445	 
	Morgan Stanley
	 	 	73	 	 	 	43 727	 
	Motorola
	 	 	138	 	 	 	30 004	 
	Munich Re Group
	 	 	79	 	 	 	41 894	 
	National Australia Bank
	 	 	303	 	 	 	16 450	 
	Nationwide
	 	 	334	 	 	 	15 118	 
	NEC
	 	 	84	 	 	 	40 796	 
	Nestle
	 	 	55	 	 	 	50 192	 
	New York life Insurance
	 	 	170	 	 	 	25 678	 
	News Corp.
	 	 	364	 	 	 	13 755	 
	Nichlmen
	 	 	305	 	 	 	16 437	 
	Nippon Express
	 	 	367	 	 	 	13 661	 
	Nippon Life Insurance
	 	 	33	 	 	 	63 827	 
	Nippon Mitsubishi Oil
	 	 	197	 	 	 	23 521	 
	Nippon Steel
	 	 	229	 	 	 	20 645	 
	Nippon Telegraph & Telephone
	 	 	16	 	 	 	93 425	 
	Nissan Motor
	 	 	58	 	 	 	49 555	 
	Nissho Iwal
	 	 	74	 	 	 	43 703	 
	NKK
	 	 	384	 	 	 	13 224	 
	Nokia
	 	 	147	 	 	 	27 931	 
	Norddeutsche Landesb.
	 	 	475	 	 	 	10 604	 

A-6

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	Nordea
	 	 	419	 	 	 	12 209	 
	Norinchukin Bank
	 	 	395	 	 	 	12 939	 
	Norsk Hydro
	 	 	291	 	 	 	16 999	 
	Nortel Networks
	 	 	263	 	 	 	18 507	 
	Northrop Grumman
	 	 	373	 	 	 	13 558	 
	Northwestern Mutual
	 	 	310	 	 	 	16 212	 
	Novartis
	 	 	257	 	 	 	18 986	 
	Obayashi
	 	 	447	 	 	 	11 226	 
	Occidental Petroleum
	 	 	355	 	 	 	14 126	 
	Office Depot
	 	 	450	 	 	 	11 154	 
	Old Mutual
	 	 	453	 	 	 	11 076	 
	Olivetts
	 	 	145	 	 	 	28 670	 
	Onex
	 	 	327	 	 	 	15 369	 
	Oracle
	 	 	464	 	 	 	10 860	 
	Otto Versand
	 	 	372	 	 	 	13 564	 
	PacifiCare Health Sys.
	 	 	433	 	 	 	11 844	 
	PDVSA
	 	 	66	 	 	 	46 250	 
	Pemex
	 	 	92	 	 	 	39 400	 
	PepsiCo.
	 	 	159	 	 	 	26 935	 
	Petrobras
	 	 	185	 	 	 	24 549	 
	Petronas
	 	 	284	 	 	 	17 679	 
	Peugeot
	 	 	65	 	 	 	46 264	 
	Pfizer
	 	 	127	 	 	 	32 259	 
	PG&E Corp.
	 	 	203	 	 	 	22 959	 
	Pharmacia
	 	 	250	 	 	 	19 299	 
	Philip Morris
	 	 	24	 	 	 	72 944	 
	Phillips Petroleum
	 	 	188	 	 	 	24 189	 
	POSCO
	 	 	494	 	 	 	10 162	 
	Power Corp. of Canada
	 	 	432	 	 	 	11 855	 
	Procter & Gamble
	 	 	93	 	 	 	39 244	 
	Prudential
	 	 	106	 	 	 	35 821	 
	Prudential Financial
	 	 	157	 	 	 	27 177	 
	Publix Super Markets
	 	 	328	 	 	 	15 284	 
	Qwest Communications
	 	 	244	 	 	 	19 743	 
	Rabobank
	 	 	225	 	 	 	21 141	 
	RAG
	 	 	365	 	 	 	13 691	 
	Raytheon
	 	 	295	 	 	 	16 867	 
	Reliant Energy
	 	 	67	 	 	 	46 226	 
	Renault
	 	 	125	 	 	 	32 552	 
	Repsol YPF
	 	 	94	 	 	 	39 091	 
	Ricoh
	 	 	379	 	 	 	13 375	 
	Rite Ald
	 	 	331	 	 	 	15 171	 
	Robert Bosch
	 	 	135	 	 	 	30 473	 
	Roche Group
	 	 	288	 	 	 	17 282	 
	Royal & Sun Alliance
	 	 	222	 	 	 	21 525	 
	Royal Ahold
	 	 	38	 	 	 	59 634	 
	Royal Bank of Canada
	 	 	299	 	 	 	16 536	 
	Royal Bank of Scotland
	 	 	115	 	 	 	33 831	 
	Royal Dutch/Shell Group
	 	 	8	 	 	 	135 211	 
	Royal KPN
	 	 	451	 	 	 	11 119	 
	Royal Philips Electronics
	 	 	143	 	 	 	28 960	 
	Rwe
	 	 	83	 	 	 	50 664	 
	Safeway
	 	 	113	 	 	 	34 301	 
	Safeway
	 	 	418	 	 	 	12 258	 
	Saint-Gobain
	 	 	155	 	 	 	27 214	 

A-7

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	Samsung
	 	 	118	 	 	 	33 212	 
	Samsung Electronics
	 	 	105	 	 	 	35 959	 
	Samsung Life Insurance
	 	 	286	 	 	 	17 503	 
	Santander Central Hispano Group
	 	 	136	 	 	 	30 422	 
	Sanyo Electric
	 	 	293	 	 	 	16 882	 
	Sara Lee
	 	 	282	 	 	 	17 747	 
	SBC Communications
	 	 	69	 	 	 	45 908	 
	Schlumberger
	 	 	357	 	 	 	13 988	 
	Sears Roebuck
	 	 	83	 	 	 	41 078	 
	Sekisui House
	 	 	472	 	 	 	10 631	 
	Sharp
	 	 	346	 	 	 	14 425	 
	Shimlzu
	 	 	405	 	 	 	12 669	 
	Showa Shell Sekiyu
	 	 	490	 	 	 	10 362	 
	Siemens
	 	 	22	 	 	 	77 359	 
	Sinochem
	 	 	311	 	 	 	16 164	 
	Sinopec
	 	 	86	 	 	 	40 388	 
	SK
	 	 	120	 	 	 	33 008	 
	SK Global
	 	 	289	 	 	 	17 214	 
	Skanska
	 	 	317	 	 	 	15 948	 
	SNCF
	 	 	274	 	 	 	18 026	 
	Société Générale
	 	 	191	 	 	 	23 924	 
	Sodexho Alliance
	 	 	476	 	 	 	10 579	 
	Solectron
	 	 	261	 	 	 	18 692	 
	Sony
	 	 	37	 	 	 	60 608	 
	Southern
	 	 	495	 	 	 	10 155	 
	Sprint
	 	 	167	 	 	 	26 071	 
	Standard Life Assurance
	 	 	265	 	 	 	18 416	 
	Staples
	 	 	469	 	 	 	10 744	 
	State Farm Insurance
	 	 	63	 	 	 	46 705	 
	State Power
	 	 	60	 	 	 	48 375	 
	Statoll
	 	 	164	 	 	 	26 286	 
	Stora Enso
	 	 	423	 	 	 	12 097	 
	Suez
	 	 	99	 	 	 	37 933	 
	Sumitomo
	 	 	23	 	 	 	77 140	 
	Sumitomo Electric Industries
	 	 	431	 	 	 	11 877	 
	Sumitomo Life Insurance
	 	 	126	 	 	 	32 549	 
	Sumitomo Metal Industries
	 	 	466	 	 	 	10 793	 
	Sumitomo Mitsui Banking
	 	 	137	 	 	 	30 229	 
	Sun Life Financial Services
	 	 	465	 	 	 	10 857	 
	Sun Microsystems
	 	 	268	 	 	 	18 250	 
	Sunoco
	 	 	412	 	 	 	12 402	 
	Suntory
	 	 	485	 	 	 	10 445	 
	Supervalu
	 	 	227	 	 	 	20 809	 
	Suzuki Motor
	 	 	381	 	 	 	13 342	 
	Swiss Life Ins. & Pension
	 	 	375	 	 	 	13 511	 
	Swiss Reinsurance
	 	 	235	 	 	 	20 210	 
	Sysco
	 	 	217	 	 	 	21 785	 
	Taisel
	 	 	378	 	 	 	13 387	 
	Taiyo Mutual Life Insurance
	 	 	401	 	 	 	12 824	 
	Takenaka
	 	 	600	 	 	 	10 096	 
	Target
	 	 	89	 	 	 	39 888	 
	Tech Data
	 	 	290	 	 	 	17 198	 
	Telefonica
	 	 	151	 	 	 	27 808	 
	Telstra
	 	 	411	 	 	 	12 415	 
	Tenet Healthcare
	 	 	424	 	 	 	12 053	 

A-8

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	Tesco
	 	 	114	 	 	 	33 916	 
	Textron
	 	 	414	 	 	 	12 321	 
	Thyssen Krupp
	 	 	116	 	 	 	33 796	 
	TIAA-CREF
	 	 	187	 	 	 	24 231	 
	TJX
	 	 	470	 	 	 	10 709	 
	Tohoku Electric Power
	 	 	371	 	 	 	13 574	 
	Tokio Marine & Fire Insurance
	 	 	312	 	 	 	16 156	 
	Tokyo Electric Power
	 	 	80	 	 	 	41 752	 
	Tomen
	 	 	255	 	 	 	19 073	 
	Toppan Printing
	 	 	489	 	 	 	10 367	 
	Toronto-Dominion Bank
	 	 	370	 	 	 	13 585	 
	Toshiba
	 	 	77	 	 	 	43 139	 
	Total Fina (Illegible)
	 	 	15	 	 	 	94 312	 
	Toyota Motor
	 	 	10	 	 	 	120 814	 
	Toyota Tsusho
	 	 	273	 	 	 	18 040	 
	Toys ‘R’ Us
	 	 	457	 	 	 	11 019	 
	TransCanada Pipelines
	 	 	435	 	 	 	11 715	 
	TRW
	 	 	306	 	 	 	16 383	 
	TUI
	 	 	223	 	 	 	21 253	 
	TXU
	 	 	148	 	 	 	27 927	 
	Tyco International
	 	 	103	 	 	 	36 389	 
	Tyson Foods
	 	 	468	 	 	 	10 751	 
	U.S. Bancorp
	 	 	304	 	 	 	16 443	 
	U.S. Postal Service
	 	 	29	 	 	 	65 834	 
	UAL
	 	 	315	 	 	 	16 138	 
	UBS
	 	 	59	 	 	 	48 503	 
	UFJ Holdings
	 	 	174	 	 	 	25 300	 
	UniCredito Italiano
	 	 	321	 	 	 	15 791	 
	Unilever
	 	 	68	 	 	 	46 131	 
	Union Pacific
	 	 	426	 	 	 	11 973	 
	United Parcel Service
	 	 	134	 	 	 	30 646	 
	United Technologies
	 	 	149	 	 	 	27 897	 
	UnitedHealth Group
	 	 	198	 	 	 	23 454	 
	Valero Energy
	 	 	336	 	 	 	14 988	 
	Verizon Communications
	 	 	26	 	 	 	67 190	 
	Viacom
	 	 	200	 	 	 	23 223	 
	Vinci
	 	 	308	 	 	 	16 291	 
	Visteon
	 	 	278	 	 	 	17 843	 
	Vivendi Universal
	 	 	51	 	 	 	51 366	 
	Vodafone
	 	 	123	 	 	 	32 713	 
	Volkswagen
	 	 	21	 	 	 	79 287	 
	Volvo
	 	 	267	 	 	 	18 301	 
	Wachovia Corp.
	 	 	211	 	 	 	22 396	 
	Walgreen
	 	 	183	 	 	 	24 623	 
	Wal-Mart Stores
	 	 	1	 	 	 	219 812	 
	Walt Disney
	 	 	177	 	 	 	25 269	 
	Washington Mutual
	 	 	283	 	 	 	17 692	 
	Waste Management
	 	 	444	 	 	 	11 322	 
	Wellpoint Health Netwks.
	 	 	410	 	 	 	12 429	 
	Wells Fargo
	 	 	160	 	 	 	26 891	 
	Westdeutsche Landesbank
	 	 	201	 	 	 	23 139	 
	Weyerhaeuser
	 	 	344	 	 	 	14 545	 
	Whirlpool
	 	 	491	 	 	 	10 343	 
	Williams
	 	 	455	 	 	 	11 055	 
	Winn-Dixie Stores
	 	 	398	 	 	 	12 903	 

A-9

 

	 	 	 	 	 	 	 	 	 
	Company	 	Rank	 	Revenues [USD mio]
	Wolseley
	 	 	487	 	 	 	10 384	 
	Woolworths
	 	 	442	 	 	 	11 502	 
	WorldCom
	 	 	109	 	 	 	35 179	 
	Wyeth
	 	 	354	 	 	 	14 129	 
	Xcel Energy
	 	 	335	 	 	 	15 028	 
	Xerox
	 	 	300	 	 	 	16 502	 
	Yasuda Fire & Marine Insurance
	 	 	445	 	 	 	11 306	 
	Yasuda Mutual Life Insurance
	 	 	298	 	 	 	18 575	 
	Zurich Financial Services
	 	 	95	 	 	 	38 650	 

A-10

 

Pharmaceutical / Medical risks — APPENDIX B

(Version 2002-Aug) (Page 1 of 2)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Net Sales or	 	Pharm/
medical
	 	 	 	 	 	 	 	 	Revenues 2001	 	sales of
	#	 	Company Name	 	Country	 	Internet Address	 	(USD mio)	 	Total
	1

	 	ABBOTT LABORATORIES
	 	USA
	 	www.abbott.com
	 	 	16,285	 	 	 	100	%
	2

	 	AKZO NOBEL
	 	Netherlands
	 	www.akzonobel.com
	 	 	12,609	 	 	 	30	%
	3

	 	ALLERGAN
	 	USA
	 	www.allergan.com
	 	 	1,746	 	 	 	100	%
	4

	 	ALPHARMA
	 	USA
	 	www.alpharma.com
	 	 	1,200	 	 	 	80	%
	5

	 	ALTANA AG
	 	Germany
	 	www.altana.com
	 	 	2,077	 	 	 	70	%
	6

	 	AMERISOURCE BERGEN
	 	USA
	 	www.amerisourcebergen.net
	 	 	39,132	 	 	 	90	%
	7

	 	AMERSHAM
	 	UK
	 	www.nycomed-amersham.com
	 	 	2,176	 	 	 	100	%
	8

	 	AMGEN
	 	USA
	 	www.amgen.com
	 	 	4,016	 	 	 	100	%
	9

	 	ASTRAZENECA
	 	UK
	 	www.astrazeneca.com
	 	 	16,431	 	 	 	100	%
	10

	 	AVENTIS
	 	France
	 	www.aventis.com
	 	 	20,500	 	 	 	100	%
	11

	 	BARR LABORATORIES
	 	USA
	 	wvw.barrlabs.com
	 	 	510	 	 	 	100	%
	12

	 	BAXTER INTERNATIONAL
	 	USA
	 	www.baxter.com
	 	 	7,663	 	 	 	100	%
	13

	 	BAYER
	 	Germany
	 	www.bayer.com
	 	 	27,248	 	 	 	35	%
	14

	 	BEAUFOUR IPSEN
	 	France
	 	www.beaufour-lpsen.com
	 	 	634	 	 	 	90	%
	15

	 	BECTON, DICKINSON AND COMPANY
	 	USA
	 	www.bd.com
	 	 	3,754	 	 	 	50	%
	16

	 	BOEHRINGER INGELHEIM KG
	 	Germany
	 	www.boehringer-ingelheim.com
	 	 	6,025	 	 	 	95	%
	17

	 	BOSTON SCIENTIFIC CORPORATION
	 	USA
	 	www.bsci.com
	 	 	2,673	 	 	 	100	%
	18

	 	BRISTOL-MYERS SQUIBB
	 	USA
	 	www.bms.com
	 	 	19,423	 	 	 	70	%
	19

	 	CARDINAL HEALTH
	 	USA
	 	www.cardinal.com
	 	 	47,948	 	 	 	80	%
	20

	 	CELLTECH (former MEDEVA)
	 	UK
	 	www.celltechgroup.com
	 	 	439	 	 	 	100	%
	21

	 	CENTERPULSE (former SULZER MEDICA)
	 	Switzerland
	 	www.centerpulse.com
	 	 	855	 	 	 	100	%
	22

	 	CHUGAI PHARMACEUTICAL
	 	Japan
	 	www.chugai-pharm.co.jp
	 	 	1,608	 	 	 	95	%
	23

	 	DAIICHI PHARMACEUTICAL
	 	Japan
	 	www.daiichipharm.co.jp
	 	 	2,511	 	 	 	95	%
	24

	 	DAINIPPON PHARMACEUTICAL
	 	Japan
	 	www.dainippon-pharm.co.jp
	 	 	1,258	 	 	 	85	%
	25

	 	EDWARDS LIFESCIENCES
	 	USA
	 	www.edwards.com
	 	 	692	 	 	 	100	%
	26

	 	EISAI
	 	Japan
	 	www.eisai.co.jp
	 	 	2,865	 	 	 	90	%
	27

	 	FOREST LABORATORIES
	 	USA
	 	www.frx.com
	 	 	1,205	 	 	 	100	%
	28

	 	FUJISAWA PHARMACEUTICAL
	 	Japan
	 	www.fujisawa.co.jp
	 	 	2,356	 	 	 	90	%
	29

	 	GENENTECH
	 	USA
	 	www.gene.com
	 	 	2,212	 	 	 	75	%
	30

	 	GLAXOSMITHKLINE
	 	UK
	 	www.gsk.com
	 	 	29,408	 	 	 	95	%
	31

	 	GUIDANT
	 	USA
	 	www.guidant.com
	 	 	2,708	 	 	 	100	%
	32

	 	IMMUNEX
	 	USA
	 	www.immunex.com
	 	 	986	 	 	 	100	%
	33

	 	IVAX
	 	USA
	 	www.Ivax.com
	 	 	1,214	 	 	 	100	%
	34

	 	JOHNSON & JOHNSON
	 	USA
	 	www.jnj.com
	 	 	33,004	 	 	 	50	%
	35

	 	KYOWA HAKKO KOGYO
	 	Japan
	 	www.kyowa.co.jp
	 	 	2,975	 	 	 	40	%
	36

	 	LABORATOIRE FOURNIER
	 	France
	 	www.groupe-foumler.com
	 	 	675	 	 	 	90	%
	37

	 	LABORATOIRE SERVIER
	 	France
	 	www.servier.com
	 	 	1,593	 	 	 	100%	 
	38

	 	LILLY (EU)
	 	USA
	 	www.lilly.com
	 	 	11,543	 	 	 	100	%
	39

	 	MEDTRONIC
	 	USA
	 	www.medtronic.com
	 	 	5,552	 	 	 	100	%
	40

	 	MERCK & CO
	 	USA
	 	www.merck.com
	 	 	47,716	 	 	 	90	%
	41

	 	MERCK KGAA
	 	Germany
	 	www.merck.de
	 	 	6,727	 	 	 	50	%
	42

	 	MINNESOTA MINING & MANUFACTURING
	 	USA
	 	www.3m.com
	 	 	16,079	 	 	 	20	%
	43

	 	MITSUBISHI PHARMACEUTICAL

(former WELFIDE)
	 	Japan
	 	www.m-pharma.co.jp
	 	 	1,437	 	 	 	85	%
	44

	 	MYLAN LABORATORIES
	 	USA
	 	www.mylan.com
	 	 	847	 	 	 	100	%
	45

	 	NOVARTIS
	 	Switzerland
	 	www.novartis.com
	 	 	18,570	 	 	 	60	%
	46

	 	NOVO NORDISK
	 	Denmark
	 	www.novonordisk.com
	 	 	2,845	 	 	 	100	%
	47

	 	OTSUKA PHARMACEUTICAL
	 	Japan
	 	www.otsuka.co.jp
	 	 	2,700	 	 	 	50	%
	48

	 	PFIZER
	 	USA
	 	www.pfizer.com
	 	 	32,259	 	 	 	81	%
	49

	 	PHARMACIA
	 	USA
	 	www.pharmacia.com
	 	 	13,837	 	 	 	100	%
	50

	 	PIERRE FABRE
	 	Franca
	 	www.pierre-fabre.com
	 	 	1,200	 	 	 	100	%
	51

	 	PROCTER & GAMBLE
	 	USA
	 	www.pg.com
	 	 	39,244	 	 	 	10	%
	52

	 	PURDUE FREDERICK PRA HOLDING
	 	USA
	 	www.purduepharma.com
	 	 	1,500	 	 	 	100	%
	53

	 	ROCHE
	 	Switzerland
	 	www.rache.com
	 	 	16,903	 	 	 	85	%
	54

	 	SANKYO
	 	Japan
	 	www.sankyo.co.jp
	 	 	4,317	 	 	 	80	%
	55

	 	SANOFI-SYNTHELABO
	 	France
	 	www.sanofi-synthelabo.fr
	 	 	5,798	 	 	 	95	%
	56

	 	SCHERING AG
	 	Germany
	 	www.schering.de
	 	 	4,327	 	 	 	100	%
	57

	 	SCHERlNG-PLOUGH
	 	USA
	 	www.schering-plough.com
	 	 	9,802	 	 	 	95	%
	58

	 	SCHWARZ PHARMA
	 	Germany
	 	www.schwarzpharma.com
	 	 	686	 	 	 	100	%
	59

	 	SERONO
	 	Switzerland
	 	www.serono.com
	 	 	1,349	 	 	 	100	%

B-1

 

			
	 	 	 
	Pharmaceutical / medical risks
	 	(Version 2002-Aug) (Page 2 of 2)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Net Sales or	 	Pharm/ medical
	 	 	 	 	 	 	 	 	Revenues 2001	 	sales of
	#	 	Company Name	 	Country	 	Internet Address	 	(USD mio)	 	Total
	60

	 	SHIONOGI
	 	Japan
	 	www.shionogi.co.jp
	 	 	3,268	 	 	 	90	%
	61

	 	SHIRE PHARMACEUTICALS
	 	UK
	 	www.shire.com
	 	 	859	 	 	 	100	%
	62

	 	SMITH & NEPHEW
	 	UK
	 	www.smith-nephew.com
	 	 	1,681	 	 	 	100	%
	63

	 	SOLVAY
	 	Belgium
	 	www.solvay.com
	 	 	7,801	 	 	 	20	%
	64

	 	STRYKER
	 	USA
	 	www.strykercorp.com
	 	 	2,602	 	 	 	60	%
	65

	 	SUMITOMO PHARMACEUTICALS
	 	Japan
	 	www.sumitomopharm.com
	 	 	862	 	 	 	100	%
	66

	 	SYNTHES-STRATEC
	 	Switzerland
	 	www.stratec.com
	 	 	907	 	 	 	100	%
	67

	 	TAKEDA CHEMICAL INDUSTRIES
	 	Japan
	 	www.takeda.com
	 	 	7,631	 	 	 	75	%
	68

	 	TANABE
	 	Japan
	 	www.tanabe.co.jp
	 	 	1,537	 	 	 	90	%
	69

	 	TAP Pharmaceutical Products
	 	USA
	 	www.tap.com
	 	 	3,300	 	 	 	100	%
	70

	 	TEVA PHARMACEUTICAL
	 	Israel
	 	www.tevapharm.com
	 	 	2,077	 	 	 	85	%
	71

	 	UCB
	 	Belgium
	 	www.ucb-group.com
	 	 	2,216	 	 	 	50	%
	72

	 	WATSON PHARMACEUTICAL
	 	USA
	 	www.watsonpharm.com
	 	 	1,161	 	 	 	100	%
	73

	 	WYETH (former American Home Products)
	 	USA
	 	www.ahp.com
	 	 	14,129	 	 	 	90	%
	74

	 	YAMANOUCHI PHARMACEUTICAL
	 	Japan
	 	www.yamanouchi.com
	 	 	3,627	 	 	 	80	%
	75

	 	ZIMMER USA www.zimmer.com
	 	USA
	 	www.zimmer.com
	 	 	1,179	 	 	 	100	%

B-2

 

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

N.M.A. 1590

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

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

     LIMITED EXCLUSION PROVISION*

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

	 	(a)	 	become effective on or after 1st May, 1960, or
	 
	 	(b)	 	become effective before that date and contain the Limited
Exclusion Provision set out above; provided this paragraph 2. shall not be
applicable to Family Automobile Policies, Special Automobile Policies, or
policies or combination policies of a similar nature, issued by the Company on
New York risks, until 90 days following approval of the Limited Exclusion
Provision by the Governmental Authority having jurisdiction thereof.

	3.	 	Except for those classes of policies specified in Clause II. of paragraph 2. and without in
any way restricting the operation of paragraph 1. of this Clause, it is understood and agreed
that for all purposes of this reinsurance the original liability policies of the Company
(new, renewal and replacement) affording the following coverages:

N.M.A. 1590

 

 

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

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

BROAD EXCLUSION PROVISION*

It is agreed that the policy does not apply:

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

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

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

	 	(a)	 	the nuclear material (1) is at any nuclear facility
owned by, or
operated by or on behalf of, an insured or (2) has been discharged or dispersed
therefrom;
	 
	 	(b)	 	the nuclear material is contained in spent fuel or waste at
any time
possessed, handled, used, processed, stored, transported or disposed of by or on
behalf of an insured; or

N.M.A. 1590

 

 

	 	(c)	 	the injury, sickness, disease, death or destruction, bodily injury or
property damage arises out of the furnishing by an insured of services,
materials, parts or equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility, but if such
facility is located within the United States of America, its territories, or possessions or
Canada, this exclusion (c) applies only to injury to or destruction of property
at such nuclear facility, property damage to such nuclear facility and any
property thereat.

	 	IV.	 	As used in this endorsement:

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

	 	(a)	 	any nuclear reactor,
	 
	 	(b)	 	any equipment or device designed or used for (1) separating the isotopes
of uranium or plutonium, (2) processing or utilizing spent fuel, or (3) handling,
processing, or packaging waste,
	 
	 	(c)	 	any equipment or device used for the processing, fabricating or alloying
of special nuclear material if at any time the total amount of such material in the
custody of the insured at the premises where such equipment or device is located
consists of or contains more than 25 grams of plutonium or uranium 233 or any
combination thereof, or more than 250 grams of uranium 235,
	 
	 	(d)	 	any structure, basin, excavation, premises or place prepared or used for
the storage or disposal of waste

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

	 	V.	 	The inception dates and thereafter of all original policies affording coverages specified
in this paragraph 3., whether new, renewal or replacement, being policies which become
effective on or after 1st May, 1960, provided this paragraph 3. shall not be applicable
to

N.M.A. 1590

 

 

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

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

	4.	 	Without in any way restricting the operations of paragraph 1. of this Clause, it is
understood and agreed that paragraphs 2. and 3. above are not applicable to original liability
policies of the Company in Canada, and that with respect to such policies, this Clause shall
be deemed to include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian
Underwriters’ Association or the Independent Insurance
Conference of Canada.

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

N.M.A. 1590

 

 

NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE — CANADA

N.M.A. 1979

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

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

Personal Liability

Farmers’ Liability

Storekeepers’ Liability

	 	 	which become effective on or after 31st December 1984, shall be deemed to include, from
their inception dates and thereafter, the following provision:
	 
	 	 	Limited Exclusion Provision —
	 
	 	 	This Policy does not apply to bodily injury or property damage with respect to which
the Insured is also Insured under a contract of nuclear energy liability insurance (whether
the insured is unnamed in such contract and whether or not it is legally enforceable by the
Insured) issued by the Nuclear Insurance Association of Canada or any other group or pool of
insurers or would be an Insured under any such policy but for its termination upon exhaustion
of its limits of liability.
	 
	 	 	With respect to property, loss of use of such property shall be deemed to be property damage.
	 
	3.	 	Without in any way restricting the operation of Paragraph 1. of this Clause, It is agreed
that for all purposes of this Agreement all the original liability contracts of the Company,
whether new, renewal or replacement, of any class whatsoever (other than Personal Liability,
Farmers’ Liability, Storekeepers’ Liability or Automobile Liability contracts), which become
effective on or after 31st December 1984, shall be deemed to include, from their inception
dates and thereafter, the following provision:
	 
	 	 	Broad Exclusion Provision —
	 
	 	 	It is agreed that this Policy does not apply:

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

 

 

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

	 	(i)	 	the ownership, maintenance, operation or use of a nuclear facility by or on
behalf of an Insured;
	 
	 	(ii)	 	the furnishing of an Insured of services, materials, parts or equipment in
connection with the planning, construction, maintenance, operation or use of any
nuclear facility; and
	 
	 	(iii)	 	the possession, consumption, use, handling, disposal or transportation of
fissionable substances, or of other radioactive material (except radioactive isotopes,
away from a nuclear facility, which have reached the final stage of fabrication so as to
be usable for any scientific, medical, agricultural, commercial or industrial purpose)
used, distributed, handled or sold by an Insured.

     As used in this Policy:

	 	(1)	 	The term “nuclear energy hazard” means the radioactive, toxic, explosive, or other
hazardous properties of radioactive material;
	 
	 	(2)	 	The term “radioactive material” means uranium, thorium, plutonium, neptunium, their
respective derivatives and compounds, radioactive isotopes of other elements and any other
substances that the Atomic Energy Control Board may, by regulation, designate as being
prescribed substances capable of releasing atomic energy, or as being requisite for the
production, use or application of atomic energy;
	 
	 	(3)	 	The term “nuclear facility” means:

	 	(a)	 	any apparatus designed or used to sustain nuclear fission in a
self-supporting chain reaction or to contain a critical mass of plutonium, thorium
and uranium or any one or more of them;
	 
	 	(b)	 	any equipment or device designed or used for (i) separating the isotopes of
plutonium, thorium and uranium or any one or more of them, (ii) processing or
utilizing spent fuel, or (iii) handling, processing or packaging waste;
	 
	 	(c)	 	any equipment or device used for the processing, fabricating or alloying of
plutonium, thorium or uranium enriched in the isotope uranium 233 or in the isotope
uranium 235, or any one or more of them if at any time the total amount of such
material in the custody of the Insured at the premises where such equipment or device
is located consists of or contains more than 25 grams of plutonium or uranium 233 or
any combination thereof, or more than 250 grams of uranium 235;
	 
	 	(d)	 	any structure, basin, excavation, premises or place prepared or used for the
storage or disposal of waste radioactive material;

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

 

 

	 	(4)	 	The term “fissionable substance” means any prescribed substance that is, or from which can
be obtained, a substance capable of releasing atomic energy by nuclear fission.
	 
	 	(5)	 	With respect to property, loss of use of such property shall be deemed to be
property damage.exv10w143

EXHIBIT
10.143

CASUALTY EXCESS OF LOSS

REINSURANCE AGREEMENT

NO. CXoLSH02

EFFECTIVE JANUARY 1, 2002

between

BRIDGEFIELD CASUALTY INSURANCE COMPANY

BRIDGEFIELD EMPLOYERS INSURANCE COMPANY

(Liberty RAM)

Lakeland, Florida

(hereinafter referred to as the “Company”)

and

PEERLESS INSURANCE COMPANY

Keene, New Hampshire

(hereinafter referred to as the “Reinsurer”)

08/26/02

 

 

CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT NO. CXoLSH02

	 	 	 	 	 	 	 
	ARTICLE	 	CONTENTS	 	PAGE
	 
	 	PREAMBLE	 	 	1	 
	I
	 	BUSINESS COVERED	 	 	1	 
	II
	 	EFFECTIVE DATE AND TERMINATION	 	 	2	 
	III
	 	TERRITORY	 	 	4	 
	IV
	 	LIMIT AND RETENTION	 	 	4	 
	V
	 	WARRANTIES	 	 	4	 
	VI
	 	ULTIMATE NET LOSS	 	 	5	 
	VII
	 	LOSS IN EXCESS OF POLICY LIMITS	 	 	6	 
	VIII
	 	EXTRA CONTRACTUAL OBLIGATIONS	 	 	6	 
	IX
	 	EXCLUSIONS	 	 	7	 
	X
	 	SPECIAL ACCEPTANCES	 	 	13	 
	XI
	 	LOSS OCCURRENCE	 	 	13	 
	XII
	 	REINSURANCE PREMIUM	 	 	15	 
	XIII
	 	REPORTS AND REMITTANCES	 	 	16	 
	XIV
	 	NOTICE OF LOSS AND LOSS SETTLEMENTS	 	 	17	 
	XV
	 	SALVAGE AND SUBROGATION	 	 	17	 
	XVI
	 	ACCESS TO RECORDS	 	 	17	 
	XVII
	 	TAXES	 	 	18	 
	XVIII
	 	CURRENCY	 	 	18	 
	XIX
	 	OFFSET	 	 	18	 
	XX
	 	ERRORS OR OMISSIONS	 	 	19	 
	XXI
	 	INSOLVENCY	 	 	19	 
	XXII
	 	DISPUTE RESOLUTION	 	 	19	 
	XXIII
	 	SPECIAL TERMINATION	 	 	22	 
	XXIV
	 	RESERVES	 	 	23	 
	XXV
	 	SERVICE OF SUIT	 	 	24	 
	XXVI
	 	CONFIDENTIALITY CLAUSE	 	 	26	 
	XXVII
	 	AMENDMENTS	 	 	26	 
	XXVIII
	 	ENTIRE AGREEMENT	 	 	26	 

	 	 	 

	ATTACHMENTS:

	 	EXHIBIT A — FIRST EXCESS OF LOSS
	 

	 	EXHIBIT B — SECOND EXCESS OF LOSS
	 

	 	EXHIBIT C — THIRD EXCESS OF LOSS
	 

	 	EXHIBIT D — FOURTH EXCESS OF LOSS
	 

	 	EXHIBIT E — FIFTH EXCESS OF LOSS
	 

	 	APPENDIX A
	 

	 	INSOLVENCY FUNDS EXCLUSION CLAUSE.
	 

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

	 	NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE — CANADA.
	 

	 	NUCLEAR INCIDENT EXCLUSION CLAUSE — REINSURANCE-NO. 4

 

 

CASUALTY EXCESS OF LOSS

REINSURANCE AGREEMENT

NO. CXoLSH02

(hereinafter referred to as the “Agreement”)

between

BRIDGEFIELD CASUALTY INSURANCE COMPANY

BRIDGEFIELD EMPLOYERS INSURANCE COMPANY

(Liberty RAM)

Lakeland, Florida

(hereinafter referred to as the “Company”)

and

PEERLESS INSURANCE COMPANY

Keene, New Hampshire

(hereinafter referred to as the “Reinsurer”)

ARTICLE I — BUSINESS COVERED

	A.	 	The Reinsurer shall indemnify the Company on an excess of loss basis in respect of the
Company’s Ultimate Net Loss paid or to be paid by the Company as a result of losses occurring
or claims made during the term of the Agreement for Policies in force as of January 1, 2002,
and new and renewal Policies becoming effective on or after said date, subject to the terms
and conditions contained herein.
	 
	B.	 	This Agreement is solely between the Company and the Reinsurer, and nothing contained in this
Agreement shall create any obligations or establish any rights against the Reinsurer in favor
of any person or entity not a party hereto.
	 
	C.	 	The performance of obligations by both parties under this Agreement shall be in accordance
with a fiduciary standard of good faith and fair dealing.
	 
	D.	 	The term “Policies” shall mean each of the Company’s binders, policies and contracts of
insurance or reinsurance on the business covered hereunder.
	 
	E.	 	Under this Agreement, the indemnity for reinsured loss applies only to the following Classes
of Insurance written by the Company.

1. NO. CXoLSH02

 

          CLASSES OF INSURANCE

	 	1.	 	Automobile Liability:
	 
	 	 	 	Bodily Injury Liability, Property Damage Liability, Medical Payments, Uninsured Motorists,
Underinsured Motorists and No-Fault Coverage.
	 
	 	2.	 	Liability including Professional Liability, as respects the Cedent’s Underwriting
Line Guide as follows:
	 
	 	 	 	Bodily Injury Liability, Property Damage Liability, Personal and Advertising Injury
Liability, and Medical Payments Coverage when written as part of a Commercial or Personal
Package Policy or on a monoline basis. However, Advertising Injury Liability shall only
apply to this Agreement when written as part of a Commercial Package Policy or a
Commercial General Liability Coverage Form.
	 
	 	3.	 	Workers Compensation and Employers Liability.
	 
	 	4.	 	Personal and Commercial Umbrella Liability.
	 
	 	5.	 	Clash of multiple policies involved in the same occurrence.

ARTICLE II — EFFECTIVE DATE AND TERMINATION

	A.	 	This Agreement shall become effective at 12:01 a.m., Local Standard Time, with respect to
Policies in force at 12:01 a.m., Local Standard Time, January 1, 2002, and new and renewal
Policies becoming effective on or after said date. This Agreement may be terminated at the
close of any calendar year by either party giving to the other 90 days prior written notice by
certified mail of its intention to do so.
	 
	B.	 	This Agreement shall apply to loss occurrence and claims made Policies in accordance with the
following provisions:

	 	1.	 	As respects Policies written on an occurrence basis:
	 
	 	 	 	This Agreement shall apply with respect to losses occurring on or after the inception date
of this Agreement.
	 
	 	2.	 	As respects Policies written on a claims made basis:
	 
	 	 	 	This Agreement shall apply to claims made Policies as respects claims received and
recorded by the Company or the insured, whichever comes first, at and after the effective
date of this Agreement, provided that each such Policy includes a specific retroactive
date and the occurrence which results in each such claim takes place on or after such
retroactive date, and

2. NO. CXoLSH02

 

	 	 	 	provided further that such retroactive date is on or after the inception date of the first
of one or more consecutive claims made policies issued by the Company or another
insurer(s) to the named insured.

	C.	 	In the event of termination of this Agreement, the Company shall have the option of
continuing or terminating the liability in force at the date of termination as set forth
below. The Company may exercise such option provided written notice of the Company’s election
is given by certified mail to the Reinsurer prior to the date of termination. If the Company
does not choose to exercise its option prior to the date of termination, such option shall
revert to the Reinsurer.

	 	1. 	a. 	 As respects Policies written on an occurrence basis:
	 
	 	 	 	Upon termination of this Agreement, all Policies covered hereunder and in force at the
date of termination of this Agreement shall continue until their natural expiry,
cancellation or next anniversary of such business, whichever first occurs; but in no case
shall this reinsurance be extended for longer than one year, plus odd time, after the
termination date.
	 
	 	 	b.	As respects Policies written on a claims made basis:
	 
	 	 	 	Upon termination of this Agreement, the Reinsurer shall continue to be liable for claims
received or recorded by the Company or by the insured with respect to Policies in force at
the date of termination for the full original policy period until the natural expiry,
cancellation or next anniversary of such policies, not to exceed one year, whichever comes
first. However, if the Company has provided an Extended Reporting Period within one year
after the date of termination on policies in force at the date of termination or if the
Extended Reporting Period is in force at the date of termination, the Reinsurer shall
continue to be liable for such extended reporting period.
	 
	 	2. 	a. 	 As respects Policies written on an occurrence basis:
	 
	 	 	 	Upon termination of this Agreement, the Reinsurer shall be liable for losses occurring
prior to the date of termination; however, the Reinsurer shall have no liability for
losses occurring subsequent to the termination of this Agreement.

	 	b.	 	As respects Policies written on a claims made basis:
	 
	 	 	 	Upon termination of this Agreement, the Reinsurer shall not be liable for claims received
or recorded by the Company or insured after the effective date of termination unless such
claim is received and recorded by the Company or the insured

3. NO. CXoLSH02

 

	 	 	 	during an Extended Reporting Endorsement Period in force at the date of termination.

ARTICLE III — TERRITORY

This Agreement applies to Policies issued by the Company within the United States of America, its
territories and possessions, and Canada and shall apply to losses covered hereunder wherever
occurring.

ARTICLE IV — LIMIT AND RETENTION

	A.	 	The limits and retentions provided under this Agreement are as set forth in Exhibits A, B, C,
D and E attached hereto and made a part of this Agreement.
	 
	B.	 	The various Profit Centers’ retention and the Reinsurer’s limit of liability for each Loss
Occurrence, set forth in Section I of Exhibits A, B, C, D and E attached hereto and made part
of this Agreement, shall apply irrespective of the number of Policies affected or number of
hazards in one policy and regardless of the number of Lines of Business involved.
	 
	C.	 	In the event both a Property and Casualty loss are involved in the same Loss Occurrence, it
is understood that each Profit Center shall retain for its own account only the first (the
highest respective retention stated in Section 1 of each Exhibit) of the combined Property and
Casualty Ultimate Net Loss, provided only one Property risk may be combined in the same Loss
Occurrence. Such loss and the Profit Centers’ retention thereon shall be apportioned to each
Property and Casualty loss in the same proportion that each Profit Centers’ Ultimate Net Loss
for each such Property and Casualty loss bears to the Profit Centers’ combined Ultimate Net
Loss from both losses. The Reinsurer shall reimburse the Profit Center for the difference
between the Profit Centers’ (respective retention as stated in Section 1 of each Exhibit)
Ultimate Net Loss under each Property and Casualty loss and the Profit Centers’ pro rated
retention on each Property and Casualty loss.
	 
	D.	 	Reinsurance of the Profit Centers’ retention, set forth in each Exhibit, shall not be
deducted in arriving at the Profit Centers’ Ultimate Net Loss herein.

ARTICLE V — WARRANTIES

Notwithstanding any other provision of this Agreement, Reinsurers’ liability under this Agreement
shall be limited to a maximum of:

	1.	 	$5,000,000 Maximum Any One Life for Worker’s Compensation;

4. NO. CXoLSH02

 

	2.	 	$10,000,000 aggregate coverage for all Profit Centers for mold in the states of California,
Florida and Texas.
	 
	3.	 	Maximum Umbrella limit $10,000,000.
	 
	4.	 	Maximum Employers Liability limit $2,000,000.

ARTICLE VI — ULTIMATE NET LOSS

	A.	 	The term “Ultimate Net Loss” shall mean the actual sum paid by the Company in settlement of
losses or liability including interest accrued prior to judgment after making deductions for
all recoveries, including subrogation, salvages, and claims upon other reinsurances, whether
collectible or not, which inure to the benefit of the Reinsurer under this Agreement, and
shall include Loss Adjustment Expenses incurred by the Company; provided, however, that in the
event of the insolvency of the Company, Ultimate Net Loss shall mean the amount of loss and
Loss Adjustment Expenses for which the Company is liable, and payment by the Reinsurer shall
be made to the liquidator, receiver, conservator or statutory successor of the Company in
accordance with the provisions of Article XXI — Insolvency of this Agreement. Notwithstanding
the foregoing, as respects Umbrella Liability policy losses, Loss Adjustment Expenses shall be
apportioned in the same proportion that each party’s interests bears to the Company’s Ultimate
Net Loss and shall be in addition to the limits stated in Section I — Limit and Retention of
Exhibits A, B, C, D and E.
	 
	B.	 	The term “Ultimate Net Loss” shall include 90% of Loss In Excess of Policy Limits and 90% of
Extra Contractual Obligations, as defined herein, but only as respects business covered under
this Agreement.
	 
	C.	 	The term “Loss Adjustment Expenses” shall mean all expenses incurred by the Company in
connection with the investigation, settlement, defense or litigation, including court costs
and post-judgment interest of any claim or loss covered by the Policies reinsured under this
Agreement and shall include Declaratory Judgement Expenses. However, the term “Loss Adjustment
Expense” shall not include the salaries and expenses of Company employees, office expenses and
other overhead expenses.
	 
	D.	 	The term “Declaratory Judgment Expenses” shall mean all legal expenses, incurred in the
representation of the Company in litigation brought to determine the Company’s defense and/or
indemnification obligations, that are allocable to any specific claim or loss covered by
Policies reinsured under this Agreement. In addition, the Company shall promptly notify the
Reinsurer of any Declaratory Judgment Expenses subject to this Agreement.
	 
	E.	 	All recoveries, salvages or payments recovered or received subsequent to a loss settlement
under this Agreement shall be

5. NO. CXoLSH02

 

	 	 	applied as if recovered or received prior to the aforesaid settlement and all necessary
adjustments to the loss settlement shall be made by the parties hereto.
	 
	F.	 	Nothing in this Article shall be construed to mean that losses are not recoverable hereunder
until the Ultimate Net Loss of the Company has been ascertained.

ARTICLE VII — LOSS IN EXCESS OF POLICY LIMITS

	A.	 	“Loss in Excess of Policy Limits” is defined as loss in excess of the limit of the original
Policy, such loss in excess of the limit having been incurred because of failure by the
Company to settle within the Policy limit or by reason of alleged or actual negligence, fraud
or bad faith in rejecting an offer of settlement or in the preparation of the defense or in
the trial of any action against its insured or reinsured or in the preparation or prosecution
of an appeal consequent upon such action.
	 
	B.	 	However, this Article shall not apply where the loss has been incurred due to fraud by a
member of the Board of Directors or a corporate officer of the Company acting individually or
collectively or in collusion with any individual or corporation or any other organization or
party involved in the presentation, defense or settlement of any claim covered hereunder.
	 
	C.	 	For the purposes of this Article, the word “loss” shall mean any amounts which the Company
would have been contractually liable to pay had it not been for the limit of the original
Policy.
	 
	D.	 	With respect to coverage provided under this Article, recoveries from any insurance or
reinsurance other than this Agreement shall be deducted to arrive at the amount of the
Company’s Ultimate Net Loss.

ARTICLE VIII — EXTRA CONTRACTUAL OBLIGATIONS

	A.	 	“Extra Contractual Obligations” are defined as those liabilities not covered under any other
provision of this Agreement and which arise from the handling of any claim on business covered
hereunder, such liabilities arising because of, but not limited to, the following: failure by
the Company to settle within the Policy limit, or by reason of alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or
in the trial of any action against its insured or reinsured or in the preparation or
prosecution of an appeal consequent upon such action.
	 
	B.	 	The date on which an Extra Contractual Obligation is incurred by the Company shall be deemed,
in all circumstances, to be the date of the original accident, casualty, disaster or loss
occurrence.

6. NO. CXoLSH02

 

	C.	 	However, coverage hereunder as respects Extra Contractual Obligations shall not apply where
the loss has been incurred due to the fraud of a member of the Board of Directors or a
corporate officer of the Company acting individually or collectively or in collusion with any
individual or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.
	 
	D.	 	Recoveries, collectibles or retention from any other form of insurance or reinsurance
including deductibles or self-insured retention which protect the Company against Extra
Contractual Obligations shall inure to the benefit of the Reinsurer and shall be deducted from
the total amount of Extra Contractual Obligations for purposes of determining the loss
hereunder.
	 
	E.	 	If any provision of this Article shall be rendered illegal or unenforceable by the laws,
regulations or public policy of any state, such provision shall be considered void in such
state, but this shall not affect the validity or enforceability of any other provision of this
contract or the enforceability of any such provision in any other jurisdiction.

ARTICLE IX — EXCLUSIONS

THIS AGREEMENT DOES NOT COVER:

	A.	 	THE FOLLOWING GENERAL CATEGORIES

	 	1.	 	Ex-gratia payments.
	 
	 	2.	 	Loss or damage caused directly or indirectly by: (a) enemy attack by armed forces
including action taken by military, naval or air forces in resisting an actual or an
immediately impending enemy attack; (b) invasion; (c) insurrection; (d) rebellion; (e)
revolution; (f) intervention; (g) civil war; and (h) usurped power.
	 
	 	3.	 	Reinsurance assumed by the Company, except intercompany reinsurance.
	 
	 	4.	 	Business derived from any Pool, Association, including Joint Underwriting
Association, Syndicate, Exchange, Plan, Fund or other facility directly as a member,
subscriber or participant, or indirectly by way of reinsurance or assessments; provided
this exclusion shall not apply to Automobile or Workers Compensation assigned risks which
may be currently or subsequently covered hereunder.

7. NO. CXoLSH02

 

	 	5.	 	Pollution Liability as per the Company’s original Policies and endorsements except when
a judicial entity invalidates the Company’s exclusion or in any jurisdiction whose
regulatory authorities have prohibited the exclusion.
	 
	 	6.	 	Insolvency Funds as per the attached Insolvency Funds Exclusion Clause.
	 
	 	7.	 	Nuclear Incident Exclusion Clauses which are attached and made part of this
Agreement:

	 	a.	 	Nuclear Incident Exclusion Clause — Liability — Reinsurance — U.S.A.
	 
	 	b.	 	Nuclear Incident Exclusion Clause — Liability — Reinsurance — Canada.
	 
	 	c.	 	Nuclear Incident Exclusion Clause — Reinsurance — No. 4.

	B.	 	THE FOLLOWING INSURANCE COVERAGES

	 	1.	 	Fiduciary Liability.
	 
	 	2.	 	Surety and Credit insurance.
	 
	 	3.	 	Fidelity Bonds.
	 
	 	4.	 	Credit and Financial Guarantee.
	 
	 	5.	 	Securities and Exchange Liability.
	 
	 	6.	 	Malpractice insurance, Directors and Officers Liability insurance or any form of
Errors and Omissions or Professional Liability insurance, except as provided for under the
Company’s Underwriting Guidelines.
	 
	 	7.	 	Advertisers’, Broadcasters’ and Telecasters’ Liability as respects Personal Injury
Liability except as provided for under the Company’s Underwriting Guidelines.
	 
	 	8.	 	Kidnap, Extortion and Ransom Liability.
	 
	 	9.	 	Protection and Indemnity (Ocean Marine) except for hulls under 50 feet.
	 
	 	10.	 	Entertainment Business, defined as Feature Film and Major Motion Picture Studios,
Commercial Negative Film Coverages, Cast Coverage, Completion Bond and Television
Productions.
	 
	 	11.	 	Asbestos liability to the extent excluded in the Company’s original policies and
endorsements except when a judicial entity invalidates the Company’s exclusion or in any
jurisdiction whose regulatory authorities have prohibited the exclusion.

8. NO. CXoLSH02

 

	C.	 	THE FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY AND AUTOMOBILE COLLISION

	 	1.	 	Autos as used in or being prepared for, any professional or organized racing or
demolition contest or stunting activity except as provided for under ISO’s Business Auto
and Garage Policy.
	 
	 	2.	 	All vehicles classified as “Public Automobiles” except school buses, church buses,
social service agency automobiles, van pools, vehicles used for the transportation of
employees and courtesy vans and buses.
	 
	 	3.	 	All rental operations. An exception for rental vehicles shall apply as respects auto
dealerships when customer’s vehicle is being serviced.
	 
	 	4.	 	Vehicles regularly used to haul property of others and operating beyond a 500 mile
radius.
	 
	 	5.	 	Newspaper delivery trucks except in non-metropolitan locations with a population of
less than 50,000.
	 
	 	6.	 	Vehicles engaged in the transportation or distribution of fireworks, fuses,
explosives, ammunitions, natural or artificial fuel gas, or liquefied petroleum gases or
gasoline, except when written as incidental coverage, as defined in the Company’s
Underwriting Guidelines. This exclusion shall not apply to vehicles engaged in the
transportation of natural or artificial fuel gas or liquified petroleum gases or gasoline
when operations are within a 500 mile radius.

	D.	 	THE FOLLOWING AS RESPECTS LIABILITY OTHER THAN AUTOMOBILE

	 	1.	 	The manufacturing, mining, refining, processing, distribution, installation, removal
or encapsulment of asbestos.
	 
	 	2.	 	Risks involving known exposure to asbestos.
	 
	 	3.	 	Liability as respects Products and Completed Operations:

	 	a.	 	The manufacture, importation, labeling or re-labeling of:

	 	(i)	 	Drugs or Pharmaceuticals.
	 
	 	(ii)	 	Cosmetics.
	 
	 	(iii)	 	Herbicides, insecticides or pesticides, except as respects risks
involved in a farming operation.

	 	b.	 	The manufacture or importing of motorized or self-propelled vehicles and
equipment.
	 
	 	c.	 	The manufacture, sale, distribution, handling, servicing or maintenance of
aircraft, aerospacecraft, missiles, satellites or any component or components
thereof.

9. NO. CXoLSH02

 

	 	4.	 	All railway operations except Railroad Protective Liability coverage as respects jobs
which do not involve track work or service disruptions.
	 
	 	5.	 	Amusement parks, carnivals or circuses, except county or country fairs.
	 
	 	6.	 	Public assembly exposure in excess of 5,000 except for schools and colleges.
	 
	 	7.	 	Gas or electric companies.
	 
	 	8.	 	Subaqueous operations.
	 
	 	9.	 	Mining.
	 
	 	10.	 	Demolition of buildings or structures in excess of three stories or 50 feet in
height.
	 
	 	11.	 	Shoring, underpinning or moving of buildings or structures.
	 
	 	12.	 	Manufacture, sale, rental, lease or repair of scaffolds.
	 
	 	13.	 	Construction of bridges over 50 feet, and tunnels or dams.

	 	14.	a. 	 Manufacturers or importers of fireworks, fuses, or any substance, as defined and
noted below, intended for use as an explosive.

	 	b.	 	Loading of fireworks, fuses, or any explosive substance defined below into
containers for use as explosive objects, propellant charges or detonation devices and
the storage thereof.
	 
	 	c.	 	Manufacturers or importers of any product in which fireworks, fuses, or any
explosive substance defined below is an ingredient.
	 
	 	d.	 	Handling, storage, transportation or use of fireworks, fuses, or any
explosive substance defined below.

	 	 	 	NOTE: An explosive substance is defined as any substance manufactured for the express
purpose of exploding as differentiated from commodities used industrially and which
are only incidentally explosive.
	 
	 	15.	 	Manufacture, production, refining, storage, wholesale distribution or transportation
of natural or artificial fuel gas, butane, propane or liquefied petroleum gases or
gasoline, except when written as incidental coverage, as defined in the Company’s
Underwriting Guidelines, or when operations are within a 500 mile radius.
	 
	 	16.	 	Onshore and offshore gas and oil drilling operations.

10. NO. CXoLSH02

 

	 	17.	 	Ownership, maintenance or use of any aircraft, including fueling, or any device or
machine intended for and/or aiding in the achievement of atmospheric flight, projection or
orbit.
	 
	 	18.	 	Municipalities except for those with a population less than 25,000.

	E.	 	THE FOLLOWING RISKS AS RESPECTS WORKERS COMPENSATION AND EMPLOYERS LIABILITY

	 	1.	 	Operations under the jurisdiction of the U.S. Longshoremen’s and Harbor Workers’ Act,
the Jones Act and the Maritime Employers Liability Act except when written as incidental
coverages as defined in the Company’s Underwriting Guidelines.
	 
	 	2.	 	Operation of docks or wharves, other than small marinas or pleasure docks.
	 
	 	3.	 	The manufacturing, mining, refining, processing, distribution, installation, removal
or encapsulment of asbestos.
	 
	 	4.	 	Risks involving known exposure to asbestos.
	 
	 	5.	 	All railway operations except sidetrack agreements.
	 
	 	6.	 	Amusement parks, carnivals or circuses, except county or country fairs.
	 
	 	7.	 	Subaqueous operations.
	 
	 	8.	 	Mining.
	 
	 	9.	 	Demolition of buildings or structures in excess of three stories or 50 feet in
height.
	 
	 	10.	 	Shoring, underpinning or moving of buildings or structures.
	 
	 	11.	 	Manufacture, sale, rental, lease, erection or repair of scaffolds.
	 
	 	12.	 	Construction of bridges over 50 feet, and tunnels or dams.

	 	13.	a. 	 Manufacturers or importers of fireworks, fuses, or any substance, as defined and
noted below, intended for use as an explosive.

	 	b.	 	Loading of fireworks, fuses, or any explosive substance defined below into
containers for use as explosive objects, propellant charges or detonation devices and
the storage thereof.
	 
	 	c.	 	Manufacturers or importers of any product in which fireworks, fuses, or any
explosive substance defined below is an ingredient.

11. NO. CXoLSH02

 

	 	d.	 	Handling, storage, transportation or use of fireworks, fuses, or any explosive
substance defined below.

	 	 	 	NOTE: An explosive substance is defined as any substance manufactured for the express
purpose of exploding as differentiated from commodities used industrially and which
are only incidentally explosive.
	 
	 	14.	 	Manufacture, production, refining, storage, wholesale distribution or transportation
of natural or artificial fuel gas, butane, propane or liquefied petroleum gases or
gasoline, except when written as incidental coverages as defined in the Company’s
Underwriting Guidelines.
	 
	 	15.	 	Onshore and offshore gas and oil drilling operations.
	 
	 	16.	 	Ownership, maintenance or use of any airport or aircraft, including fueling, or any
device or machine intended for and/or aiding in the achievement of atmospheric flight,
projection or orbit except as respects corporate owned aircraft up to four passengers.
	 
	 	17.	 	Municipalities, except for those with a population less than 25,000.

12. NO. CXoLSH02

 

	F.	 	THE FOLLOWING RISKS AS RESPECTS TERRORISM
	 
	 	 	Airports, Bridges, Government Buildings, Nuclear Facilities, Office Buildings over 25 stories,
Security Services, Stadiums and Tunnels.
	 
	G.	 	The Company and the Reinsurer have agreed on the Company’s Underwriting Guidelines, as
respects policies covered under this Agreement. The Company shall advise the Reinsurer of any
change in such Underwriting Guidelines.
	 
	H.	 	In the event the Company is inadvertently bound on any risk which is excluded under this
Agreement, the reinsurance provided under this Agreement shall apply to such risk until
discovery by the Company within its Home Office of the existence of such risk and for 45 days
thereafter or for the period required by statutes, and shall then cease unless within such
period, the Company has received from the Reinsurer written notice of its approval of such
risk.

ARTICLE X — SPECIAL ACCEPTANCES

	A.	 	Policies which are beyond the terms, conditions or limitations of this Agreement may be
submitted to the Subscribing Reinsurer identified on the attached Interests and Liabilities
Agreement as Swiss Reinsurance America Corporation for special acceptance hereunder. Such
acceptance shall bind each Subscribing Reinsurer for its respective share in the interests and
liabilities of said risk. A Subscribing Reinsurers’ failure to respond within 48 hours or
approval by the Lead Reinsurer shall be deemed approval of a risk submitted for special
acceptance.
	 
	B.	 	When a policy is specially accepted, such policy shall be covered under the terms and
conditions of this Agreement, except as such terms shall be modified by such acceptance.
Premiums and losses derived from any special acceptance shall be included with other data for
rating purposes of this Agreement. Once a risk has been accepted under the provisions of this
Article, it will automatically be included at renewal unless there have been material changes
to the risk, in which case the risk will be resubmitted.

ARTICLE XI — LOSS OCCURRENCE

The provisions under this Article are set forth in the following Parts I, II and III:

Part I — As respects Policies written on an occurrence basis:

The term “Loss Occurrence” shall mean any accident or occurrence or series of accidents or
occurrences arising out of any one event and happening within the term and scope of this Agreement.
Without limiting

13. NO. CXoLSH02

 

the generality of the foregoing, the term “Loss Occurrence” shall be held to include:

	A.	 	As respects Products Bodily Injury and Products Property Damage Liability, injuries to all
persons and all damage to property of others occurring during a Policy Period and proceeding
from or traceable to the same causative agency shall be deemed to arise out of one Loss
Occurrence, and the date of such Loss Occurrence shall be deemed to be the commencing date of
the Policy Period. For the purpose of this provision, each annual period of a Policy which
continues in force for more than one year shall be deemed to be a separate Policy Period.
	 
	B.	 	As respects Bodily Injury Liability (other than Automobile and Products), said term shall
also be understood to mean, as regards each original assured, injuries to one or more than one
person resulting from infection, contagion, poisoning, or contamination proceeding from or
traceable to the same causative agency.
	 
	C.	 	As respects Property Damage Liability (other than Automobile and Products), said term shall
also, subject to Provisions 1. and 2. below, be understood to mean loss or losses caused by a
series of operations, events, or occurrences arising out of operations at one specific site
and which cannot be attributed to any single one of such operations, events or occurrences,
but rather to the cumulative effect of the same. In assessing each and every Loss Occurrence
within the foregoing definition, it is understood and agreed that:

	 	1.	 	the series of operations, events or occurrences shall not extend over a period longer
than 12 consecutive months; and
	 
	 	2.	 	the Company may elect the date on which the period of not exceeding 12 consecutive
months shall be deemed to have commenced.

	 	 	In the event that the series of operations, events or occurrences extend over a period longer
than 12 consecutive months, then each consecutive period of 12 months, the first of which
commences on the date elected under 2. above, shall form the basis of claim under this
Agreement.
	 
	D.	 	As respects those Policies of the Company which provide aggregate limits of liability, the
total of all individual losses occurring during any one policy year which proceed from or are
traceable to the same causative agency.
	 
	E.	 	As respects an occupational or other disease or cumulative injury under Workers Compensation
and Employers Liability, each case of an employee contracting any disease for which the
Company may be liable shall be considered a separate and distinct occurrence and the date of
each occurrence shall be deemed to be as follows:

14. NO. CXoLSH02

 

	 	1.	 	If the case is compensable under the Workers Compensation Law or any Occupational
Disease Compensation Act, the date of the beginning of the disability for which
compensation is payable;
	 
	 	2.	 	If the case is not compensable under the Workers Compensation Law or any Occupational
Disease Compensation Act, the date of the disability due to said disease actually began;
	 
	 	3.	 	Where claim is made after employment has ceased, then the date of the cessation of
employment shall be deemed to be the date of disability;
	 
	 	4.	 	Notwithstanding the foregoing, in the incidence of a sudden catastrophic event not
exceeding 48 hours in duration including traumatic injury or death, all losses to all
employers shall be deemed an occurrence.

Part II — As respects Policies written on a claims made basis:

	A.	 	The term “Loss Occurrence” shall mean each claim or series of claims made to the Company, or
the insured, during the term of this Agreement arising out of one casualty or event.
	 
	B.	 	As respects a Loss Occurrence involving one or more Policies written on a claims made basis,
the date of Loss Occurrence for purposes of reinsurance, shall be considered the earliest date
when notice of claims is first received and recorded by the Company or the insured, whichever
comes first, and any related claims reported subsequent to such date shall be included in such
loss. However, if notice of claims is first received and recorded by the Company or the
insured during an Extended Reporting Period, the date of occurrence shall be deemed to be the
last day of the policy period.

Part III — As respects loss occurrence and claims-made Policies involved in the same Loss
Occurrence:

In the event a Loss Occurrence involving one or more Policies written on an occurrence basis and
one or more Policies written on a claims-made basis, it is understood that the earliest date on
which bodily injury or property damage occurs, and any related claims reported subsequent to such
date shall be included in such loss whether they are covered under occurrence or claims-made
Policies.

ARTICLE XII — REINSURANCE PREMIUM

The rates set forth in Section 3 of the attached Exhibits A, B, C, D, and E, shall be applied to
the various Profit Centers’ Subject Earned Premium for all classes of Business Covered hereunder,
as stated in Paragraph E. of Article I — Business Covered.

15. NO. CXoLSH02

 

	B.	 	The term “Subject Earned Premium” as used herein is equal to the sum of the Net Premiums
Written on the business covered hereunder during the period under consideration, plus the
unearned premium reserve as respects premiums in force at the beginning of such period, less
the unearned premium reserve as respects premiums in force at the end of the period, said
unearned premium is to be calculated on a monthly pro rata basis.
	 
	C.	 	The term “Net Premiums Written” shall mean gross premiums written less returns, allowances
and reinsurances which inure to the benefit of the Reinsurer.
	 
	D.	 	The following percentages of the Company’s and/or various Profit Centers’ indivisible premium
shall be allocated to the business covered under this Agreement: 10% Homeowners, 10% Mobile
Homeowners, 10% Farmowners and 35% Businessowners.

ARTICLE XIII — REPORTS AND REMITTANCES

	A.	 	The Company shall furnish the Reinsurer with all necessary data respecting premiums and
losses for as long as one of the parties hereto has a claim against the other arising from
this Agreement.
	 
	B.	 	Within 45 days after the close of each calendar quarter, the Company shall submit an account
to the Reinsurer summarizing Subject Earned Premium by annual statement line of business, and
the reinsurance premium due. Such reinsurance premium shall be remitted within 45 days after
the close of each calendar quarter except for the quarter beginning January 1, 2002 at which
time 25% of the estimated premium income for each layer is due within 15 days of January 1,
2002.
	 
	 	 	Minimum premiums shall be 80% of the estimated premium income for each layer of Reinsurance per
Profit Center, except Merchant’s & Business Mens’, where the minimum premium shall be waived.
	 
	C.	 	Payment by the Reinsurer of its portion of loss and Loss Adjustment Expenses paid by the
Company shall be made by the Reinsurer to the Company within 15 days after proof of payment is
received by the Reinsurer.

16. NO. CXoLSH02

 

ARTICLE XIV — NOTICE OF LOSS AND LOSS SETTLEMENT

	A.	 	The Company shall advise the Reinsurer promptly, but in no event later than 30 days, of all
losses which, in the opinion of the Company, may result in a claim hereunder and of all
subsequent developments thereto which, in the opinion of the Company, may materially affect
the position of the Reinsurer. Notwithstanding the foregoing, the Company shall give notice to
the Reinsurer once a claim exceeds the retention of the primary company or has the potential
to exceed the retention.
	 
	B.	 	All loss settlements made by the Company, provided they are within the terms of this
Contract, shall be unconditionally binding upon the Reinsurer, who agrees to pay all amounts
for which they may be liable immediately, but in no event later than 30 days, upon being
furnished by the Company with reasonable evidence of the amount due.
	 
	C.	 	The Company shall have the responsibility to investigate, defend or negotiate settlements of
all claims and lawsuits related to Policies written by the Company and reinsured under this
Agreement. The Reinsurer, at its own expense, may associate with the Company in the defense or
control of any claim, suit or other proceeding which involves or is likely to involve the
reinsurance provided under this Agreement, and the Company shall cooperate in every respect in
the defense of any such claim, suit or proceeding.

ARTICLE XV — SALVAGE AND SUBROGATION

	A.	 	In the event of the payment of any indemnity by the Reinsurer under this Agreement, the
Reinsurer shall be subrogated, to the extent of such payment, to all of the rights of the
Company against any person or entity legally responsible for damages of the loss. The Company
agrees to enforce such rights; but, in case the Company refuses or neglects to do so, the
Reinsurer is hereby authorized and empowered to bring any appropriate action in the name of
the Company or their policyholders or otherwise to enforce such rights.
	 
	B.	 	From any amount recovered by subrogation, salvage or other means, there shall first be
deducted the expenses incurred in effecting the recovery. The balance shall then be used to
reimburse the excess carriers in the inverse order to that in which their respective
liabilities attached, before being used to reimburse the Company for its primary loss.

ARTICLE XVI — ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to examine, at the
offices of the Company at a reasonable time, during the currency of this Agreement or anytime
thereafter, all books

17. NO. CXoLSH02

 

and records of the Company relating to business which is the subject of this Agreement.

ARTICLE XVII — TAXES

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

ARTICLE XVIII — CURRENCY

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

ARTICLE XIX — OFFSET

Each party to this Agreement together with their successors or assigns shall have and may exercise,
at any time, the right to offset any balance or balances due the other (or, if more than one, any
other). Such offset may include balances due under this Agreement (which may take into account
underlying internal offsets within, between and/or among the Profit Centers listed on Appendix A)
and any other agreements heretofore or hereafter entered into between the parties regardless of
whether such balances arise from premiums, losses or otherwise, and regardless of capacity of any
party, whether as assuming insurer and/or ceding insurer, under the various agreements involved,
provided however, that in the event of insolvency of a party hereto, offsets shall only be allowed
in accordance with the provisions of the applicable law, statute or regulation governing such
offset.

18. NO. CXoLSH02

 

ARTICLE XX — ERRORS OR OMISSIONS

Errors or omissions of an administrative nature on the part of the Company shall not invalidate the
reinsurance under this Agreement provided such errors or omissions are corrected promptly, but not
later than 30 days after discovery thereof; but the liability of the Reinsurer under this Agreement
or any exhibits, addenda, or endorsements attached hereto shall in no event exceed the limits
specified herein nor be extended to cover any risks, perils, lines of business or classes of
insurance generally or specifically excluded herein.

ARTICLE XXI — INSOLVENCY

In the event of insolvency and the appointment of a conservator, liquidator, or statutory successor
of the Company 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 Company by any court of competent jurisdiction or by any conservator, liquidator, or
statutory successor of the Company 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. Payments by the Reinsurer shall be made directly to
the Company or to its conservator, liquidator, or statutory successor, except where the contract of
insurance or reinsurance specially provides another payee of such reinsurance in the event of the
insolvency of the Company. The conservator, liquidator, or statutory successor of the Company shall
give written notice of the pendency of a claim against the Company indicating the policy or bond
reinsured, within a reasonable time after such claim is filed and the Reinsurer may 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 Company or its conservator, liquidator, or statutory successor.
The expense thus incurred by the Reinsurer shall be payable subject to court approval out of the
estate of the insolvent Company as part of the expense of conservation or liquidation to the extent
of a proportionate share of the benefit which may accrue to the Company in conservation or
liquidation, solely as a result of the defense undertaken by the Reinsurer.

ARTICLE XXII — DISPUTE RESOLUTION

Part I — Choice Of Law And Forum

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

19. NO. CXoLSH02

 

Part II — Mediation

If a dispute between the Company and the Reinsurer, arising out of the provisions of this Agreement
or concerning its interpretation or validity and whether arising before or after termination of
this Agreement has not been settled through negotiation, both parties agree to try in good faith to
settle such dispute by nonbinding mediation, before resorting to arbitration. The parties shall
choose a mediator within thirty (30) days of a written demand by either party for mediation under
Part II of this Article XXII. The mediator shall be a disinterested current or retired insurance or
reinsurance officer knowledgeable in reinsurance matters. The parties shall have sixty (60) days
from the selection of the mediator in which to mediate the dispute to resolution. In the event that
mediation fails to resolve the dispute, the parties shall proceed to arbitration in accordance with
Part III of this Article XXII.

Part III — Arbitration

	A.	 	Resolution of Disputes — As a condition precedent to any right arising hereunder, any dispute
not resolved by mediation between the Company and the Reinsurer arising out of the provisions
of this Agreement or concerning its interpretation or validity, whether arising before or
after termination of this Agreement, shall be submitted to arbitration in the manner
hereinafter set forth.
	 
	B.	 	Composition of Panel — Unless the parties agree upon a single arbitrator within 15 days after
the receipt of a notice of intention to arbitrate, all disputes shall be submitted to an
arbitration panel composed of two arbitrators and an umpire chosen in accordance with
Paragraph C. hereof.
	 
	C.	 	Appointment of Arbitrators — The members of the arbitration panel shall be chosen from
persons knowledgeable in the insurance and reinsurance business. Unless a single arbitrator is
agreed upon, the party requesting arbitration (hereinafter referred to as the “claimant”)
shall appoint an arbitrator and give written notice thereof by certified mail, to the other
party (hereinafter referred to as the “respondent”) together with his notice of intention to
arbitrate.
	 
	 	 	Within 30 days after receiving such notice, the respondent shall also appoint an arbitrator and
notify the claimant thereof by certified mail. Before instituting a hearing, the two
arbitrators so appointed shall choose an umpire. If, within 20 days after the appointment of
the arbitrator chosen by the respondent, the two arbitrators fail to agree upon the appointment
of an umpire, each of them shall nominate three individuals to serve as umpire, of whom the
other shall decline two and the umpire shall be chosen from the remaining two by drawing lots.
The name of the individual first drawn shall be the umpire.

20. NO. CXoLSH02

 

	D.	 	Failure of Party to Appoint an Arbitrator — If the respondent fails to appoint an arbitrator
within 30 days after receiving a notice of intention to arbitrate, the claimant’s arbitrator
shall appoint an arbitrator on behalf of the respondent, such arbitrator shall then, together
with the claimant’s arbitrator, choose an umpire as provided in Paragraph C. of Part III of
this Article.
	 
	E.	 	Involvement of Other Reinsurers — If more than one reinsurer is involved in the same dispute,
all such reinsurers shall constitute and act as one party for purposes of this Article and
communications shall be made by the Company to each of the reinsurers constituting the one
party; provided, however, nothing herein shall impair the right of such reinsurers to assert
several, rather than joint, defenses or claims, nor be construed as changing the liability of
the reinsurers under the terms of this Agreement from several to joint.
	 
	F.	 	If the Company is involved in a dispute under the terms of this Agreement and in one or more
separate disputes with one or more other reinsurers in which common questions of law or fact
are in issue, the Company or the Reinsurer, at its option, may join with such other reinsurers
in a common arbitration proceeding under the terms of this Article. If the Company and such
other reinsurers have commenced arbitration, the Reinsurer may at its option join such
proceeding for the determination of the dispute between the Company and the Reinsurer.
	 
	G.	 	Submission of Dispute to Panel — Unless otherwise extended by the arbitration panel or agreed
to by the parties, each party shall submit its case to the panel within 30 days after the
selection of the umpire.
	 
	H.	 	Procedure Governing Arbitration — All proceedings before the panel shall be informal and the
panel shall not be bound by the formal rules of evidence. The panel shall have the power to
fix all procedural rules relating to the arbitration proceeding. In reaching any decision, the
panel shall give due consideration to the customs and usages of the insurance and reinsurance
business.
	 
	I.	 	Arbitration Award — The arbitration panel shall render its decision within 60 days after
termination of the proceeding, which decision shall be in writing, stating the reasons
therefor. The decision of the majority of the panel shall be final and binding on the parties
to the proceeding.
	 
	J.	 	Cost of Arbitration — Unless otherwise allocated by the panel, each party shall bear the
expense of its own arbitrator and shall jointly and equally bear with the other parties the
expense of the umpire and the arbitration.

21. NO. CXoLSH02

 

ARTICLE XXIII — SPECIAL TERMINATION

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

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

	 	a.	 	Entry of an order of liquidation, rehabilitation, receivership or
conservatorship with respect to the Company or the Reinsurer by any court or
regulatory authority;
	 
	 	b.	 	Assignment of this Agreement by either party;
	 
	 	c.	 	Any transfer of control of either party by change in ownership or
otherwise;
	 
	 	d.	 	General reinsurance of any portion of the Company’s business it retains net
for its own account, as determined under the provisions of this Agreement without
prior consent of the Reinsurer.

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

	 	a.	 	A reduction of 50% or more of the Company’s policyholders surplus during
any calendar year. Such reduction shall be determined by calculating the difference
between the Company’s prior year annual statement and each subsequent quarterly
statutory statement within such current calendar year.
	 
	 	 	 	As respects the event set forth in this Paragraph A.2., the Company shall be
obligated to notify the Reinsurer in writing within 30 days after the filing of its
quarterly statement. Upon receipt of such notification the Reinsurer shall have the
right to terminate this Agreement, by giving not less than 30 days notice of its
intention to do so.
	 
	 	b.	 	A reduction of 50% or more of the Reinsurer’s policyholders surplus during
any calendar year. Such reduction shall be determined by calculating the difference
between the Reinsurer’s prior year annual statement and each subsequent quarterly
statutory statement within such current calendar year.
	 
	 	 	 	As respects the event set forth in this Paragraph A.2., the Reinsurer shall be
obligated to notify the Company in writing within 30 days after the filing of its
quarterly statement. Upon receipt of such notification the Company shall have the
right to terminate this Agreement, by giving not less than 30 days notice of its
intention to do so.

22. NO. CXoLSH02

 

	 	3.	 	Terminated by either party by giving not less than 30 days notice of its intention to
do so upon any transfer of control of either party by charge of ownership or otherwise.

	B.	 	Any notice of termination pursuant to provisions set forth in Paragraph A. 2. and A. 3. above
shall be sent by certified mail, return receipt requested. Such notice period shall commence
upon the other party’s receipt of the notice of termination.
	 
	C.	 	In the event of termination, the Reinsurer shall not be liable for losses occurring
subsequent to the date of termination.

ARTICLE XXIV — RESERVES

	A.	 	If a jurisdiction of the United States will not permit the Reassured, in the statements
required to be filed with its regulatory authority(ies), to receive full credit as admitted
reinsurance for any Reinsurer’s share of obligations, the Reassured shall forward to such
Reinsurer a statement of the Reinsurer’s share of such obligations. Upon receipt of such
statement the Reinsurer shall promptly apply for, and provide the Reassured with, a “clean,”
unconditional and irrevocable Letter of Credit, in the amount specified in the statement
submitted, with terms and bank acceptable to the regulatory authority(ies) having jurisdiction
over the Reassured.
	 
	B.	 	“Obligations,” as used in this Article, shall mean the sum of losses paid and allocated loss
adjustment expenses paid by the Reassured but not yet recovered from the Reinsurer, plus
reserves for reported losses, allocated loss adjustment expenses and losses incurred but not
reported.
	 
	C.	 	The Reinsurer hereby agrees that the Letter of Credit will provide for automatic extension of
the Letter of Credit without amendment for one year from the date of expiration of said Letter
or any future expiration date unless thirty (30) days prior to any expiration the issuing bank
shall notify the Reassured by registered mail that the issuing bank elects not to consider the
Letter of Credit renewed for any additional period. An issuing bank, not a “qualified bank” as
defined by Regulation No. 133 promulgated by the Insurance Department of the State of New
York, shall provide sixty (60) days notice to the Reassured prior to any expiration.
	 
	D.	 	Notwithstanding any other provision of this Contract, the Reassured or any successor by
operation of law of the Reassured including, without limitation, any
Liquidator,
rehabilitator, receiver or conservator of the Reassured may draw upon such credit, without
diminution because of the insolvency of any party hereto, at any time and undertakes to use
and apply such credit for one or more of the following purposes only:

23. NO. CXoLSH02

 

	 	1.	 	To pay the Reinsurer’s share or to reimburse the Reassured for the Reinsurer’s share of
any obligations, as stipulated in the statement submitted by the Reassured to the
Reinsurer, which is due to the Reassured and not otherwise paid by the Reinsurer.
	 
	 	2.	 	In the event the Reassured has received effective notice of non- renewal of the
Letter of Credit and the Reinsurer’s liability remains unliquidated and undischarged
thirty (30) days prior to the expiry date of the Letter of Credit and place such sums in
an interest bearing trust account to secure the continuing liabilities of the Reinsurer
under this Contract until a renewal Letter of Credit acceptable to
the regulatory
authority(ies) having jurisdiction over the Reassured, or a substitute in lieu thereof
acceptable to the regulatory authority(ies) having jurisdiction over the Reassured, has
been received by the Reassured. The Reassured shall provide to the Reinsurer payment of
any interest thereon accruing from such account.
	 
	 	3.	 	To make refund of any sum which is in excess of the actual amount required for
Sections 1. and 2. of this paragraph.

	E.	 	At annual intervals or more frequently as determined by the Reassured, but never more
frequently than quarterly, the Reassured shall prepare a specific statement, for the sole
purpose of amending the Letter of Credit, of the Reinsurer’s share of any obligations. If the
statement shows that the Reinsurer’s share of obligations exceeds the balance of credit as of
the statement date, the Reinsurer shall, within thirty (30) days after receipt of notice of
such excess, secure delivery to the Reassured of an amendment of the Letter of Credit
increasing the amount of credit by the amount of such difference. If the statement shows,
however, that the Reinsurer’s share of obligations is less than the balance of credit as of
the statement date, the Reassured shall, within thirty (30) days after receipt of a written
request from the Reinsurer, release such excess credit by agreeing to secure an amendment to
the Letter of Credit reducing the amount of credit available by the amount of such excess
credit.
	 
	F.	 	The bank shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Reassured or the disposition of funds withdrawn, except to assure that
withdrawals are made only upon the order of properly authorized representatives of the
Reassured. The Reassured shall incur no obligation to the bank in acting upon the credit,
other than as appears in the express terms thereof.

ARTICLE XXV — SERVICE OF SUIT

(Paragraphs A. and B. of this Clause only apply to Reinsurers domiciled outside of the United
States and/or unauthorized in the State of New York)

24. NO. CXoLSH02

 

	A.	 	It is agreed that in the event of the failure of the Reinsurers hereon to pay any amount
claimed to be due hereunder, the Reinsurers hereon, at the request of the Reassured, 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
Reinsurers’ 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. It is further agreed that service of process in such suit may be made upon Mendes and
Mount, 750 Seventh Avenue, New York, New York 10019-6829, and that in any suit instituted
against any one of them upon this Contract, such Reinsurer(s) will abide by the final decision
of such Court or of any Appellate Court in the event of an appeal.
	 
	B.	 	The above-named are authorized and directed to accept service of process on behalf of
Reinsurers in any such suit and/or upon the request of the Reassured to give a written
undertaking to the Reassured that they will enter a general appearance upon Reinsurers’ behalf
in the event such a suit shall be instituted.
	 
	C.	 	Further, pursuant to any statute of any state, territory or district of the United States
which makes provision therefore, Reinsurers hereon hereby designate the Superintendent,
Commissioner or Director of Insurance or their 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 Reassured or any beneficiary hereunder arising out of this Contract of reinsurance, and
hereby designate the above-named as the person to whom the said officer is authorized to mail
such process or a true copy thereof.

25. NO. CXoLSH02

 

IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed by their duly
authorized representative.

In Lakeland, Florida, this 26 day of August, 2002.

	 	 	 	 	 	 	 

	ATTEST:

	 	 
	 	BRIDGEFIELD CASUALTY INSURANCE COMPANY

BRIDGEFIELD EMPLOYERS INSURANCE COMPANY
	 	 
	 
	 	 	 	 	 	 
	/s/ 

 

	 	 	 	/s/ 

 
	 	 
	 
	

And in Keene, New Hampshire, this       day of                     , 2002.

	 	 	 	 	 	 	 

	ATTEST:

	 	 
	 	PEERLESS INSURANCE COMPANY
	 	 
	 
	 	 	 	 	 	 
	/s/ Stephen D. Powell
 

	 	 	 	/s/ Nancy C. Callender
 
	 	 
	Stephen D. Powell

	 	 	 	Nancy C. Callender	 	 
	AVP — Finance

	 	 	 	AVP — Risk Management	 	 

 

 

ARTICLE XXVI — CONFIDENTIALITY CLAUSE

The Company and the Reinsurer agree to comply with all state and federal privacy laws, including
the provisions of the Gramm-Leach-Bliley Act, relating to the non-public personal information of
cedent’s customers and claimants. All such information shall be used solely for the purpose for
which it was provided to the Reinsurer or as otherwise provided under, and in accordance with, such
state and federal privacy laws and for no other purpose. Accordingly, the non-public personal
information of cedent’s customers and claimants shall not be reproduced or shared with any other
party except: (1) those entities with which the Reinsurer may from time to time contract in
accordance with the terms of this Agreement, as well as state and federal privacy law; (2)
retrocessionaires subject to the business ceded to this Agreement when required by contract; (3)
state regulators when required in the course of an audit; (4) with external auditors when required
in connection with an audit of the Reinsurer’s records in the normal course of business; or (5)
when otherwise permitted under state and federal privacy law. The parties agree that the
obligations contained in this paragraph shall survive termination of this Agreement.

ARTICLE XXVII — AMENDMENTS

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

ARTICLE XXVIII — ENTIRE AGREEMENT

This Agreement represents the entire agreement and understanding among the parties, and may not be
changed except in writing, signed by the parties. No other oral or written agreements or contracts
relating to the risks reinsured hereunder currently exist and/or are contemplated between the
parties.

26. NO. CXoLSH02

 

EXHIBIT A

FIRST EXCESS OF LOSS

IS ATTACHED TO AND

FORMS PART OF

REINSURANCE AGREEMENT NO. CXoLSH02

 

 

EXHIBIT A — FIRST EXCESS OF LOSS

	 	 	 	 	 	 	 
	SECTION	 	SUBJECT	 	PAGE
	 
	 	 	 	 	 	 
	1
	 	LIMIT AND RETENTION	 	 	A-1	 
	 
	 	 	 	 	 	 
	2
	 	REINSTATEMENT	 	 	A-1	 
	 
	 	 	 	 	 	 
	3
	 	REINSURANCE PREMIUM	 	 	A-2	 

 

 

EXHIBIT A — FIRST EXCESS OF LOSS (ACCOUNTING CODE CXoLSH02)

SECTION 1 — LIMIT AND RETENTION

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Reinsurer Liability with
	 	 	 	 	 	 	Respect to any one
	Profit Center	 	Retention	 	Loss Occurrence
	 
	 	 	 	 	 	 	 	 
	Summit
	 	$	500,000	 	 	$	500,000	 
	Merchants & Business Mens’
	 	$	200,000	 	 	$	800,000	 

SECTION 2 — REINSTATEMENT

	A.	 	It is understood and agreed that each claim hereunder reduces the amount of indemnity from
the time of occurrence of the loss by the sum paid, but any amount so exhausted is hereby
reinstated from the time the Loss Occurrence commences without payment of an additional
premium.
	 
	B.	 	Notwithstanding the foregoing, Reinsurers’ liability for losses arising out of an act of
Terrorism shall be limited to one occurrence limit in all, each Profit Center, any one
Agreement Year.
	 
	C.	 	An “Act of Terrorism” for purposes of this Agreement shall mean:

	 	1.	 	Any actual or threatened violent act or act harmful to human life, tangible or
intangible property or infrastructure directed towards or having the effect of (a)
influencing or protesting against any de jure or de facto government or policy thereof,
(b) intimidating, coercing or putting in fear a civilian population or section thereof for
the purpose of establishing or advancing a specific ideological, religious or political
system of thought, perpetrated by a specific individual or group directly or indirectly
through agents acting on behalf of said individual or group or (c) retaliating against any
country for direct or vicarious support by that country of any other government or
political system.
	 
	 	2.	 	Any act deemed or declared by the Federal Office of Homeland Security to be terrorism
or a terrorist act shall also be considered an “Act of Terrorism” for purposes of this
Agreement.

	D.	 	The term “Agreement Year” shall mean each consecutive twelve month period commencing January
1 and ending December 31.

A-1

 

SECTION 3 — REINSURANCE PREMIUM

	 	 	 	 	 
	Profit Centers	 	Rate
	 
	 	 
	Summit
	 	 	2.59	%
	Merchants & Business Mens’
	 	 	14.83	%

Total Subject Premium to the Layer: $320,570,000

Composite Rate: 3.23% Subject Net Earned premium Income ($10,343,171)

A-2

 

EXHIBIT B

SECOND EXCESS OF LOSS

IS ATTACHED TO AND

FORMS PART OF

REINSURANCE AGREEMENT NO. CXoLSH02

 

 

EXHIBIT B — SECOND EXCESS OF LOSS

	 	 	 	 	 	 	 
	SECTION	 	SUBJECT	 	PAGE
	 
	 	 	 	 	 	 
	1
	 	LIMIT AND RETENTION	 	 	B-l	 
	 
	 	 	 	 	 	 
	2
	 	REINSTATEMENT	 	 	B-l	 
	 
	 	 	 	 	 	 
	3
	 	REINSURANCE PREMIUM	 	 	B-2	 

 

 

EXHIBIT B — SECOND EXCESS OF LOSS (ACCOUNTING CODE CXoLSH02)

SECTION 1 — LIMIT AND RETENTION

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Reinsurer Liability with
	 	 	 	 	 	 	Respect to any one
	Profit Center	 	Retention	 	Loss Occurrence
	 
	 	 	 	 	 	 	 	 
	Montgomery
	 	$	1,000,000	 	 	$	1,000,000	 
	Colorado
	 	$	1,000,000	 	 	$	1,000,000	 
	SBG
	 	$	1,000,000	 	 	$	1,000,000	 
	Summit
	 	$	1,000,000	 	 	$	4,000,000	 
	Merchants & Business Mens’
	 	$	1,000,000	 	 	$	1,000,000	 
	Indiana
	 	$	1,500,000	 	 	$	500,000	 

SECTION 2 — REINSTATEMENT

	A.	 	It is understood and agreed that each claim hereunder reduces the amount of indemnity from
the time of occurrence of the loss by the sum paid, but any amount so exhausted is hereby
reinstated from the time the Loss Occurrence commences without payment of an additional
premium.
	 
	B.	 	Notwithstanding the foregoing, Reinsurers’ liability for losses arising out of an act of
Terrorism shall be limited to one occurrence limit in all, each Profit Center, any one
Agreement Year.
	 
	C.	 	An “Act of Terrorism” for purposes of this Agreement shall mean:

	 	1.	 	Any actual or threatened violent act or act harmful to human life, tangible or
intangible property or infrastructure directed towards or having the effect of (a)
influencing or protesting against any de jure or de facto government or policy thereof,
(b) intimidating, coercing or putting in fear a civilian population or section thereof for
the purpose of establishing or advancing a specific ideological, religious or political
system of thought, perpetrated by a specific individual or group directly or indirectly
through agents acting on behalf of said individual or group or (c) retaliating against any
country for direct or vicarious support by that country of any other government or
political system.
	 
	 	2.	 	Any act deemed or declared by the Federal Office of Homeland Security to be terrorism
or a terrorist act shall also be considered an “Act of Terrorism” for purposes of this
Agreement.

B-1

 

	D.	 	The term “Agreement Year” shall mean each consecutive twelve month period commencing January
1 and ending December 31.

SECTION 3 — REINSURANCE PREMIUM

	 	 	 	 	 
	Profit Centers	 	Rate
	 
	 	 	 	 
	Montgomery
	 	 	1.61	%
	Colorado
	 	 	1.94	%
	SBG
	 	 	2.42	%
	Summit
	 	 	2.26	%
	Merchants & Business Mens’
	 	 	1.82	%
	Indiana
	 	 	1.25	%

Total Subject Premium to the Layer: $797,293,011

Composite Rate: 1.78% Subject Net Earned Premium Income ($14,182,180)

B-2

 

EXHIBIT C

THIRD EXCESS OF LOSS

IS ATTACHED TO AND

FORMS PART OF

REINSURANCE AGREEMENT NO. CXoLSH02

 

 

EXHIBIT C — THIRD EXCESS OF LOSS

	 	 	 	 	 
	SECTION	 	SUBJECT	 	PAGE
	 	 	 
	 	 
	1	 	LIMIT AND RETENTION
	 	C-l
	 	 	 
	 	 
	2	 	REINSTATEMENT
	 	C-l
	 	 	 
	 	 
	3	 	REINSURANCE PREMIUM
	 	C-2

 

 

EXHIBIT C — THIRD EXCESS OF LOSS (ACCOUNTING CODE CXoLSH02)

SECTION 1 — LIMIT AND RETENTION

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Reinsurer Liability with
	 	 	 	 	 	 	Respect to any one
	Profit Center	 	Retention	 	Loss Occurrence
	 
	 	 	 	 	 	 	 	 
	Golden Eagle
	 	$	2,000,000	 	 	$	3,000,000	 
	Indiana
	 	$	2,000,000	 	 	$	3,000,000	 
	Merchants & Business Mens’
	 	$	2,000,000	 	 	$	3,000,000	 
	Montgomery
	 	$	2,000,000	 	 	$	3,000,000	 
	Peerless
	 	$	2,000,000	 	 	$	3,000,000	 
	SBG
	 	$	2,000,000	 	 	$	3,000,000	 
	Colorado
	 	$	2,000,000	 	 	$	3,000,000	 

SECTION 2 — REINSTATEMENT

	A.	 	It is understood and agreed that each claim hereunder reduces the amount of indemnity from
the time of occurrence of the loss by the sum paid, but any amount so exhausted is hereby
reinstated from the time the Loss Occurrence commences without payment of an additional
premium.
	 
	B.	 	Notwithstanding the foregoing, Reinsurers’ liability for losses arising out of an act of
Terrorism shall be limited to one occurrence limit in all, each Profit Center, any one
Agreement Year.
	 
	C.	 	An “Act of Terrorism” for purposes of this Agreement shall mean:

	 	1.	 	Any actual or threatened violent act or act harmful to human life, tangible or
intangible property or infrastructure directed towards or having the effect of (a)
influencing or protesting against any de jure or de facto government or policy thereof,
(b) intimidating, coercing or putting in fear a civilian population or section thereof for
the purpose of establishing or advancing a specific ideological, religious or political
system of thought, perpetrated by a specific individual or group directly or indirectly
through agents acting on behalf of said individual or group or (c) retaliating against any
country for direct or vicarious support by that country of any other government or
political system.
	 
	 	2.	 	Any act deemed or declared by the Federal Office of Homeland Security to be terrorism
or a terrorist act shall also be considered an “Act of Terrorism” for purposes of this
Agreement.

C-1

 

	D.	 	The term “Agreement Year” shall mean each consecutive twelve month period commencing January
1 and ending December 31.

SECTION 3 — REINSURANCE PREMIUM

	 	 	 	 	 
	Profit Centers	 	Rate
	 
	 	 	 	 
	Golden Eagle
	 	 	1.495	%
	Indiana
	 	 	1.76	%
	Merchants & Business Mens’
	 	 	1.25	%
	Montgomery
	 	 	0.96	%
	Peerless
	 	 	1.04	%
	SBG
	 	 	1.36	%
	Colorado
	 	 	0.78	%

Total Subject Premium to the Layer: $955,414,163

Composite Rate: 1.34% Subject Net Earned Premium Income ($12,836,032)

C-2

 

EXHIBIT D

FOURTH EXCESS OF LOSS

IS ATTACHED TO AND

FORMS PART OF

REINSURANCE AGREEMENT NO. CXoLSH02

 

 

EXHIBIT D — FOURTH EXCESS OF LOSS

	 	 	 	 	 
	SECTION	 	SUBJECT	 	PAGE
	 	 	 
	 	 
	1	 	LIMIT AND RETENTION
	 	D-l
	 	 	 
	 	 
	2	 	REINSTATEMENT
	 	D-l
	 	 	 
	 	 
	3	 	REINSURANCE PREMIUM
	 	D-2

 

 

EXHIBIT D — FOURTH EXCESS OF LOSS (ACCOUNTING CODE CXoLSH02)

SECTION 1 — LIMIT AND RETENTION

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Reinsurer Liability with
	 	 	 	 	 	 	Respect to any one Loss
	Profit Center	 	Retention	 	Occurrence
	 
	 	 	 	 	 	 	 	 
	Colorado
	 	$	5,000,000	 	 	$	5,000,000	 
	Summit
	 	$	5,000,000	 	 	$	5,000,000	 
	Golden Eagle
	 	$	5,000,000	 	 	$	5,000,000	 
	Merchants & Business Mens’
	 	$	5,000,000	 	 	$	5,000,000	 
	Peerless
	 	$	5,000,000	 	 	$	5,000,000	 
	Indiana
	 	$	5,000,000	 	 	$	5,000,000	 
	SBG
	 	$	5,000,000	 	 	$	5,000,000	 
	Montgomery
	 	$	5,000,000	 	 	$	5,000,000	 

SECTION 2 — REINSTATEMENT

	A.	 	It is understood and agreed that each claim hereunder reduces the amount of indemnity from
the time of occurrence of the loss by the sum paid, but any amount so exhausted is hereby
reinstated from the time the Loss Occurrence commences without payment of an additional
premium.

	B.	 	Notwithstanding the foregoing, Reinsurers’ liability for losses arising out of an act of
Terrorism shall be limited to one occurrence limit in all, each Profit Center, any one
Agreement Year.

	C.	 	An “Act of Terrorism” for purposes of this Agreement shall mean:

	 	1.	 	Any actual or threatened violent act or act harmful to human life, tangible or
intangible property or infrastructure directed towards or having the effect of (a)
influencing or protesting against any de jure or de facto government or policy thereof,
(b) intimidating, coercing or putting in fear a civilian population or section thereof for
the purpose of establishing or advancing a specific ideological, religious or political
system of thought, perpetrated by a specific individual or group directly or indirectly
through agents acting on behalf of said individual or group or (c) retaliating against any
country for direct or vicarious support by that country of any other government or
political system.
	 
	 	2.	 	Any act deemed or declared by the Federal Office of Homeland Security to be terrorism
or a terrorist act shall also be considered an “Act of Terrorism” for purposes of this
Agreement.

D-1

 

	D.	 	The term “Agreement Year” shall mean each consecutive twelve month period commencing January
1 and ending December 31.

SECTION 3 — REINSURANCE PREMIUM

	 	 	 	 	 
	Profit Centers	 	Rate
	 
	 	 	 	 
	Colorado
	 	 	1.225	%
	Summit
	 	 	0.25	%
	Golden Eagle
	 	 	0.49	%
	Merchants & Business Mens’
	 	 	1.02	%
	Peerless
	 	 	0.27	%
	Indiana
	 	 	0.49	%
	SBG
	 	 	0.72	%
	Montgomery
	 	 	0.40	%

Total Subject Premium to the Layer: $1,259,314,163

Composite Rate: 0.19% Subject Net Earned Premium Income ($2,363,213)

D-2

 

EXHIBIT E

FIFTH EXCESS OF LOSS

IS ATTACHED TO AND

FORMS PART OF

REINSURANCE AGREEMENT NO. CXoLSH02

 

 

EXHIBIT E — FIFTH EXCESS OF LOSS

	 	 	 	 	 
	SECTION	 	SUBJECT	 	PAGE
	 	 	 
	 	 
	1	 	LIMIT AND RETENTION
	 	E-l
	 	 	 
	 	 
	2	 	REINSTATEMENT
	 	E-l
	 	 	 
	 	 
	3	 	REINSURANCE PREMIUM
	 	E-2

 

 

EXHIBIT E — FIFTH EXCESS OF LOSS (ACCOUNTING CODE CXoLSH02)

SECTION 1 — LIMIT AND RETENTION

The Liberty Ram Group of Companies/Profit Centers shall retain the first $10,000,000 of Ultimate
Net Loss as respects any one loss occurrence. The Reinsurers shall then be liable for the amount by
which the Companies’ Ultimate Net Loss exceeds the Companies’ retention of $10,000,000 but the
liability of the Reinsurers shall never exceed $15,000,000 any one loss occurrence.

SECTION 2 — REINSTATEMENT

	A.	 	Each claim hereunder reduces the amount of indemnity from the time of occurrence of the loss
by the sum paid, but any amount so exhausted is hereby reinstated from the time the Loss
Occurrence commences hereon.

	B.	 	For each amount so reinstated the Company agrees to pay an additional premium calculated at
pro rata of the annual premium hereon, being pro rata only as to the fraction of the limit of
liability of this Agreement (i.e., the fraction of 100% of $15,000,000) so reinstated and 100%
as to the term.

	C.	 	Nevertheless, the Reinsurer’s liability hereunder shall never exceed $15,000,000 in respect
of any one Loss Occurrence and shall be further limited in all during the term of this
Agreement to $30,000,000. Notwithstanding the foregoing, Reinsurers’ liability arising out of
an act of Terrorism shall be limited to only $5,000,000 in the aggregate as respects all
Profit Centers, any one Agreement Year.

	D.	 	An “Act of Terrorism” for purposes of this Agreement shall mean:

	 	1.	 	Any actual or threatened violent act or act harmful to human life, tangible or
intangible property or infrastructure directed towards or having the effect of (a)
influencing or protesting against any de jure or de facto government or policy thereof,
(b) intimidating, coercing or putting in fear a civilian population or section thereof for
the purpose of establishing or advancing a specific ideological, religious or political
system of thought, perpetrated by a specific individual or group directly or indirectly
through agents acting on behalf of said individual or group or (c) retaliating against any
country for direct or vicarious support by that country of any other government or
political system.

E-1

 

	 	2.	 	Any act deemed or declared by the Federal Office of Homeland Security to be terrorism
or a terrorist act shall also be considered an “Act of Terrorism” for purposes of this
Agreement.

	E.	 	The term “Agreement Year” shall mean each consecutive twelve month period commencing January
1 and ending December 31.

SECTION 3 — REINSURANCE PREMIUM

Profit Centers

Liberty Ram Group of Companies/Profit Centers

Total Subject Premium to the Layer: $1,259,314,163

Composite Rate: 0.19% Subject Net Earned Premium Income ($2,363,213)

E-2

 

APPENDIX A

Definition of Company:

For purposes of Article I or any Articles, wherever the word “Company” is used the Company is
defined to include the following Profit Centers.

	 	 	 
	Profit Center	 	Legal Entities
	Colorado Casualty:

	 	Colorado Casualty Insurance Company, Golden Eagle
Insurance Corporation in certain territories
	 
	 	 
	Golden Eagle Insurance:

	 	Golden Eagle Insurance Corporation, Peerless
Insurance Company and The Netherlands Insurance
Company in certain territories
	 
	 	 
	Indiana Insurance:

	 	Indiana Insurance Company, Consolidated Insurance
Company, The Midwestern Indemnity Company,
Mid-American Fire and Casualty Company, Peerless
Insurance Company and The Netherlands Insurance
Company in certain territories
	 
	 	 
	LMIC Small Business Group:

	 	Liberty Mutual Insurance Company, Liberty Mutual
Fire Insurance Company, LM Insurance Corporation,
Liberty Insurance Corporation, and The First Liberty
Insurance Corporation for business classified as
Small Business Group only, Bridgefield Casualty
Insurance Company in certain lines
	 
	 	 
	Merchants and Business Men’s:

	 	Merchants and Business Men’s Mutual Insurance Company
	 
	 	 
	Montgomery Insurance:

	 	Montgomery Mutual Insurance Company, Montgomery
Indemnity Company, Colorado Casualty Insurance
Company, Peerless Insurance Company, The Netherlands
Insurance Company and Excelsior Insurance Company,
The Midwestern Indemnity Company, in certain
territories
	 
	 	 
	Peerless Insurance:

	 	Peerless Insurance Company, The Netherlands
Insurance Company, Excelsior Insurance Company, Indiana Insurance Company in certain territories
	 
	 	 
	Summit:

	 	Bridgefield Casualty Insurance Company, and
Bridgefield Employers Insurance Company WC only

 

 

Definition of Profit Center Continued

	 	 	 
	Profit Center/Legal Entity	 	Territory
	 
	 	 
	Colorado Casualty
	 	 
	Colorado Casualty Insurance Co.

	 	All states excluding AL, GA, LA, NC, SC
	Golden Eagle Insurance Corp.

	 	AZ
	 
	 	 
	Golden Eagle Insurance
	 	 
	Golden Eagle Insurance Corp.

	 	All states excluding AZ
	Peerless Insurance Co.

	 	CA
	The Netherlands Insurance Co.

	 	CA
	 
	 	 
	Indiana Insurance
	 	 
	Indiana Insurance Co.

	 	All states excluding NJ
	Consolidated Insurance

	 	All states
	Mid-American Fire and Casualty Co.

	 	All states
	Peerless Insurance Co.

	 	IL, IN, KY, MI, MO, MN, OH, TN, WI
	The Netherlands Insurance Co.

	 	IL, IN, KY, MI, MO, MN, OH, TN, WI
	The Midwestern Indemnity Co.

	 	All states excluding IA, WI, GA
	 
	 	 
	LMIC Small Business Group
	 	 
	Liberty Insurance Corp.

	 	Business classified as Small Business Group only
	Liberty Mutual Fire Insurance Co.

	 	Business classified as Small Business Group only
	Liberty Mutual Insurance Co.

	 	Business classified as Small Business Group only
	LM Insurance Corp.

	 	Business classified as Small Business Group only
	The First Liberty Insurance Corp.

	 	Business classified as Small Business Group only
	Bridgefield Casualty Insurance Co.

	 	Business classified as Small Business Group only
	 
	 	 
	Merchants and Business Men’s Mutual Insurance Co.

	 	All states
	 
	 	 
	Montgomery Insurance
	 	 
	Colorado Casualty Insurance Co.

	 	AL, GA, LA, NC, SC
	Excelsior Insurance Co.

	 	MD, DC, VA
	Montgomery Indemnity Insurance Co.

	 	All states
	Montgomery Mutual Insurance Co.

	 	All states
	Peerless Insurance Co.

	 	GA, DC, DE, MD, NC, SC, VA
	The Midwestern Indemnity Co.

	 	GA
	The Netherlands Insurance Co.

	 	GA, DC, DE, MD, NC, SC, VA

 

 

Definition of Profit Center Continued

	 	 	 
	Profit Center/Legal Entity	 	Territory
	 
	 	 
	Peerless Insurance Co.
	 	 
	Peerless Insurance Co.

	 	All states excluding CA, DE, DC,
GA, IL, IN, KY, MO, MI, MN, NC,
OH, SC, TN, VA, WI
	Excelsior Insurance Co.

	 	All states excluding MD, DC, VA
	Indiana Insurance Co.

	 	NJ only
	The Netherlands Insurance Co.

	 	All states excluding CA, DE,
	 

	 	DC, GA, IL, IN, KY, MO, MI, MN, NC, OH, SC, TN, VA, WI
	 
	 	 
	Summit
	 	 
	Bridgefield Casualty Insurance Co.

	 	All states, WC only
	Bridgefield Employers Insurance Co.

	 	All states, WC only

 

 

SUPPLEMENT TO THE ATTACHMENTS

DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS

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

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

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

INSOLVENCY FUNDS EXCLUSION CLAUSE

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

 

 

ENDORSEMENT NO. 1

to the

INTERESTS AND LIABILITIES CONTRACT

(hereinafter referred to as the “Contract”)

of the

CASUALTY EXCESS OF LOSS

REINSURANCE AGREEMENT

NO. CXoLSH-02

between

BRIDGEFIELD CASUALTY INSURANCE COMPANY

BRIDGEFIELD EMPLOYERS INSURANCE COMPANY

Lakeland, Florida

(Liberty RAM)

(hereinafter referred to as the “Company”)

and

PEERLESS INSURANCE COMPANY

Keene, New Hampshire

(hereinafter referred to as the “Reinsurer”)

It is understood and agreed that Addendum No. 1 to the Casualty Excess of Loss Reinsurance
Agreement No. CXoLSH-02 is attached hereto and made a part of said Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Endorsement to be executed in duplicate, by
their duly authorized representatives.

In Lakeland, Florida, this 30th day of September, 2003.

	 	 	 	 	 

	ATTEST:

	 	BRIDGEFIELD CASUALTY INSURANCE COMPANY

BRIDGEFIELD EMPLOYERS INSURANCE COMPANY
	 	 
	 
	 	 	 	 
	/s/

	 	/s/ 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	And in Keene, New Hampshire, this 29th day of September, 2003.
	 
	 	 	 	 
	ATTEST:

	 	PEERLESS INSURANCE COMPANY	 	 
	 
	 	 	 	 
	/s/

	 	/s/ Nancy C. Callender	 	 
	 

	 	 	 	 

No. CXoLSH-02

Endorsement No. 1

 

 

ADDENDUM NO. 1

to the

CASUALTY EXCESS OF LOSS

REINSURANCE AGREEMENT

NO. CXoLSH-02

(hereinafter referred to as the “Agreement”)

between

BRIDGEFIELD CASUALTY INSURANCE COMPANY

BRIDGEFIELD EMPLOYERS INSURANCE COMPANY

Lakeland, Florida

(Liberty RAM)

(hereinafter referred to as the “Company”)

and

The reinsurer subscribing to the respective

Interests and Liabilities Contract attached to

and forming part of this Agreement

(hereinafter referred to as the “Reinsurer”)

It is understood and agreed that effective 12:01 a.m., Eastern Standard Time, January 1, 2003, this
Agreement is terminated in accordance with the provisions of Article II — Effective Date and
Termination.

No. CXoLSH-02

Addendum No. 1

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