Document:

exv10w40

Exhibit 10.40

GUY CARPENTER

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

issued to

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

			
	 	 	 
	Effective: July 1, 2008

2175-10-0005
	 	DOC: July 25, 2008

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     GUY CARPENTER

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Article	 	 	 	Page
	 

	 	Preamble
	 	 	3	 
	1

	 	Business Covered
	 	 	4	 
	2

	 	Retention and Limit
	 	 	4	 
	3

	 	Term
	 	 	5	 
	4

	 	Special Termination
	 	 	6	 
	5

	 	Territory
	 	 	7	 
	6

	 	Exclusions
	 	 	7	 
	7

	 	Special Acceptance
	 	 	9	 
	8

	 	Premium
	 	 	10	 
	9

	 	Other Reinsurance
	 	 	10	 
	10

	 	Reinstatement
	 	 	10	 
	11

	 	Definitions
	 	 	11	 
	12

	 	Extra Contractual Obligations/Excess of Policy Limits
	 	 	14	 
	13

	 	Run-Off Reinsurers
	 	 	15	 
	14

	 	Net Retained Liability
	 	 	17	 
	15

	 	Original Conditions
	 	 	17	 
	16

	 	No Third Party Rights
	 	 	17	 
	17

	 	Notice of Loss and Loss Settlements
	 	 	18	 
	18

	 	Commutation
	 	 	18	 
	19

	 	Sunset
	 	 	19	 
	20

	 	Late Payments
	 	 	19	 
	21

	 	Currency
	 	 	20	 
	22

	 	Unauthorized Reinsurance
	 	 	21	 
	23

	 	Taxes
	 	 	23	 
	24

	 	Access to Records
	 	 	23	 
	25

	 	Confidentiality
	 	 	24	 
	26

	 	Indemnification and Errors and Omissions
	 	 	25	 
	27

	 	Insolvency
	 	 	25	 
	28

	 	Arbitration
	 	 	26	 
	29

	 	Service of Suit
	 	 	28	 
	30

	 	Agency
	 	 	29	 
	31

	 	Governing Law
	 	 	29	 
	32

	 	Entire Agreement
	 	 	29	 
	33

	 	Intermediary
	 	 	29	 
	34

	 	Mode of Execution
	 	 	30	 
	 

	 	Company Signing Block
	 	 	3	 

			
	 	 	 
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THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Attachments	 	 	 	Page
	 

	 	Nuclear Risk Exclusion
	 	 	3	 

			
	 	 	 
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THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)

issued to

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

by

THE SUBSCRIBING REINSURER(S) IDENTIFIED

IN THE INTERESTS AND LIABILITIES AGREEMENT(S)

ATTACHED TO AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

ARTICLE 1

BUSINESS COVERED

This Contract is to indemnify the Company in respect of the liability that may accrue to the
Company as a result of loss or losses under Policies classified by the Company as Workers’
Compensation and/or Employers Liability (including losses arising from the United States Longshore
and Harbor Workers’ Compensation Act, Jones Act, Federal Employers Liability Act, and any other
Federal Act), in force at the inception of this Contract, or written or renewed during the term of
this Contract by or on behalf of the Company, subject to the terms and conditions herein contained.

ARTICLE 2

RETENTION AND LIMIT

	A.	 	The Reinsurer shall be liable in respect of each Loss Occurrence, for the Ultimate Net Loss
over and above an initial Ultimate Net Loss of $10,000,000 each Loss Occurrence, subject to a
limit of liability to the Reinsurer of $10,000,000 each Loss Occurrence, and subject further
to a limit of liability to the Reinsurer of $20,000,000 as respects all Loss Occurrences
subject to this Contract.

			
	 	 	 
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	B.	 	Notwithstanding the foregoing, as respects Employers Liability business, no more than
$2,000,000 any one claimant, any one Loss Occurrence shall contribute to the Ultimate Net
Loss.
	 
	C.	 	Notwithstanding the above, the Reinsurer’s liability for all Loss Occurrences subject to this
Contract as respects Acts of Terrorism covered hereunder shall be $10,000,000.
	 
	D.	 	The maximum amount of Ultimate Net Loss any one life is $10,000,000.
	 
	E.	 	If one Loss Occurrence involves losses allocated to this Contract and its predecessor or
successor contract, the Company’s retention for the Loss Occurrence shall be proportionate,
with the amount of Ultimate Net Loss to be retained by the Company for each contract being
reduced to that percentage which the Company’s Ultimate Net Loss attaching to each contract
bears to the total of all the Company’s Ultimate Net Loss in respect of the same Loss
Occurrence. The limit of the Reinsurer’s liability shall be calculated in the same manner.

ARTICLE 3

TERM

	A.	 	This Contract shall take effect at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008, applying to Loss Occurrences commencing at or after that time and date, and
shall remain in effect until 12:01 a.m., Local Standard Time at the place of the loss, July 1,
2009.
	 
	B.	 	The Reinsurer shall have no liability for Loss Occurrences commencing at or after expiration
or termination (as provided in the Special Termination Article) of this Contract.
	 
	C.	 	However, at the Company’s option, the Reinsurer shall remain liable hereunder in respect of
Policies in force prior to expiration or termination, until the termination, natural
expiration or renewal of such Policies, whichever occurs first. In such event, the Company
shall pay to the Reinsurer an additional premium equal to the rate set forth in the Rate and
Premium Article, multiplied by the Gross Net Earned Premium Income during the run-off period,
payable within 30 days after the end of each quarter.
	 
	D.	 	In the event this Contract expires or terminates on a run-off basis, the Reinsurer’s
liability hereunder shall continue if the Company is required by statute or regulation to
continue coverage, until the earliest date on which the Company may cancel the Policy.

			
	 	 	 
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ARTICLE 4

SPECIAL TERMINATION

	A.	 	The Company may terminate a Subscribing Reinsurer’s percentage share in this Contract at any
time by giving written notice to the Subscribing Reinsurer in the event of any of the
following circumstances:

	 	1.	 	The Subscribing Reinsurer ceases underwriting operations.
	 
	 	2.	 	A state insurance department or other legal authority orders the Subscribing
Reinsurer to cease writing business, or the Subscribing Reinsurer is placed under
regulatory supervision.
	 
	 	3.	 	The Subscribing Reinsurer has become insolvent or has been placed into
liquidation or receivership (whether voluntary or involuntary), or there have been
instituted against it proceedings for the appointment of a receiver, liquidator,
rehabilitator, conservator, trustee in bankruptcy, or other agent known by whatever
name, to take possession of its assets or control of its operations.
	 
	 	4.	 	The Subscribing Reinsurer’s policyholders’ surplus (or the equivalent under the
Subscribing Reinsurer’s accounting system) as reported in such financial statements of
the Subscribing Reinsurer as designated by the Company, has been reduced by 20% of the
amount thereof at any date during the prior 12-month period (including the period prior
to the inception of this Contract).
	 
	 	5.	 	The Subscribing Reinsurer has merged with or has become acquired or controlled by
any company, corporation, or individual(s) not controlling the Subscribing Reinsurer’s
operations at the inception of this Contract.
	 
	 	6.	 	The Subscribing Reinsurer has retroceded its entire liability under this Contract
without the Company’s prior written consent.
	 
	 	7.	 	The Subscribing Reinsurer has been assigned an A.M. Best’s rating of less than
“A-” and/or an S&P rating of less than “BBB+.” However, as respects Underwriting Members
of Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M. Best and/or less
than “BBB+” by S&P shall apply.

	B.	 	Termination shall be effected on a run-off or cut-off basis as set forth in the Term Article,
at the sole discretion of the Company. The reinsurance premium due the Subscribing Reinsurer
hereunder (including any minimum reinsurance premium) shall be pro rated based on the period
of the Subscribing Reinsurer’s participation hereon, and the Subscribing Reinsurer shall
immediately return any excess reinsurance premium received. In the event that the Subscribing
Reinsurer is terminated on a cut-off basis, the minimum reinsurance premium shall be waived.
Reinstatement premium, if any, shall be calculated

			
	 	 	 
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	 	 	based on the Subscribing Reinsurer’s reinsurance premium earned during the period of the
Subscribing Reinsurer’s participation hereon.
	 
	C.	 	Additionally, in the event of any of the circumstances listed in paragraph A of this Article,
the Company shall have the option to commute the Subscribing Reinsurer’s liability for losses
on Policies covered by this Contract. In the event the Company and the Subscribing Reinsurer
cannot agree on the commutation amount, they shall appoint an actuary and/or appraiser to
assess such amount and shall share equally any expense of the actuary and/or appraiser. If the
Company and the Subscribing Reinsurer cannot agree on an actuary and/or appraiser, the Company
and the Subscribing Reinsurer each shall nominate three individuals, of whom the other shall
decline two, and the final appointment shall be made by drawing lots. Payment by the
Subscribing Reinsurer of the amount of liability ascertained shall constitute a complete and
final release of both parties in respect of liability arising from the Subscribing Reinsurer’s
participation under this Contract.
	 
	D.	 	The Company’s option to require commutation under paragraph C above shall survive the
termination or expiration of this Contract.

ARTICLE 5

TERRITORY

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

ARTICLE 6

EXCLUSIONS

	A.	 	This Contract shall not apply to and specifically excludes:

	 	1.	 	Assumed reinsurance, except 100% of business ceded by fronting insurance companies.
	 
	 	2.	 	Liability of the Company arising by contract, operation of law, or otherwise, from
its participation or membership, whether voluntary or involuntary, in any Insolvency
Fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, howsoever denominated, established or governed,
that provides for any assessment of or payment or assumption by the Company of part or
all of any claim, debt, charge, fee, or other obligation of an insurer, or its successors
or assigns, that has been declared by any competent authority to be insolvent, or that is
otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole
or in part.

			
	 	 	 
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	 	3.	 	Loss or liability accruing to the Company directly or indirectly from any
insurance written by or through any pool, association, or syndicate, including pools,
associations, or syndicates in which membership by the Company is required under any
statutes or regulations.
	 
	 	4.	 	Loss or damage which is occasioned by war, invasion, hostilities, acts of foreign
enemies, civil war, rebellion, insurrection, military or usurped power, or martial law
or confiscation by order of any government or public authority. Nevertheless, this
Exclusion shall not apply to loss or damage occasioned by riots, strikes, civil
commotion, vandalism, malicious damage, and Acts of Terrorism.
	 
	 	5.	 	All loss or liability of the Company excluded by the “Nuclear Risk Exclusion”
attached hereto.
	 
	 	6.	 	Manufacturing, packaging, handling, shipping or storage of explosives, explosive
substances intended for use as an explosive, ammunitions, fuses, arms, or fireworks;
however, this exclusion shall not apply to the incidental packaging, handling or storage
of same in connection with the sale or transportation by owner operators of such
substances.
	 
	 	7.	 	Loss arising from Professional Sports Teams.
	 
	 	8.	 	Loss sustained by Commercial Airline Personnel on board the aircraft and arising
while the aircraft is In Flight. The following definitions shall apply to this
Exclusion:

	 	a.	 	“Commercial Airline” shall mean an organization in the business of
transporting passengers and/or goods by aircraft;
	 
	 	b.	 	“Personnel” shall mean employees of the Commercial Airline acting
within the scope of their employment; and
	 
	 	c.	 	“In Flight” shall mean from the time the door(s) close for departure to
the time the door(s) open for arrival.

	 	9.	 	Liability arising out of, or resulting as a consequence of, insureds principally
involved in the manufacture, distribution, installation, testing, remediation, removal,
storage, disposal, sale, use of or exposure to asbestos.
	 
	 	10.	 	Railroads, except scenic railways, and access lines and industrial aid owner
operations when written as an incidental part of an insured’s overall operations.
	 
	 	11.	 	Chemical or petrochemical manufacturing.
	 
	 	12.	 	Underground mining.
	 
	 	13.	 	Loss arising from the intentional wrecking or demolition of buildings or
structures in excess of three stories.

			
	 	 	 
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	 	14.	 	Losses arising from the United States Longshore and Harbor Workers’ Compensation
Act, Jones Act, Federal Employers Liability Act, Maritime Employers Liability Act, and
any other federal act if the payroll for such business is greater than 10% of the total
payroll for the original insured’s total operations including such business.
	 
	 	15.	 	As respects Acts of Terrorism, losses directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with biological,
chemical, or nuclear or radiation pollution or contamination.
	 
	 	 	 	This exclusion shall not be construed to apply to loss or damage occasioned by riots,
strikes, civil commotion, vandalism or malicious damage as those terms have been
interpreted by United States courts to apply to insurance policies.
	 
	 	16.	 	Financial Guaranty.

	B.	 	If the Company becomes involved in a risk excluded by the foregoing either by an existing
insured extending its operations or if the Company inadvertently issues a Policy falling
within the scope of one or more of the preceding exclusions, such Policy shall be covered
hereunder, provided that the Company issues, or causes to be issued, the required notice of
cancellation within 30 days after a member of the executive or managerial staff at the
Company’s home office having underwriting authority in the class of business involved becomes
aware that the Policy applies to excluded classes, unless the Company is prevented from
canceling said Policy within such period by applicable statute or regulation, in which case
such Policy shall be covered hereunder until the earliest date on which the Company may
cancel.

ARTICLE 7

SPECIAL ACCEPTANCE

Business that is not within the scope of this Contract may be submitted to the Reinsurer for
special acceptance hereunder, and such business, if accepted by the Reinsurer shall be covered
hereunder, subject to the terms and conditions of this Contract, except as modified by the special
acceptance. The Reinsurer shall be deemed to have accepted a risk, if it has not responded within
five days after receiving the underwriting information on such risk. Any renewal of a special
acceptance agreed to for a predecessor contract to this Contract shall automatically be covered
hereunder.

			
	 	 	 
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ARTICLE 8

PREMIUM

	A.	 	The Company shall pay the Reinsurer a deposit premium of $525,000 for the term of this
Contract, to be paid in the amount of $131,250 on July 1 and October 1, 2008, and January 1
and April 1, 2009.
	 
	B.	 	Within 45 days following the expiration of this Contract, the Company shall furnish to the
Reinsurer a statement of the Gross Net Earned Premium Income for the term of this Contract and
calculate a premium at a rate of 0.434%, multiplied by the Company’s Gross Net Earned Premium
Income. Should the premium so calculated exceed the deposit premium paid in accordance with
paragraph A of this Article, the Company shall immediately pay the Reinsurer the difference.
Should the premium so calculated be less than the deposit premium paid in accordance with
paragraph A of this Article, the Reinsurer shall immediately pay the Company the difference,
subject to a minimum premium for the term of this Contract of $420,000.
	 
	C.	 	The Company shall furnish the Reinsurer with such information as may be required by the
Reinsurer for completion of its NAIC annual statements.

ARTICLE 9

OTHER REINSURANCE

The Company is permitted to have other treaty reinsurance, recoveries under which shall inure
solely to the benefit of the Company and shall be entirely disregarded in applying all of the
provisions of this Contract.

ARTICLE 10

REINSTATEMENT

	A.	 	Loss payments under this Contract shall reduce the limit of coverage afforded by the amounts
paid, but the limit of coverage shall be reinstated from the time of the occurrence of the
loss, and for each amount so reinstated, the Company agrees to pay an additional premium
calculated at pro rata of 100% of the Reinsurer’s premium for the term of this Contract, being
pro rata only as to the fraction of the Reinsurer’s limit of liability hereunder (i.e., the
fraction of $10,000,000) so reinstated. Nevertheless, the Reinsurer’s liability hereunder
shall not exceed the limits as provided in the Retention and Limit Article.
	 
	B.	 	If at the time of a loss settlement hereon the reinsurance premium, as calculated in
accordance with the Premium Article, is unknown, the above calculation of reinstatement

			
	 	 	 
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	 	 	premium shall be based upon the deposit premium, subject to adjustment when the reinsurance
premium is finally established.

ARTICLE 11

DEFINITIONS

	A.	1.	 “Ultimate Net Loss” means the actual loss paid by the Company or which the
Company becomes liable to pay, including structured settlements with claimants or
outside insurers, such loss to include Loss Adjustment Expense, Extra Contractual
Obligations and Loss in Excess of Policy Limits as defined in the Extra Contractual
Obligations/Excess of Policy Limits Article.

	 	2.	 	Salvages and all recoveries (including amounts due under all reinsurances that
inure to the benefit of this Contract, whether recovered or not), shall be first
deducted from such loss to arrive at the amount of liability attaching hereunder.
	 
	 	3.	 	All salvages, recoveries or payments recovered or received subsequent to loss
settlement hereunder shall be applied as if recovered or received prior to the aforesaid
settlement, and all necessary adjustments shall be made by the parties hereto.
	 
	 	4.	 	Ultimate Net Loss shall not be reduced by the amount of any deductibles, whether
or not recovered by the Company. “Deductibles” shall mean any insurance plan, however
denominated, where the insured participates in, and is responsible for, reimbursing the
Company for losses up to a specified limit.
	 
	 	5.	 	The Company shall be deemed to be “liable to pay” a loss when a judgment has been
rendered that the Company does not plan to appeal, and/or the Company has obtained a
release, and/or the Company has accepted a proof of loss.
	 
	 	6.	 	Nothing in this clause shall be construed to mean that losses are not recoverable
hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

	B.	 	“Loss Occurrence” means each and every disaster, casualty, accident, or loss or series of
disasters, casualties, accidents or losses arising out of one event. The Company shall be the
sole judge of what constitutes one event.

	 	1.	 	As respects a Loss Occurrence involving Occupational Disease or Other Disease or
Cumulative Trauma, the following shall apply:

	 	a.	 	Per Event Coverage. As respects losses arising from
Occupational Disease or Other Disease, regardless of the specific kind or class,
suffered by employees of one or more employers, all such losses sustained by the
Company from one event not exceeding 72 hours in duration shall, together with
losses not

			
	 	 	 
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	 	 	 	classified as Occupational Disease or Other Disease, be deemed to be a single
“Loss Occurrence.”
	 
	 	b.	 	Per Employee Coverage. As respects losses arising from
Occupational Disease or Other Disease or Cumulative Trauma suffered by a single
employee, and not covered under subparagraph (a) above, the date that the Loss
Occurrence commences shall be determined as follows:

	 	i.	 	If the case is compensable under the Workers’ Compensation
Law, the date of the beginning of the disability for which compensation is
payable.
	 
	 	ii.	 	If the case is not compensable under the Workers’
Compensation Law, the date that disability due to said disease actually
began.
	 
	 	iii.	 	If the claim is made after employment has ceased, the date
of cessation of such employment.

	 	2.	 	As respects natural disasters, the term “Loss Occurrence” shall mean any one or
more occurrence, disaster or casualty arising out of or caused by the perils described
below (a natural Act of God) during any continuous period of 168 hours.

	 	a.	 	As regards the perils of tornado, cyclone, windstorm, hurricane and/or
hail, “Loss Occurrence” shall mean all losses occasioned by tornadoes, cyclones,
windstorm, hurricanes or hailstorms occurring during any continuous period of 168
hours, and arising from the same atmospheric disturbance.
	 
	 	b.	 	As regards the peril of earthquake, “Loss Occurrence” shall mean all
losses occasioned by earthquakes, including ensuing fire, flood or tidal wave
occurring during any continuous period of 168 hours.
	 
	 	c.	 	As regards the following perils, “Loss Occurrence” shall mean all
losses occasioned by the following perils during any continuous period of 168
hours:

	 	i.	 	Volcanic eruption,
	 
	 	ii.	 	Flood, tides, tidal wave,
	 
	 	iii.	 	Landslide/mudslide,
	 
	 	iv.	 	Meteors.

	 	 	 	With respect to natural disasters as defined above, the Company may choose the date and
time when any such period of consecutive hours commences and if any Loss Occurrence is
of greater duration than the above period(s), the Company may divide that Loss
Occurrence into two or more “Loss Occurrences,” provided no two periods overlap and
provided no period commences earlier than the date and time of the

			
	 	 	 
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	 	 	 	happening of the first recorded individual loss to the Company in that Loss
Occurrence.

	C.	 	“Gross Net Earned Premium Income” means gross earned manual premium adjusted
for experience and schedule credit/debit modifications, State/NCCI safety credit
and other allowable credits, premium discount, deductible credits, expense
constants and Policy fees, less returns and cancellations and less the earned
portion of premiums ceded by the Company for reinsurance that inures to the
benefit of this Contract, if any.
	 
	D.	 	“Loss Adjustment Expense” means costs and expenses incurred by the Company in
connection with the investigation, appraisal, adjustment, settlement,
litigation, defense or appeal of a specific claim or loss, or alleged loss,
including but not limited to:

	 	1.	 	court costs;
	 
	 	2.	 	costs of supersedeas and appeal bonds;
	 
	 	3.	 	monitoring counsel expenses;
	 
	 	4.	 	legal expenses and costs incurred in connection with coverage
questions and legal actions connected thereto, including but not limited to
declaratory judgment actions;
	 
	 	5.	 	post-judgment interest;
	 
	 	6.	 	pre-judgment interest, unless included as part of an award or judgment;
	 
	 	7.	 	salary charges for staff adjusters, fieldsmen or other employees
while actually engaged in the settlements of the losses; and
	 
	 	8.	 	subrogation, salvage and recovery expenses.

	 	 	“Loss Adjustment Expense” does not include salaries and expenses of the
Company’s employees, except salaries as provided in subparagraph (7) above, and
office and other overhead expenses.
	 
	E.	 	“Policy(ies)” means any binder, policy, or contract of insurance or reinsurance
issued, accepted or held covered provisionally or otherwise, by or on behalf of
the Company.
	 
	F.	 	“Occupational Disease,” “Other Disease” and “Cumulative Trauma” shall be
defined by the applicable state or federal statutes, regulations, or case law
having jurisdiction over such losses.
	 
	G.		1. An “Act of Terrorism” as used in this Contract shall be as defined in
Section 102 of the Terrorism Risk Insurance Act of 2002, as amended (“TRIA”),
except as hereinafter provided.

			
	 	 	 
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	 	2.	 	“Act of Terrorism” in respect of losses not covered by TRIA shall be defined as
in the Company’s original Policies or, if not defined therein, shall mean: the use of
force or violence and/or the threat thereof committed for political, religious, or
ideological purposes and with the intention to influence any government and/or to put
the public, or any section of the public, in fear.
	 
	 	3.	 	This Contract also covers loss, damage, cost, or expense directly or indirectly
caused by, contributed by, resulting from, or arising out of or in connection with any
action in controlling, preventing, suppressing, retaliating against, or responding to
any “Act of Terrorism” set forth above.

ARTICLE 12

EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS

	A.	 	This Contract shall cover 90% of any Extra Contractual Obligations, as provided in the
definition of Ultimate Net Loss. “Extra Contractual Obligations” shall be defined as those
liabilities not covered under any other provision of this Contract and that 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.	 	This Contract shall cover 90% of any Loss in Excess of Policy Limits, as provided in the
definition of Ultimate Net Loss. “Loss in Excess of Policy Limits” shall be defined as Loss
in excess of the Policy limit, having been incurred because of, but not limited to,
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.
	 
	C.	 	An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to
have occurred on the same date as the loss covered under the Company’s Policy, and shall
constitute part of the original loss.
	 
	D.	 	For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word “Loss”
means any amounts for which the Company would have been contractually liable to pay had it not
been for the limit of the original Policy.
	 
	E.	 	Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of
Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense.

			
	 	 	 
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	F.	 	However, this Article shall not apply where the loss has been incurred due to final legal
adjudication of 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.
	 
	G.	 	In no event shall coverage be provided to the extent not permitted under law.

ARTICLE 13

RUN-OFF REINSURERS

	A.	 	“Run-off Reinsurer” means any Subscribing Reinsurer that:

	 	1.	 	has been ordered by a state insurance department or other legal authority to
cease writing business, or has been placed under regulatory supervision or in
rehabilitation; or
	 
	 	2.	 	has ceased reinsurance underwriting operations; or
	 
	 	3.	 	has transferred its claims-paying authority to an unaffiliated entity; or
	 
	 	4.	 	in any other way has assigned its interests or delegated its obligations under
this Contract to an unaffiliated entity.

	 	 	Notwithstanding the foregoing, the provisions of subparagraphs (3) and (4) above shall not
apply to or be enforceable against Lloyd’s Syndicates to the extent those Syndicates are
subject to and/or are required to comply with the Lloyd’s 2006 Claims Scheme.
	 
	B.	 	Notwithstanding any other provision of this Contract, in the event that a Subscribing
Reinsurer becomes a Run-off Reinsurer at any time, the Company may elect, by giving written
notice to the Run-off Reinsurer at any time thereafter, that all or any of the following shall
apply to the Run-off Reinsurer’s participation hereunder:

	 	1.	 	If the Run-off Reinsurer does not pay a claim or raise a query concerning the claim
within 30 days of billing, it shall be estopped from denying such claim and must pay
immediately.
	 
	 	2.	 	If payment of any claim has been received from Subscribing Reinsurers constituting
at least 70% of the interests and liabilities of all Subscribing Reinsurers that
participated on this Contract and are active as of the due date; it being understood that
said date shall not be later than 90 days from the date of transmittal by the
Intermediary of the initial billing for each such payment, the Run-off Reinsurer shall be
estopped from denying such claim and must pay within 10 days following transmittal to the
Run-off Reinsurer of written notification of such payments. In no event shall the
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	 	 	 	Subscribing Reinsurers who are active as of the due date of the claim. For purposes
of this subparagraph, a Subscribing Reinsurer shall be deemed to be active if it is
not a Run-off Reinsurer.
	 
	 	3.	 	Should the Run-off Reinsurer refuse to pay claims as required by the
subparagraphs 1 and/or 2 above, the interest penalty specified in the Late Payments
Article shall be increased by 0.5% for each 30 days that a payment is past due, subject
to a maximum increase of 7.0%.
	 
	 	4.	 	The Run-off Reinsurer’s liability for losses for Policies covered by this
Contract shall be commuted. In the event the Company and the Run-off Reinsurer cannot
agree on the commutation amount, they shall appoint an actuary and/or appraiser to
assess such amount and shall share equally any expense of the actuary and/or appraiser.
If the Company and the Run-off Reinsurer cannot agree on an actuary and/or appraiser,
the Company and the Run-off Reinsurer each shall nominate three individuals, of whom the
other shall decline two, and the final appointment shall be made by drawing lots.
Payment by the Run-off Reinsurer of the amount of liability ascertained shall constitute
a complete and final release of both parties under this Contract.
	 
	 	5.	 	The Run-off Reinsurer shall have no right of access to the Records of the Company
if the Run-off Reinsurer has denied payment of any claim hereunder or there is a pending
arbitration between the Company and the Run-off Reinsurer regarding any claim hereunder.
A reservation of rights shall be considered a denial of a claim.
	 
	 	6.	 	In the event that either party demands arbitration of a dispute between the
Company and the Run-off Reinsurer, and the amount in dispute is less than $100,000,
unless the arbitration notice includes a demand for rescission of this Contract,
notwithstanding the terms of the Arbitration Article, the dispute shall be resolved by a
sole arbitrator and the following procedures shall apply:

	 	a.	 	The sole arbitrator shall be chosen by mutual agreement of the parties
within 15 business days after the demand for arbitration. If the parties have not
chosen an arbitrator within the 15 business days after the receipt of the
arbitration notice, the arbitrator shall be chosen in accordance with the Neutral
Arbitrator Selection Procedure modified for a single arbitrator, established by the
AIDA Reinsurance and Insurance Arbitration Society — U.S. (ARIAS) and in force on
the date the arbitration is demanded. The nominated arbitrator must be available to
read any written submissions and hear testimony within 60 calendar days of being
chosen.
	 
	 	b.	 	Within 10 business days after the arbitrator has been appointed, the
parties shall be notified of deadlines for the submission of briefs and documentary
evidence, as determined by the arbitrator. There shall be no discovery or hearing
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	 	 	 	arbitrator can determine, without the consent of the parties, that a limited
hearing is necessary.
	 
	 	c.	 	The arbitrator shall render a decision no later than 10 business days
from the later of the date on which the briefs are submitted or the close of the
hearing, if any. The decision of the arbitrator shall be in writing and shall be
final and binding.

	C.	 	The Company’s waiver of any rights provided in this Article is not a waiver of that right or
other rights at a later date.

ARTICLE 14

NET RETAINED LIABILITY

	A.	 	This Contract applies only to that portion of any loss that the Company retains net for its
own account (prior to deduction of any reinsurance that inures solely to the benefit of the
Company).
	 
	B.	 	The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not
be increased by reason of the inability of the Company to collect from any other reinsurer(s),
whether specific or general, any amounts that may have become due from such reinsurer(s),
whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.

ARTICLE 15

ORIGINAL CONDITIONS

All reinsurance under this Contract shall be subject to the same terms, conditions, waivers and
interpretations, and to the same modifications and alterations as the respective Policies of the
Company. However, in no event shall this be construed in any way to provide coverage outside the
terms and conditions set forth in this Contract.

ARTICLE 16

NO THIRD PARTY RIGHTS

This Contract is solely between the Company and the Reinsurer, and in no instance shall any
insured, claimant or other third party have any rights under this Contract except as may be
expressly provided otherwise herein.

			
	 	 	 
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ARTICLE 17

NOTICE OF LOSS AND LOSS SETTLEMENTS

	A.	 	The Company shall advise the Reinsurer promptly of all losses that, in the opinion of the
Company, may result in a claim hereunder and of all subsequent developments thereto that may
materially affect the position of the Reinsurer.
	 
	B.	 	The Company alone and at its full discretion shall adjust, settle or compromise all claims
and losses.
	 
	C.	 	As respects losses subject to this Contract, all loss settlements made by the Company,
whether under strict Policy terms or by way of compromise, and any Extra Contractual
Obligations and/or Loss in Excess of Policy Limits, shall be binding upon the Reinsurer, and
the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement
immediately upon receipt of proof of loss.

ARTICLE 18

COMMUTATION

	A.	 	This Article will only take effect should the parties hereto mutually agree to commute one or
any number of the Workers’ Compensation losses under this Contract. There will be no
obligation on the part of either party to so commute.
	 
	B.	 	Should the Company become liable for any loss hereunder, and be required to make periodic
payments to or otherwise set up on its books reserves for such loss, at any time after seven
years following the date of such loss and upon mutual agreement of the Company and the
Reinsurer, said loss (including Loss Adjustment Expenses) may be commuted. If the value of
said loss, including amounts falling to the share of the Reinsurer, cannot be agreed upon by
the parties to this Contract, said value may be determined by employing one of the following:

	 	1.	 	A present value calculation based on the following criteria:

	 	a.	 	In respect of all unindexed benefits, the present value calculation
shall be determined based upon an annual discount equal to the five-year U.S.
Treasury note rate at the time of commutation.
	 
	 	b.	 	In respect of all future medical costs, the present value calculation
shall be based upon the Company’s evaluation of long term medical care and
rehabilitation requirements, using an annual discount equal to the five-year U.S.
Treasury note rate at the time of commutation, and an annual escalation equal to
the Medical Care Consumer Price Index (CPI-MC) at the time of commutation.

			
	 	 	 
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	 	c.	 	Where applicable, impaired life expectancy, survivors’ life
expectancy, as well as remarriage probability shall be reflected in the
calculation by employing tables required by statute.

	 	2.	 	The Company may determine the present value by purchasing (or obtaining a
quotation for) an annuity from any A. M. Best’s Class VIII IIA+II rated or better
annuity writer, with an AAA rating by Standard & Poor’s.

	C.	 	The Reinsurer’s proportion of the amount determined will be considered its total liability
for such loss and the lump sum payment thereof shall constitute a complete release of both
parties from liability hereunder for the commuted losses.
	 
	D.	 	This Article shall survive the expiration or termination of this Contract.

ARTICLE 19

SUNSET

Notwithstanding the provisions of paragraph C of the Indemnification and Errors and Omissions
Article, coverage hereunder shall apply only to Loss Occurrences notified by the Company to the
Reinsurer within 84 months from the effective date of this Contract.

ARTICLE 20

LATE PAYMENTS

	A.	 	In the event any payment due either party is not received by the Intermediary by the payment
due date, the party to whom payment is due may, by notifying the Intermediary in writing,
require the debtor party to pay, and the debtor party agrees to pay, an interest penalty, on
the amount past due calculated for each such payment on the last business day of each month as
follows:

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

	 	 	Interest shall accumulate until payment of the original amount due plus interest penalties has
been received by the Intermediary.
	 
	B.	 	The due date shall, for purposes of this Article, be determined as follows:

			
	 	 	 
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	 	1.	 	Payments from the Reinsurer to the Company shall be due on the date on which the
demand for payment (including delivery of bordereaux or quarterly or monthly reports) is
received by the Reinsurer, and shall be overdue 30 days thereafter.
	 
	 	2.	 	Payments from the Company to the Reinsurer shall be due on the dates specified
within this Contract. Payments shall be overdue 30 days thereafter except for the first
installment of premium, if applicable, which shall be overdue 60 days from inception or
30 days from final line-signing, whichever the later. Reinstatement premium, if
applicable, shall have as a due date the date when the Company receives payment for the
claim giving rise to such reinstatement premium, and payment shall be overdue 30 days
thereafter. In the event a due date is not specifically stated for a given payment, the
overdue date shall be 30 days following the date of billing.

	C.	 	If the information contained in the Company’s demand for payment is insufficient or not in
accordance with the conditions of this Contract, then within 30 days the Reinsurer shall
request from the Company all additional information necessary to validate its claim and the
payment due date as defined in paragraph B shall be deemed to be the date upon which the
Reinsurer received the requested additional information. This paragraph is only for the
purpose of establishing when a payment is overdue, and shall not alter the provisions of the
Notice of Loss and Loss Settlements Article or other pertinent contractual stipulations.
	 
	D.	 	Should the Reinsurer dispute a claim presented by the Company and the timeframes set out in
paragraph B be exceeded, interest as stipulated in paragraph A shall be payable for the entire
overdue period, but only for the amount of the final settlement with the Reinsurer.
	 
	E.	 	In the event arbitration is necessary to settle a dispute, the panel shall have the authority
to make a determination awarding interest to the prevailing party. Interest, if any, awarded
by the panel shall supersede the interest amounts outlined herein.
	 
	F.	 	Any interest owed pursuant to this Article may be waived by the party to which it is owed.
Waiver of such interest, however, shall not affect the waiving party’s rights to other
interest amounts due as a result of this Article.
	 
	G.	 	For purposes of this Article, reinsuring Underwriting Members of Lloyd’s, London, shall be
considered to be one entity.

ARTICLE 21

CURRENCY

	A.	 	Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United
States Dollars.
	 
	B.	 	For purposes of this Contract, where the Company receives premiums or pays losses in
currencies other than United States Dollars, such premiums or losses shall be converted

			
	 	 	 
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	 	 	into United States Dollars at the actual rates of exchange at the time of receipt or payment
by the Company.

ARTICLE 22

UNAUTHORIZED REINSURANCE

	A.	 	This Article applies only to a Subscribing Reinsurer who does not qualify for full credit
with any insurance regulatory authority having jurisdiction over the Company’s reserves.
	 
	B.	 	The Company agrees, in respect of its Policies or bonds falling within the scope of this
Contract, that when it files with its insurance regulatory authority, or sets up on its books
liabilities as required by law, it shall forward to the Reinsurer a statement showing the
proportion of such liabilities applicable to the Reinsurer. The “Reinsurer’s Obligations”
shall be defined as follows:

	 	1.	 	unearned premium (if applicable);
	 
	 	2.	 	known outstanding losses that have been reported to the Reinsurer and Loss
Adjustment Expense relating thereto;
	 
	 	3.	 	losses and Loss Adjustment Expense paid by the Company but not recovered from the
Reinsurer;
	 
	 	4.	 	losses incurred but not reported and Loss Adjustment Expense relating thereto.

	C.	 	The Reinsurer’s Obligations shall be funded by funds withheld, cash advances, Trust Agreement
or a Letter of Credit (LOC). The Reinsurer shall have the option of determining the method of
funding provided it is acceptable to the insurance regulatory authorities having jurisdiction
over the Company’s reserves.
	 
	D.	 	When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to the
Company of a clean, irrevocable and unconditional LOC issued by a bank and containing
provisions acceptable to the insurance regulatory authorities having jurisdiction over the
Company’s reserves in an amount equal to the Reinsurer’s Obligations. Such LOC shall be issued
for a period of not less than one year, and shall be automatically extended for one year from
its date of expiration or any future expiration date unless 30 days (or such other time period
as may be required by insurance regulatory authorities), prior to any expiration date the
issuing bank shall notify the Company by certified or registered mail that the issuing bank
elects not to consider the LOC extended for any additional period.
	 
	E.	 	The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant to
the provisions of this Contract may be drawn upon at any time, notwithstanding any other
provision of this Contract, and be utilized by the Company or any successor, by

			
	 	 	 
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	 	 	operation of law, of the Company including, without limitation, any liquidator,
rehabilitator, receiver or conservator of the Company, for the following purposes, unless
otherwise provided for in a separate Trust Agreement:

	 	1.	 	to reimburse the Company for the Reinsurer’s Obligations, the payment of which is
due under the terms of this Contract and that has not been otherwise paid;
	 
	 	2.	 	to make refund of any sum that is in excess of the actual amount required to pay
the Reinsurer’s Obligations under this Contract (or in excess of 102% of the Reinsurer’s
Obligations, if funding is provided by a Trust Agreement);
	 
	 	3.	 	to fund an account with the Company for the Reinsurer’s Obligations. Such cash
deposit shall be held in an interest bearing account separate from the Company’s other
assets, and interest thereon not in excess of the prime rate shall accrue to the benefit
of the Reinsurer. Any taxes payable on accrued interest shall be paid out of the assets
in the account that are in excess of the Reinsurer’s Obligations (or in excess of 102%
of the Reinsurer’s Obligations, if funding is provided by a Trust Agreement). If the
assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer;
	 
	 	4.	 	to pay the Reinsurer’s share of any other amounts the Company claims are due
under this Contract.

	F.	 	If the amount drawn by the Company is in excess of the actual amount required for E(l) or
E(3), or in the case of E(4), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be
applied without diminution because of insolvency on the part of the Company or the Reinsurer.
	 
	G.	 	The issuing bank shall have no responsibility whatsoever in connection with the propriety of
withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that
withdrawals are made only upon the order of properly authorized representatives of the
Company.
	 
	H.	 	At annual intervals, or more frequently at the discretion of the Company, but never more
frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer’s
Obligations for the sole purpose of amending the LOC or other method of funding, in the
following manner:

	 	1.	 	If the statement shows that the Reinsurer’s Obligations exceed the balance of
the LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of
the statement, secure delivery to the Company of an amendment to the LOC increasing the
amount of credit by the amount of such difference. Should another method of funding be
used, the Reinsurer shall, within the time period outlined above, increase such funding
by the amount of such difference.

			
	 	 	 
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	 	2.	 	If, however, the statement shows that the Reinsurer’s Obligations are less than
the balance of the LOC (or that 102% of the Reinsurer’s Obligations are less than the
trust account balance if funding is provided by a Trust Agreement), as of the statement
date, the Company shall, within 30 days after receipt of written request from the
Reinsurer, release such excess credit by agreeing to secure an amendment to the LOC
reducing the amount of credit available by the amount of such excess credit. Should
another method of funding be used, the Company shall, within the time period
outlined above, decrease such funding by the amount of such excess.

ARTICLE 23

TAXES

	A.	In consideration of the terms under which this Contract is issued, the Company
undertakes not to claim any deduction of the premium hereon when making Canadian tax
returns or when making tax returns, other than Income or Profits Tax returns, to any
state or territory of the United States of America or to the District of Columbia.
	 
	B.	1.	Each Subscribing Reinsurer has agreed to allow, for the purpose of paying the Federal
Excise Tax, the applicable percentage of the premium payable hereon (as imposed
under the Internal Revenue Code) to the extent such premium is subject to
Federal Excise Tax.

	 	2.	In the event of any return of premium becoming due hereunder, the
Subscribing Reinsurer shall deduct the applicable percentage of the premium
from the amount of the return, and the Company or its agent should take steps
to recover the Tax from the U.S. Government.

ARTICLE 24

ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to visit the
offices of the Company to inspect, examine, audit, and verify any of the Policy,
accounting or claim files (“Records”) relating to business reinsured under this Contract
during regular business hours after giving five working days’ prior notice. This right
shall be exercisable during the term of this Contract or after the expiration of this
Contract. Notwithstanding the above, the Reinsurer shall not have any right of access to
the Records of the Company if it is not current in all undisputed payments due the
Company.

			
	 	 	 
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ARTICLE 25

CONFIDENTIALITY

	A.	 	The Reinsurer hereby acknowledges that the documents, information and data provided to it by
the Company, whether directly or through an authorized agent, in connection with the placement
and execution of this Contract (“Confidential Information”) are proprietary and confidential
to the Company. Confidential Information shall not include documents, information or data that
the Reinsurer can show:

	 	1.	 	are publicly known or have become publicly known through no unauthorized act of
the Reinsurer;
	 
	 	2.	 	have been rightfully received from a third person without obligation of
confidentiality; or
	 
	 	3.	 	were known by the Reinsurer prior to the placement of this Contract without an
obligation of confidentiality.

	B.	 	Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential
Information to any third parties, including any affiliated companies, except:

	 	1.	 	when required by retrocessionaires subject to the business ceded to this Contract;
	 
	 	2.	 	when required by regulators performing an audit of the Reinsurer’s records and/or
financial condition; or
	 
	 	3.	 	when required by external auditors performing an audit of the Reinsurer’s records
in the normal course of business.

	 	 	Further, the Reinsurer agrees not to use any Confidential Information for any purpose not
related to the performance of its obligations or enforcement of its rights under this
Contract.
	 
	C.	 	Notwithstanding the above, in the event that the Reinsurer is required by court order, other
legal process or any regulatory authority to release or disclose any or all of the
Confidential Information, the Reinsurer agrees to provide the Company with written notice of
same at least 10 days prior to such release or disclosure and to use its best efforts to
assist the Company in maintaining the confidentiality provided for in this Article.
	 
	D.	 	The provisions of this Article shall extend to the officers, directors and employees of the
Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

			
	 	 	 
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ARTICLE 26

INDEMNIFICATION AND ERRORS AND OMISSIONS

	A.	 	The Reinsurer is reinsuring, to the amount herein provided, the obligations of the Company
under any original insurance or reinsurance. The Company shall be the sole judge as to:

	 	1.	 	what shall constitute a claim or loss covered under any original insurance or
reinsurance written by the Company;
	 
	 	2.	 	the Company’s liability thereunder;
	 
	 	3.	 	the amount or amounts that it shall be proper for the Company to pay thereunder.

	B.	 	The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and
liability(ies) of the Company under any original insurance or reinsurance.
	 
	C.	 	Except for the conditions as provided for in the Sunset Article of this Contract, any
inadvertent error, omission or delay in complying with the terms and conditions of this
Contract shall not be held to relieve either party hereto from any liability that would attach
to it hereunder if such error, omission or delay had not been made, provided such error,
omission or delay is rectified immediately upon discovery.

ARTICLE 27

INSOLVENCY

	A.	 	If more than one reinsured company is referenced within the definition of “Company” in the
Preamble to this Contract, this Article will apply severally to each such company. Further,
this Article and the laws of the domiciliary state will apply in the event of the insolvency
of any company covered hereunder. In the event of a conflict between any provision of this
Article and the laws of the domiciliary state of any company covered hereunder, that
domiciliary state’s laws will prevail.
	 
	B.	 	In the event of the insolvency of the Company, this reinsurance (or the portion of any risk
or obligation assumed by the Reinsurer, if required by applicable law) shall be payable
directly to the Company, or to its liquidator, receiver, conservator or statutory successor,
either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed
and allowed in the liquidation proceeding, whichever may be required by applicable statute,
without diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay all or a portion
of any claim. It is agreed, however, that the liquidator, receiver, conservator or statutory
successor of the Company shall give written notice to the Reinsurer of the pendency of a claim
against the Company indicating the Policy or bond reinsured, which claim would involve a
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	 	 	time after such claim is filed in the conservation or liquidation proceeding or in the
receivership, and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding where such claim is to be
adjudicated any defense or defenses that it may deem available to the Company or its
liquidator, receiver, conservator or statutory successor. The expense thus incurred by the
Reinsurer shall be chargeable, subject to the approval of the court, against the Company as
part of the expense of conservation or liquidation to the extent of a pro rata share of the
benefit that may accrue to the Company solely as a result of the defense undertaken by the
Reinsurer.

	C.	 	Where two or more reinsurers are involved in the same claim and a majority in interest elect
to interpose defense to such claim, the expense shall be apportioned in accordance with the
terms of this reinsurance Contract as though such expense had been incurred by the Company.
	 
	D.	 	As to all reinsurance made, ceded, renewed or otherwise becoming effective under this
Contract, the reinsurance shall be payable as set forth above by the Reinsurer to the Company
or to its liquidator, receiver, conservator or statutory successor, (except as provided by
Section 4118(a)(l)(A) of the New York Insurance Law, provided the conditions of 1114(c) of
such law have been met, if New York law applies) or except (1) where the Contract specifically
provides another payee in the event of the insolvency of the Company, or (2) where the
Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy
obligations of the Company as direct obligations of the Reinsurer to the payees under such
Policies and in substitution for the obligations of the Company to such payees. Then, and in
that event only, the Company, with the prior approval of the certificate of assumption on New
York risks by the Superintendent of Insurance of the State of New York, or with the prior
approval of such other regulatory authority as may be applicable, is entirely released from
its obligation and the Reinsurer shall pay any loss directly to payees under such Policy.

ARTICLE 28

ARBITRATION

	A.	 	Any dispute arising out of the interpretation, performance or breach of this Contract,
including the formation or validity thereof, shall be submitted for decision to a panel of
three arbitrators. Notice requesting arbitration will be in writing and sent certified
registered mail, return receipt requested.
	 
	B.	 	One arbitrator shall be chosen by each party and the two arbitrators shall, before
instituting the hearing, choose an impartial third arbitrator who shall preside at the
hearing. If either party fails to appoint its arbitrator within 30 days after being requested
to do so by the other party, the latter, after 10 days’ notice by certified or registered mail
of its intention to do so, may appoint the second arbitrator.

			
	 	 	 
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	C.	 	If the two arbitrators are unable to agree upon the third arbitrator within 30 days of their
appointment, the third arbitrator shall be selected by the American Arbitration Association.
	 
	D.	 	All arbitrators shall be disinterested active or former executives of insurance or
reinsurance companies or Underwriters at Lloyd’s, London, with expertise or experience in the
area being arbitrated. If a member of the panel dies, becomes disabled or is otherwise
unwilling or unable to serve, a substitute shall be selected in the same manner as the
departing member was chosen and the arbitration shall continue.
	 
	E.	 	Within 45 days after notice of appointment of all arbitrators, the panel shall meet and
determine timely periods for briefs, discovery procedures and schedules for hearings.
	 
	F.	 	The panel shall be relieved of all judicial formality and shall not be bound by the strict
rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract,
the arbitrators may at their discretion, consider underwriting and placement information
provided by the Company to the Reinsurer, as well as any correspondence exchanged by the
parties that is related to this Contract. Unless the panel agrees otherwise, arbitration shall
take place in Fort Lauderdale, Florida, but the venue may be changed when deemed by the panel
to be in the best interest of the arbitration proceeding. The decision of any two arbitrators
when rendered in writing shall be final and binding. The panel is empowered to grant interim
relief, as it may deem appropriate.
	 
	G.	 	The panel shall make its decision considering the custom and practice of the applicable
insurance and reinsurance business within 60 days following the termination of the hearings.
Judgment upon the award may be entered in any court having jurisdiction thereof.
	 
	H.	 	At the Company’s sole option, if more than one Subscribing Reinsurer is involved in
arbitration where there are common questions of law or fact and a possibility of conflicting
awards or inconsistent results, all such Subscribing 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 Subscribing Reinsurers constituting the one party; provided, however, that
nothing herein shall impair the rights of such Subscribing Reinsurers to assert several,
rather than joint defenses or claims, nor be construed as changing the liability of the
Subscribing Reinsurers under the terms of this Contract from several to joint (if
applicable).
	 
	I.	 	If more than one of the Subscribing Reinsurers are involved in an arbitration as respondent,
the time for the appointment of their party-appointed arbitrator shall be extended to 60
days. This provision shall not change the liability of each of the Subscribing Reinsurers
under the terms of this Contract from several to joint.
	 
	J.	 	Each party shall bear the expense of its own arbitrator and shall jointly and equally bear
with the other party the cost of the third arbitrator. The remaining costs of the arbitration
shall be allocated by the panel. The panel may, at its discretion, award such further costs

			
	 	 	 
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2175-10-0005
	 	DOC: July 25, 2008

27 of 32 

 

GUY CARPENTER

	 	 	and expenses as it considers appropriate, including but not limited to attorneys’ fees, to the
extent permitted by law.

ARTICLE 29

SERVICE OF SUIT

	A.	 	This Article applies only to those Subscribing Reinsurers not domiciled in the
United States of America, and/or not authorized in any state, territory and/or
district of the United States
of America where authorization is required by insurance regulatory authorities.
	 
	B.	 	This Article shall not be read to conflict with or override the obligations of the
parties to arbitrate their disputes as provided for in the Arbitration Article. This
Article is intended as an aid to compelling arbitration or enforcing such
arbitration or arbitral award, not as an alternative to the Arbitration Article for
resolving disputes arising out of this Contract.
	 
	C.	 	In the event of the failure of the Reinsurer to pay any amount claimed to be due
hereunder, the Reinsurer, at the request of the Company, shall submit to the
jurisdiction of a court of competent jurisdiction within the United States. Nothing
in this Article constitutes or should be understood to constitute a waiver of the
Reinsurer’s rights to commence an action in any court of competent jurisdiction in
the United States, to remove an action to a United States District Court, or to seek
a transfer of a case to another court as permitted by the laws of the United States
or of any state in the United States. The Reinsurer, once the appropriate court is
selected, whether such court is the one originally chosen by the Company and
accepted by Reinsurer or is determined by removal, transfer, or otherwise, as
provided for above, shall comply with all requirements necessary to give said court
jurisdiction and, in any suit instituted against the Reinsurer upon this Contract,
shall abide by the final decision of such court or of any appellate court in the
event of an appeal.
	 
	D.	 	Service of process in such suit may be made upon Messrs. Mendes and Mount, 750
Seventh Avenue, New York, New York 10019-6829, or another party specifically
designated in the applicable Interests and Liabilities Agreement attached hereto.
The above-named are authorized and directed to accept service of process on behalf
of the Reinsurer in any such suit.
	 
	E.	 	Further, pursuant to any statute of any state, territory or district of the United
States that makes provision therefor, the Reinsurer hereby designates the
Superintendent, Commissioner or Director of Insurance, or other officer specified
for that purpose in the statute, or his successor or successors in office, as its
true and lawful attorney upon whom may be served any lawful process in any action,
suit or proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Contract, and hereby designates the above-named as the
person to whom the said officer is authorized to mail such process or a true copy
thereof.

			
	 	 	 
	Effective: July 1, 2008

2175-10-0005
	 	DOC: July 25, 2008

28 of 32 

 

GUY CARPENTER

ARTICLE 30

AGENCY

For purposes of sending and receiving notices and payments required by this Contract, Guarantee
Insurance Company shall be deemed the agent of all other reinsured Companies referenced in this
Contract. In no event, however, shall any reinsured Company be deemed the agent of another with
respect to the terms of the Insolvency Article.

ARTICLE 31

GOVERNING LAW

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

ARTICLE 32

ENTIRE AGREEMENT

This Contract sets forth all of the duties and obligations between the Company and the Reinsurer
and supersedes any and all prior or contemporaneous written agreements with respect to matters
referred to in this Contract. The Contract may not be modified or changed except by an amendment
to this Contract in writing signed by both parties.

ARTICLE 33

INTERMEDIARY

Guy Carpenter & Company, LLC, is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including notices, statements, premiums, return
premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages, and loss settlements)
relating thereto shall be transmitted to the Company or the Reinsurer through Guy Carpenter &
Company, LLC, 3600 Minnesota Drive, Suite 400, Edina, Minnesota 55435. Payments by the Company to
the Intermediary shall be deemed payment to the Reinsurer. Payments by the Reinsurer to the
Intermediary shall be deemed payment to the Company only to the extent that such payments are
actually received by the Company.

			
	 	 	 
	Effective: July 1, 2008

2175-10-0005
	 	DOC: July 25, 2008

29 of 32 

 

GUY CARPENTER

ARTICLE 34

MODE OF EXECUTION

	A.	 	This Contract may be executed by:

	 	1.	 	an original written ink signature of paper documents;
	 
	 	2.	 	an exchange of facsimile copies showing the original written ink signature of
paper documents;
	 
	 	3.	 	electronic signature technology employing computer software and a digital
signature or digitizer pen pad to capture a person’s handwritten signature in such a
manner that the signature is unique to the person signing, is under the sole control of
the person signing, is capable of verification to authenticate the signature and is
linked to the document signed in such a manner that if the data is changed, such
signature is invalidated.

	B.	 	The use of any one or a combination of these methods of execution shall constitute a
legally binding and valid signing of this Contract. This Contract may be executed in one or
more counterparts, each of which, when duly executed, shall be deemed an original.

IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly authorized
representative(s) this 12 day of August, in the year of 2008.

Signed in Fort Lauderdale, Florida

	 	 	 	 	 	 	 
	ATTEST:	 	GUARANTEE INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 
	/s/ Simone O. Resende
 

	 	By:
	 	/s/ [ILLEGIBLE]
 

	 	 
	 
	Broward County, Florida
	 	Title: 	 	CUO

 

	 	 
	 	 	Reference:	 	 	 
	 

	 	 	 	 

	 	 

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective: July 1, 2008

2175-10-0005
	 	DOC: July 25, 2008

30 of 32 

 

GUY CARPENTER

NUCLEAR RISK EXCLUSION

This Agreement does not apply to “Ultimate Net Loss” arising from, whether directly or indirectly,
whether proximate or remote:

	 	a)	 	Any Nuclear Facility, Nuclear Hazard or Nuclear Reactor;
	 
	 	b)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear Radiation
or radioactive contamination, all whether controlled or uncontrolled; or
	 
	 	c)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear Radiation
or radioactive contamination, all whether controlled or uncontrolled, caused directly or
indirectly by, contributed to or aggravated by an Event;
	 
	 	d)	 	Any Spent Fuel or Waste;

	 
	 	e)	 	Any Fissionable Substance; or
	 
	 	f)	 	Any nuclear device or bomb.

As used in this Exclusion:

“Fissionable Substance” means;

	 	 	 	any prescribe substance that is, or from which can be obtained, a substance capable of
releasing atomic energy by nuclear fission.

“Nuclear Facility” means;

	 	 	 	any Nuclear Reactor,
	 
	 	 	 	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;
	 
	 	 	 	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;
	 
	 	 	 	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,

			
	 	 	 
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2175-10-0005
	 	DOC: July 25, 2008

31 of 32 

 

GUY CARPENTER

	 	 	 	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 premised 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;
	 
	 	 	 	any structure, basin, excavation, premises or place prepared or used for the storage
or disposal of Waste or Radioactive Material, and includes the site on which any of
the foregoing is located, all operations conducts on such site and all premises used
for such operations;

“Nuclear Hazard” means: the radioactive, toxic, explosive or other hazardous properties of Radioactive Material or Nuclear Material.

“Nuclear Material” means Source Material, Special Nuclear Material or Byproduct Material.

“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.

“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.

“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 sued or
exposed to radiation in the Nuclear Reactor.

“Waste” means any waste material (i) containing Byproduct Material and (ii) resulting from the
operation by any person or organization of any Nuclear Facility.

			
	 	 	 
	Effective: July 1, 2008
2175-10-0005	 	DOC: July 25, 2008

32 of 32 

 

GUY CARPENTER

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

MAX BERMUDA LTD.

(the “Subscribing Reinsurer”)

as respects the

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT
Effective July 1, 2008
(the “Contract”)

issued to and executed by

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth in
the Contract shall be      25.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in
respect of the Contract shall be separate and apart from the shares of other subscribing
reinsurers, if any, on the Contract. The interests and liabilities of the Subscribing Reinsurer
shall not be joint with those of such other subscribing reinsurers and in no event shall the
Subscribing Reinsurer participate in the interests and liabilities of such other subscribing
reinsurers.

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special
Termination Article and all other terms and conditions of the Contract.

Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(l) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.

Brokerage for Guy Carpenter (US) hereunder
is 10.00% of gross ceded premium.

The
brokerage rate on reinstatement premium shall be 50.00% of the above rate.

			
	 	 	 
	Effective: July 1, 2008
2175-10-0005	 	DOC: July 25, 2008

1 of 2

 

GUY CARPENTER

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be executed by its duly
authorized representative as follows:

on this 30th day of July, in the year 2008.

MAX BERMUDA LTD.

/s/ [ILLEGIBLE]                 
                                      
                                      /s/ [ILLEGIBLE]
                                      

 

Market Reference Number: 21604

GUARANTEE INSURANCE COMPANY

including any and/or all companies that are or may hereafter become affiliated therewith

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective: July 1, 2008
2175-10-0005	 	DOC: July 25, 2008

2 of 2

 

GUY CARPENTER

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

TOKIO MILLENNIUM REINSURANCE LIMITED

(the “Subscribing Reinsurer”)

as respects the

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

Effective: July 1, 2008

(the “Contract”)

issued to and executed by

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth
in the Contract shall be      25.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect
of the Contract shall be separate and apart from the shares of other subscribing reinsurers, if
any, on the Contract. The interests and liabilities of the Subscribing Reinsurer shall not be joint
with those of such other subscribing reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of such other subscribing reinsurers.

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special
Termination Article and all other terms and conditions of the Contract.

Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(l) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.

Brokerage for Guy Carpenter
(US) hereunder is 10.00% of gross ceded premium.

The brokerage rate on reinstatement premium shall be 50.00% of the above rate.

			
	 	 	 
	Effective: July 1, 2008
2175-10-0005	 	DOC: July 25, 2008

1 of 2

 

GUY CARPENTER

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be executed by its duly
authorized representative as follows:

on this 11thday of
August, in the year 2008.

TOKIO MILLENNIUM REINSURANCE LIMITED

/s/ [ILLEGIBLE]

 

Market Reference Number:     510052/01/2008                    

GUARANTEE INSURANCE COMPANY

including any and/or all companies that are or may hereafter become affiliated therewith

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective: July 1, 2008
2175-10-0005	 	DOC: July 25, 2008

2 of 2

 

GUY CARPENTER

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

CERTAIN UNDERWRITING MEMBERS OF LLOYD’S, LONDON, ON WHOSE

BEHALF THIS AGREEMENT HAS BEEN SIGNED.

(AS PER SCHEDULE ATTACHED HERETO)

(the “Subscribing Reinsurer”)

as respects the

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

Effective: July 1, 2008

(the “Contract”)

issued to and executed by

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth
in the Contract shall be      25.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect
of the Contract shall be separate and apart from the shares of other subscribing reinsurers, if
any, on the Contract. The interests and liabilities of the Subscribing Reinsurer shall not be joint
with those of such other subscribing reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of such other subscribing reinsurers.

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special
Termination Article and all other terms and conditions of the Contract.

Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(l) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.

			
	 	 	 
	Effective: July 1, 2008
2175-10-0005	 	DOC: July 25, 2008

1 of 2

 

GUY CARPENTER

Brokerage for this Contract is 15.00% of gross ceded premium, of which 10.00% is for Guy Carpenter
(US) and 5.00% is for Guy Carpenter & Company Limited, as London correspondent broker.

No brokerage will be paid on reinstatement premium.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be executed by its duly
authorized representative as follows:

on this 11th day of
August, in the year 2008.

CERTAIN UNDERWRITING MEMBERS OF LLOYD’S, LONDON, ON WHOSE

BEHALF THIS AGREEMENT HAS BEEN SIGNED.

(AS PER SCHEDULE ATTACHED HERETO)

      

GUARANTEE INSURANCE COMPANY

including any and/or all companies that are or may hereafter become affiliated therewith

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective: July 1, 2008
2175-10-0005 (London)	 	DOC: August 7, 2008

2 of 2

 

     Now Know He that We the Underwriters, Members of the Syndicates whose definitive
numbers in the after-mentioned List of Underwriting Members of Lloyd’s are set out in the attached
Table, hereby bind ourselves each for his own part and not one for another, our Executors and
Administrators, and in respect of his due proportion only, to pay or make good to the Assured or to
the Assured’s Executors or Administrators or to indemnify him or them against all such loss,
[ILLEGIBLE] the [ILLEGIBLE]

	 	 	 	 	 
	BUREAU REFERENCE
	 	61463 29/07/08
	 	BROKER NUMBER 0775
	PROPORTION

%
	 	SYNDICATE
	 	UNDERWRITER’S REFERENCE
	10.7144
	 	4472
	 	1149090108FC
	7.1428
	 	2987
	 	BA442508B000
	7.1428
	 	1955
	 	000938102108
	TOTAL LINE
	 	No. OF SYNDICATES	 	 
	25.0000
	 	3	 	 

THE LIST OF UNDERWRITING MEMBERS

OF LLOYDS IS IN RESPECT OF 2008
YEAR OF ACCOUNT

Page 1 of 1

 

 

     Now
Know Ye that We the Underwriters, Members of the Syndicates whose definitive numbers in
the after-mentioned List of Underwriting Members of Lloyd’s are set out in the attached Table,
hereby bind ourselves each for his own part and not one for another, our Executors and
Administrators, and in respect of his due proportion only, to pay or make good to the Assured or to
the Assured’s Executors or Administrators or to indemnify him or them against all such loss, image
or liability as herein provided, such payment to be made after such loss, damage or liability is
proved and the due proportion for which each of us, the underwriters, is liable shall be
ascertained by reference to his share, as shown in the said List, of the Amount, Percentage or
Proportion of the total sum insured [ILLEGIBLE] reunder which is in the Table set opposite the
definitive number of the Syndicate of which such Underwriter is a Member AND FURTHER THAT the List
of underwriting Members of Lloyd’s referred to above shows their respective Syndicates and Shares
therein, is deemed to be incorporated in and to form part of [ILLEGIBLE] policy, bears the
number specified in the attached Table and is available for inspection at Lloyd’s Policy Signing
Office by the Assured or his or their presentatives and a true copy of the material parts of the
said List certified by the General Manager of Lloyd’s Policy Signing Office will be furnished to
the [ILLEGIBLE] on application.

     In Witness whereof the General Manager of Lloyd’s Policy Signing Office has subscribed his
name of behalf of each of us. [ILLEGIBLE])

LLOYD’S POLICY SIGNING OFFICE,

R.C. [ILLEGIBLE]

General Manager

Definitive Numbers of Syndicates and
Amount, Percentage or Proportion of the
Total Sum insured hereunder shared
between the Members of those
Syndicates.

 

 

GUY CARPENTER

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

CERTAIN INSURANCE COMPANIES ON WHOSE BEHALF THIS AGREEMENT

HAS BEEN SIGNED

(AS PER SCHEDULE ATTACHED HERETO)

(the “Subscribing Reinsurer”)

as respects the

THIRD WORKERS’ COMPENSATION EXCESS OF LOSS
REINSURANCE CONTRACT

Effective: July 1, 2008

(the “Contract”)

issued to and executed by

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth
in the Contract shall be      25.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in respect
of the Contract shall be separate and apart from the shares of other subscribing reinsurers, if
any, on the Contract. The interests and liabilities of the Subscribing Reinsurer shall not be joint
with those of such other subscribing reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of such other subscribing reinsurers.

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special
Termination Article and all other terms and conditions of the Contract.

Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account in
accordance with Section 32.3(a)(l) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.

			
	 	 	 
	Effective: July 1, 2008
2175-10-0005 (London)	 	DOC: August 7, 2008

 1 of 2 

 

GUY CARPENTER

Brokerage for this Contract is 15.00% of gross ceded premium, of which 10.00% is for Guy Carpenter
(US) and 5.00% is for Guy Carpenter & Company Limited, as London correspondent broker.

No brokerage will be paid on reinstatement premium.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be executed by its duly
authorized representative as follows.

on this
11th day of
August, in the year 2008.

CERTAIN INSURANCE
COMPANIES ON WHOSE BEHALF THIS AGREEMENT

HAS BEEN SIGNED (AS PER SCHEDULE ATTACHED HERETO)

      

GUARANTEE INSURANCE COMPANY

including any and/or all companies that are or may hereafter become affiliated therewith

THIRD
WORKERS’ COMPENSATION EXCESS OF LOSS
REINSURANCE CONTRACT

			
	 	 	 
	Effective: July 1, 2008

2175-10-0005 (London)
	 	DOC: August 7, 2008

 2 of 2 

 

	 	 	 	 	 
	BUREAU REFERENCE

	 	 	 	0807250004213 
	PROPORTION

	 	CODE
	 	MEMBER COMPANY AND REFERENCE
	%

25.0000000
	 	

A8408	 	

ASPEN INSURANCE UK LIMITED
U07433608A0X
	 
	 	 	 	 
	25.0000000 %

	 	TOTAL	 	 

 

 

IS7-0/0/03

Companies
Treaty Attestation Clause

We the Reinsurers, hereby severally agree to reinsure the Reinsured in the manner and proportions
set forth in this reinsurance contract.

The subscribing Reinsurers’ obligations under this contract are several and not joint and are
limited solely to the extent of their individual signed
subscriptions. The subscribing Reinsurers are not responsible for the subscription of any
co-subscribing Reinsurer who for any reason does not satisfy all or part of its obligations.

In Witness whereof the name of the Managing Director of Ins-sure Services Limited is subscribed on
behalf of each of the Reinsurers in accordance
with the Provisions of the Services Agreement that each of the Reinsurers has with London
Processing Centre Limited (a wholly owned subsidiary of Ins sura services Limited).

/s/ [ILLEGIBLE]
Managing Director

This wording is not valid unless it bears the signature of the Managing Director of Ins-sure
Services Limited.exv10w50

Exhibit 10.50

GUY CARPENTER

TRADITIONAL WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

issued to

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

			
	 	 	 
	Effective: July 1, 2008

2175-10-0002
	 	DOC: August 8, 2008

1 of 35

 

GUY CARPENTER

TRADITIONAL WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Article	 	 	 	Page
	 

	 	Preamble
	 	 	4	 
	1

	 	Business Covered
	 	 	4	 
	2

	 	Retention and Limit
	 	 	4	 
	3

	 	Term
	 	 	5	 
	4

	 	Special Termination
	 	 	6	 
	5

	 	Territory
	 	 	7	 
	6

	 	Exclusions
	 	 	7	 
	7

	 	Special Acceptance
	 	 	9	 
	8

	 	Premium
	 	 	10	 
	9

	 	Other Reinsurance
	 	 	10	 
	10

	 	Definitions
	 	 	10	 
	11

	 	Extra Contractual Obligations/Excess of Policy Limits
	 	 	12	 
	12

	 	Net Retained Liability
	 	 	13	 
	13

	 	Original Conditions
	 	 	14	 
	14

	 	No Third Party Rights
	 	 	14	 
	15

	 	Notice of Loss and Loss Settlements
	 	 	14	 
	16

	 	Commutation
	 	 	15	 
	17

	 	Sunset
	 	 	16	 
	18

	 	Late Payments
	 	 	16	 
	19

	 	Currency
	 	 	18	 
	20

	 	Unauthorized Reinsurance
	 	 	18	 
	21

	 	Taxes
	 	 	20	 
	22

	 	Access to Records
	 	 	21	 
	23

	 	Confidentiality
	 	 	21	 
	24

	 	Indemnification and Errors and Omissions
	 	 	22	 
	25

	 	Insolvency
	 	 	22	 
	26

	 	Arbitration
	 	 	24	 
	27

	 	Service of Suit
	 	 	25	 
	28

	 	Agency
	 	 	26	 
	29

	 	Governing Law
	 	 	26	 
	30

	 	Entire Agreement
	 	 	26	 
	31

	 	Intermediary
	 	 	27	 
	32

	 	Mode of Execution
	 	 	27	 
	 

	 	Company Signing Block
	 	 	28	 

			
	 	 	 
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TRADITIONAL WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	Attachments	 	 	 	Page
	 

	 	Nuclear Risk Exclusion
	 	 	29	 
	 

	 	Terrorism Exclusion
	 	 	31	 
	 

	 	Specific Business Operations Exclusion
	 	 	32	 

			
	 	 	 
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TRADITIONAL WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

(the “Contract”)

issued to

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

by

THE SUBSCRIBING REINSURER(S) IDENTIFIED

IN THE INTERESTS AND LIABILITIES AGREEMENT(S)

ATTACHED TO AND FORMING PART OF THIS CONTRACT

(the “Reinsurer”)

ARTICLE 1

BUSINESS COVERED

This Contract is to indemnify the Company in respect of the liability that may accrue to the
Company as a result of loss or losses under Policies classified by the Company as Traditional
Workers’ Compensation (Section A) and/or Employers Liability (Section B), and Policies classified
by the Company as Preferred Agency Captive business covering Traditional Workers’ Compensation
(Section A) and/or Employers Liability (Section B) exposures, written or renewed during the term of
this Contract by or on behalf of the Company, subject to the terms and conditions herein contained.

ARTICLE 2

RETENTION AND LIMIT

	A.	 	As respects Section A, the Reinsurer shall be liable in respect of each Loss Occurrence, for
the Ultimate Net Loss over and above an initial Ultimate Net Loss of $1,000,000, each Loss
Occurrence, subject to a limit of liability to the Reinsurer of $4,000,000 each Loss
Occurrence.

			
	 	 	 
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	B.	 	As respects Section B:

	 	1.	 	For all New York risks only, the Reinsurer shall be liable in respect of each
Loss
Occurrence, for the Ultimate Net Loss over and above an initial Ultimate Net Loss of
$750,000, each Loss Occurrence, subject to a limit of liability to the Reinsurer of
$4,250,000 each Loss Occurrence.
	 
	 	2.	 	For all non-New York risks only, the Reinsurer shall be liable in respect of each
Loss
Occurrence, for the Ultimate Net Loss over and above an initial Ultimate Net Loss of
$750,000, each Loss Occurrence, subject to a limit of liability to the Reinsurer of
$1,250,000 each Loss Occurrence.

	C.	 	In addition to the retentions in paragraphs A and B above, the Company shall retain
$1,000,000 of aggregate Ultimate Net Loss for Loss Occurrences (i.e., the total of excess
losses otherwise recoverable under paragraphs A and/or B above) subject to this Contract.
	 
	D.	 	If one Loss Occurrence involves losses allocated to this Contract and its predecessor or
successor contract, the Company’s retention for the Loss Occurrence shall
be
proportionate, with the amount of Ultimate Net Loss to be retained by the Company for
each contract being reduced to that percentage which the Company’s Ultimate Net Loss
attaching to each contract bears to the total of all the Company’s Ultimate Net Loss in
respect of the same Loss Occurrence. The limit of the Reinsurer’s liability shall be
calculated in the same manner.

ARTICLE 3

TERM

	A.	 	This Contract shall take effect at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 applying to Loss Occurrences commencing at or after that time and date on
Policies written or renewed during the term of this Contract, and shall remain in effect until
12:01 a.m., Local Standard Time at the place of the loss, July 1, 2009.
	 
	B.	 	The Reinsurer shall have no liability for Loss Occurrences commencing at or after
expiration or termination (as provided in the Special Termination Article) of this Contract.
	 
	C.	 	However, at the Company’s option, the Reinsurer shall remain liable hereunder in respect
of Policies in force prior to expiration or termination, until the termination, natural
expiration or renewal of such Policies, whichever occurs first. In such event, the Company
shall pay to the Reinsurer an additional premium equal to the rate set forth in the Premium
Article, multiplied by the Gross Net Earned Premium Income during the run-off period,
payable within 30 days after the end of each quarter.

			
	 	 	 
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	D.	 	In the event this Contract expires or terminates on a run-off basis, the Reinsurer’s
liability hereunder shall continue if the Company is required by statute or regulation to
continue coverage, until the earliest date on which the Company may cancel the Policy.

ARTICLE 4

SPECIAL TERMINATION

	A.	 	The Company may terminate a Subscribing Reinsurer’s percentage share in this Contract at any
time by giving 30 days’ written notice to the Subscribing Reinsurer by certified or
registered mail in the event of any of the following circumstances:

	 	1.	 	The Subscribing Reinsurer ceases underwriting operations.
	 
	 	2.	 	A state insurance department or other legal authority orders the Subscribing
Reinsurer
to cease writing business, or the Subscribing Reinsurer is placed under regulatory
supervision.
	 
	 	3.	 	The Subscribing Reinsurer has become insolvent or has been placed into liquidation
or receivership (whether voluntary or involuntary), or there have been instituted
against it proceedings for the appointment of a receiver, liquidator, rehabilitator,
conservator, trustee in bankruptcy, or other agent known by whatever name, to take
possession of its assets or control of its operations.
	 
	 	4.	 	The Subscribing Reinsurer’s policyholders’ surplus (or the equivalent under the
Subscribing Reinsurer’s accounting system) as reported in such financial statements
of the Subscribing Reinsurer as designated by the Company, has been reduced by
20% of the amount thereof at any date during the prior 12-month period (including
the period prior to the inception of this Contract).
	 
	 	5.	 	The Subscribing Reinsurer has merged with or has become acquired or controlled by
any company, corporation, or individual(s) not controlling the
Subscribing
Reinsurer’s operations at the inception of this Contract. However, this provision shall
not apply where the acquiring or surviving company, corporation or individual(s)
have a Standard & Poors and A.M. Best rating equal to or higher than the Subscribing
Reinsurer had on the effective date of this Contract.
	 
	 	6.	 	The Subscribing Reinsurer has retroceded its entire liability under this Contract
without the Company’s prior written consent.
	 
	 	7.	 	The Subscribing Reinsurer has been assigned an A.M. Best’s rating of less than “A-”
and/or an S&P rating of less than “BBB+.” However, as respects Underwriting
Members of Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M.
Best and/or less than “BBB+” by S&P shall apply.

			
	 	 	 
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	B.	 	Termination shall be effected on a run-off or cut-off basis as set forth in the Term Article,
at the sole discretion of the Company. The reinsurance premium due the Subscribing
Reinsurer hereunder (including any minimum reinsurance premium) shall be pro rated
based on the period of the Subscribing Reinsurer’s participation hereon, and the
Subscribing Reinsurer shall immediately return any excess reinsurance premium received.
In the event that the Subscribing Reinsurer is terminated on a cut-off basis, the minimum
reinsurance premium shall be waived. Reinstatement premium, if any, shall be calculated
based on the Subscribing Reinsurer’s reinsurance premium earned during the period of the
Subscribing Reinsurer’s participation hereon.
	 
	C.	 	Additionally, in the event of any of the circumstances listed in paragraph A of this Article,
the Company shall have the option to commute the Subscribing Reinsurer’s liability for
losses on Policies covered by this Contract. In the event the Company and the Subscribing
Reinsurer cannot agree on the commutation amount, they shall appoint an actuary and/or
appraiser to assess such amount and shall share equally any expense of the actuary and/or
appraiser. If the Company and the Subscribing Reinsurer cannot agree on an actuary
and/or appraiser, the Company and the Subscribing Reinsurer each shall nominate three
individuals, of whom the other shall decline two, and the final appointment shall be made
by drawing lots. Payment by the Subscribing Reinsurer of the amount of liability
ascertained shall constitute a complete and final release of both parties in respect of
liability
arising from the Subscribing Reinsurer’s participation under this Contract.

	D.	 	The Company’s option to require commutation under paragraph C above shall survive the
termination or expiration of this Contract.

ARTICLE 5

TERRITORY

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

ARTICLE 6

EXCLUSIONS

	A.	 	This Contract shall not apply to and specifically excludes:

	 	1.	 	Assumed reinsurance, except 100% of business ceded by fronting insurance
companies.
	 
	 	2.	 	Liability of the Company arising by contract, operation of law, or otherwise, from
its
participation or membership, whether voluntary or involuntary, in any Insolvency
Fund. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool,
association, fund or other arrangement, howsoever denominated, established or

			
	 	 	 
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	 	 	 	governed, that provides for any assessment of or payment or assumption by the Company
of part or all of any claim, debt, charge, fee, or other obligation of an insurer, or
its successors or assigns, that has been declared by any competent authority to be
insolvent, or that is otherwise deemed unable to meet any claim, debt, charge, fee or
other obligation in whole or in part.
	 
	 	3.	 	Loss or liability accruing to the Company directly or indirectly from any insurance
written by or through any pool, association, or syndicate, including
pools,
associations, or syndicates in which membership by the Company is required under
any statutes or regulations.
	 
	 	4.	 	Loss or damage which is occasioned by war, invasion, hostilities, acts of foreign
enemies, civil war, rebellion, insurrection, military or usurped power, or martial law
or confiscation by order of any government or public authority. Nevertheless, this
Exclusion shall not apply to loss or damage occasioned by riots, strikes, civil
commotion, vandalism, and malicious damage.
	 
	 	5.	 	All loss or liability of the Company excluded by the “Nuclear Risk Exclusion”
attached hereto.
	 
	 	6.	 	Manufacturing, packaging, handling, shipping or storage of explosives, explosive
substances intended for use as an explosive, ammunitions, fuses, arms, or fireworks;
however, this exclusion shall not apply to the incidental packaging, handling or
storage of same in connection with the sale or transportation by owner operators of
such substances.
	 
	 	7.	 	Loss arising from professional sports teams.
	 
	 	8.	 	Aircraft owned or leased by the insured.
	 
	 	9.	 	Liability arising out of, or resulting as a consequence of, insureds principally
involved
in the manufacture, distribution, installation, testing, remediation, removal, storage,
disposal, sale, use of or exposure to asbestos.
	 
	 	10.	 	Railroads, except scenic railways, and access lines and industrial aid
owner
operations when written as an incidental part of an insured’s overall operations.
	 
	 	11.	 	Chemical or petrochemical manufacturing.
	 
	 	12.	 	Mining, either above or below ground.
	 
	 	13.	 	Loss arising from the intentional wrecking or demolition of buildings or structures
in
excess of three stories.
	 
	 	14.	 	Operations requiring coverage under the Defense Base Act, Admiralty Act or any
other federal act including but not limited to the Jones Act and Federal Employers

			
	 	 	 
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	 	 	 	Liability Act. United States Longshore and Harbor Workers’ Compensation Act is excluded
except where Incidental. “Incidental” as used in this exclusion means otherwise excluded
operations which are less than 10% of an individual insured’s total payroll.
	 
	 	15.	 	Terrorism per the attached Terrorism Exclusion.
	 
	 	16.	 	Professional Employment Organizations or Employee Leasing Organizations,
including temporary employment agencies. A “Professional Employment
Organization” or “Employee Leasing Organization” is defined as an organization that
performs various employee administration services on behalf of an employer by
contractually assuming substantial employer rights and responsibilities from the
employer including at a minimum the right to hire, assign and fire employees and the
responsibility to pay employee wages and employment taxes out of its own accounts.
	 
	 	17.	 	Business excluded by the attached Specific Business Operations Exclusion.

	B.	 	If the Company becomes involved in a risk excluded by the foregoing either by an existing insured
extending its operations or if the Company inadvertently issues a Policy falling within the scope
of one or more of the preceding exclusions, such Policy shall be covered hereunder, provided that
the Company issues, or causes to be issued, the required notice of cancellation within 30 days
after a member of the executive or managerial staff at the Company’s home office having
underwriting authority in the class of business involved becomes aware that the Policy applies to
excluded classes, unless the Company is prevented from canceling said Policy within such period by
applicable statute or regulation, in which case such Policy shall be covered hereunder until the
earliest date on which the Company may cancel.

ARTICLE 7

SPECIAL ACCEPTANCE

Business that is not within the scope of this Contract may be submitted to the Reinsurer for
special acceptance hereunder, and such business, if accepted by the Reinsurer shall be covered
hereunder, subject to the terms and conditions of this Contract, except as modified by the special
acceptance. Any renewal of a special acceptance agreed to for a predecessor contract to this
Contract shall automatically be covered hereunder.

			
	 	 	 
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ARTICLE 8

PREMIUM

	A.	 	The Company shall pay the Reinsurer a minimum and deposit premium of $1,647,632 for
the term of this Contract, to be paid in the amount of $411,908 on September 30 and
December 31, 2008, and March 31 and June 30, 2009.
	 
	B.	 	Within 90 days following the expiration of this Contract, the Company shall furnish to the
Reinsurer a statement of the Gross Net Earned Premium Income for the term of this
Contract and calculate a premium at a rate of 3.75%, multiplied by the Company’s Gross
Net Earned Premium Income. Should the premium so calculated exceed the minimum and
deposit premium paid in accordance with paragraph A of this Article, the Company shall
immediately pay the Reinsurer the difference.
	 
	C.	 	The Company shall furnish the Reinsurer with such information as may be required by the
Reinsurer for completion of its NAIC annual statements.

ARTICLE 9

OTHER REINSURANCE

The Company is permitted to have other treaty reinsurance, recoveries under which shall inure
solely to the benefit of the Company and shall be entirely disregarded in applying all of the
provisions of this Contract.

ARTICLE 10

DEFINITIONS

	A.	1.	 	“Ultimate Net Loss” means the actual loss paid by the Company or which the Company
becomes liable to pay, including structured settlements with claimants or outside insurers,
such loss to include Loss Adjustment Expense, Extra Contractual Obligations and Loss in
Excess of Policy Limits as defined in the Extra Contractual Obligations/Excess of Policy
Limits Article.

	 	2.	 	Salvages and all recoveries (including amounts due under all reinsurances that
inure
to the benefit of this Contract, whether recovered or not), shall be first deducted from
such loss to arrive at the amount of liability attaching hereunder.
	 
	 	3.	 	All salvages, recoveries or payments recovered or received subsequent to loss
settlement hereunder shall be applied as if recovered or received prior to the aforesaid
settlement, and all necessary adjustments shall be made by the parties hereto.

			
	 	 	 
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	 	4.	 	Ultimate Net Loss shall not be reduced by the amount of any deductibles, whether or
not recovered by the Company. “Deductibles” shall mean any insurance plan,
however denominated, where the insured participates in, and is responsible for,
reimbursing the Company for losses up to a specified limit.
	 
	 	5.	 	The Company shall be deemed to be “liable to pay” a loss when a judgment has been
rendered that the Company does not plan to appeal, and/or the Company has obtained
a release, and/or the Company has accepted a proof of loss.
	 
	 	6.	 	Nothing in this clause shall be construed to mean that losses are not recoverable
hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

	B.	 	“Loss Occurrence” means each and every disaster, casualty, accident, or loss or series of
disasters, casualties, accidents or losses arising out of one event. The Company shall be the
sole judge of what constitutes one event. As respects a Loss Occurrence involving
Occupational Disease or Other Disease or Cumulative Trauma, the following shall apply:

	 	1.	 	Per Event Coverage. As respects losses arising from Occupational Disease
or Other
Disease, regardless of the specific kind or class, suffered by employees of one or
more employers, all such losses sustained by the Company from one event not
exceeding 72 hours in duration shall, together with losses not classified as
Occupational Disease or Other Disease, be deemed to be a single “Loss Occurrence.”
	 
	 	2.	 	Per Employee Coverage. As respects losses arising from Occupational
Disease or
Other Disease or Cumulative Trauma suffered by a single employee, and not covered
under subparagraph (a) above, subject loss shall also be limited to events not
exceeding 72 hours in duration.
	 
	 	3.	 	Per Employer Coverage. As respects losses arising from Occupational
Disease or
Other Disease or Cumulative Trauma of the same specific kind or class, suffered by
multiple employees of the same employer, and not covered under subparagraphs (1)
or (2) above, all such losses sustained by the Company within a Policy year shall be
aggregated and considered as constituting one “Loss Occurrence” hereunder and the
inception date of the Policy year in which losses occur shall be deemed to be the date
of the Loss Occurrence.

	C.	 	“Gross Net Earned Premium Income” means gross earned manual premium for Policies
covered hereunder adjusted for experience and schedule credit/debit modifications,
State/NCCI safety credit and other allowable credits, premium discount, deductible credits,
expense constants and Policy fees, less the earned portion of premiums for Policies covered
hereunder ceded by the Company for reinsurance that inures to the benefit of this Contract,
if any.

			
	 	 	 
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	D.	 	“Loss Adjustment Expense” means costs and expenses incurred by the Company in
connection with the investigation, appraisal, adjustment, settlement, litigation, defense or
appeal of a specific claim or loss, or alleged loss, including but not limited to:

	 	1.	 	court costs;
	 
	 	2.	 	costs of supersedeas and appeal bonds;
	 
	 	3.	 	monitoring counsel expenses;
	 
	 	4.	 	legal expenses and costs incurred in connection with coverage questions and legal
actions connected thereto, including but not limited to declaratory judgment actions;
	 
	 	5.	 	post-judgment interest;
	 
	 	6.	 	pre-judgment interest, unless included as part of an award or judgment;
	 
	 	7.	 	a pro rata share of salaries and expenses of Company field employees, calculated in
accordance with the time occupied in adjusting such loss, and expenses of other
Company employees who have been temporarily diverted from their normal and
customary duties and assigned to the field adjustment of losses covered by this
Contract; and
	 
	 	8.	 	subrogation, salvage and recovery expenses.

“Loss Adjustment Expense” does not include salaries and expenses of the Company’s employees,
except as provided in subparagraph (7) above, and office and other overhead expenses.

	E.	 	“Policy(ies)” means any binder, policy, or contract of insurance or reinsurance issued,
accepted or held covered provisionally or otherwise, by or on behalf of the Company.
	 
	F.	 	“Occupational Disease,” “Other Disease” and “Cumulative Trauma” shall be defined by the
applicable state or federal statutes, regulations, or case law having jurisdiction over such
losses.

ARTICLE 11

EXTRA CONTRACTUAL OBLIGATIONS/EXCESS OF POLICY LIMITS

	A.	 	This Contract shall cover 90% of any Extra Contractual Obligations, as provided in the
definition of Ultimate Net Loss. “Extra Contractual Obligations” shall be defined as those
liabilities not covered under any other provision of this Contract and that 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
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	 	 	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.	 	This Contract shall cover 90% of any Loss in Excess of Policy Limits, as provided in the
definition of Ultimate Net Loss. “Loss in Excess of Policy Limits” shall be defined as Loss
in excess of the Policy limit, having been incurred because of, but not limited to, 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.
	 
	C.	 	An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to
have occurred on the same date as the loss covered under the Company’s Policy, and shall
constitute part of the original loss.
	 
	D.	 	For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word
“Loss” means any amounts for which the Company would have been contractually liable to
pay had it not been for the limit of the original Policy.
	 
	E.	 	Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in
Excess of Policy Limits shall be covered hereunder in the same manner as other Loss
Adjustment Expense.
	 
	F.	 	However, this Article shall not apply where the loss has been incurred due to final legal
adjudication of 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.
	 
	G.	 	In no event shall coverage be provided to the extent not permitted under law.

ARTICLE 12

NET RETAINED LIABILITY

	A.	 	This Contract applies only to that portion of any loss that the Company and/or its agents
retains net for its own account (prior to deduction of any reinsurance that inures solely to
the benefit of the Company).
	 
	B.	 	The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not
be increased by reason of the inability of the Company to collect from any other
reinsurer(s), whether specific or general, any amounts that may have become due from such
reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or
otherwise.

			
	 	 	 
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ARTICLE 13

ORIGINAL CONDITIONS

All reinsurance under this Contract shall be subject to the same terms, conditions, waivers and
interpretations, and to the same modifications and alterations as the respective Policies of the
Company. However, in no event shall this be construed in any way to provide coverage outside the
terms and conditions set forth in this Contract.

ARTICLE 14

NO THIRD PARTY RIGHTS

This Contract is solely between the Company and the Reinsurer, and in no instance shall any
insured, claimant or other third party have any rights under this Contract except as may be
expressly provided otherwise herein.

ARTICLE 15

NOTICE OF LOSS AND LOSS SETTLEMENTS

	A.	 	The Company shall advise the Reinsurer promptly 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.
Inadvertent omission or oversight in giving such notices shall in no way affect the liability
of the Reinsurer. However, the Reinsurer shall be informed of such omission or oversight
promptly upon its discovery.
	 
	B.	 	Such advises outlined in paragraph A above shall include any loss for which the reserve is
50% or more of the Company’s retention and, irrespective of the reserve or any question on
liability or coverage, any loss falling within the following categories:

	 	1.	 	Fatalities.
	 
	 	2.	 	Bodily injuries involving:

	 	a.	 	brain injuries resulting in impairment of physical functions;
	 
	 	b.	 	spinal injuries resulting in partial or total paralysis of
upper or lower
extremities;
	 
	 	c.	 	amputations or permanent loss of use of upper or lower extremities;

			
	 	 	 
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	 	d.	 	severe burn cases;
	 
	 	e.	 	all other injuries likely to result in a permanent disability rating of 50% or more.

	C.	 	The Reinsurer agrees to abide by the loss settlements of the Company, provided that
retroactive extension of Policy terms or coverages made by the Company will be covered
under this Contract only if made as a result of a court decision against the Company, or the
existence of a clear legal precedent in the form of a court decision against other companies
affording the same or similar coverages.
	 
	D.	 	When so requested, the Company will afford the Reinsurer an opportunity to be associated
with the Company, at the expense of the Reinsurer, in the defense of any claim or suit or
proceeding involving this reinsurance, and the Company will cooperate in every respect in
the defense of such claim, suit or proceeding.

ARTICLE 16

COMMUTATION

	A.	 	This Article will only take effect should the parties hereto mutually agree to commute one
or any number of the Workers’ Compensation losses under this Contract. There will be no
obligation on the part of either party to so commute.
	 
	B.	 	Should the Company become liable for any loss hereunder, and be required to make
periodic payments to or otherwise set up on its books reserves for such loss, at any time
after seven years following the date of such loss and upon mutual agreement of the
Company and the Reinsurer, said loss (including Loss Adjustment Expenses) may be
commuted. If the value of said loss, including amounts falling to the share of the
Reinsurer, cannot be agreed upon by the parties to this Contract, said value may be
determined by employing one of the following:

	 	1.	 	A present value calculation based on the following criteria:

	 	a.	 	In respect of all unindexed benefits, the present value calculation
shall be
determined based upon an annual discount equal to the five-year U.S. Treasury
note rate at the time of commutation.
	 
	 	b.	 	In respect of all future medical costs, the present value calculation
shall be
based upon the Company’s evaluation of long term medical care and
rehabilitation requirements, using an annual discount equal to the five-year U.S.
Treasury note rate at the time of commutation, and an annual escalation equal to
the Medical Care Consumer Price Index (CPI-MC) at the time of commutation.

			
	 	 	 
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	 	c.	 	Where applicable, impaired life expectancy, survivors’ life expectancy,
as well as remarriage probability shall be reflected in the calculation by
employing tables required by statute.

	 	2.	 	The Company may determine the present value by purchasing (or obtaining a quotation
for) an annuity from any A. M. Best’s Class VIII IIA+II rated or better annuity writer, with
an AAA rating by Standard & Poor’s.

	C.	 	The Reinsurer’s proportion of the amount determined will be considered its total liability
for such loss and the lump sum payment thereof shall constitute a complete release of both
parties from liability hereunder for the commuted losses.
	 
	D.	 	This Article shall survive the expiration or termination of this Contract.

ARTICLE 17

SUNSET

Notwithstanding the provisions of paragraph C of the Indemnification and Errors and Omissions
Article of this Contract, coverage hereunder shall apply only to Loss Occurrences notified by
Company to the Reinsurer, with full particulars, within 84 months from the effective date of this
Contract. Notice of an event shall include:

	 	1.	 	The approximate time and location of the Loss Occurrence.
	 
	 	2.	 	The date of loss as established under this Contract.
	 
	 	3.	 	The names of any original insureds that have been identified by the Company, at the
time of notice, as being involved in the Loss Occurrence.
	 
	 	4.	 	The current indemnity, medical and expense reserves delineated by the original
insured.
	 
	 	5.	 	The total payments made by the Company, delineated by original insured.

ARTICLE 18

LATE PAYMENTS

	A.	 	In the event any payment due either party is not received by the Intermediary by the payment
due date, the party to whom payment is due may, by notifying the Intermediary in writing,
require the debtor party to pay, and the debtor party agrees to pay, an interest penalty on
the amount past due calculated for each such payment on the last business day of each month
as follows:

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

Interest shall accumulate until payment of the original amount due plus interest penalties
has been received by the Intermediary.

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

	 	1.	 	Payments from the Reinsurer to the Company shall be due on the date on which the
demand for payment (including delivery of bordereaux or quarterly or monthly
reports) is received by the Reinsurer, and shall be overdue 30 days thereafter.
	 
	 	2.	 	Payments from the Company to the Reinsurer shall be due on the dates specified
within this Contract. Payments shall be overdue 30 days thereafter except for the first
installment of premium, if applicable, which shall be overdue 60 days from inception
or 30 days from final line-signing, whichever the later. Reinstatement premium, if
applicable, shall have as a due date the date when the Company receives payment for
the claim giving rise to such reinstatement premium, and payment shall be overdue
30 days thereafter. In the event a due date is not specifically stated for a given
payment, the overdue date shall be 30 days following the date of billing.

	C.	 	If the information contained in the Company’s demand for payment is insufficient or not in
accordance with the conditions of this Contract, then within 30 days the Reinsurer shall
request from the Company all additional information necessary to validate its claim and the
payment due date as defined in paragraph B shall be deemed to be the date upon which the
Reinsurer received the requested additional information. This paragraph is only for the
purpose of establishing when a payment is overdue, and shall not alter the provisions of the
Notice of Loss and Loss Settlements Article or other pertinent contractual stipulations.
	 
	D.	 	Should the Reinsurer dispute a claim presented by the Company and the timeframes set out
in paragraph B be exceeded, interest as stipulated in paragraph A shall be payable for the
entire overdue period, but only for the amount of the final settlement with the Reinsurer.
	 
	E.	 	In the event arbitration is necessary to settle a dispute, the panel shall have the authority
to
make a determination awarding interest to the prevailing party. Interest, if any, awarded by
the panel shall supersede the interest amounts outlined herein.
	 
	F.	 	Any interest owed pursuant to this Article may be waived by the party to which it is owed.
Waiver of such interest, however, shall not affect the waiving party’s rights to other
interest
amounts due as a result of this Article.

			
	 	 	 
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	G.	 	For purposes of this Article, reinsuring Underwriting Members of Lloyd’s, London, shall
be considered to be one entity.

ARTICLE 19

CURRENCY

	A.	 	Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean
United States Dollars.
	 
	B.	 	For purposes of this Contract, where the Company receives premiums or pays losses in
currencies other than United States Dollars, such premiums or losses shall be converted
into United States Dollars at the actual rates of exchange at the time of receipt or payment
by the Company.

ARTICLE 20

UNAUTHORIZED REINSURANCE

	A.	 	This Article applies only to a Subscribing Reinsurer who does not qualify for full credit
with any insurance regulatory authority having jurisdiction over the Company’s reserves.
	 
	B.	 	The Company agrees, in respect of its Policies or bonds falling within the scope of this
Contract, that when it files with its insurance regulatory authority, or sets up on its books
liabilities as required by law, it shall forward to the Reinsurer a statement showing the
proportion of such liabilities applicable to the Reinsurer. The “Reinsurer’s Obligations”
shall be defined as follows:

	 	1.	 	unearned premium (if applicable);
	 
	 	2.	 	known outstanding losses that have been reported to the Reinsurer and Loss
Adjustment Expense relating thereto;
	 
	 	3.	 	losses and Loss Adjustment Expense paid by the Company but not recovered from the
Reinsurer;
	 
	 	4.	 	losses incurred but not reported and Loss Adjustment Expense relating thereto.

	C.	 	The Reinsurer’s Obligations shall be funded by funds withheld, cash advances, Trust
Agreement or a Letter of Credit (LOC). The Reinsurer shall have the option of determining
the method of funding provided it is acceptable to the insurance regulatory authorities
having jurisdiction over the Company’s reserves.
	 
	D.	 	When funding by an LOC, the Reinsurer agrees to apply for and secure timely delivery to
the Company of a clean, irrevocable and unconditional LOC issued by a bank and

			
	 	 	 
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	 	 	containing provisions acceptable to the insurance regulatory authorities having jurisdiction
over the Company’s reserves in an amount equal to the Reinsurer’s Obligations. Such LOC shall
be issued for a period of not less than one year, and shall be automatically extended for one
year from its date of expiration or any future expiration date unless 30 days (or such other
time period as may be required by insurance regulatory authorities), prior to any expiration
date the issuing bank shall notify the Company by certified or registered mail that the
issuing bank elects not to consider the LOC extended for any additional period.
	 
	E.	 	The Reinsurer and the Company agree that any funding provided by the Reinsurer pursuant
to the provisions of this Contract may be drawn upon at any time, notwithstanding any
other provision of this Contract, and be utilized by the Company or any successor, by
operation of law, of the Company including, without limitation, any
liquidator,
rehabilitator, receiver or conservator of the Company, for the following purposes, unless
otherwise provided for in a separate Trust Agreement:

	 	1.	 	to reimburse the Company for the Reinsurer’s Obligations, the payment of which is
due under the terms of this Contract and that has not been otherwise paid;
	 
	 	2.	 	to make refund of any sum that is in excess of the actual amount required to pay
the
Reinsurer’s Obligations under this Contract (or in excess of 102% of the Reinsurer’s
Obligations, if funding is provided by a Trust Agreement);
	 
	 	3.	 	to fund an account with the Company for the Reinsurer’s Obligations. Such cash
deposit shall be held in an interest bearing account separate from the Company’s
other assets, and interest thereon not in excess of the prime rate shall accrue to the
benefit of the Reinsurer. Any taxes payable on accrued interest shall be paid out of
the assets in the account that are in excess of the Reinsurer’s Obligations (or in
excess
of 102% of the Reinsurer’s Obligations, if funding is provided by a Trust Agreement).
If the assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer;
	 
	 	4.	 	to pay the Reinsurer’s share of any other amounts the Company claims are due under
this Contract.

	F.	 	If the amount drawn by the Company is in excess of the actual amount required for E(l) or
E(3), or in the case of E(4), the actual amount determined to be due, the Company shall
promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be
applied without diminution because of insolvency on the part of the Company or the
Reinsurer.
	 
	G.	 	The issuing bank shall have no responsibility whatsoever in connection with the propriety
of withdrawals made by the Company or the disposition of funds withdrawn, except to
ensure that withdrawals are made only upon the order of properly
authorized
representatives of the Company.

			
	 	 	 
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	H.	 	At annual intervals, or more frequently at the discretion of the Company, but never more
frequently than quarterly, the Company shall prepare a specific statement of the Reinsurer’s
Obligations for the sole purpose of amending the LOC or other method of funding, in the
following manner:

	 	1.	 	If the statement shows that the Reinsurer’s Obligations exceed the balance of the
LOC as of the statement date, the Reinsurer shall, within 30 days after receipt of the
statement, secure delivery to the Company of an amendment to the LOC increasing
the amount of credit by the amount of such difference. Should another method of
funding be used, the Reinsurer shall, within the time period outlined above, increase
such funding by the amount of such difference.
	 
	 	2.	 	If, however, the statement shows that the Reinsurer’s Obligations are less than the
balance of the LOC (or that 102% of the Reinsurer’s Obligations are less than the
trust account balance if funding is provided by a Trust Agreement), as of the
statement date, the Company shall, within 30 days after receipt of written request
from the Reinsurer, release such excess credit by agreeing to secure an amendment to
the LOC reducing the amount of credit available by the amount of such excess credit.
Should another method of funding be used, the Company shall, within the time period
outlined above, decrease such funding by the amount of such excess.

ARTICLE 21

TAXES

	A.	 	 	In consideration of the terms under which this Contract is issued, the Company undertakes
not to claim any deduction of the premium hereon when making Canadian tax returns or
when making tax returns, other than Income or Profits Tax returns, to any state or territory
of the United States of America or to the District of Columbia.
	 
	B.	1.	 	Each Subscribing Reinsurer has agreed to allow, for the purpose of paying the Federal
Excise Tax, the applicable percentage of the premium payable hereon (as imposed under
the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

	 	2.	 	In the event of any return of premium becoming due hereunder, the Subscribing
Reinsurer shall deduct the applicable percentage of the premium from the amount of the
return, and the Company or its agent should take steps to recover the Tax from the U.S.
Government.

			
	 	 	 
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ARTICLE 22

ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to visit the offices of
the Company to inspect, examine, audit, and verify any of the Policy, accounting or claim files
(“Records”) relating to business reinsured under this Contract during regular business hours after
giving five working days’ prior notice. This right shall be exercisable during the term of this
Contract or after the expiration of this Contract. Notwithstanding the above, the Reinsurer shall
not have any right of access to the Records of the Company if it is not current in all undisputed
payments due the Company.

ARTICLE 23

CONFIDENTIALITY

	A.	 	The Reinsurer hereby acknowledges that the documents, information and data provided to
it by the Company, whether directly or through an authorized agent, in connection with the
placement and execution of this Contract (“Confidential Information”) are proprietary and
confidential to the Company. Confidential Information shall not include documents,
information or data that the Reinsurer can show:

	 	1.	 	are publicly known or have become publicly known through no unauthorized act of
the Reinsurer;
	 
	 	2.	 	have been rightfully received from a third person without
obligation of
confidentiality; or
	 
	 	3.	 	were known by the Reinsurer prior to the placement of this Contract without an
obligation of confidentiality.

	B.	 	Absent the written consent of the Company, the Reinsurer shall not disclose any
Confidential Information to any third parties, including any affiliated companies, except:

	 	1.	 	when required by retrocessionaires subject to the business ceded to this Contract;
	 
	 	2.	 	when required by regulators performing an audit of the Reinsurer’s records and/or
financial condition; or
	 
	 	3.	 	when required by external auditors performing an audit of the Reinsurer’s records
in
the normal course of business.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not
related to the performance of its obligations or enforcement of its rights under this
Contract.

			
	 	 	 
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	C.	 	Notwithstanding the above, in the event that the Reinsurer is required by court order, other
legal process or any regulatory authority to release or disclose any or all of the
Confidential
Information, the Reinsurer agrees to provide the Company with written notice of same at
least 10 days prior to such release or disclosure and to use its best efforts to assist the
Company in maintaining the confidentiality provided for in this Article.
	 
	D.	 	The provisions of this Article shall extend to the officers, directors and employees of the
Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 24

INDEMNIFICATION AND ERRORS AND OMISSIONS

	A.	 	The Reinsurer is reinsuring, to the amount herein provided, the obligations of the Company
under any original insurance or reinsurance. The Company shall be the sole judge as to:

	 	1.	 	what shall constitute a claim or loss covered under any original insurance or
reinsurance written by the Company;
	 
	 	2.	 	the Company’s liability thereunder;
	 
	 	3.	 	the amount or amounts that it shall be proper for the Company to pay thereunder.

	B.	 	The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and
liability(ies) of the Company under any original insurance or reinsurance.
	 
	C.	 	Except for the conditions as provided for in the Sunset Article of this Contract, any
inadvertent error, omission or delay in complying with the terms and conditions of this
Contract shall not be held to relieve either party hereto from any liability that would attach
to it hereunder if such error, omission or delay had not been made, provided such error,
omission or delay is rectified immediately upon discovery.

ARTICLE 25

INSOLVENCY

	A.	 	If more than one reinsured company is referenced within the definition of “Company” in
the Preamble to this Contract, this Article will apply severally to each such company.
Further, this Article and the laws of the domiciliary state will apply in the event of the
insolvency of any company covered hereunder. In the event of a conflict between any
provision of this Article and the laws of the domiciliary state of any company covered
hereunder, that domiciliary state’s laws will prevail.
	 
	B.	 	In the event of the insolvency of the Company, this reinsurance (or the portion of any risk
or obligation assumed by the Reinsurer, if required by applicable law) shall be payable

			
	 	 	 
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	 	 	directly to the Company, or to its liquidator, receiver, conservator or statutory successor,
either: (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and
allowed in the liquidation proceeding, whichever may be required by applicable statute, without
diminution because of the insolvency of the Company or because the liquidator, receiver,
conservator or statutory successor of the Company has failed to pay all or a portion of any claim.
It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the
Company shall give written notice to the Reinsurer of the pendency of a claim against the Company
indicating the Policy or bond reinsured, which claim would involve a possible liability on the part
of the Reinsurer within a reasonable time after such claim is filed in the conservation or
liquidation proceeding or in the receivership, and that during the pendency of such claim, the
Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where
such claim is to be adjudicated any defense or defenses that it may deem available to the Company
or its liquidator, receiver, conservator or statutory successor. The expense thus incurred by the
Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of
the expense of conservation or liquidation to the extent of a pro rata share of the benefit that
may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.
	 
	C.	 	Where two or more reinsurers are involved in the same claim and a majority in interest elect to
interpose defense to such claim, the expense shall be apportioned in accordance with the terms of
this reinsurance Contract as though such expense had been incurred by the Company.
	 
	D.	 	As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Contract, the
reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its
liquidator, receiver, conservator or statutory successor, (except as provided by Section
4118(a)(l)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have
been met, if New York law applies) or except (1) where the Contract specifically provides another
payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent
of the direct insured or insureds, has assumed such Policy obligations of the Company as direct
obligations of the Reinsurer to the payees under such Policies and in substitution for the
obligations of the Company to such payees. Then, and in that event only, the Company, with the
prior approval of the certificate of assumption on New York risks by the Superintendent of
Insurance of the State of New York, or with the prior approval of such other regulatory authority
as may be applicable, is entirely released from its obligation and the Reinsurer shall pay any loss
directly to payees under such Policy.

			
	 	 	 
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ARTICLE 26

ARBITRATION

	A.	 	Any dispute arising out of the interpretation, performance or breach of this Contract,
including the formation or validity thereof, shall be submitted for decision to a panel of
three arbitrators. Notice requesting arbitration will be in writing and sent certified
registered mail, return receipt requested.
	 
	B.	 	One arbitrator shall be chosen by each party and the two arbitrators shall, before
instituting
the hearing, choose an impartial third arbitrator who shall preside at the hearing. If either
party fails to appoint its arbitrator within 30 days after being requested to do so by the
other
party, the latter, after 10 days’ notice by certified or registered mail of its intention to
do so,
may appoint the second arbitrator.
	 
	C.	 	If the two arbitrators are unable to agree upon the third arbitrator within 30 days of their
appointment, the third arbitrator shall be selected by the American Arbitration Association.
	 
	D.	 	All arbitrators shall be disinterested active or former executives of insurance or
reinsurance
companies or Underwriters at Lloyd’s, London, with expertise or experience in the area
being arbitrated. If a member of the panel dies, becomes disabled or is otherwise unwilling
or unable to serve, a substitute shall be selected in the same manner as the departing
member was chosen and the arbitration shall continue.
	 
	E.	 	Within 45 days after notice of appointment of all arbitrators, the panel shall meet and
determine timely periods for briefs, discovery procedures and schedules for hearings.
	 
	F.	 	The panel shall be relieved of all judicial formality and shall not be bound by the strict
rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract,
the arbitrators may at their discretion, consider underwriting and placement information
provided by the Company to the Reinsurer, as well as any correspondence exchanged by
the parties that is related to this Contract. Unless the panel agrees otherwise, arbitration
shall take place in Fort Lauderdale, Florida, but the venue may be changed when deemed
by the panel to be in the best interest of the arbitration proceeding. The decision of any two
arbitrators when rendered in writing shall be final and binding. The panel is empowered to
grant interim relief, as it may deem appropriate.
	 
	G.	 	The panel shall make its decision considering the custom and practice of the applicable
insurance and reinsurance business within 60 days following the termination of the
hearings. Judgment upon the award may be entered in any court having jurisdiction
thereof.
	 
	H.	 	At the Company’s sole option, if more than one Subscribing Reinsurer is involved in
arbitration where there are common questions of law or fact and a possibility of conflicting
awards or inconsistent results, all such Subscribing Reinsurers shall constitute and act as

			
	 	 	 
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	 	 	one party for purposes of this Article and communications shall be made by the Company to
each of the Subscribing Reinsurers constituting the one party; provided, however, that
nothing herein shall impair the rights of such Subscribing Reinsurers to assert several,
rather than joint defenses or claims, nor be construed as changing the liability of the
Subscribing Reinsurers under the terms of this Contract from several to joint (if
applicable).
	 
	I.	 	If more than one of the Subscribing Reinsurers are involved in an arbitration as respondent,
the time for the appointment of their party-appointed arbitrator shall be extended to 60
days. This provision shall not change the liability of each of the Subscribing Reinsurers
under the terms of this Contract from several to joint.
	 
	J.	 	Each party shall bear the expense of its own arbitrator and shall jointly and equally bear
with the other party the cost of the third arbitrator. The remaining costs of the arbitration
shall be allocated by the panel. The panel may, at its discretion, award such further costs
and expenses as it considers appropriate, including but not limited to attorneys’ fees, to
the extent permitted by law.

ARTICLE 27

SERVICE OF SUIT

	A.	 	This Article applies only to those Subscribing Reinsurers not domiciled in the United States
of America, and/or not authorized in any state, territory and/or district of the United States
of America where authorization is required by insurance regulatory authorities.
	 
	B.	 	This Article shall not be read to conflict with or override the obligations of the parties to
arbitrate their disputes as provided for in the Arbitration Article. This Article is intended
as
an aid to compelling arbitration or enforcing such arbitration or arbitral award, not as an
alternative to the Arbitration Article for resolving disputes arising out of this Contract.
	 
	C.	 	In the event of the failure of the Reinsurer to pay any amount claimed to be due hereunder,
the Reinsurer, at the request of the Company, shall submit to the jurisdiction of a court of
competent jurisdiction within the United States. Nothing in this Article constitutes or
should be understood to constitute a waiver of the Reinsurer’s rights to commence an
action in any court of competent jurisdiction in the United States, to remove an action to a
United States District Court, or to seek a transfer of a case to another court as permitted by
the laws of the United States or of any state in the United States. The Reinsurer, once the
appropriate court is selected, whether such court is the one originally chosen by the
Company and accepted by Reinsurer or is determined by removal, transfer, or otherwise, as
provided for above, shall comply with all requirements necessary to give said court
jurisdiction and, in any suit instituted against the Reinsurer upon this Contract, shall abide
by the final decision of such court or of any appellate court in the event of an appeal.
	 
	D.	 	Service of process in such suit may be made upon Messrs. Mendes and Mount, 750
Seventh Avenue, New York, New York 10019-6829, or another party specifically

			
	 	 	 
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	 	 	designated in the applicable Interests and Liabilities Agreement attached hereto. The
above-named are authorized and directed to accept service of process on behalf of the
Reinsurer in any such suit.
	 
	E.	 	Further, pursuant to any statute of any state, territory or district of the United States
that makes provision therefor, the Reinsurer hereby designates the Superintendent,
Commissioner or Director of Insurance, or other officer specified for that purpose in the
statute, or his successor or successors in office, as its true and lawful attorney upon whom
may be served any lawful process in any action, suit or proceeding instituted by or on behalf
of the Company or any beneficiary hereunder arising out of this Contract, and hereby
designates the above-named as the person to whom the said officer is authorized to mail such
process or a true copy thereof.

ARTICLE 28

AGENCY

For purposes of sending and receiving notices and payments required by this Contract, Guarantee
Insurance Company shall be deemed the agent of all other reinsured Companies referenced in this
Contract. In no event, however, shall any reinsured Company be deemed the agent of another with
respect to the terms of the Insolvency Article.

ARTICLE 29

GOVERNING LAW

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

ARTICLE 30

ENTIRE AGREEMENT

This Contract sets forth all of the duties and obligations between the Company and the Reinsurer
and supersedes any and all prior or contemporaneous written agreements with respect to matters
referred to in this Contract. The Contract may not be modified or changed except by an amendment
to this Contract in writing signed by both parties.

			
	 	 	 
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ARTICLE 31

INTERMEDIARY

Guy Carpenter & Company, LLC, is hereby recognized as the Intermediary negotiating this Contract
for all business hereunder. All communications (including notices, statements, premiums, return
premiums, commissions, taxes, losses, Loss Adjustment Expense, salvages, and loss settlements)
relating thereto shall be transmitted to the Company or the Reinsurer through Guy Carpenter &
Company, LLC, 3600 Minnesota Drive, Suite 400, Edina, Minnesota 55435. Payments by the Company to
the Intermediary shall be deemed payment to the Reinsurer. Payments by the Reinsurer to the
Intermediary shall be deemed payment to the Company only to the extent that such payments are
actually received by the Company.

ARTICLE 32

MODE OF EXECUTION

	A.	 	This Contract may be executed by:

	 	1.	 	an original written ink signature of paper documents;
	 
	 	2.	 	an exchange of facsimile copies showing the original written ink signature of paper
documents;
	 
	 	3.	 	electronic signature technology employing computer software and a digital signature
or digitizer pen pad to capture a person’s handwritten signature in such a manner that
the signature is unique to the person signing, is under the sole control of the person
signing, is capable of verification to authenticate the signature and is linked to the
document signed in such a manner that if the data is changed, such signature is
invalidated.

	B.	 	The use of any one or a combination of these methods of execution shall constitute a
legally binding and valid signing of this Contract. This Contract may be executed in one or
more counterparts, each of which, when duly executed, shall be deemed an original.

			
	 	 	 
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IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly
authorized representative(s) this 12 day of August ,
in the year of 2008

	 	 	 	 	 	 	 
	Signed in Fort Lauderdale, Florida
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ATTEST:	 	GUARANTEE INSURANCE COMPANY	 	 
	 

	 	By:
	 	/s/ [ILLEGIBLE]	 	 
	 

	 	 	 	 	 	 
	 
	 	Title:	 	CUO	 	 
	/s/ Simone O. Resende

	 	Reference:	 	 	 	 
	Broward County, Florida

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	 
	 

	 	 	 	 	 	 

TRADITIONAL WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
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NUCLEAR RISK EXCLUSION

This Agreement does not apply to “Ultimate Net Loss” arising from, whether directly or
indirectly, whether proximate or remote:

	 	a)	 	Any Nuclear Facility, Nuclear Hazard or Nuclear Reactor;
	 
	 	b)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear
Radiation or
radioactive contamination, all whether controlled or uncontrolled; or
	 
	 	c)	 	Any Nuclear Material, Radioactive Material, Nuclear Reaction, Nuclear
Radiation or
radioactive contamination, all whether controlled or uncontrolled, caused
directly or
indirectly by, contributed to or aggravated by an Event;
	 
	 	d)	 	Any Spent Fuel or Waste;
	 
	 	e)	 	Any Fissionable Substance; or
	 
	 	f)	 	Any nuclear device or bomb.

As used in this Exclusion:

“Fissionable Substance” means;

any prescribe substance that is, or from which can be obtained, a
substance capable of releasing atomic energy by nuclear fission.

“Nuclear Facility” means;

any Nuclear Reactor,

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;

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;

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,

					
	 	 	 	 	 
	Effective: July 1, 2008
	 	 	 	DOC: August 8, 2008
	2175-10-0002
	 	 	 	 
	 	 
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GUY CARPENTER

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 premised 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;

any structure, basin, excavation, premises or place prepared or used for the storage or
disposal of Waste or Radioactive Material, and includes the site on which any of the
foregoing is located, all operations conducts on such site and all premises used for
such operations;

“Nuclear Hazard” means: the radioactive, toxic, explosive or other hazardous properties of
Radioactive Material or Nuclear Material.

“Nuclear Material” means Source Material, Special Nuclear Material or Byproduct Material.

“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.

“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.

“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 sued or
exposed to radiation in the Nuclear Reactor.

“Waste” means any waste material (i) containing Byproduct Material and (ii) resulting from the
operation by any person or organization of any Nuclear Facility.

					
	 	 	 	 	 
	Effective: July 1, 2008
	 	 	 	DOC: August 8, 2008
	2175-10-0002
	 	 	 	 
	 	 
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GUY CARPENTER

TERRORISM EXCLUSION

Notwithstanding any provision to the contrary within this reinsurance or any endorsement thereto,
it is agreed that this reinsurance excludes loss, damage, cost or expense of whatsoever nature
directly or indirectly caused by, resulting from or in connection with any Act of Terrorism
regardless of any other cause or even contributing concurrently or in any other sequence to the
loss.

For the purpose of this exclusion, an “Act of Terrorism” means any act, including but not limited
to the use of force or violence and/or the threat thereof (or the use or release of any biological
or chemical material or weapons that may harm or endanger any person, property, animals or the
environment) of any person or group(s) of persons, whether acting alone or on behalf of or in
connection with any organization(s) or government(s), committed for political, religious,
ideological or similar purposes including the intention to influence any government and/or to put
the public, or any section of the public, in fear.

This Contract also excludes loss, damage, cost or expense of whatsoever nature directly or
indirectly caused by resulting from or in connection with any action taken in controlling,
preventing, suppressing or in any way relating to any Act of Terrorism.

In the event any portion of this exclusion is found to be invalid or unenforceable, the remainder
shall remain in the full force and effect.

					
	 	 	 	 	 
	Effective: July 1, 2008
	 	 	 	DOC: August 8, 2008
	2175-10-0002
	 	 	 	 
	 	 
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GUY CARPENTER

SPECIFIC BUSINESS OPERATIONS EXCLUSION

These exclusions apply based on the activities performed by a business and therefore
will not always be identified by a class code.

The related class codes are those with known operations to be excluded — They are not
meant to be all inclusive. They DO NOT include State specific codes which must be
identified through the Scopes Manual.

	 	 	 
	Reinsurance Description of Operations to be Excluded	 	Related Class Codes & Descriptions
	 
	 	 
	Airline and Aircraft
Operations-Commercial Airline
Crews

	 	7403 — Aircraft or Helicopter Air Carrier-Ground Crew
	 

	 	7405 — Aircraft or Helicopter Air Carrier-Flying
Crew
	 

	 	7409* — Aircraft or Helicopter: Aerial Application
	 

	 	7420* — Aircraft or Helicopter: Public Exhibition
	 

	 	7421 — Aircraft or Helicopter: Transportation-Crew
	 

	 	7422* — Aircraft or Helicopter: NOC, not Helicopters
	 

	 	7423 — Aircraft or Helicopter Operation: Commuter
	 

	 	7425* — Aircraft Operation — Helicopters NOC
	 

	 	7431 * — Aircraft or Helicopter — Commuter-Crew
	 

	 	9088* — Rocket or missile testing or Launching
	 
	 	 
	Asbestos Operations

	 	1852 — Asbestos Goods Manufacturing
	 

	 	5472 — Asbestos Removal Operation: Contractor
	 

	 	5473 — Asbestos Removal Operation: Contractor NOC
	 
	 	 
	Banks & Trust Companies:
Employees of Contracting
Agencies in Bank
Service: Guards,
Patrols, Messengers or Armored
Car Crews

	 	7720 — With this specific language (CR)
	 
	 	 
	Blasting Rock

	 	6217 — Blasting Rock-Specialist Contractor (CR)
	 
	 	 
	Boat Building and Ship Building

	 	6854* — Ship Building — Iron or Steel — NOC

All related “F” Classes Separately Identified**
	 

	 	6843* — Ship Building Iron or Steel
	 

	 	6872* — Ship Repair or Marine Railway
	 

	 	6882* — Ship Repair Conversion
	 

	 	8709* — Stevedoring: Talliers, Inspectors
	 

	 	7016* — Vessels NOC-Program 1
	 

	 	7024* — Vessels NOC-Program 2 State Act
	 

	 	7038* — Boat Livery-Boats under 15 Tons-Program 1
	 

	 	7046* — Vessels — Not Self-Propelled-Program 1
	 

	 	7047* — Vessels-NOC-Program 2 USL Act
	 

	 	7050* — Boat Livery-Boats under 15 Tons-Program 2 USL Act
	 

	 	7090* — Boat Livery-Boats under 15 Tons-Program 2

					
	 	 	 	 	 
	Effective: July 1, 2008
	 	 	 	DOC: August 8, 2008
	2175-10-0002
	 	 	 	 
	 	 
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GUY CARPENTER

	 	 	 
	Reinsurance Description of Operations to be Excluded	 	Related Class Codes & Descriptions
	 	 
	 

	 	State Act

	 

	 	7098* — Vessels — Not Self-Propelled-Program 2
State Act
	 

	 	7099* — Vessels-Not Self-Propelled-Program 2 USL
Act
	 

	 	7309* — Stevedoring NOC
	 

	 	7313* — Ore or Coal Dock Operation
	 

	 	7317* — Stevedoring by Hand or Truck
	 

	 	7323* — Stevedoring Explosive Materials
	 

	 	7327* — Stevedoring Containerized Freight
	 

	 	7333* — Dredging — All Types-Program 1
	 

	 	7335* — Dredging — All Types-Program 2 State Act
	 

	 	7337* — Dredging — All Types-Program 2 USL Act
	 

	 	7350* — Freight Handling & Stevedoring
	 
	 	 
	Construction, operation, repair or maintenance of:

	 	2702 — Dam or Lock Construction (CR)
	      Bridges

	 	5037* — Painting Metal Structure Over Two Stories
	      Dams or Locks

	 	5040* — Iron or Steel Erection-Frame Structures
	      Dikes or Revetments

	 	5059* — Iron or Steel; Erection-Frame Structures
	      Subways

	 	Less
Than Two Stories

	      Sub-Aqueous Works Under Pressure

	 	5222* — Concrete Const. In Connection wlBridges
	      Tunnels

	 	5403 — Construction: Wooden Bridges (Desc)
	 

	 	6003 — Wood Bridge Construction (Desc)
	 

	 	6005 — Dike or Revetment Construction (CR)
	 

	 	6017 — Dam or Lock Construction: Concrete Work
	 

	 	6018 — Dam or Lock Construction: Earthmoving
	 

	 	6251 * — Tunneling — Not Pneumatic
	 

	 	6252* — Shaft Sinking
	 

	 	6260* — Tunneling — Pneumatic
	 

	 	7133 — Subway Operation (Desc)
	 

	 	7538* — Electric Light or Power Line Construction
	 

	 	7540* — Electric Light or Power Co-op; REA
Project only
	 

	 	9019 — Bridge or Vehicular Tunnel Operation
	 
	 	 
	Demolition or Wrecking of:

	 	5022 — Wrecking Bldgs or Structures-Masonry (CR)
	      Bridges

	 	5057* — Wrecking
Bldgs/Structures-Iron or Steel (CR)
	      Buildings

	 	5213 — Wrecking Bldgs or Structures-Concrete (CR)
	      Maritime Structures

	 	 
	      Demolition or Wrecking of:

	 	5403 — Wrecking Bldgs or Structures-Wooden (CR)
	      Vessels

	 	6003 — Wrecking of Piers or Wharfs (Desc)
	 

	 	7394*, 7395* & 7398* — Marine Wrecking (CR)

					
	 	 	 	 	 
	Effective: July 1, 2008
	 	 	 	DOC: August 8, 2008
	2175-10-0002
	 	 	 	 
	 	 
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GUY CARPENTER

	 	 	 
	Reinsurance Description of Operations to be Excluded	 	Related Class Codes & Descriptions
	 	 
	Detective or Patrol Agencies

	 	7720 — Detective or Patrol Agencies (CR).
Not applicable to unarmed patrol personnel.

	 
	 	 
	Firefighters

	 	7704 — Firefighters
	 
	 	 
	Gas Main, Steam Main or Water Main Construction Or 

    Connection Construction

	 	6319 — Gas Main or Connection Construction

6206* — Oil or Gas Well-Cementing

7515* — All Oil or Gas Pipeline Operation
	 
	 	 
	Manufacturing, transportation, packing, handling, 

shipping, storage or loading into containers:

     Explosives (incl substance intended for use as)

     Ammunitions, fuses or arms 

     Propellant charges

     Detonating devices 

     Fireworks

     Celluloid, magnesium, nitroglycerine or pyroxylin

	 	3574 — Arms Mfg-Small & Cartridge Mfg (CR)

3632 — Projectile or Shell Mfg (CR)

4771 * — Explosives or Ammunition Manufacturing

4777 — Explosives Distributors

7228 — Hauling Explosives or Ammo-Local (CR)

7229 — Hauling Explosives or Ammo-Long Dist
(CR)

7360 — Packing/Handling/Shipping Expl or Ammo
(CR)
	 
	 	 
	Mfg, packing, handling, shipping or storage of:

     Natural or artificial fuel gases

     Butane or propane

     Gasoline or liquefied petroleum gas (LPG)

	 	4635* — Oxygen or Hydrogen Manufacturing

4740 — Oil Refining-Petroleum

8350 — Gasoline Dealer
	 
	 	 
	Mining of All Types Including:

     Underground

     Surface

     Quarrying

	 	1005* — Coal Mining-Surface

1016 — Coal Mining NOC

1164* — Mining NOC — Not Coal-Underground

1165 — Mining NOC — Not Coal-Surface

1624 — Quarry NOC

1654 — Quarry — Cement Rock-Surface

1655 — Quarry — Limestone-Surface (CR)

1710 — Stone Crushing-Included by SIC

1741 * — Flint or Spar Grinding

1803* — Stone Cutting or Polishing NOC

4000 — Sand or Gravel Digging-Included by SIC
	 
	 	 
	Oil or Gas Burner Installation

	 	3724 — Oil or Gas Burner
Installation-Commercial (CR)

3726* — Boiler Installation or Repair

5183 — Oil or Gas Burner Installation-Domestic (CR)
	 
	 	 
	Police Officers

	 	7720 — Police Officers

			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 8, 2008
	2175-10-0002
	 	 

34 of 35

 

GUY CARPENTER

	 	 	 
	Reinsurance Description of Operations to be Excluded	 	Related Class Codes & Descriptions
	 	 
	Railroads

Except — scenic railways and access lines
industrial aid owner operations if
incidental

	 	6702,6703 & 6704  — RR Construction-State &
Federal

7133 — Railroad Operations NOC

7151,7152 & 7153 — RR Operations-State & Federal

7382 — Scheduled RR Operations (CR)

7855 — RR Construction: Laying or Relaying of
Tracks

8734,8737, 8738 — Sales for RR ops-State & Fed

8805, 8814 & 8815 — Clerical for RR ops-State &
Fed
	 
	 	 
	Sewer Construction — All Operations

	 	6306 — Sewer Construction

3620 — Pressure Vessel Manufacturing (Desc)
	 
	 	 
	Tank Installation: Gasoline Service Stations

	 	3724 — Tank Installation-Gas Stations (CR)

			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 8, 2008
	2175-10-0002
	 	 

35 of 35

 

GUY CARPENTER

INTERESTS AND LIABILITIES AGREEMENT

(the “Agreement”)

of

MIDWEST EMPLOYERS CASUALTY COMPANY

(the “Subscribing Reinsurer”)

as respects the

TRADITIONAL WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

Effective: July 1, 2008 

(the “Contract”)

issued to and executed by

GUARANTEE INSURANCE COMPANY

Fort Lauderdale, Florida

including any and/or all companies that are or may hereafter become affiliated therewith

(collectively, the “Company”)

The Subscribing Reinsurer’s share in the interests and liabilities of the Reinsurer as set forth
in the Contract shall be 100.00%.

The share of the Subscribing Reinsurer in the interests and liabilities of the Reinsurer in
respect of the Contract shall be separate and apart from the shares of other subscribing
reinsurers, if any, on the Contract. The interests and liabilities of the Subscribing Reinsurer
shall not be joint with those of such other subscribing reinsurers and in no event shall the
Subscribing Reinsurer participate in the interests and liabilities of such other subscribing
reinsurers.

This Agreement shall become effective at 12:01 a.m., Local Standard Time at the place of the loss,
July 1, 2008 and shall be subject to the provisions of the Term Article and the Special Termination
Article and all other terms and conditions of the Contract.

Premium and loss payments made to Guy Carpenter shall be deposited in a Premium and Loss Account
in accordance with Section 32.3(a)(l) of Regulation 98 of the New York Insurance Department. The
Subscribing Reinsurer consents to withdrawals from said account in accordance with Section
32.3(a)(3) of the Regulation, including interest and Federal Excise Tax.

			
	 	 	 
	Effective: July 1, 2008
	 	DOC: August 8, 2008
	2175-10-0002	 	 

1 of 2

 

GUY CARPENTER

Brokerage for Guy Carpenter (US) hereunder is 10.00% of gross ceded premium.

IN WITNESS WHEREOF, the Subscribing Reinsurer has caused this Agreement to be executed by its duly
authorized representative as follows:

on this 11th day of August, in the year 2008.

MIDWEST EMPLOYERS CASUALTY COMPANY

/s/ [ILLEGIBLE]                                                                                

Market Reference Number: 5213TRS-PA

GUARANTEE INSURANCE COMPANY

including any and/or all companies that are or may hereafter become affiliated therewith

TRADITIONAL WORKERS’ COMPENSATION EXCESS OF LOSS

REINSURANCE CONTRACT

			
	 	 	 
	Effective: July 1, 2008

2175-10-0002
	 	DOC: August 8, 2008

2 of 2

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