Document:

exv10w10

Exhibit 10.10

INDEMNIFICATION AGREEMENT

          AGREEMENT, dated as of [•], 2010, by and between LIBERTY MUTUAL AGENCY CORPORATION, a Delaware
corporation (the “Company”), and [•] (the “Indemnitee”).

          WHEREAS, it is essential to the Company to retain and attract as directors and officers the
most capable persons available;

          WHEREAS, the Indemnitee is a director and/or officer of the Company;

          WHEREAS, the Company and the Indemnitee recognize the increased risk of litigation and other
claims being asserted against directors and officers of companies in today’s environment;

          WHEREAS, the Company’s Amended and Restated Certificate of Incorporation (“Certificate of
Incorporation”) and Amended and Restated By-Laws (“By-Laws”) require the Company to
indemnify and advance expenses to its directors and officers to the extent provided therein, and
the Indemnitee serves as a director and/or officer of the Company, in part, in reliance on such
provisions in the Company’s Certificate of Incorporation and By-Laws;

          WHEREAS, the Company has determined that its inability to retain and attract as directors and
officers the most capable persons would be detrimental to the interests of the Company, and that
the Company therefore should seek to assure such persons that indemnification and insurance
coverage will be available in the future; and

          WHEREAS, in recognition of the Indemnitee’s need for substantial protection against personal
liability in order to enhance the Indemnitee’s continued service to the Company in an effective
manner and the Indemnitee’s reliance on the Company’s Certificate of Incorporation and By-Laws, and
in part to provide the Indemnitee with specific contractual assurance that the protection promised
by the Company’s Certificate of Incorporation and By-Laws will be available to the Indemnitee
(regardless of, among other things, any amendment to or revocation of the applicable provisions of
the Company’s Certificate of Incorporation and By-Laws or any change in the composition of the
governing bodies of the Company or any acquisition transaction relating to the Company), the
Company wishes to provide in this Agreement for the indemnification of and the advancing of
expenses to the Indemnitee to the fullest extent (whether partial or complete) permitted by law and
as set forth in this Agreement, and, to the extent insurance is maintained, for the continued
coverage of the Indemnitee under the directors’ and officers’ liability insurance policy of the
Company.

 

 

          NOW, THEREFORE, in consideration of the premises and of the Indemnitee continuing to serve the
Company directly or, on its behalf or at its request, as an officer, director, manager, member,
partner, tax matters partner, fiduciary or trustee of, or in any other capacity with, another
Person (as defined below) or any employee benefit plan, and intending to be legally bound hereby,
the parties hereto agree as follows:

     1. Certain Definitions. In addition to terms defined elsewhere herein, the following
terms have the following meanings when used in this Agreement:

          (a) Agreement: shall mean this Indemnification Agreement, as amended from time to time
hereafter.

          (b) Board of Directors: shall mean the Board of Directors of the Company.

          (c) Change in Control shall be deemed to have occurred if any of the events shall have
occurred:

	 	(i)	 	any Person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing more than 50% of either
the then outstanding shares of common stock of the Company or the combined
voting power of the Company’s then outstanding securities, excluding any Person
who becomes such a beneficial owner in connection with a transaction described
in Section 1(c)(iii)(A) below;
	 
	 	(ii)	 	the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board of Directors of the Company and any new director
(other than a director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board of Directors or nomination for
election by the Company’s stockholders was approved or recommended by a vote of
at least two-thirds (2/3) of the directors then in office who either were
directors on the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended;
	 
	 	(iii)	 	There is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation,
other than (A) a merger or consolidation which results in the holders of voting
securities of the Company outstanding immediately prior to such

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	 	 	 	merger or consolidation beneficially owning (either by remaining outstanding
or by being converted into voting securities of the surviving entity or any
parent thereof) more than 50% of the combined voting power of the securities
of the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation in substantially the same
proportions as their ownership of the Company immediately prior to such
transaction, or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no Person
is or becomes the beneficial owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its Affiliates)
representing 25% or more of the combined voting power of the Company’s then
outstanding securities; or
	 
	 	(iv)	 	The stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company’s assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

          (d) Claim: means any threatened, asserted, pending or completed civil, criminal,
administrative, investigative or other action, suit or proceeding of any kind whatsoever, including
any arbitration or other alternative dispute resolution mechanism, or any appeal of any kind
thereof, or any inquiry or investigation, whether instituted by the Company, any governmental
agency or any other party, that the Indemnitee in good faith believes might lead to the institution
of any such action, suit or proceeding, whether civil, criminal, administrative, investigative or
other, including any arbitration or other alternative dispute resolution mechanism.

          (e) Indemnifiable Expenses: means (i) all expenses and liabilities, including
judgments, fines, penalties, interest, amounts paid in settlement with the approval of the Company,
and counsel fees and disbursements (including, without limitation, experts’ fees, court costs,
retainers, transcript fees, duplicating, printing and binding costs, as well as telecommunications,
postage and courier charges) paid or incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to investigate, defend, be a
witness in or participate in, any Claim by reason of the fact that Indemnitee is or was or has
agreed to serve as a director, officer, employee or agent of the Company, or while serving as a
director or officer of the Company, is or was serving or has agreed to serve on behalf of or at the
request of the Company as a director, officer, employee or

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agent (which, for purposes hereof, shall include a trustee, fiduciary, partner or manager or
similar capacity) of another corporation, limited liability company, partnership, joint venture,
trust, association, employee benefit plan or other enterprise, or by reason of any action alleged
to have been taken or omitted in any such capacity, whether occurring before, on or after the date
of this Agreement (any such event, an “Indemnifiable Event”), and (ii) any liabilities which an
Indemnitee incurs as a result of acting on behalf of the Company (whether as a fiduciary or
otherwise) in connection with the operation, administration or maintenance of an employee benefit
plan or any related trust or funding mechanism (whether such liabilities are in the form of excise
taxes assessed by the United States Internal Revenue Service, penalties assessed by the Department
of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or
beneficiary of such plan, trust or other funding mechanism, or otherwise).

          (f) Indemnitee-Related Entities: means any corporation, limited liability company,
partnership, joint venture, trust, association, employee benefit plan or other enterprise (other
than the Company or any other corporation, limited liability company, partnership, joint venture,
trust, association, employee benefit plan or other enterprise Indemnitee has agreed, on behalf of
the Company or at the Company’s request, to serve as a director, officer, employee or agent and
which service is covered by the indemnity described in this Agreement) from whom an Indemnitee may
be entitled to indemnification or advancement of expenses with respect to which, in whole or in
part, the Company may also have an indemnification or advancement obligation (other than as a
result of obligations under an insurance policy).

          (g) Jointly Indemnifiable Claim: means any Claim for which the Indemnitee shall be
entitled to indemnification from both an Indemnitee-Related Entity and the Company pursuant to
applicable law, any indemnification agreement or the certificate of incorporation, by-laws,
partnership agreement, operating agreement, certificate of formation, certificate of limited
partnership or comparable organizational documents of the Company and an Indemnitee-Related Entity.

          (h) Person: means any individual, corporation, firm, partnership, joint venture,
limited liability company, estate, trust, business association, organization, governmental entity
or other entity.

     2. Basic Indemnification Arrangement; Advancement of Expenses.

          (a) In the event that the Indemnitee was, is or becomes subject to, a party to or witness or
other participant in, or is threatened to be made subject to, a party to or witness or other
participant in, a Claim by reason of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify the Indemnitee, or cause such Indemnitee to be indemnified, to the fullest
extent permitted by Delaware law in effect on the date hereof and as amended from time to time;
provided, however, that no change in Delaware law shall have the effect of reducing
the benefits available to the Indemnitee hereunder based on Delaware law as in effect on the date

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hereof or as such benefits may improve as a result of amendments after the date hereof. The
rights of the Indemnitee provided in this Section 2 shall include, without limitation, the rights
set forth in the other sections of this Agreement. Payments of Indemnifiable Expenses shall be
made as soon as practicable but in any event no later than thirty (30) days after written demand is
presented to the Company, against any and all Indemnifiable Expenses.

          (b) If so requested by the Indemnitee, the Company shall advance, or cause to be advanced
(within five business days of such request), any and all Indemnifiable Expenses incurred by the
Indemnitee (an “Expense Advance”). The Indemnitee shall provide reasonable documentation
to support any Expense Advance. The Company shall, in accordance with such request (but without
duplication), either (i) pay, or cause to be paid, such Indemnifiable Expenses on behalf of the
Indemnitee, or (ii) reimburse, or cause the reimbursement of, the Indemnitee for such Indemnifiable
Expenses. The Indemnitee’s right to an Expense Advance is absolute and shall not be subject to any
condition that the Board of Directors shall not have determined that the Indemnitee is not entitled
to be indemnified under applicable law. However, the obligation of the Company to make an Expense
Advance pursuant to this Section 2(b) shall be subject to the condition that, if, when and to the
extent that a final judicial determination is made (as to which all rights of appeal therefrom have
been exhausted or lapsed) that the Indemnitee is not entitled to be so indemnified under applicable
law, the Company shall be entitled to be reimbursed by the Indemnitee (who hereby agrees to
reimburse the Company within 90 days) for all such amounts theretofore paid (it being understood
and agreed that the foregoing agreement by the Indemnitee shall be deemed to satisfy any
requirement that the Indemnitee provide the Company with an undertaking to repay any Expense
Advance if it is ultimately determined that the Indemnitee is not entitled to indemnification under
applicable law). The Indemnitee’s undertaking to repay such Expense Advances shall be unsecured and
interest-free.

          (c) Notwithstanding anything in this Agreement to the contrary, the Indemnitee shall not be
entitled to indemnification or advancement of Indemnifiable Expenses pursuant to this Agreement in
connection with any Claim initiated by the Indemnitee unless (i) the Company has joined in or the
Board of Directors of the Company has authorized or consented to the initiation of such Claim or
(ii) the Claim is one to enforce the Indemnitee’s rights under this Agreement (including an action
pursued by the Indemnitee to secure a determination that the Indemnitee should be indemnified under
applicable law).

          (d) The indemnification obligations of the Company under Section 2(a) shall be subject to the
condition that the Board of Directors shall not have determined (by majority vote of directors who
are not parties to the applicable Claim) that the indemnification of the Indemnitee is not proper
in the circumstances because the Indemnitee is not entitled to be indemnified under applicable law.
If the Board of Directors determines that the Indemnitee is not entitled to be indemnified in
whole or in part under applicable law, the Indemnitee shall have the right to commence litigation
in any court in the State of Delaware or the Commonwealth of Massachusetts having subject matter
jurisdiction thereof and in which venue is proper, seeking an initial determination by the court or
challenging any such determination by the Board of

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Directors or any aspect thereof, including the legal or factual bases therefor, and the
Company hereby consents to service of process and to appear in any such proceeding. If the
Indemnitee commences legal proceedings in a court of competent jurisdiction to secure a
determination that the Indemnitee should be indemnified under applicable law, any determination
made by the Board of Directors that the Indemnitee is not entitled to be indemnified under
applicable law shall not be binding, the Indemnitee shall continue to be entitled to receive
Expense Advances, and the Indemnitee shall not be required to reimburse the Company for any Expense
Advance, until a final judicial determination is made (as to which all rights of appeal therefrom
have been exhausted or lapsed) that the Indemnitee is not entitled to be so indemnified under
applicable law. Any determination by the Board of Directors otherwise shall be conclusive and
binding on the Company and the Indemnitee.

          (e) In the event of a Change in Control after the date hereof, then with respect to all
matters thereafter arising concerning the rights of Indemnitee to payments under this Agreement or
any Company By-Law or provision of the Company’s Certificate of Incorporation now or hereafter in
effect, the Company shall seek legal advice only from independent counsel who has not otherwise
performed services for the Company or the Indemnitee (other than in connection with indemnification
matters) within the last five years selected (i) if there are two or more independent directors, by
the Board of Directors by a majority vote of all independent directors or by a majority of the
members of a committee of two or more independent directors appointed by vote or (ii) if there are
fewer than two independent directors, by the Board of Directors of the Company; and which in any
such case of selection in accordance with clause (i) or (ii) of this section, shall be reasonably
acceptable to the Indemnittee (such independent counsel, the “Independent Counsel”). The
Independent Counsel shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in representing either the
Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.
The Independent Counsel, among other things, shall render its written opinion to the Company and
the Indemnitee as to whether and to what extent the Indemnitee should be permitted to be
indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent
Counsel and to indemnify fully such Independent Counsel against any and all expenses (including
attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.

          (f) To the extent that the Indemnitee has been successful on the merits or otherwise in
defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense
of any issue or matter therein, including dismissal without prejudice, the Indemnitee shall be
indemnified against all Indemnifiable Expenses actually and reasonably incurred in connection
therewith, notwithstanding an earlier determination by the Board of Directors that the Indemnitee
is not entitled to indemnification under applicable law.

     3. Indemnification for Additional Expenses. The Company shall indemnify, or cause the
indemnification of, the Indemnitee against any and all Indemnifiable Expenses and, if requested by
the Indemnitee, shall advance such Indemnifiable Expenses to the Indemnitee

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subject to and in accordance with Section 2(b) and (d), which are incurred by the Indemnitee
in connection with any action brought by the Indemnitee, the Company or any other Person with
respect to the Indemnitee’s right to: (i) indemnification or an Expense Advance by the Company
under this Agreement or any provision of the Company’s Certificate of Incorporation and/or By-Laws
and/or, (ii) recovery under any directors’ and officers’ liability insurance policies maintained by
the Company, regardless of whether the Indemnitee ultimately is determined to be entitled to such
indemnification, Expense Advance or insurance recovery, as the case may be; provided that
the Indemnitee shall be required to reimburse such Indemnifiable Expenses within 90 days in the
event that a final judicial determination is made (as to which all rights of appeal therefrom have
been exhausted or lapsed) that such action brought by the Indemnitee, or the defense by the
Indemnitee of an action brought by the Company or any other Person, as applicable, was frivolous or
in bad faith.

     4. Partial Indemnity, Etc. If the Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of the Indemnifiable Expenses in
respect of a Claim but not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify the Indemnitee for the portion thereof to which the Indemnitee is entitled.

     5. Burden of Proof. In connection with any determination by the Board of Directors,
any court or otherwise as to whether the Indemnitee is entitled to be indemnified hereunder, the
Board of Directors or court shall presume that the Indemnitee has satisfied the applicable standard
of conduct and is entitled to indemnification, and the burden of proof shall be on the Company or
its representative to establish, by clear and convincing evidence, that the Indemnitee is not so
entitled.

     6. Reliance as Safe Harbor. The Indemnitee shall be entitled to indemnification for
any action or omission to act undertaken (a) in good faith reliance upon the records of the
Company, including its financial statements, or upon information, opinions, reports or statements
furnished to the Indemnitee by the officers or employees of the Company or any of its subsidiaries
in the course of their duties, or by committees of the Board of Directors, or by any other Person
as to matters the Indemnitee reasonably believes are within such other Person’s professional or
expert competence, or (b) on behalf of the Company in furtherance of the interests of the Company
in good faith in reliance upon, and in accordance with, the advice of legal counsel or accountants,
provided such legal counsel or accountants were selected with reasonable care by or on behalf of
the Company. In addition, the knowledge and/or actions, or failures to act, of any director,
officer, agent or employee of the Company shall not be imputed to the Indemnitee for purposes of
determining the right to indemnity hereunder.

     7. No Other Presumptions. For purposes of this Agreement, the termination of any
claim, action, suit or proceeding, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere or its equivalent, shall not create a
presumption that the Indemnitee did not meet any particular standard of conduct or have any

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particular belief or that a court has determined that indemnification is not permitted by
applicable law. In addition, neither the failure of the Board of Directors to have made a
determination as to whether the Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Board of Directors that the Indemnitee has
not met such standard of conduct or did not have such belief, prior to the commencement of legal
proceedings by the Indemnitee to secure a judicial determination that the Indemnitee should be
indemnified under applicable law shall be a defense to the Indemnitee’s claim or create a
presumption that the Indemnitee has not met any particular standard of conduct or did not have any
particular belief.

     8. Nonexclusivity, Etc. The rights of the Indemnitee hereunder shall be in addition
to any other rights the Indemnitee may have under the Company’s Certificate of Incorporation and
By-Laws, the laws of the State of Delaware, or otherwise. To the extent that a change in Delaware
law or the interpretation thereof (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the Company’s Certificate of
Incorporation and By-Laws, it is the intent of the parties hereto that the Indemnitee shall enjoy
by this Agreement the greater benefits so afforded by such change. To the extent that there is a
conflict or inconsistency between the terms of this Agreement and the Company’s Certificate of
Incorporation or By-Laws, it is the intent of the parties hereto that the Indemnitee shall enjoy
the greater benefits regardless of whether contained herein, in the Company’s Certificate of
Incorporation or By-Laws. No amendment or alteration of the Company’s Certificate of Incorporation
or By-Laws or any other agreement shall adversely affect the rights provided to Indemnitee under
this Agreement.

     9. Liability Insurance. The Company shall use its reasonable best efforts to purchase
and maintain a policy or policies of insurance with reputable insurance companies, which may be
their affiliate(s), providing Indemnitee with coverage for any liability asserted against, or
incurred by, Indemnitee or on Indemnitee’s behalf by reason of the fact that Indemnitee is or was
or has agreed to serve as a director, officer, employee or agent of the Company, or while serving
as a director or officer of the Company, is or was serving or has agreed to serve on behalf of or
at the request of the Company as a director, officer, employee or agent (which, for purposes
hereof, shall include a trustee, fiduciary, partner or manager or similar capacity) of another
corporation, limited liability company, partnership, joint venture, association, trust, employee
benefit plan or other enterprise, or arising out of Indemnitee’s status as such, whether or not the
Company would have the power to indemnify Indemnitee against such liability under the provisions of
this Agreement. Such insurance policies shall have coverage terms and policy limits at least as
favorable to Indemnitee as the insurance coverage provided to any other director or officer of the
Company. If the Company has such insurance in effect at the time the Company receives from
Indemnitee any notice of the commencement of an action, suit or proceeding, the Company shall give
prompt notice of the commencement of such action, suit or proceeding to the insurers in accordance
with the procedures set forth in the policy. The Company shall thereafter take all necessary or
desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a
result of such proceeding in accordance with the terms of such policy.

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     10. Amendments, Etc. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. In the event
the Company or any of its subsidiaries enters into an indemnification agreement with another
director, officer, agent, fiduciary or manager of the Company or any of its subsidiaries containing
a term or terms more favorable to the indemnitee than the terms contained herein (as determined by
the Indemnitee), the Indemnitee shall be afforded the benefit of such more favorable term or terms
and such more favorable term or terms shall be deemed incorporated by reference herein as if set
forth in full herein. As promptly as practicable following the execution by the Company or the
relevant subsidiary of each indemnity agreement with any such other director, officer or manager
(i) the Company shall send a copy of the indemnity agreement to the Indemnitee, and (ii) if
requested by the Indemnitee, the Company shall prepare, execute and deliver to the Indemnitee an
amendment to this Agreement containing such more favorable term or terms.

     11. Subrogation. Subject to Section 12, in the event of payment by the Company under
this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Indemnitee with respect to any insurance policy. Indemnitee shall execute all
papers reasonably required and shall do everything that may be reasonably necessary to secure such
rights, including the execution of such documents necessary to enable the Company effectively to
bring suit to enforce such rights. The Company shall pay or reimburse all expenses actually and
reasonably incurred by Indemnitee in connection with such subrogation.

     12. Jointly Indemnifiable Claims. Given that certain Jointly Indemnifiable Claims may
arise due to the relationship between the Indemnitee-Related Entities and the Company and the
service of the Indemnitee as a director and/or officer of the Company at the request of the
Indemnitee-Related Entities, the Company acknowledges and agrees that the Company shall be fully
and primarily responsible for the payment to the Indemnitee in respect of indemnification and
advancement of expenses in connection with any such Jointly Indemnifiable Claim, pursuant to and in
accordance with the terms of this Agreement, irrespective of any right of recovery the Indemnitee
may have from the Indemnitee-Related Entities. Under no circumstance shall the Company be entitled
to any right of subrogation or contribution by the Indemnitee-Related Entities and no right of
recovery the Indemnitee may have from the Indemnitee-Related Entities shall reduce or otherwise
alter the rights of the Indemnitee or the obligations of the Company hereunder. In the event that
any of the Indemnitee-Related Entities shall make any payment to the Indemnitee in respect of
indemnification or advancement of expenses with respect to any Jointly Indemnifiable Claim, the
Indemnitee-Related Entity making such payment shall be subrogated to the extent of such payment to
all of the rights of recovery of the Indemnitee against the Company, and the Indemnitee shall
execute all papers reasonably required and shall do all things that may be reasonably necessary to
secure such rights, including the execution of such documents as may be necessary to enable the
Indemnitee-Related Entities effectively to bring suit to enforce such rights. Each of the
Indemnitee-Related Entities shall be third-party beneficiaries with respect to this Paragraph 12,
entitled to enforce this Paragraph 12 against the Company as though each such Indemnitee-Related
Entity were a party to this Agreement.

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     13. No Duplication of Payments. Subject to Paragraph 12 hereof, the Company shall not
be liable under this Agreement to make any payment in connection with any Claim made against the
Indemnitee to the extent the Indemnitee has otherwise actually received payment (under any
insurance policy, any provision of the Company’s Certificate of Incorporation and By-Laws, or
otherwise) of the amounts otherwise indemnifiable hereunder.

     14. Defense of Claims. The Company shall be entitled to participate in the defense of
any Claim relating to an Indemnifiable Event or to assume the defense thereof, with counsel
reasonably satisfactory to the Indemnitee; provided that if the Indemnitee reasonably
believes, after consultation with counsel selected by the Indemnitee, that (i) the use of counsel
chosen by the Company to represent the Indemnitee would present such counsel with an actual or
potential conflict of interest, (ii) the named parties in any such Claim (including any impleaded
parties) include the Company or any subsidiary of the Company and the Indemnitee and the Indemnitee
concludes that there may be one or more legal defenses available to him that are different from or
in addition to those available to the Company or any subsidiary of the Company or (iii) any such
representation by such counsel would be precluded under the applicable standards of professional
conduct then prevailing, then the Indemnitee shall be entitled to retain separate counsel (but not
more than one law firm plus, if applicable, local counsel in respect of any particular Claim) at
the Company’s expense. The Company shall not be liable to the Indemnitee under this Agreement for
any amounts paid in settlement of any Claim relating to an Indemnifiable Event effected without the
Company’s prior written consent. The Company shall not, without the prior written consent of the
Indemnitee, effect any settlement of any Claim relating to an Indemnifiable Event which the
Indemnitee is or could have been a party unless such settlement solely involves the payment of
money and includes a complete and unconditional release of the Indemnitee from all liability on all
claims that are the subject matter of such Claim. Neither the Company nor the Indemnitee shall
unreasonably withhold its or his consent to any proposed settlement; provided that the
Indemnitee may withhold consent to any settlement that does not provide a complete and
unconditional release of the Indemnitee. To the fullest extent permitted by Delaware law, the
Company’s assumption of the defense of a Claim pursuant to this Section 14 will constitute an
irrevocable acknowledgement by the Company that any Indemnifiable Expenses incurred by or for the
account of Indemnitee incurred in connection therewith are indemnifiable by the Company under
Section 2 of this Agreement.

     15. Binding Effect, Etc. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective successors, (including any
direct or indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company), assigns, spouses, heirs, executors
and personal and legal representatives. The Company shall require and cause any successor(s)
(whether directly or indirectly, whether in one or a series of transactions, and whether by
purchase, merger, consolidation, or otherwise) to all or a significant portion of the business
and/or assets of the Company and/or its subsidiaries (on a consolidated basis), by written
agreement in form and substance satisfactory to the Indemnitee and his or her counsel, expressly to
assume and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place; provided that
no such assumption shall relieve the Company from its obligations hereunder and any obligations
shall thereafter be

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joint and several. This Agreement shall continue in effect regardless of whether the
Indemnitee continues to serve as a director or officer of the Company and/or on behalf of or at the
request of the Company as a director, officer, employee or agent (which, for purposes hereof, shall
include a trustee, fiduciary, partner or manager or similar capacity) of another corporation,
limited liability company, partnership, joint venture, trust, association, employee benefit plan or
other enterprise. Neither this Agreement nor any duties or responsibilities pursuant hereto may be
assigned by the Company to any other person or entity without the prior written consent of the
Indemnitee.

     16. Severability. If any provision or provisions of this Agreement shall be held to
be invalid, illegal or unenforceable for any reason whatsoever, (a) the validity, legality and
enforceability of the remaining provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal or unenforceable) shall be construed so
as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable
and to give effect to the terms of this Agreement.

     17. Specific Performance, Etc. The parties recognize that if any provision of this
Agreement is violated by the parties hereto, the Indemnitee may be without an adequate remedy at
law. Accordingly, in the event of any such violation, the Indemnitee shall be entitled, if the
Indemnitee so elects, to institute proceedings, either in law or at equity, to obtain damages, to
enforce specific performance, to enjoin such violation, or to obtain any relief or any combination
of the foregoing as the Indemnitee may elect to pursue.

     18. Notices. All notices, requests, consents and other communications hereunder to
any party shall be deemed to be sufficient if contained in a written document delivered in person
or sent by telecopy, nationally recognized overnight courier or personal delivery, addressed to
such party at the address set forth below or such other address as may hereafter be designated on
the signature pages of this Agreement or in writing by such party to the other parties:

          (a) If to the Company, to:

Liberty Mutual Agency Corporation

175 Berkeley Street

Boston, Massachusetts 02117-0140

Attn: Chief Financial Officer

with a copy (which shall not constitute notice) to:

11

 

Liberty Mutual Agency Corporation

175 Berkeley Street

Boston, Massachusetts 02117-0140

Attn: General Counsel

          (b) If to the Indemnitee, to the address set forth on Annex A hereto.

All such notices, requests, consents and other communications shall be deemed to have been given or
made if and when received (including by overnight courier) by the parties at the above addresses
(or at such other address for a party as shall be specified by like notice). Any notice delivered
by any party hereto to any other party hereto shall also be delivered to each other party hereto
simultaneously with delivery to the first party receiving such notice.

     19. Counterparts. This Agreement may be executed in counterparts, each of which shall
for all purposes be deemed to be an original but all of which together shall constitute one and the
same agreement. Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.

     20. Headings. The headings of the sections and paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this Agreement or to
affect the construction or interpretation thereof.

     21. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made and to be performed
in such state without giving effect to the principles of conflicts of laws.

[SIGNATURE PAGE FOLLOWS]

12

 

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	LIBERTY MUTUAL AGENCY CORPORATION

 	 
	 	By:  	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 	 	 
	 	 	 
	 	[Indemnitee] 	 
	 	 	 
	 

 

 

Annex A

	 	 	 	 	 

	Name and Business Address	 	 
	 
	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Attn:
	 	 	 	 
	Tel:

	 	 

	 	 
	Fax:exv10w14

Exhibit 10.14

WORKERS’ COMPENSATION CATASTROPHE EXCESS OF LOSS

REINSURANCE CONTRACT

No. 2009300

EFFECTIVE JANUARY 1, 2009

between

PEERLESS INSURANCE COMPANY

Keene, New Hampshire

and

The reinsurers subscribing to the respective

Interests and Liabilities Agreements attached to

and forming part of this Contract

			
	 	 	 
	Effective: January 1, 2009
	 	2009 Agency Markets Workers’
	 
	 	Compensation Catastrophe
	 
	 	Reinsurance Contract

 

 

WORKERS’ COMPENSATION CATASTROHE EXCESS OF LOSS REINSURANCE CONTRACT

	 	 	 	 	 	 	 	 	 
	Clause	 	Article No.	 	Page
	ACCESS TO RECORDS (LM-00100-2008.08.25-A) (AM)
	 	 	16	 	 	 	11	 
	ARBITRATION (LM-00200-2008.06.27-A)
	 	 	19	 	 	 	14	 
	ASSIGNMENT, NOVATION or TRANSFER (LM-00300-2008.05.13-A)
	 	 	4	 	 	 	2	 
	BUSINESS COVERED
	 	 	1	 	 	 	1	 
	COMMENCEMENT AND EXPIRATION
	 	 	2	 	 	 	2	 
	COMMUTATION (LM-02601-2007.10.29-W)
	 	 	13	 	 	 	9	 
	CONFIDENTIALITY (LM-00400-2008.08.15-A)
	 	 	26	 	 	 	22	 
	CURRENCY (LM-00500-2005.08.09)
	 	 	15	 	 	 	11	 
	DEFINITIONS
	 	 	5	 	 	 	2	 
	DEFINITION OF LOSS OCCURRENCE
	 	 	11	 	 	 	6	 
	DIVIDENDS AND TAXES (LM-00600-2008.10.10-A)
	 	 	21	 	 	 	19	 
	ENTIRE AGREEMENT (LM-00701-2008.08.15-A)
	 	 	29	 	 	 	24	 
	ERRORS OR OMISSIONS (LM-00800-2005.06.02-A)
	 	 	17	 	 	 	13	 
	EXCLUSIONS
	 	 	6	 	 	 	3	 
	EXTRA CONTRACTUAL OBLIGATIONS (LM-00900-2007.03.28-A) (AM)
	 	 	10	 	 	 	7	 
	FEDERAL EXCISE TAX (LM-01000-2008.08.15-A)
	 	 	22	 	 	 	19	 
	FEDERAL TERRORISM EXCESS RECOVERY (LM-01100-2008.08.06-A)
	 	 	30	 	 	 	25	 
	GOVERNING LAW (LM-01200-2008.09.18-A)
	 	 	27	 	 	 	24	 
	INSOLVENCY (LM-01300-2008.07.25-A)
	 	 	18	 	 	 	13	 
	INTEREST PENALTY (LM-01400-2005.08.24-A) (AM)
	 	 	20	 	 	 	17	 
	LOSS ADJUSTMENT AND SETTLEMENT (LM-01500-2006.09.07-A) (AM)
	 	 	9	 	 	 	6	 
	LOSS IN EXCESS OF POLICY LIMITS (LM-01600-2005.08.24-A) (AM)
	 	 	12	 	 	 	8	 
	OFFSET (LM-01701-2005.06.02-A)
	 	 	23	 	 	 	19	 
	REINSURER CLAIMS OBLIGATIONS (LM-03100-2008.07.21-A) (AM)
	 	 	32	 	 	 	30	 
	SALVAGE AND SUBROGATION (LM-01800-2008.08.15-A) (AM)
	 	 	14	 	 	 	10	 
	SELF INSURED OBLIGATIONS
	 	 	7	 	 	 	5	 
	SERVICE OF SUIT (LM-01900-2008.07.17-A)
	 	 	24	 	 	 	20	 
	SEVERABILITY (LM-02000-2005.06.02-A)
	 	 	28	 	 	 	24	 
	SPECIAL CONDITIONS (LM-02100-2008.11.18-A) (AM)
	 	 	31	 	 	 	25	 
	TERRITORY (LM-02201-2005.06.02-A)
	 	 	3	 	 	 	2	 
	ULTIMATE NET LOSS (LM-02400-2008.05.13-A) (AM)
	 	 	8	 	 	 	5	 
	UNAUTHORIZED REINSURANCE (LM-02500-2008.09.24-A) (AM)
	 	 	25	 	 	 	20	 
	 
	ATTACHMENTS:
	 	 	 	 	 	 	 	 
	 
	EXHIBIT A — FIRST EXCESS OF LOSS — $75,000,000 x $25,000,000
	 	 	 	 	 	 	 	 
	 
	EXHIBIT B — SECOND EXCESS OF LOSS — $100,000,000 x $100,000,000
	 	 	 	 	 	 	 	 
	 
	EXHIBIT C — THIRD EXCESS OF LOSS — $300,000,000 X $200,000,000
	 	 	 	 	 	 	 	 
	 
	EXHIBIT D — FOURTH EXCESS OF LOSS — $200,000,000 X $500,000,000
	 	 	 	 	 	 	 	 
	 
	EXHIBIT E — FIFTH EXCESS OF LOSS — $300,000,000 X $700,000,000
	 	 	 	 	 	 	 	 
	 
	EXHIBIT F — SIXTH EXCESS OF LOSS — $200,000,000 X $1,000,000,000
	 	 	 	 	 	 	 	 
	 
	WAR AND TERRORISM EXCLUSION ENDORSEMENT (NBCR) (LM-03200-2008.08.06-W)
	 	 	 	 	 	 	 	 

			
	 	 	 
	Effective: January 1, 2009
	 	2009 Agency Markets Workers’
	 
	 	Compensation Catastrophe
	 
	 	Reinsurance Contract

 

 

WORKERS’ COMPENSATION CATASTROPHE

EXCESS OF LOSS REINSURANCE CONTRACT No. 2009300

(hereinafter referred to as the “Contract”)

The reinsurers subscribing to the respective

Interests and Liabilities Agreements attached to

and forming part of this Contract

(hereinafter referred to as the “Subscribing Reinsurer”)

does hereby indemnify, as herein provided and specified, the

PEERLESS INSURANCE COMPANY

Keene, New Hampshire

(hereinafter referred to as the “Company”).

ARTICLE 1 — BUSINESS COVERED

The Subscribing Reinsurer hereby agrees to indemnify the Company for all sums paid or payable for
losses occurring during the term of this Contract under in force, new and renewed Workers’
Compensation Policies, as defined herein, to the extent and on the terms and conditions and subject
to the exceptions, exclusions and limitations hereinafter set forth and as provided in Exhibits A,
B, C, D, E and F, which are attached hereto and made part of this Contract. For purposes of
identification, Exhibits A, B, C, D, E and F are entitled as follows:

	 	 	 	 	 

	 

	 	EXHIBIT “A” —
	 	FIRST WORKERS’ COMPENSATION CATASTROPHE
EXCESS OF LOSS REINSURANCE — ALL PERILS
($75,000,000 excess $25,000,000)
	 
	 	 	 	 
	 

	 	EXHIBIT “B” —
	 	SECOND WORKERS’ COMPENSATION CATASTROPHE
EXCESS OF LOSS REINSURANCE — ALL PERILS
($100,000,000 excess $100,000,000)
	 
	 	 	 	 
	 

	 	EXHIBIT “C” —
	 	THIRD WORKERS’ COMPENSATION CATASTROPHE
EXCESS OF LOSS REINSURANCE — ALL PERILS
($300,000,000 excess $200,000,000)
	 
	 	 	 	 
	 

	 	EXHIBIT “D” —
	 	FOURTH WORKERS’ COMPENSATION CATASTROPHE
EXCESS OF LOSS REINSURANCE — ALL PERILS
($200,000,000 excess $500,000,000)
	 
	 	 	 	 
	 

	 	EXHIBIT “E” —
	 	FIFTH WORKERS’ COMPENSATION CATASTROPHE
EXCESS OF LOSS REINSURANCE — ALL PERILS
($300,000,000 excess $700,000,000)
	 
	 	 	 	 
	 

	 	EXHIBIT “F” —
	 	SIXTH WORKERS’ COMPENSATION CATASTROPHE
EXCESS OF LOSS REINSURANCE— ALL PERILS
($200,000,000 excess $1,000,000,000)

					
	 	 	 	 	 
	Effective: January 1, 2009
	 	Page 1 of 44
	 	2009 Agency Markets Workers’
	 
	 	 	 	Compensation Catastrophe
	 
	 	 	 	Reinsurance Contract

 

 

ARTICLE 2 — COMMENCEMENT AND EXPIRATION

	A.	 	This Contract shall be effective 12:01 a.m., Local Standard Time, January 1, 2009 and shall
remain in full force and effect until 12:01 a.m., Local Standard Time, January 1, 2010, in
respect of Loss Occurrences taking place during said period, unless terminated earlier as
provided herein. Local Standard Time refers to the location of the risk.
	 
	B.	 	The Subscribing Reinsurer shall have no liability for losses arising out of occurrences
commencing after the effective time and date of expiration.
	 
	C.	 	If this Contract expires while a Loss Occurrence covered hereunder is in progress, the
Subscribing Reinsurer shall indemnify the Company as if the entire Loss Occurrence had
occurred during the term of this Contract.

ARTICLE 3 — TERRITORY (LM-02201-2005.06.02-A)

This Contract is worldwide in scope and shall cover risks wherever located.

ARTICLE 4 — ASSIGNMENT, NOVATION, OR TRANSFER (LM-00300-2008.05.13-A)

This Contract shall be binding upon and inure to the benefit of the Company and the
Subscribing Reinsurer and their respective successors and assigns provided, however, that this
Contract may not be assigned, novated or transferred, including any attempted transfer of rights
and/or obligations under any U.S. or foreign statute, legislation or jurisprudence, by either the
Company or the Subscribing Reinsurer , or as the result of the action(s) of a parent company or an
affiliated entity of either, without the prior written consent of the other. In the event of any
assignment, novation or transfer, the assignor, novator or transferor shall remain liable under
this Contract, and further guarantees the performance of all obligations of any assignee, novatee
or transferee under this Contract. Notwithstanding the foregoing, the Company may assign this
Contract to an insurance entity controlling, controlled by or under common control with the
Company, without the Subscribing Reinsurer’s written consent.

ARTICLE 5 — DEFINITIONS

	A.	 	The term “Policy” or “Policies,” as used in this Contract, means any written or oral binder,
policy, cover note, or contract of insurance or reinsurance and/or any endorsement to any of
the foregoing, issued, accepted, or held covered provisionally or otherwise, by or on behalf
of the Company or a Legal Entity (hereinafter each referred to as a “Legal Entity” and,
collectively, the “Legal Entities”), and reinsured, directly or indirectly, by the Company and
identified as belonging to the Agency Markets strategic business unit of the Liberty Mutual
Group.

					
	 	 	 	 	 
	Effective: January 1, 2009
	 	Page 2 of 44
	 	2009 Agency Markets Workers’
	 
	 	 	 	Compensation Catastrophe
	 
	 	 	 	Reinsurance Contract

 

 

	B.	 	The term “Workers’ Compensation Policies,” as used in this Contract, means Workers’
Compensation Policies, including all Policies providing coverage for benefits or other amounts
payable under any workers compensation law or any similar law; Employer’s Liability coverage
under any Policy; Foreign Voluntary Workers’ Compensation coverage under any Policy, Foreign
Workers’ Compensation coverage under any Policy; and Excess Workers’ Compensation and
Employer’s Liability coverage under any Policy.

ARTICLE 6 — EXCLUSIONS

	A.	 	This Contract does not apply to and specifically excludes the following:
	 
	 	 	Section 1

	 	a.	 	Occupational Disease unless arising from a sudden and accidental event of not more than
forty-eight (48) hours in duration.
	 
	 	b.	 	Cumulative Trauma.
	 
	 	c.	 	Nuclear Accident.
	 
	 	d.	 	All liability of the Company or a Legal Entity arising by contract, operation of law,
or otherwise, from its participation or membership, whether voluntary or involuntary, in
any insolvency fund. “Insolvency fund” includes any guaranty fund, insolvency fund, plan,
pool, association, fund or other arrangement, however denominated, established or governed,
which provides for any assessment of or payment or assumption by the Company or a Legal
Entity of part or all of any claim, debt, charge, fee or other obligation of any insurer,
or its successors or assigns, which has been declared by any competent authority to be
insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or
other obligation in whole or in part.
	 
	 	e.	 	Reinsurance Assumed except for any Workers’ Compensation business assumed by the
Company or a Legal Entity through inter-company reinsurance agreements between the members
of the Agency Markets strategic business unit, reinsurance assumed by Liberty National
Market-Global Business Unit, business classified as reinsurance written by the Company or a
Legal Entity for and on behalf of a direct insured, business assumed from OneBeacon
Insurance Group and USAIG business written on behalf of the Company.
	 
	 	f.	 	War and Terrorism as per the attached War and Terrorism Exclusions Endorsement (NBCR).

	 	 	Section 2

	 	a.	 	Offshore Oil Rigs.
	 
	 	b.	 	Jones Act.
	 
	 	c.	 	Professional Sports Teams.
	 
	 	d.	 	Airline Crews, except USAIG business written on behalf of the Company.

					
	 	 	 	 	 
	Effective: January 1, 2009
	 	Page 3 of 44
	 	2009 Agency Markets Workers’
	 
	 	 	 	Compensation Catastrophe
	 
	 	 	 	Reinsurance Contract

 

 

	 	e.	 	Any of the following occupations, employments or risks (except when not disclosed to
the Company or a Legal Entity, when incidental to a non-excluded risk (the Company to be
the sole judge of what is incidental) or when insured through voluntary or statutory pools
or assigned risk plans):

	 	1)	 	The navigation and operation of vessels on the high seas in foreign commerce;
	 
	 	2)	 	Underground coal mining;
	 
	 	3)	 	Fireworks manufacturing;
	 
	 	4)	 	Manufacturing of fuses used with explosive risks and fireworks;
	 
	 	5)	 	Explosive risks, as per the following:

	 	(i)	 	Manufacture of any explosive substance intended for use as an
explosive;
	 
	 	(ii)	 	Manufacture of any product, other than Fireworks and Fuses, in which
any such explosive substance is an ingredient;
	 
	 	(iii)	 	The loading of any such explosive substance into containers for use as
explosive objects, propellant charges or detonating devices, and the incidental
storage thereof;
	 
	 	(iv)	 	Handling, transportation or storage of any such explosive substance
intended solely for war purposes.

	B.	 	If any risks reinsured hereunder, but falling within the scope of the exclusions in Section 2
are assigned to the Company or a Legal Entity under any assigned risk plan, the coverage
afforded by this Contract shall apply to such risks, but only for the Policy limits prescribed
by said plan, and subject to the limits of this Contract.
	 
	C.	 	The above exclusions within Section 2 shall not apply when they are merely incidental to the
main operations of the insured, provided such main operations are covered by the Company or a
Legal Entity and are not themselves excluded from the scope of this Contract. The Company
shall be the sole judge of what is “incidental”.
	 
	D.	 	Should the Company or a Legal Entity, by reason of an inadvertent act, error, or omission, be
bound to afford coverage excluded hereunder within Section 2 the Subscribing Reinsurer shall
waive the exclusion(s). The duration of said waiver shall not extend beyond the time that
notice of such coverage has been received by the responsible underwriting authority of the
Company or a Legal Entity plus the minimum time period required thereafter for the Company or
a Legal Entity, as applicable, to terminate such coverage.
	 
	E.	 	The Company may submit to the Subscribing Reinsurer for special acceptance hereunder,
business not covered by this Contract. If said business is accepted by the Subscribing
Reinsurer, it shall be subject to the terms of this Contract, except as such terms are
modified by such acceptance. Any special acceptance business covered under the reinsurance
agreement being replaced by this Contract shall be automatically covered hereunder. Further,
should the Subscribing Reinsurer become a party to this Contract subsequent to the acceptance
of any business not normally covered hereunder, they shall automatically accept same as being a part of this Contract.

					
	 	 	 	 	 
	Effective: January 1, 2009
	 	Page 4 of 44
	 	2009 Agency Markets Workers’
	 
	 	 	 	Compensation Catastrophe
	 
	 	 	 	Reinsurance Contract

 

 

ARTICLE 7 — SELF-INSURED OBLIGATIONS

	A.	 	A Policy issued by the Company or a Legal Entity wherein the Company or a Legal Entity, as
applicable, is named as the insured either alone or jointly with another party shall, subject
to the other terms and conditions of this Contract, be deemed to be a Policy coming within the
scope of this Contract, notwithstanding that no legal liability may arise in respect thereof
by reason of the fact that the Company or a Legal Entity is the insured or one of the
insureds.
	 
	B.	 	Any such Policy shall have been issued prior to loss on the same form and at the same premium
as if the insured and the Company or a Legal Entity were dealing at arm’s length and claims,
if any, under such Policy shall be settled strictly in accordance with the Policy conditions.

ARTICLE 8 — ULTIMATE NET LOSS (LM-02400-2008.05.13-A) (AM)

	A.	 	“Ultimate Net Loss” as used in this Contract shall mean: (1) all amounts paid or due and
payable by the Company or a Legal Entity in the investigation, appraisal, adjustment,
settlement, litigation, defense or appeal, or payment of claims or judgments arising from each
and every loss, and/or Loss Occurrence for which the Company or a Legal Entity is or may be
found liable under the Policies, less salvages and subrogation recoveries and amounts
recovered or recoverable under pooling agreements or other reinsurances, whether collectible,
or not. “Ultimate Net Loss” includes, but is not limited to, the following paid or due and
payable amounts: loss adjustment expenses, defense costs, court costs, supersedeas and appeal
bond costs, Post or Prejudgment Interest or Delayed Damages, Attorneys Fees and Expenses,
Claim-Specific Declaratory Judgment Expenses, a pro rata share of salaries and expenses of the
Company’s or its affiliates’ field employees according to the time occupied in adjusting,
defending, and settling such loss, and expenses of all of the Company’s or its affiliates’
officers and employees incurred in connection with the loss; (except that salaries of officers
and employees engaged in general management of the Company or its affiliates’ and any office
expense of the Company or its affiliates’ shall not be included), and all other costs of
investigation or litigation (2) Extra Contractual Obligations (as defined in the Extra
Contractual Obligations Article), and (3) Loss in Excess of Original Policy Limits (as
described in the Loss in Excess of Original Policy Limits Article).
	 
	B.	 	Nothing herein shall be construed to mean that losses under this Contract are not
recoverable until the Company’s or a Legal Entity’s Ultimate Net Loss has been
ascertained.
	 
	C.	 	“Claim-Specific Declaratory Judgment Expenses” shall mean the fees and expenses incurred in
actions brought to determine whether the Company or a Legal Entity has a defense and/or
indemnification obligation for individual claims presented against Policies covered under this
Contract. Any Claim-Specific Declaratory Judgment Expense shall be deemed to have been fully
incurred on

					
	 	 	 	 	 
	Effective: January 1, 2009
	 	Page 5 of 44
	 	2009 Agency Markets Workers’
	 
	 	 	 	Compensation Catastrophe
	 
	 	 	 	Reinsurance Contract

 

 

	 	 	the same date as the insured’s original loss or Loss Occurrence (if any) giving
rise to the action, unless otherwise provided for within this Contract.

	D.	 	“Attorneys’ Fees and Expenses” as used above, shall mean all fees and expenses of attorneys,
including but not limited to the fees and expenses of the Company’s or its affiliates’
in-house attorneys providing legal advice on coverage questions and/or defending the Company
or a Legal Entity in coverage litigation, and fees and expenses of staff counsel in the
defense of policyholder claims. Such Attorneys’ Fees and Expenses for in-house attorneys and
staff counsel shall be calculated at the rate for such attorneys plus the expenses incurred by
such attorneys, but excluding office expenses of the Company and its affiliates and salaries
and expenses of their other employees.
	 
	E.	 	“Post or Prejudgment Interest or Delayed Damages” shall mean interest or damages added to a
settlement, verdict, award, or judgment based on the period of time prior to or after the
settlement, verdict, award, or judgment whether or not expressly identified as such.

ARTICLE 9 — LOSS ADJUSTMENT AND SETTLEMENT (LM-01500-2006.09.07-A) (AM)

	A.	 	The Company shall give notice, as soon as practicable, to the Subscribing Reinsurer of any
claim that it has reason to believe could involve this Contract. The Company shall keep the
Subscribing Reinsurer informed of significant developments likely to affect the cost of any
claim or claims hereunder.
	 
	B.	 	The Company or a Legal Entity may commence, continue, defend, settle, or withdraw from
actions, suits, or prosecutions and, generally, do all such things relating to any claim or
loss in which the Subscribing Reinsurer is interested as, in the Company’s or a Legal Entity’s
judgment, may be beneficial or expedient to the Company and the Subscribing Reinsurer. The
Company and the Legal Entities shall be the sole judges as to what claims are covered under
the Policies. All of the Ultimate Net Loss, as well as all loss settlements made and
judgments paid by the Company or a Legal Entity, provided they are within the terms of this
Contract either under the strict conditions of the Policies or by way of compromise, shall be
unconditionally binding upon the Subscribing Reinsurer, who agrees to pay all amounts for
which they are liable immediately upon reasonable evidence of the amount due being furnished
to the Subscribing Reinsurer by the Company. The true intent of this Contract is that the
Subscribing Reinsurer shall, in every case to which this Contract applies, follow the
settlements of the Company and the Legal Entities.

ARTICLE 10 — DEFINITION OF LOSS OCCURRENCE

	A.	 	The term “Loss Occurrence”, as used in this Contract, shall mean any one accident or
occurrence or series of accidents or occurrences arising out of one event. All losses that
are attributable directly or indirectly to one cause or one series of similar causes shall be
deemed to constitute one event.

					
	 	 	 	 	 
	Effective: January 1, 2009
	 	Page 6 of 44
	 	2009 Agency Markets Workers’
	 
	 	 	 	Compensation Catastrophe
	 
	 	 	 	Reinsurance Contract

 

 

	B.	 	As regards an act of Terrorism, multiple incidents which occur within one hundred sixty-eight
(168) hour period and appear to be carried out in concert or to have a related purpose or
common leadership shall be considered one “Loss Occurrence”.
	 
	C.	 	An act of terrorism means any activity that (1) involves a violent act or the unlawful use of
force or an unlawful act dangerous to human life, tangible or intangible property or
infrastructure, or threat thereof; and (2) appears to be intended to (i) intimidate or coerce
a civilian population, or any segment thereof, or (ii) disrupt any segment of the economy of a
government de jure or de facto, state, or country; or (iii) overthrow, influence, or affect
the conduct or policy of any government de jure or de facto by intimidation or coercion; or
(iv) affect the conduct of a government de jure or de facto by mass destruction,
assassination, kidnapping or hostage-taking.
	 
	D.	 	However, with respect to Natural Disasters the term “Loss Occurrence” shall mean any one or
more occurrences, disasters or casualties arising out of or caused by the perils described
below (a natural Act of God) during any continuous period of one hundred sixty-eight (168)
hours.

	 	1.	 	As regards the perils of tornado, cyclone, windstorm, hurricane and/or hail,
including ensuing storm surge or collapse, “Loss Occurrence” shall mean all losses
occasioned by tornadoes, cyclones, windstorm, hurricanes or hailstorms, including
ensuing storm surge or collapse, occurring during any continuous period of one hundred
sixty-eight (168) hours, and arising from the same atmospheric disturbance;
	 
	 	2.	 	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 one hundred sixty-eight (168) hours;
	 
	 	3.	 	As regards the following perils, “Loss Occurrence” shall mean all losses
occasioned by the following perils during any continuous period of one hundred
sixty-eight (168) hours:

	 	a)	 	Volcanic eruption;
	 
	 	b)	 	Flood, tides, tidal waves;
	 
	 	c)	 	Landslide/mudslide;
	 
	 	d)	 	Meteors.

ARTICLE 11 — EXTRA CONTRACTUAL OBLIGATIONS (LM-00900-2007.03.28-A) (AM)

	A.	 	This Contract shall protect the Company within the limits hereof for one hundred percent
(100%) of Extra Contractual Obligations. “Extra Contractual Obligations” are defined as any
actual or potential liabilities not covered under any other provision of this Contract,
arising from or relating to any alleged or actual act, error or omission, whether intentional
or otherwise, or from any alleged or actual negligence, tortious conduct, reckless conduct,
violations of statutes or regulations

					
	 	 	 	 	 
	Effective: January 1, 2009
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	 	2009 Agency Markets Workers’
	 
	 	 	 	Compensation Catastrophe
	 
	 	 	 	Reinsurance Contract

 

 

	 	 	governing the conduct of insurance companies and/or
claims adjusters, or bad faith in connection with: (i) the handling of any claim under the
Policies covered by this Contract, such liabilities arising because of, but not limited to,
the following: failure by the Company, a Legal Entity or by a third party claims
administrator to settle within the Policy limit, or by reason of alleged or actual negligence,
fraud or bad faith of the Company, a Legal Entity or by a third party claims administrator in
rejecting an offer of settlement, or in defending or prosecuting litigation, including
appeals, arbitration, or any alternative dispute resolution or settlement discussions
involving any claim; or (ii) the providing of or failure to provide any loss control or loss
prevention services in connection with any Policy hereunder.

	B.	 	The date on which any Extra Contractual Obligation is incurred by the Company or a Legal
Entity shall be deemed, in all circumstances, to be the date of the original Occurrence, loss
occurrence, accident, casualty, disaster, or loss, as selected by the Company.
	 
	C.	 	However, this Article shall not apply where the loss has been incurred due to the fraud of a
member of the Board of Directors or a corporate officer of the Company or a Legal Entity
acting individually or collectively or in collusion with any individual or corporation or any
other organization or party involved in the presentation, defense or settlement of any claim
covered hereunder.

ARTICLE 12 — LOSS IN EXCESS OF ORIGINAL POLICY LIMITS (LM-01600-2005.08.24-A) (AM)

	A.	 	This Contract shall protect the Company within the limits hereof, for one hundred percent
(100%) of any Loss in excess of the Company’s or Legal Entity’s original Policy limit where
Loss in excess of the limit has been incurred because of a failure by the Company, or a Legal
Entity or by a third-party claims administrator 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
defending or prosecuting litigation, including appeals, arbitration, or any alternative
dispute resolution or settlement discussions involving any claim.
	 
	B.	 	However, the above paragraph shall not apply where the Loss has been incurred due to the
fraud of a member of the Board of Directors or a Corporate Officer of the Company or a Legal
Entity acting individually or collectively or in collusion with any individual or corporation
or any other organization or party involved in the presentation, defense or settlement of any
claim covered hereunder.
	 
	C.	 	With regard to excess of Policy limits, the word “Loss” shall mean any amounts for which the
Company or a Legal Entity would have been contractually liable to pay had it not been for the
limit of the original Policy. The date on which any Loss in excess of the Company’s original
Policy limit is incurred by the Company or a Legal Entity shall be deemed, in all
circumstances, to be the date of the original Occurrence, accident, casualty, disaster, loss
occurrence or loss, as selected by the Company.

					
	 	 	 	 	 
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ARTICLE 13 — COMMUTATION (LM-02601-2007.10.29-W)

	A.	 	Eighty-four (84) months after the expiry of this Contract, the Company shall advise the
Subscribing Reinsurer of any Loss Occurrence which may not have been finally settled and which
may cause a claim under this Contract. Upon review, if either the Company or any Subscribing
Reinsurer requests commutation, such commutation shall proceed for all Subscribing Reinsurers,
as follows:

	 	1.	 	The Company shall prepare a final claim against the Subscribing Reinsurer in
respect of such Loss Occurrence.
	 
	 	2.	 	The Company and the Subscribing Reinsurer shall review the final claim and
shall attempt to reach settlement by mutual agreement.
	 
	 	3.	 	The final claim shall be calculated in accordance with the following criteria:

	 	a.	 	Mortality assumptions shall be calculated from the latest
available United States Census Table as follows:

	 	•	 	Survivor Benefits — Total Female or Male, whichever applies
	 
	 	•	 	Disability Benefits — Total Population

	 	 	 	The mortality assumptions should reflect: (a) the mortality improvement since
the publication of the most recent U.S. Census Table, and (b) the life
impairment of the injured worker.
	 
	 	b.	 	Remarriage expectations shall be in accordance with the
assumptions used by the National Council on Compensation Insurance in its
statistical tables, adjusted for the gender of the survivor.
	 
	 	c.	 	For all future medical costs, projected cash payments shall be
based upon projected long-term medical care and rehabilitation requirements,
using the average annual Medical Consumer Price Index (CPI) escalation rate of
the past twenty (20) years using the most recent published tables, going back
twenty (20) years.
	 
	 	d.	 	For all future indemnity costs, projected cash payments shall
be calculated based upon the average historical actual Cost-Of-Living
Adjustment (COLA) over however many years of information are available, but no more than twenty (20) years; up through the most recent
published data that is available from the State or Federal governing body
over Workers Compensation, whichever may apply.
	 
	 	e.	 	The annual interest discount percentage shall be calculated as
the average yield to maturity of all United States Treasury Bonds maturing
during the calendar quarter that is fifteen (15) years after the calendar
quarter in which the commutation date falls.

					
	 	 	 	 	 
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	 	f.	 	The final claim shall be the amount of cash payments made, plus
the discounted present value of the future payments as determined by the above
calculations. The final claim with respect to each injured worker or fatality
shall then be capped at $10,000,000 ($5,000,000 as respects the coverage
provided in Exhibit A). The resulting individual values shall then be summed
together. The Company’s retention shall then be subtracted from this amount
and the Subscribing Reinsurer shall pay up to the per occurrence limit afforded
under this Contract.

	B.	 	In the event the Company and the Subscribing Reinsurer are unable to reach a settlement
following the criteria laid out in steps A.1.a-f above, then the Company and the Subscribing
Reinsurer shall, within four (4) weeks from the written request of one of the parties,
mutually appoint an independent actuarial consulting firm or, in the event that they fail to
agree on the selection of an independent actuarial consulting firm within four (4) weeks, each
party shall name three (3) independent actuarial consulting firms of which the other party
shall decline two (2), and the decision shall be made by drawing lots. The appointed
independent actuarial consulting firm shall investigate, determine, and value the Loss
Occurrence. The valuation of such Loss Occurrence shall use the assumptions and methodologies
as stated above. The independent actuarial consulting firm’s decisions to the valuation of
such final claim shall be final and binding. The commutation process described in this
Article shall not be subject to any other dispute resolution process, including but not
limited to the Arbitration Article of this Contract.
	 
	C.	 	Payment by the Subscribing Reinsurer to the Company or any other third party mutually agreed
upon by the Subscribing Reinsurer and the Company of the final claim as determined by the
procedures described above, in respect of each such Loss Occurrence shall constitute complete
release of the Subscribing Reinsurer from liability for each such Loss Occurrence.
	 
	D.	 	This Article does not preclude termination or commutation of this Contract as provided in
the Special Conditions Article.

ARTICLE 14 — SALVAGE AND SUBROGATION (LM-01800-2008.08.15-A) (AM)

	A.	 	The Subscribing Reinsurer shall be credited with its share of salvage and/or subrogation in
respect of claims and settlements under this Contract, less its share of recovery expense.
Unless the Company agrees to waive such rights in the settlement of a disputed claim, or the
Company and Subscribing Reinsurer agree to the contrary, the Company and the Legal Entities
shall enforce the right to salvage and/or subrogation and shall prosecute all claims arising
out of such right. Should the Company or the Legal Entities refuse or neglect to enforce this
right, the Subscribing Reinsurer is hereby empowered and authorized to institute appropriate
action in the name of the Company or the Legal Entities, as applicable.
	 

					
	 	 	 	 	 
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	B.	 	Amounts recovered from salvage and/or subrogation and the expense of any salvage and/or
subrogation proceedings brought by the Company or the Subscribing Reinsurer to enforce such
rights shall be apportioned between the Company and the Subscribing Reinsurer in the ratio of
their respective interests in the total salvage and/or subrogation recovery, and shall be in
addition to the limits hereon. In the event there is a failure to obtain a salvage and/or
subrogation recovery, the expense of the proceedings shall be apportioned between the Company
and the Subscribing Reinsurer in the ratio of their respective interests in the total loss.

	C.	 	All salvage and/or subrogation recoveries obtained by either party, subsequent to payments
made by the Subscribing Reinsurer under this Contract, shall be applied as if obtained prior
to said payments and all necessary adjustments shall be made between the Company and the
Subscribing Reinsurer as soon as practicable after said salvage and/or subrogation recovery is
obtained.
	 
	D.	 	The Company or a Legal Entity shall have the right, before the happening of the loss, to
waive its right of subrogation as to that loss.

ARTICLE 15 — CURRENCY (LM-00500-2005.08.09)

Whenever a reference to a monetary currency appears in this Contract, it shall be construed to
mean United States Dollars ($). All payments made by either party shall be made in United States
Dollars. All amounts paid or received by the Company in any other currency shall be converted into
United States Dollars at the rate of exchange on the date at which it is entered on the books of
the Company.

ARTICLE 16 — ACCESS TO RECORDS (LM-00100-2008.08.25-A) (AM)

	A.	 	Except as otherwise provided in this Article, the Subscribing Reinsurer, or its duly
authorized representative, may upon reasonable prior written notice to the Company, at the
Subscribing Reinsurer’s own expense, examine at the offices of the Company or its affiliates,
during normal office hours, the Company’s or the Legal Entities’ Policy, accounting,
underwriting, or claim records and files, or any such additional relevant records and files, as they exist in the Company’s or its
affiliates’ possession or reasonable control, relating to business ceded under this
Contract. The Subscribing Reinsurer’s notice shall reasonably describe the nature of the
inspection that it wishes to conduct, the persons conducting the inspection and upon notice
of available files from the Company, the files that it wishes to review. Subject to the
limitations expressed in this Article, this right of inspection shall survive termination or
expiration of this Contract and shall continue as long as either Party has any rights or
obligations under this Contract.
	 
	B.	 	The Company reserves the right to deny the Subscribing Reinsurer access to records or files
concerning any particular claim(s) if the Subscribing Reinsurer has not disputed liability for
payment of such claim(s), and payment of such claim(s) is

					
	 	 	 	 	 
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	 	 	(are) more than ninety (90) days
overdue according to the Company’s records. The Company shall, however, prior to an
arbitration demand that may be instituted by either party, continue to respond to reasonable
specific requests for information and questions raised by the Subscribing Reinsurer concerning
such claims; and nothing in this Article shall restrict the right or ability of the
Subscribing Reinsurer to seek discovery of relevant information in a proceeding pursuant to
the Arbitration Article of this Contract.

	C.	 	As a condition precedent to access to records under this Article, the Subscribing Reinsurer,
its personnel and any authorized third party representative of the Subscribing Reinsurer shall
agree to the provisions of the Confidentiality Article of this Contract.
	 
	D.	 	The Company reserves the right to withhold any documents from the Subscribing Reinsurer (1)
concerning Trade Secrets of the Company or its affiliates, (2) subject to the terms of a third
party non-disclosure agreement with the Company or its affiliates requiring third party
consent to disclosure, (3) subject to the Work Product Privilege or Attorney-Client Privilege
or (4) concerning individual private information that as a matter of law cannot be disclosed
by the Company or its affiliates (hereinafter referred to in the Contract as “Privileged
Documents”). The Company shall reasonably try to exempt the Subscribing Reinsurers from any
third party non-disclosure agreement or obtain consent from the third party to disclose to the
Subscribing Reinsurers.
	 
	E.	 	Notwithstanding the foregoing, the Company shall permit and not object to the Subscribing
Reinsurer’s access to Privileged Documents falling within (3) above, in connection with the
underlying claim reinsured hereunder following final settlement or final adjudication of the
case or cases involving such claim, with prejudice against all claimants, and all parties to
such adjudications; provided that the Company, may defer release of such Privileged Documents
if there are subrogation, contribution, or other third party actions with respect to that
claim or case, which may jeopardize the Company’s or its affiliates’ defense by release of
such Privileged Documents. In the event that the Company shall seek to defer release of such Privileged Documents or to withhold documents concerning Trade Secrets, it
will in consultation with the Subscribing Reinsurer take other steps as reasonably necessary
to provide the Subscribing Reinsurer with the information it reasonably requires to
indemnify the Company without causing a loss of such privileges or protections. The
Subscribing Reinsurer, however, shall not have access to Privileged Documents relating to
any dispute between the Company and the Subscribing Reinsurer.
	 
	F.	 	For purposes of this Article, “Trade Secrets” shall have the meaning provided in Section 1839
of the United States Economic Espionage Act of 1996. “Attorney—Client Privilege” shall mean
communications of a confidential nature between 1) the Company or its affiliates, or anyone
retained by or in the control of the Company or its affiliates, or their in-house or outside
legal counsel, or anyone in

					
	 	 	 	 	 
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	 	 	the control of such legal counsel, and 2) any in-house or outside
legal counsel which relate to legal advice being sought by the Company or its affiliates
and/or which contains legal advice being provided to the Company or its affiliates. “Work
Product Privilege” shall mean communications, written materials and tangible things prepared
by or for in-house or outside counsel, or prepared by or for the Company or its affiliates, in
anticipation of or in connection with litigation, arbitration, or other dispute resolution
proceedings.

ARTICLE 17— ERRORS AND OMISSIONS (LM-00800-2005.06.02-A)

	A.	 	Any inadvertent delay, omission, or error in complying with the terms and conditions of
this Contract shall not be held to relieve either party hereto from any liability, which would
attach to it hereunder if such delay, omission, or error had not been made, provided such
delay, omission, or error is rectified upon discovery.
	 
	B.	 	However, this Article shall not override the application of the commutation of losses as set
forth in the Commutation Article or the Special Conditions Article of this Contract.

ARTICLE 18 — INSOLVENCY (LM-01300-2008.07.25-A)

If more than one reinsured company is referenced within the definition of “Company” in the
Preamble to this Contract, this Article shall apply severally to each such company. Further, this
Article and the laws of the domiciliary state shall apply in the event of the insolvency of any
company intended to be covered hereunder. In the event of a conflict between any provision of this
Article and the laws of the domiciliary state of any company intended to be covered hereunder, that
domiciliary state’s laws shall prevail.

	A.	 	In the event of the insolvency of the Company, reinsurance under this Contract shall be
payable with reasonable provision for verification, on the basis of claims allowed against the
insolvent Company by any court of competent jurisdiction or by any liquidator, receiver, conservator, or statutory successor of the Company having
authority to allow such claims, without diminution because of such insolvency or because
such liquidator, receiver, conservator, or statutory successor has failed to pay all or a
portion of any claims. Such payments by the Subscribing Reinsurer shall be made directly to
the Company or its liquidator, receiver, conservator, or statutory successor, except to the
extent Section 4118(a) of the New York Insurance Law applies, or except (1) where the
Contract specifically provides another payee of such reinsurance in the event of the
insolvency of the Company, or (2) where the Subscribing Reinsurer with the consent of the
direct insured or insureds has assumed such Policy obligations of the Company as direct
obligations of the Subscribing Reinsurer to the payees under such Policies and in
substitution for the obligations of the Company to such payees.
	 

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

	C.	 	Where two or more Reinsurers are involved in the same claim and a majority in interest elects
to interpose defense to such claim, the expense shall be apportioned in accordance with the
terms of this Contract as though such expense had been incurred by the insolvent Company.
	 
	D.	 	Applicable to a Subscribing Reinsurer licensed to write Workers’ Compensation business in
California.
	 
	 	 	With respect to California Workers Compensation loss(es), it is agreed that in the event of
any delinquency proceeding, receivership, or insolvency of the Company and/or the failure of
the Subscribing Reinsurer, for any reason, to make payments under this Contract, the
Insurance Commissioner of California may, upon 30-days notice, draw upon any sums from the
deposit made by the Subscribing Reinsurer in accordance with the provisions of sections
11691 — 11703 of the California Insurance Code.

ARTICLE 19 — ARBITRATION (LM-00200-2008.06.27-A)

	A.	 	Disputes to be Arbitrated. With the exception of any dispute resolution procedures
that are otherwise contained in this Contract, any and all disputes between the Company and
any Subscribing Reinsurer or Reinsurers (“Party” individually or “Parties” collectively)
arising out of, relating to, or concerning this Contract, whether sounding in contract or tort
and whether arising during or after this Contract’s formation, or after its termination,
including disputes as to whether the Contract was validly formed or is voidable, shall be
submitted to the decision of an arbitration panel (“Panel”). The Panel shall consist of an
umpire and two party-appointed arbitrators unless a Party meets the requirements of Paragraph
C of this Article and demands arbitration pursuant thereto, in which case the Panel would
consist of an umpire only.
	 
	B.	 	Procedures. Except as provided herein, any arbitration shall be based upon the
Procedures for the Resolution of U.S. Insurance and Reinsurance Disputes, Regular Panel
Version, dated April 2004 (the “Procedures”), developed by the

					
	 	 	 	 	 
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	 	 	Insurance and Reinsurance
Dispute Resolution Task Force, subject to the following
modifications:

	 	1.	 	Qualifications of the arbitrators and umpires shall be in accordance with
section 6.2 of the Procedures, except that other professionals who have worked for at
least 10 years for an insurer or reinsurer shall also be qualified to serve as an
arbitrator or umpire.
	 
	 	2.	 	The Parties hereby designate the umpire list maintained by ARIAS (U.S.) as the
list to be used in the event that section 6.7(a) of the Procedures is invoked.
	 
	 	3.	 	Unless otherwise mutually agreed, the members of the Panel shall be impartial
and disinterested. The members of the Panel may not be: (1) in the control of any
Party or its parent, affiliate, or agent, (2) a former director or officer of any Party
or its parent, affiliate, or agent, or (3) a likely witness in the arbitration. The
requirement of impartiality means that all members of the Panel shall have the same
obligation to approach the Panel’s duties and decisions with fairness and without
consideration for the fact that Panel members may have been appointed by one of the
Parties. The requirement of impartiality does not mean that any arbitrator can have no
previous knowledge of or experience with respect to issues involved in the dispute or
disputes.
	 
	 	4.	 	The first sentence of Section 10.4 of the Procedures shall be replaced by the
following sentence: “The Panel shall require that each Party submit concise written
statements of position, including summaries of the facts and evidence a Party intends
to present, discussion of the applicable law and the basis for the requested Award or
denial of relief sought.”
	 
	 	5.	 	Once the Panel has been constituted, no Party (or anyone acting for a Party)
shall have any communications concerning the arbitration or any of the issues before
the Panel with any member of the Panel that is not also disclosed to all other Parties
and all members of the Panel. Each Panel member shall have a continuing duty to
disclose promptly to all Parties and all Panel members any violation of this
prohibition and the specifics of any improper communications that occurred. This
prohibition shall remain in place until all challenges to any arbitration awards and
decisions have been either waived or finally concluded.
	 
	 	6.	 	Section 11.1 of the Procedures shall be replaced by the following provision:
“The Parties may propound discovery seeking disclosure of such information and/or
documents relevant to the dispute or necessary for the proper resolution of the
dispute.”
	 
	 	7.	 	Position statements may be amended at any reasonable time, but not later than
the close of discovery without a showing to the Panel that the

					
	 	 	 	 	 
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	 	 	 	amending Party could not
reasonably have raised the new claim or issue at an earlier time.

	 	8.	 	The Panel shall hold an evidentiary hearing, if one is necessary, within one
year of the arbitration demand, unless the Parties otherwise agree. Should a Party
seek a reasonable extension to this time frame for good cause shown, the other Party’s
agreement shall not be unreasonably withheld.
	 
	 	9.	 	To the extent permitted by the law, the Panel shall have the authority to issue
subpoenas and other orders to enforce its decisions.
	 
	 	10.	 	The Panel may award reasonable attorneys’ fees and arbitration costs to the
prevailing Party, as determined by the Panel.
	 
	 	11.	 	Section 14.3 of the Procedures shall be replaced by the following provision:
“The Panel shall make a decision and issue an award with regard to the terms expressed
in this Contract, and the custom and practice of the property and casualty insurance
and reinsurance business. The Panel shall not be obligated to follow the strict rules
of law and evidence.”

	C.	 	Alternative Streamlined Procedures. Notwithstanding the foregoing provisions of this
Article, the Alternative Streamlined Procedures set forth in section 16 of the Procedures, as
modified by sections B3, B4, and B9 through B11 of this Article, shall apply in the event
that, in a consolidated proceeding or otherwise, the Party initiating arbitration is seeking
payment of a total amount that is no greater than one million dollars ($1,000,000), or the
currency equivalent thereof. Sections 16.1, 16.2, 16.3 and the second sentence of section
16.4 of the Alternative Streamlined Procedures shall not apply. The Parties agree to comply
with section 6.7 of the Procedures to appoint a single umpire, and hereby designate the umpire list
maintained by ARIAS (U.S.) as the list to be used in section 6.7(a).
	 
	D.	 	Hearing Location. The hearing shall be held in Boston, Massachusetts, unless the
Parties mutually agree to a different location.
	 
	E.	 	Confirmation. Either Party may apply to a court of competent jurisdiction for an
order confirming any award of the Panel; a judgment of that court shall thereupon be entered
on any award. If the application for confirmation is contested and a judgment is issued
confirming the award, then the Party against whom confirmation is sought shall pay the
attorneys’ fees incurred by the Party who applied for the confirmation and all court costs of
any such proceeding.
	 
	F.	 	Equitable Relief from a Court of Law. Nothing herein shall be construed to prevent
any participating Party from applying to a court of competent jurisdiction to issue a
restraining order or other equitable relief to maintain the “status quo” of the Parties
participating in the arbitration pending the decision and award by the Panel.
	 
	G.	 	Consolidated Proceedings.

					
	 	 	 	 	 
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	 	1.	 	Same contract, single Subscribing Reinsurer. Both the Company and any single
Subscribing Reinsurer on this Contract have the right to combine any and all disputes
between them that concern this Contract (including any renewal of this Contract or any
contract for which this Contract is a renewal) into a single arbitration proceeding
before a single Panel, except that the standard for determining whether a Party may add
a new issue, claim, or dispute to an arbitration proceeding shall be the standard for
amending a Position statement, as set forth in Paragraph B7 of this Article.

	 	2.	 	Multiple contracts, single Subscribing Reinsurer.

	 	a.	 	Either the Company or any single Subscribing Reinsurer has the
right to combine any and all disputes between the Company and such single
Subscribing Reinsurer into one arbitration proceeding before a single Panel
where such disputes involve this Contract and any additional contracts between
the two Parties, except that the standard for determining whether a Party may
add a new issue, claim, or dispute to an arbitration proceeding shall be the
standard for amending a Position statement, as set forth in Paragraph B7 of
this Article.
	 
	 	b.	 	Notwithstanding the foregoing, subject in each instance to the
mutual agreement of the Parties, new issues, claims, or disputes may be added
to such existing arbitration proceeding.

	 	3.	 	Same contract, multiple Reinsurers. At the Company’s option, if more than one
Subscribing Reinsurer is involved in arbitration relating to this Contract, where
there are common questions of law or fact and a possibility of conflicting awards or
inconsistent results, all such Reinsurers shall constitute and act as one Party for purposes of this Article and
communications shall be made by the Company to each of the Reinsurers constituting
the one Party; provided, however, that the Reinsurers shall have the right to
assert several, rather than joint defenses or claims, and to be represented by
separate counsel. This provision shall not change the liability of each of the
Reinsurers under the terms of this Contract from several to joint.

	H.	 	Choice of Law. The law set forth in the Governing Law Article shall apply to this
Arbitration Article. In addition, to the extent the Panel (or the umpire in an Alternative
Streamlined Procedure) looks to applicable law, such Panel or umpire shall apply the law as
set forth in the Governing Law Article of this Contract.
	 
	I.	 	Survival of Article. This Article shall survive the termination or expiration of
this Contract.

ARTICLE 20 — INTEREST PENALTY (LM-01400-2005.08.24-A) (AM)

	A.	 	The interest amounts provided for in this Article shall apply to the Subscribing Reinsurer
or to the Company in the following circumstances:

					
	 	 	 	 	 
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	 	1.	 	If a loss payment owed by the Subscribing Reinsurer to the Company is not
received within 45 calendar days following the date of presentation
to the Subscribing
Reinsurer of information necessary to approve payment of the claim, and/or

	 	2.	 	If any premium payment owed by the Company to the Subscribing Reinsurer is not
received within 45 calendar days following the date on which payment is due, and/or
	 
	 	3.	 	If any premium adjustment, agreed by either party to the other, is not
received within 150 calendar days following the expiry or anniversary of this
Contract, and/or
	 
	 	4.	 	If any return of premiums, commissions, profit sharing, or any amounts not
provided in subparagraphs 1, 2, and 3 above, are not received in accordance with the
date specified in this Contract or if no date is specified, within 90 calendar days
following the date the debtor party received the billing.

	B.	 	Failure by the Subscribing Reinsurer or Company to comply with their respective payment
obligations within the time periods as herein provided shall, as of that date, be subject to
an interest payment computed by multiplying the amount due by a variable rate consisting of
the U.S. Prime Rate as published in the Eastern Edition of The Wall Street Journal on
the first day of the calendar month in which the amount became past due, plus 2%. The
variable rate shall be adjusted monthly thereafter to equal the U.S. Prime Rate as published in the Eastern Edition of
The Wall Street Journal on the first day of each successive month during which the
amount due remains unpaid, plus 2%. The product shall then be multiplied by 1/365 for each
day after the due date that the amount due and the interest amount remain unpaid. Any
interest that occurs pursuant to this Article shall be calculated by the party to which it
is owed.
	 
	C.	 	The validity of any claim or payment may be contested under the provisions of this Contract.
If the debtor party prevails in an arbitration or any other proceeding with respect to the
amounts in dispute, there shall be no interest penalty due. If the creditor party wholly or
partially prevails on any of the amounts in dispute, the interest penalty shall be awarded as
outlined above. Such interest penalty shall be calculated from the date the monies were due
and owing to the date of resolution of the arbitration or proceeding, and shall be payable as
of the date of resolution of the arbitration or proceeding.
	 
	D.	 	If a Subscribing Reinsurer advances the entire or partial payment of any claim it is
contesting, and wholly or partially prevails in the contest, the Company shall promptly
return the applicable amount of such payment. The arbitrator(s) hearing such dispute shall
determine if interest shall be added to the amount returned by the Company.

					
	 	 	 	 	 
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	E.	 	Any interest owing pursuant to this Article may be waived by the party to which it is owed.
Further, any interest calculated pursuant to this Article that is $100 or less shall be
waived. Any waiver of any interest pursuant to this paragraph, however, shall not affect the
waiving party’s right to claim and/or pursue interest for any other failure by the other
party to make payment when due under this Article.

ARTICLE 21 — DIVIDENDS AND TAXES (LM-00600-2008.10.10-A)

In consideration of the terms of this Contract, the Company shall not claim any deduction in
respect of any amount paid as dividends or as reinsurance premium when making tax returns, other
than income or profits tax returns to any State or to the District of Columbia.

ARTICLE 22 — FEDERAL EXCISE TAX LM-01000-2008.08.15-A)

	A.	 	This Article is applicable to any Subscribing Reinsurer who is domiciled outside of the
United States of America, except for any Subscribing Reinsurer exempt from Federal Excise Tax.
A Subscribing Reinsurer that claims exempt status from Federal Excise Tax shall provide to
the Company, upon its request, proof that the exempt status adequately satisfies the demands
of the U.S. Internal Revenue Service, Department of the Treasury, or its successor and/or
other applicable U.S. government authority.
	 
	B.	 	Each Subscribing Reinsurer shall allow the applicable percentage of the premium payable
hereon (as imposed under Section 4371 of the Internal Revenue Code) for the purpose of paying
Federal Excise Tax to the extent such premium is subject to such tax.
	 
	C.	 	In the event of any return of premium, the Subscribing Reinsurer shall deduct the aforesaid
percentage from the return premium payable hereon and the Company or its agent shall recover
such tax from the United States Government.

ARTICLE 23 — OFFSET (LM-01701-2005.06.02-A)

Each party to this Contract together with their successors or assigns shall have and may
exercise, at any time, the right to offset any balance(s) due the other (or, if more than one, any
other) under this Contract. Such offset may include balances due under this Contract regardless of
whether such balances arise from premiums, losses, or otherwise, provided however, that in the
event of insolvency of a party hereto, offsets shall only be allowed in accordance with the
provisions of the applicable law, statute, or regulation governing such offset.

					
	 	 	 	 	 
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ARTICLE
24 — SERVICE OF SUIT (LM-01900-2008.07.17-A)

(This
article applies to unauthorized reinsurers and to reinsurers who are
domiciled outside the United States of America.)

	A.	 	This Service of Suit Article will 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.
	 
	B.	 	In the event of the failure of the Subscribing Reinsurer to pay any amount claimed to be due
hereunder, the Subscribing Reinsurer, at the request of the Company, will submit to the
jurisdiction of a Court of competent jurisdiction within the United States. Nothing in this
Article constitutes or should be understood to constitute a waiver of the Subscribing
Reinsurer’s right 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 Subscribing Reinsurer, once the appropriate Court is selected, whether such court
is the one originally chosen by the Company and accepted by the Subscribing Reinsurer or is
determined by removal, transfer, or otherwise, as provided for above, will comply with all
requirements necessary to give said Court jurisdiction and, in any suit instituted against any of them upon this Contract, will abide by the final decision of
such Court or of any Appellate Court in the event of an appeal.
	 
	C.	 	Service of process in such suit may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New
York, NY 10019-6829.
	 
	D.	 	The above-named are authorized and directed to accept service of process on behalf of the
Subscribing Reinsurer in any such suit. Further, pursuant to any statute of any state,
territory, or district of the United States that makes provision therefore, the Subscribing
Reinsurer hereby designates the Superintendent, Commissioner, or Director of Insurance, or
other officer specified for that purpose in the statute, or their successor(s) in office, as
their true and lawful attorney upon whom may be served any lawful process in any action, suit,
or proceedings instituted by or on behalf of the Company or any beneficiary hereunder arising
out of this Contract, and hereby designate the above-named as the person to whom the said
officer is authorized to mail such process or a true copy thereof.

ARTICLE 25 — UNAUTHORIZED REINSURANCE (LM-02500-2008.09.24-A) (AM)

(Applies only to a Subscribing Reinsurer who at the inception of the Contract or at any time
thereafter does not qualify for full credit with any insurance regulatory authority having
jurisdiction over the Company’s reserves.)

					
	 	 	 	 	 
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	A.	 	As regards Policies issued by the Company coming within the scope of this Contract, the
Company agrees that when it shall file with the insurance regulatory authority or set up on
its books reserves for unearned premium and losses covered hereunder which it shall be
required by law to set up, it will forward to the Subscribing Reinsurer a statement showing
the proportion of such reserves which is applicable to the Subscribing Reinsurer. The
Subscribing Reinsurer hereby agrees to fund such reserves in respect of unearned premium,
known outstanding losses that have been reported to the Subscribing Reinsurer and allocated
loss adjustment expense relating thereto, losses and allocated loss adjustment expense paid by
the Company or the Legal Entities but not recovered from the Subscribing Reinsurer, plus
reserves for losses incurred but not reported as determined by the Company, as shown in the
statement prepared by the Company (hereinafter referred to as “ Subscribing Reinsurer
Obligations”) by Letters of Credit, unless the Company and the Subscribing Reinsurer otherwise
agree, and/or the method of funding is determined by applicable law, statute, or regulation.

	B.	 	When funding by Letters of Credit, the Subscribing Reinsurer agrees to apply for and secure
timely delivery to the Company of clean, irrevocable, and unconditional Letters of Credit
issued by a bank that is a qualified U.S. financial institution and containing provisions
acceptable to the insurance regulatory authorities having jurisdiction over the Company’s
reserves in an amount equal to the Subscribing Reinsurer’s proportion of said reserves. At
the Company’s request, the Subscribing Reinsurer will agree to provide separate Letters of Credit for each
Legal Entity. Such Letters of Credit shall be issued for a period of not less than one
year, and shall be automatically extended for one year from the date of expiration or any
future expiration date unless 60 days prior to any expiration date, the issuing bank shall
notify the Legal Entity by certified mail that the issuing bank elects not to consider the
Letters of Credit extended for any additional period.
	 
	C.	 	The Subscribing Reinsurer and Company agree that the Letters of Credit provided by the
Subscribing 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, a
Legal Entity or any successor, by operation of law, of the Company or a Legal Entity,
including without limitation, any liquidator, rehabilitator, receiver, or conservator of the
Company, without diminution because of the insolvency of the Company, a Legal Entity or the
Subscribing Reinsurer for one or more of the following purposes:

	 	1.	 	To pay or reimburse the Company or a Legal Entity for:

	 	a.	 	The Subscribing Reinsurer’s share under this Contract
of premiums returned, but not yet recovered from the Subscribing
Reinsurer, to the owners of Policies reinsured under this Contract on
account of cancellations of such Policies; and
	 
	 	b.	 	The Subscribing Reinsurer’s share, under this
Contract, of surrenders and benefits or losses paid by the Company or a Legal
Entity, but not yet recovered from the Subscribing Reinsurer, under
the terms and provisions of the Policies reinsured under this Contract; and
	 

					
	 	 	 	 	 
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	 	c.	 	Any other amounts necessary to secure the credit or reduction
from liability for reinsurance taken by the Company or a Legal Entity.

	 	2.	 	Where the Letters of Credit will expire without renewal or be reduced or
replaced by Letters of Credit for a reduced amount and where the Subscribing
Reinsurer’s entire obligations under this Contract remain unliquidated and
undischarged 10 days prior to the termination date, to withdraw amounts equal to the
Subscribing Reinsurer’s share of the liabilities, to the extent that the
liabilities have not yet been funded by the Subscribing Reinsurer and exceed
the amount of any reduced or replacement Letters of Credit, and deposit those amounts
in a separate account in the name of the Company or a Legal Entity in a qualified U.S.
financial institution, apart from its general assets, in trust for such uses and
purposes specified in above as may remain after withdrawal and for any period after the
termination date.

	D.	 	At annual intervals, or at the Company’s option, on a quarterly basis, the Company shall
prepare a specific statement of the Subscribing Reinsurer’s Obligations, for the sole purpose of amending the Letters of Credit, in the following
manner:

	 	1.	 	If the statement shows that the Subscribing Reinsurer’s Obligations exceed the
balance of credit as of the statement date, the Subscribing Reinsurer shall, within 30
days after receipt of notice of such excess, secure delivery to the Company of an
amendment to the Letters of Credit increasing the amount of credit by the amount of
such difference.
	 
	 	2.	 	If, however, the statement shows that the Subscribing Reinsurer’s Obligations
are less than the balance of credit as of the statement date, the Company shall, within
30 days after receipt of written request from the Subscribing Reinsurer, release such
excess credit by agreeing to secure an amendment to the Letters of Credit reducing the
amount of credit available by the amount of such excess credit.

	E.	 	Any and all disputes between the Company and any Subscribing Reinsurer or Reinsurers
(“Party”, individually, or “Parties”, collectively) arising out of, relating to, or
concerning this Article shall be resolved pursuant to the ARIAS-U.S. Newer Arbitrator
Program. Unless the Parties otherwise agree, the ARIAS Newer Arbitrator Program expedited
proceeding with a single Newer Arbitrator shall be used to resolve any such disputes.

ARTICLE 26 — CONFIDENTIALITY (LM-00400-2008.08.15-A)

	A.	 	Confidential Information. The submission materials, and any Policy, financial,
underwriting, accounting, and claims information, data statements, representations, and other
materials provided by the Company or its affiliates and

					
	 	 	 	 	 
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	 	 	received by the Subscribing Reinsurer
in the course of an audit, inspection, or otherwise, represent confidential or proprietary
information (“Confidential Information”). This Confidential Information is intended for the
sole use of the Subscribing Reinsurer (and its retrocessionaires, accountants, attorneys,
auditors, actuaries or third party catastrophe modelers or others where required by law) as
may be necessary in analyzing and/or accepting a participation in and/ or executing its
responsibilities under or related to this Contract. The Subscribing Reinsurer acknowledges
and agrees that with respect to any review of Confidential Information by the Subscribing
Reinsurer, and/or discussion of Confidential Information, the Company and its affiliates do
not waive and do not intend to waive any available privilege or protection. The review of
Confidential Information by the Subscribing Reinsurer and/or discussion of Confidential
Information with the Company or its affiliates shall not destroy, waive, or otherwise impair
the proprietary and/or protected status of any Confidential Information or any information
revealed in such discussion with the personnel of the Company or its affiliates, whether
reviewed by and/or discussed with the Subscribing Reinsurer intentionally or inadvertently,
nor does the review of the Confidential Information and/or discussion of Confidential
Information with the Company or its affiliates constitute an estoppel or waiver of the
Company’s or its affiliates’ rights to assert the attorney-client or work-product privileges, or any other applicable privilege
or protection, over certain documents contained in the Company’s or its affiliates’ files
and/or certain information.

	B.	 	The Company and the Subscribing Reinsurer agree that no confidentiality obligations will
apply to Confidential Information to the extent such Confidential Information: (1) is or
becomes available to the public, other than as a result of impermissible disclosure by the
Subscribing Reinsurer, (2) was or became available lawfully to the Subscribing Reinsurer from
a source, other than the Company, its affiliates or their personnel, that is not subject to a
confidentiality obligation, (3) was developed independently by the Subscribing Reinsurer prior
to disclosure by the Company, its affiliates or their personnel, as demonstrated by the
Subscribing Reinsurer’s records, or (4) is required to be disclosed by law, regulation, court,
or regulatory agency action, subject to the Third Party Demand Paragraph of this article.
	 
	C.	 	The Subscribing Reinsurer agrees to preserve all confidentiality and privilege pertaining to
all Confidential Information provided by the Company and all knowledge and information gained
through its review of Confidential Information or discussions with the personnel of the
Company or its affiliates. The Subscribing Reinsurer further agrees not to disclose any such
Confidential Information to any other person or entity except as such disclosure may be
necessary to its retrocessionaires, accountants, attorneys, auditors, actuaries or third party
catastrophe modelers or as otherwise required by law. The Subscribing Reinsurer agrees that
no Confidential Information is to be copied and/or removed from the Company’s or its
affiliates’ premises without the express permission of the Company.

					
	 	 	 	 	 
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	D.	 	Non-Public Personally Identifiable Information. Additionally, any disclosure of
Non-Public Personally Identifiable information shall comply with all state and federal
statutes and regulations governing the disclosure of Non-Public Personally Identifiable
information. “Non-Public Personally Identifiable information” shall be defined as this term
or a similar term is defined in any applicable state, provincial, territory, or federal law.
Disclosing or using this information for any purpose not authorized by applicable law is
expressly forbidden without the prior consent of the Company.

	E.	 	Third-Party Demand. Should the Subscribing Reinsurer receive a third-party demand
pursuant to subpoena, summons, or court or governmental order, to disclose Confidential
Information (including Non-Public Personally Identifiable Information) that has been provided
by the Company or its affiliates, the Subscribing Reinsurer shall make commercially reasonable
efforts to notify the Company promptly upon receipt of the demand and prior to disclosure of
the Confidential Information and provide the Company a reasonable opportunity to object to the
disclosure. If the Company timely objects to the release of the Confidential Information, the
Subscribing Reinsurer will comply with the reasonable requests of the Company in connection with the Company’s efforts to resist
release of the Confidential Information. The Company shall bear the cost of resisting the
release of the Confidential Information.
	 
	F.	 	Survival. The parties agree that the obligations contained in this Article shall
survive the expiration or termination of this Contract.

ARTICLE 27 — GOVERNING LAW (LM-01200-2008.09.18-A)

The validity and interpretation of this Contract shall be governed by and construed in
accordance with the law of the Commonwealth of Massachusetts, without regard to conflicts of law
principles.

ARTICLE 28 — SEVERABILITY (LM-02000-2005.06.02-A)

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

ARTICLE 29 — ENTIRE AGREEMENT(LM-00701-2008.08.15-A)

This Contract shall constitute the entire agreement between the Company and the Subscribing
Reinsurer with respect to the subject matter of this Contract and shall supersede all prior
understandings, negotiations and discussions, whether oral or written, by or between the Company
and the Subscribing Reinsurer relating to the subject matter hereof. There are no general or
specific warranties, representations or other agreements by or among the Company and the
Subscribing Reinsurer in connection with entering into this Contract except as specifically set
forth in this Contract. Notwithstanding the foregoing, this Contract may be amended or modified
only by a writing signed by both the Company and the Subscribing Reinsurer.

					
	 	 	 	 	 
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ARTICLE 30 — FEDERAL TERRORISM EXCESS RECOVERY (LM-01100-2008.08.06-A)

	A.	 	Any loss reimbursement the Company receives from the United States Government under the
Terrorism Risk Insurance Act of 2002 as amended by the Terrorism Risk Insurance Extension Act
of 2005 and as further amended by the Terrorism Risk Insurance Program Reauthorization Act of
2007 (“TRIA”) as a result of Loss Occurrences commencing during the term of this Contract
shall apply as follows:
	 
	B.	 	Except as provided below, any loss reimbursement under TRIA shall inure solely to the benefit
of the Company and shall be entirely disregarded in applying all of the provisions of this
Contract.
	 
	C.	 	If one or more Loss Occurrences commencing during the term of this Contract result(s) in
reinsurance recoveries to the Company under this Contract and reimbursement under TRIA, and
such amounts, together with any other reinsurance recoveries to the Company for said loss
occurrence(s), exceed the total amount of “Insured Losses” to the Company, any amount in
excess thereof shall be held by the Company. The Company shall then reimburse the Subscribing
Reinsurer a portion of such excess recovery in an amount equal to the proportion that the
Subscribing Reinsurer’s payment under this Contract bears to the total treaty reinsurance
recoveries to the Company for Insured Losses for said Loss Occurrence(s). Provided, however,
that in no event shall such reimbursement exceed the amount paid by the Subscribing Reinsurer
to the Company under this Contract.
	 
	D.	 	For purposes hereof, if a loss reimbursement received by the Company under TRIA is based on
the Company’s Insured Losses in more than one Loss Occurrence and neither the Secretary of the
Treasury nor his delegatee specifies the amount of loss allocable to each respective Loss
Occurrence, the reimbursement shall be pro-rated in the proportion that the Company’s Insured
Losses in each Loss Occurrence bears to the Company’s total Insured Losses resulting from all
Loss Occurrences to which the reimbursement applies.
	 
	E.	 	For purposes of this Article, “Insured Loss (es)” shall have the same meaning as
set forth in Section 102(5) of TRIA.

ARTICLE 31 — SPECIAL CONDITIONS (LM-02100-2008.11.18-A) (AM)

	A.	 	This Article applies only in the event that:

					
	 	 	 	 	 
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	 	1.	 	A State Insurance Department or other legal authority orders the Subscribing
Reinsurer to cease writing business or has imposed upon it any other restrictions on or
conditions relating to the Subscribing Reinsurer’s license or conduct of business in
any jurisdiction; or
	 
	 	2.	 	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; or
	 
	 	3.	 	The Subscribing Reinsurer’s policyholders’ surplus or equity has been reduced
by 25% or more from the amount on the effective date of this Contract, or has been
reduced by 25% or more in any period of twelve (12) months or less after the effective
date of this Contract; or
	 
	 	4.	 	As respects a Subscribing Reinsurer domiciled outside the United States other
than Lloyd’s syndicate, such Subscribing Reinsurer’s Shareholder Funds, Net Worth or
Capital & Surplus has been reduced by 25% or more from the amount on the effective
date of this Contract, or has been reduced by 25% or more in any period of twelve (12)
months or less after the effective date of this Contract; or
	 
	 	5.	 	As respects a Subscribing Reinsurer who is a Lloyd’s syndicate, such
Subscribing Reinsurer’s Stamp Capacity or Funds at Lloyd’s has been reduced by 25% or
more from the amount on the effective date of this Contract or has been reduced by 25%
or more in any period of twelve (12) months or less after the effective date of this
Contract; or
	 
	 	6.	 	The Subscribing Reinsurer has entered into a definitive agreement to become
merged with, acquired, or controlled by any company, corporation, or individual(s) not
controlling the Subscribing Reinsurer’s operations at the inception of this Contract;
or
	 
	 	7.	 	The Subscribing Reinsurer’s A.M. Best’s financial strength rating has been
assigned or downgraded below A- or Standard and Poor’s financial strength rating has
been assigned or downgraded below A-; or
	 
	 	8.	 	As respects a Subscribing Reinsurer who is subject to an Authorized Control
Level Risk-Based Capital Requirement, such Subscribing Reinsurer fails to maintain its
surplus at a level of at least 200% of the Subscribing Reinsurer’s Authorized Control
Level Risk-Based Capital; or
	 
	 	9.	 	The Subscribing Reinsurer announces intentions to cease underwriting
operations; or
	 
	 	10.	 	The Subscribing Reinsurer voluntarily ceases underwriting operations; or
	 
	 	11.	 	The Subscribing Reinsurer has reinsured its entire liability under this
Contract; or
	 
	 	12.	 	The Subscribing Reinsurer, directly or through the actions of a parent company
or an affiliated entity, has or has attempted to assign, novate or transfer the
Subscribing Reinsurer’s rights and/or obligations under this Contract, including any
attempted transfer of rights and/or obligations under any U.S. or foreign statute,
legislation or jurisprudence, without the Company’s prior written consent; or

					
	 	 	 	 	 
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	 	13.	 	The Subscribing Reinsurer, directly or through the actions of a parent company
or an affiliated entity, has invoked any U.S. or foreign statute, legislation or
jurisprudence which purports to enable the Subscribing Reinsurer to require the Company
to settle its claims liabilities, including but not limited to any estimated or undetermined claims liabilities under this Contract,
on an accelerated basis. This does not include any attempt to enforce a settlement
of claims liabilities under a commutation process to which the parties have agreed.

	B.	 	If one or more of the circumstances in Paragraph A (1) through (13) occur (a “Trigger
Event”), the Subscribing Reinsurer shall provide the Company with written notice within five
(5) business days from the happening of a Trigger Event. Following its receipt of notice of a
Trigger Event from the Subscribing Reinsurer, the Company may terminate this Contract, upon
thirty (30) days written notice to the Subscribing Reinsurer.
	 
	C.	 	Irrespective of the Subscribing Reinsurer’s failure to provide the Company with timely
written notice of the happening of a Trigger Event, upon occurrence of a Trigger Event, the
Company may terminate this Contract at any time, upon thirty (30) days written notice to the
Subscribing Reinsurer. No failure or delay by the Company in exercising its option under this
section will operate as a waiver thereof.
	 
	D.	 	Termination under this Article can be made after the date of expiration of this Contract.
	 
	E.	 	If this Contract is terminated under this Article, this Contract shall remain in full force
and effect as respects the Company’s and the Subscribing Reinsurer’s respective rights and
obligations, prior to the effective date and time of termination. The coverage afforded by
this Contract shall cease as of the date and time of termination and the Subscribing Reinsurer
shall return the unearned premium, if any, within fifteen (15) days of the termination date.
If coverage hereunder terminates while a claim covered by this Contract is in progress, the
Subscribing Reinsurer shall be liable, subject to all conditions hereof, for its proportion of
the entire claim, provided the event giving rise to the claim started before such termination.

	F.	1.	 	If the Company elects to terminate this Contract under this Article, the Company may also
elect to commute this Contract. Such election to commute shall be made either within the
written thirty (30) day notice to the Subscribing Reinsurer of the Company’s intention to
terminate this Contract, or by written notice thereafter. If the Company elects to commute,
the Subscribing Reinsurer has the option to provide security for its Obligations (as defined
herein), as an alternative to commutation. The

					
	 	 	 	 	 
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	 	 	 	Subscribing Reinsurer shall notify the Company
of its decision to provide security for its Obligations within fifteen (15) business days of
the receipt of written notice of the Company’s election to commute. If the Subscribing
Reinsurer elects to provide security for its Obligations under this Contract, the Company
shall provide the Subscribing Reinsurer with a written statement of the Subscribing
Reinsurer’s share of all paid recoverables, case reserves, loss adjustment expenses, incurred
but not reported losses, reserves for unearned premium, and ceding commissions due under this
Contract prior to the effective date and time of termination (collectively
“Obligations”). Within fifteen (15) days of the Subscribing Reinsurer’s receipt of
such statement, the Subscribing Reinsurer shall fund all Obligations by securing
clean, irrevocable, and unconditional Letters of Credit, payable exclusively to the
Company and issued by a bank acceptable to the Company. At the Company’s request,
the Subscribing Reinsurer shall agree to provide separate Letters of Credit for each
Legal Entity. Any Letters of Credit provided by the Subscribing Reinsurer under the
Unauthorized Reinsurance Article of this Contract also constitute funding under this
Article.
	 
	 	2.	 	Any Letters of Credit secured by the Subscribing Reinsurer shall be issued for
a period of not less than one year, and shall be automatically extended for one year
from their dates of expiration or any future expiration dates, unless sixty (60) days
prior to any expiration date the issuing bank shall notify the Company or a Legal
Entity, as applicable, by certified mail that the issuing bank elects not to extend any
Letter of Credit for any additional period.
	 
	 	3.	 	The Subscribing Reinsurer and the Company agree that the Letters of Credit
provided by the Subscribing Reinsurer, pursuant to the provisions of this Article, may
be drawn upon at any time, notwithstanding any other provision of this Contract, and be
utilized by the Company, a Legal Entity or any successor, by operation of law, of the
Company or a Legal Entity, including without limitation, any liquidator, rehabilitator,
receiver, or conservator of the Company or a Legal Entity, without diminution because
of the insolvency of the Company or a Legal Entity, or the Subscribing Reinsurer for
one or more of the following purposes:

	 	a.	 	To pay or reimburse the Company or a Legal Entity for:

	 	i.	 	The Subscribing Reinsurer’s share under this
Contract of premiums returned, but not yet recovered from the
Subscribing Reinsurer, to the owners of Policies reinsured under this
Contract due to cancellations of such Policies; and
	 
	 	ii.	 	The Subscribing Reinsurer’s share, under this
Contract, of surrenders and benefits or liabilities paid by the Company
or a Legal Entity, but not yet recovered from the Subscribing Reinsurer,
under the terms and provisions of the Policies reinsured under this
Contract; and

					
	 	 	 	 	 
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	 	iii.	 	Any other amounts necessary to secure the credit
or reduction from liability for reinsurance taken by the Company or a
Legal Entity.

	 	4.	 	Where the Letters of Credit will expire without renewal or be reduced or
replaced by Letters of Credit for a reduced amount and where the Subscribing
Reinsurer’s Obligations under this Contract remain unliquidated and undischarged ten
(10) days prior to the expiration of the Letter of Credit, to withdraw amounts equal to
the Subscribing Reinsurer’s Obligations, to the extent that the liabilities have not yet been funded by the
Subscribing Reinsurer and exceed the amount of any reduced or replacement Letters of
Credit.
	 
	 	5.	 	If the Company has concluded that the issuing bank’s financial condition is
such that the value of the security represented by the Letter of Credit may be in
jeopardy, the Company or a Legal Entity, as applicable, may withdraw amounts equal to
the Subscribing Reinsurer’s Obligations.
	 
	 	6.	 	If the Company or a Legal Entity draws on the Letter of Credit to obtain a cash
advance, under paragraphs F.4 or F.5, the Company or the Legal Entity, as applicable,
will hold the amount of the cash advance so obtained in trust in the name of the
Company in any qualified United States financial institution as defined by the
Insurance Law of the Company’s or Legal Entity’s domiciliary state, solely to secure
the Obligations and for the use and purposes enumerated above. The Company or the
Legal Entity, as applicable, will return any balance to the Subscribing Reinsurer upon
the complete and final liquidation and discharge of all of the Subscribing Reinsurer’s
Obligations to the Company under this Contract or in the event the Subscribing
Reinsurer provides alternative or replacement security consistent with the terms hereof
and acceptable to the Company.

	G.	 	If the Company elects to commute this Contract and the Subscribing Reinsurer does not fund
its Obligations under this Contract, then:

	 	1.	 	The Company shall submit a statement of valuation showing the Subscribing
Reinsurer’s liability for loss(es), whether reported or unreported, comprising the sum
total of the present value of the ceded: (a) case reserves and allocated loss
adjustment expense, (b) projected ultimate losses, (c) any unearned premium reserve,
and (d) undiscounted outstanding paid claims (hereinafter the “Commutation Losses”), on
Policies covered by this Contract as of the effective date and time of termination. If
the Subscribing Reinsurer agrees with the statement of valuation, the Subscribing
Reinsurer shall pay the amount requested within ten (10) days of receipt of the
statement of valuation.
	 
	 	2.	 	In the event the Company and the Subscribing Reinsurer cannot agree on the
statement of valuation of the Subscribing Reinsurer’s liability under such Policies,
either party may request in writing that the differences be settled by a panel of three
actuaries. Each party shall appoint an actuary to assess such liability within fifteen
(15) days after receipt of the written request for commutation. Upon such appointment,
the two actuaries shall appoint a third actuary. If the two actuaries fail to agree on
the third actuary within thirty (30) days of their appointment, each of them shall
nominate three individuals, of whom the other shall decline two, and the final decision
shall be made by drawing lots.

					
	 	 	 	 	 
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	 	3.	 	The actuaries shall then investigate and Capitalize such Commutation Loss(es)
within thirty (30) days. As used herein, “Capitalize” shall mean to determine the
present value of Commutation Losses, without regard to the Subscribing Reinsurer’s ability to pay such losses. The panel shall meet in Boston,
Massachusetts, unless the Company and Subscribing Reinsurer agree otherwise.

	 	a.	 	All actuaries shall be disinterested in the outcome of the
commutation and shall be Fellows of the Society of Actuaries/Fellows of the
Casualty Actuarial Society. Except as stated below, the expense of the
actuaries and of the commutation shall be equally divided between the parties
of the commutation.
	 
	 	b.	 	The decision in writing of the actuaries, when filed with the
parties hereto, shall be final and binding, except that if the Company does not
agree with the Capitalized value of the Commutation Loss(es), the Company shall
have no obligation to commute. In the event the Company does not agree with
the Capitalized value of the Commutation Loss(es) and does not move forward
with commutation, the Company will pay the expense of the actuaries, including
reasonable expense of the actuary appointed by the Subscribing Reinsurer.
	 
	 	c.	 	If the Contract is commuted, payment by the Subscribing
Reinsurer to the Company or any other third party mutually agreed upon by the
Subscribing Reinsurer and the Company shall constitute a complete and final
release of the Subscribing Reinsurer in respect to its liability under this
Contract.

	 	4.	 	The commutation process described in this Article shall not be subject to any
other dispute resolution process, including but not limited to the Arbitration Article
of this Contract.

ARTICLE 32 — REINSURER CLAIMS OBLIGATIONS (LM-03100-2008.07.21-A) (AM)

It is understood and agreed that the Subscribing Reinsurer will fulfill its obligations under
the Loss Adjustment and Settlement Article, until all claims have been reported and settled.
Without first obtaining the Company’s written consent, the Subscribing Reinsurer will not, either
directly or as the result of an action of a parent company or an affiliated entity, invoke any U.S.
or foreign statute, legislation, or jurisprudence that purports to enable the Subscribing Reinsurer
to require the Company or a Legal Entity to settle their claims liabilities, including but not
limited to any estimated or undetermined claims liabilities, under this Contract on an accelerated
basis. If the Subscribing Reinsurer has provided collateral relating to this Contract and the
Subscribing Reinsurer attempts to require the Company or a Legal Entity to settle their claims
liabilities on an accelerated basis, the Company shall have the right to utilize or to draw upon
Letters of Credit or other collateral, under the terms of this Contract, or as otherwise agreed
between the Subscribing Reinsurer and the Company. This Article does not prevent the Company and
the Subscribing Reinsurer from settling any claims liabilities using a commutation process that is
agreeable to both parties. This Article shall in no way affect the rights and obligations of the
Company and the Subscribing Reinsurer under the Insolvency Article.

					
	 	 	 	 	 
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EXHIBIT A

FIRST WORKERS’ COMPENSATION

CATASTROPHE EXCESS OF LOSS REINSURANCE

$75,000,000 excess $25,000,000 (ALL PERILS)

SECTION 1— LIMIT AND RETENTION

	A.	 	Under this Exhibit the Subscribing Reinsurer shall be liable for the Ultimate Net Loss in
excess of $25,000,000 each Loss Occurrence (regardless of the number of Policies under which
such loss is payable or the number of different interests insured) subject to a limit of
$75,000,000 each Loss Occurrence. The maximum contribution to the Ultimate Net Loss shall be
limited to a maximum per life recovery of $5,000,000 (discounted to net present value in
accordance with the provisions of Article 13 — Commutation).
	 
	B.	 	Notwithstanding the Subscribing Reinsurer’s liability on each Loss Occurrence, the
Subscribing Reinsurer’s liability shall further be limited to $150,000,000 for all such loss
occurrences recoverable during the term of this Contract.
	 
	C.	 	It is understood and agreed that the limit and retention described above applies to both the
Company, and to Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company, and
all of their affiliates (other than the Company and the Legal Entities) (hereinafter “the LMG
Companies”). Any loss occurrence affecting both the LMG Companies, on the one hand, and the
Company and the Legal Entities, on the other, shall be combined with respect to the
application of the limit and retention set forth herein. The reinsurance recovery will be
calculated assuming the LMG Companies have the same co-participation as the Company. The
recovery will then be allocated to the Company in the same ratio that the Ultimate Net Loss
bears to the total Ultimate Net Loss of the Company and the Legal Entities, on the one hand,
and the LMG Companies, on the other hand.

SECTION 2 — PREMIUM

	A.	 	The estimated premium to be paid to the Subscribing Reinsurer under this Exhibit shall be
$807,625.
	 
	B.	 	The term “gross net written premium” shall mean gross written premiums less return premiums
for cancellations and reductions in rates and less premium paid for reinsurance inuring to the
Subscribing Reinsurer’s benefit, if any.
	 
	C.	 	The Company shall pay to the Subscribing Reinsurer a minimum and deposit premium of $807,625 in
equal quarterly installments of $201,906 on January 1, April 1, July 1 and October 1, 2009.
	 
	D.	 	As soon as practicable following the termination or expiration of this Contract, the Company
shall furnish to the Subscribing Reinsurer a statement of its gross net written premium, as
defined herein, for the term of this Contract. If the actual

					
	 	 	 	 	 
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	 	 	gross net written premium of the Company is greater than $1,651,790,196 and the actual gross net written
premium of the Company and the LMG Companies combined is greater than $5,275,768,874, the Company shall pay additional
premium.
	 
	E.	 	The additional premium shall be calculated assuming the LMG Companies have the same
co-participation as the Company. The Total Additional Premium shall be calculated at a rate
of .1659% times the actual gross written premium of the Company and the LMG Companies combined
in excess of $5,275,768,874. The Total Additional Premium shall be allocated to the Company in the
same ratio that the Company’s actual gross net written premium
exceeding $1,651,790,196 bears to any
LMG Company whose actual gross written premium was more than 110% of its estimated gross
written premium.

SECTION 3 — REINSTATEMENT

	A.	 	If all or any portion of the coverage limit under this Exhibit is reduced by a Loss
Occurrence, the amount that coverage limit is reduced is automatically reinstated from the
time of the Loss Occurrence. The Company shall pay to the Subscribing Reinsurer reinstatement
premium calculated at one hundred percent (100%) of the deposit premium under this Exhibit,
multiplied by the percentage of the original $75,000,000 limits being reinstated. For
purposes of calculating reinstatement premium, the reinsurance
premium is deemed to be $8,750,000,
multiplied by the ratio that the Company’s reinsurance recovery bears to the total reinsurance
recovery of the Company and the LMG Companies. The reinstatement premium shall be calculated
assuming the LMG Companies have the same co-participation as the Company.
	 
	B.	 	Regardless of the number of reinstatements under this Exhibit, the Subscribing Reinsurer’s
liability shall not exceed $150,000,000 in the aggregate for all Loss Occurrences during the
term of this Contract.
	 
	C.	 	In the event of a paid loss hereunder, there shall be simultaneous settlement of
reinstatement premium by the Company. In the event a reinstatement premium is paid prior to
the calculation of the annual premium in accordance with the first paragraph of SECTION 2 of
this Exhibit, the reinstatement premium shall be provisionally calculated upon the deposit
premium and adjusted subsequently when the premium adjustment is made.

					
	 	 	 	 	 
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EXHIBIT B

SECOND WORKERS’ COMPENSATION

CATASTROPHE EXCESS OF LOSS REINSURANCE

$100,000,000 excess $100,000,000) (ALL PERILS)

SECTION 1— LIMIT AND RETENTION

	A.	 	Under this Exhibit the Subscribing Reinsurer shall be liable for the Ultimate Net Loss in
excess of $100,000,000 each Loss Occurrence (regardless of the number of policies under which
such loss is payable or the number of different interests insured) subject to a limit of
$100,000,000 each Loss Occurrence. The maximum contribution to the Ultimate Net Loss shall be
limited to a maximum per life recovery of $10,000,000 (discounted to net present value in
accordance with the provisions of Article 13 — Commutation).
	 
	B.	 	Notwithstanding Subscribing Reinsurer’s liability on each Loss Occurrence, Subscribing
Reinsurer’s liability shall further be limited to $200,000,000 for all such loss occurrences
recoverable during the term of this Contract.
	 
	C.	 	It is understood and agreed that the limit and retention described above applies to both the
Company, and to Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company, and
all of their affiliates (other than the Company and the Legal Entities) (hereinafter “the LMG
Companies”). Any loss occurrence affecting both the LMG Companies, on the one hand, and the
Company and the Legal Entities, on the other, shall be combined with respect to the
application of the limit and retention set forth herein. The reinsurance recovery will be
calculated assuming the LMG Companies have the same co-participation as the Company. The
recovery will then be allocated to the Company in the same ratio that the Ultimate Net Loss
bears to the total Ultimate Net Loss of the Company and the Legal Entities, on the one hand,
and the LMG Companies, on the other hand.

SECTION 2 — PREMIUM

	A.	 	The estimated premium to be paid to the Subscribing Reinsurer under this Exhibit shall be
$733,785.
	 
	B.	 	The term “gross net written premium” shall mean gross written premiums less return premiums
for cancellations and reductions in rates and less premium paid for reinsurance inuring to the
Subscribing Reinsurer’s benefit, if any.
	 
	C.	 	The Company shall pay to the Subscribing Reinsurer a minimum
and deposit premium of $733,785 in
equal quarterly installments of $183,446 on January 1, April 1, July 1 and October 1, 2009.
	 
	D.	 	As soon as practicable following the termination or expiration of this Contract, the Company
shall furnish to the Subscribing Reinsurer a statement of its gross net

					
	 	 	 	 	 
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	 	 	written premium, as defined herein, for the term of this Contract. If the actual gross net
written premium of the Company is greater than $1,651,790,196 and the actual gross net written
premium of the Company and the LMG Companies combined is greater than
$5,275,768,874, the Company
shall pay additional premium.
	 
	E.	 	The additional premium shall be calculated assuming the LMG Companies have the same
co-participation as the Company. The Total Additional Premium shall be calculated at a rate
of .1507% times the actual gross written premium of the Company and the LMG Companies combined
in excess of $5,275,768,874. The Total Additional Premium shall be allocated to the Company in the
same ratio that the Company’s actual gross net written premium
exceeding $1,651,790,196 bears to any
LMG Company whose actual gross written premium was more than 110% of its estimated gross
written premium.

SECTION 3 — REINSTATEMENT

	A.	 	If all or any portion of the coverage limit under this Exhibit is reduced by a Loss
Occurrence, the amount that coverage limit is reduced is automatically reinstated from the
time of the Loss Occurrence. The Company shall pay to the Subscribing Reinsurer reinstatement
premium calculated at one hundred percent (100%) of the deposit premium under this Exhibit,
multiplied by the percentage of the original $100,000,000 limits being reinstated. For
purposes of calculating reinstatement premium, the reinsurance
premium is deemed to be $7,950,000,
multiplied by the ratio that the Company’s reinsurance recovery bears to the total reinsurance
recovery of the Company and the LMG Companies. The reinstatement premium shall be calculated
assuming the LMG Companies have the same co-participation as the Company.
	 
	B.	 	Regardless of the number of reinstatements under this Exhibit, the Subscribing Reinsurer’s
liability shall not exceed $200,000,000 in the aggregate for all Loss Occurrences during the
term of this Contract.
	 
	C.	 	In the event of a paid loss hereunder, there shall be simultaneous settlement of
reinstatement premium by the Company. In the event a reinstatement premium is paid prior to
the calculation of the annual premium in accordance with the first paragraph of SECTION 2 of
this Exhibit, the reinstatement premium shall be provisionally calculated upon the deposit
premium and adjusted subsequently when the premium adjustment is made.

					
	 	 	 	 	 
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EXHIBIT C

THIRD WORKERS’ COMPENSATION

CATASTROPHE EXCESS OF LOSS REINSURANCE

$300,000,000 excess $200,000,000) (ALL PERILS)

SECTION 1— LIMIT AND RETENTION

	A.	 	Under this Exhibit the Subscribing Reinsurer shall be liable for the Ultimate Net Loss in
excess of $200,000,000 each Loss Occurrence (regardless of the number of policies under which
such loss is payable or the number of different interests insured) subject to a limit of
$300,000,000 each Loss Occurrence. The maximum contribution to the Ultimate Net Loss shall be
limited to a maximum per life recovery of $10,000,000 (discounted to net present value in
accordance with the provisions of Article 10 — Commutation).
	 
	B.	 	Notwithstanding Subscribing Reinsurer’s liability on each Loss Occurrence, Subscribing
Reinsurer’s liability shall further be limited to $600,000,000 for all such loss occurrences
recoverable during the term of this Contract.
	 
	C.	 	It is understood and agreed that the limit and retention described above applies to both the
Company, and to Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company, and
all of their affiliates (other than the Company and the Legal Entities) (hereinafter “the LMG
Companies”). Any loss occurrence affecting both the LMG Companies, on the one hand, and the
Company and the Legal Entities, on the other, shall be combined with respect to the
application of the limit and retention set forth herein. The reinsurance recovery will be
calculated assuming the LMG Companies have the same co-participation as the Company. The
recovery will then be allocated to the Company in the same ratio that the Ultimate Net Loss
bears to the total Ultimate Net Loss of the Company and the Legal Entities, on the one hand,
and the LMG Companies, on the other hand.

SECTION 2 — PREMIUM

	A.	 	The estimated premium to be paid to the Subscribing Reinsurer under this Exhibit shall be
$1,438,772.
	 
	B.	 	The term “gross net written premium” shall mean gross written premiums less return premiums
for cancellations and reductions in rates and less premium paid for reinsurance inuring to the
Subscribing Reinsurer’s benefit, if any.
	 
	C.	 	The Company shall pay to the Subscribing Reinsurer a minimum and deposit premium of $1,438,772 in
equal quarterly installments of $359,693 on January 1, April 1, July 1 and
October 1, 2009.
	 
	D.	 	As soon as practicable following the termination or expiration of this Contract, the Company
shall furnish to the Subscribing Reinsurer a statement of its gross net written premium, as
defined herein, for the term of this Contract. If the actual

					
	 	 	 	 	 
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	 	 	gross net written premium of the Company is greater than
$1,651,790,196 and the actual
gross net written premium of the Company and the LMG Companies combined is greater than
$5,275,768,874, the Company shall pay additional premium.
	 
	 	 	The additional premium shall be calculated assuming the LMG Companies have the same
co-participation as the Company. The Total Additional Premium shall be calculated at a
rate of .2955% times the actual gross written premium of the Company and the LMG Companies
combined in excess of $5,275,768,874. The Total Additional Premium shall be allocated
to the Company in the same ratio that the Company’s actual gross net written premium
exceeding $1,651,790,196 bears to any LMG Company whose actual gross written premium
was more than 110% of its estimated gross written premium.

SECTION 3 — REINSTATEMENT

	A.	 	If all or any portion of the coverage limit under this Exhibit is reduced by a Loss
Occurrence, the amount that coverage limit is reduced is automatically reinstated from the
time of the Loss Occurrence. The Company shall pay to the Subscribing Reinsurer reinstatement
premium calculated at one hundred percent (100%) of the deposit premium under this Exhibit,
multiplied by the percentage of the original $300,000,000 limits being reinstated. For
purposes of calculating reinstatement premium, the reinsurance premium is deemed to be $15,588,000,
multiplied by the ratio that the Company’s reinsurance recovery bears to the total
reinsurance recovery of the Company and the LMG Companies. The reinstatement premium shall be
calculated assuming the LMG Companies have the same co-participation as the Company.
	 
	B.	 	Regardless of the number of reinstatements under this Exhibit, the Subscribing Reinsurer’s
liability shall not exceed $600,000,000 in the aggregate for all Loss Occurrences during the
term of this Contract.
	 
	C.	 	In the event of a paid loss hereunder, there shall be simultaneous settlement of
reinstatement premium by the Company. In the event a reinstatement premium is paid prior to
the calculation of the annual premium in accordance with the first paragraph of SECTION 2 of
this Exhibit, the reinstatement premium shall be provisionally calculated upon the deposit
premium and adjusted subsequently when the premium adjustment is made.

					
	 	 	 	 	 
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EXHIBIT D

FOURTH WORKERS’ COMPENSATION

CATASTROPHE EXCESS OF LOSS REINSURANCE

$200,000,000 excess $500,000,000) (ALL PERILS)

SECTION 1— LIMIT AND RETENTION

	A.	 	Under this Exhibit the Subscribing Reinsurer shall be liable for the Ultimate Net Loss in
excess of $500,000,000 each Loss Occurrence (regardless of the number of policies under which
such loss is payable or the number of different interests insured) subject to a limit of
$200,000,000 each Loss Occurrence. The maximum contribution to the Ultimate Net Loss shall be
limited to a maximum per life recovery of $10,000,000 (discounted to net present value in
accordance with the provisions of Article 10 — Commutation).
	 
	B.	 	Notwithstanding Subscribing Reinsurer’s liability on each Loss Occurrence, Subscribing
Reinsurer’s liability shall further be limited to $400,000,000 for all such loss occurrences
recoverable during the term of this Contract.
	 
	C.	 	It is understood and agreed that the limit and retention described above applies to both the
Company, and to Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company, and
all of their affiliates (other than the Company and the Legal Entities) (hereinafter “the LMG
Companies”). Any loss occurrence affecting both the LMG Companies, on the one hand, and the
Company and the Legal Entities, on the other, shall be combined with respect to the
application of the limit and retention set forth herein. The reinsurance recovery will be
calculated assuming the LMG Companies have the same co-participation as the Company. The
recovery will then be allocated to the Company in the same ratio that the Ultimate Net Loss
bears to the total Ultimate Net Loss of the Company and the Legal Entities, on the one hand,
and the LMG Companies, on the other hand.

SECTION 2 — PREMIUM

	A.	 	The estimated premium to be paid to the Subscribing Reinsurer under this Exhibit shall be
$761,475.
	 
	B.	 	The term “gross net written premium” shall mean gross written premiums less return premiums
for cancellations and reductions in rates and less premium paid for reinsurance inuring to the
Subscribing Reinsurer’s benefit, if any.
	 
	C.	 	The Company shall pay to the Subscribing Reinsurer a minimum and deposit premium of $761,475 in
equal quarterly installments of $190,369 on January 1, April 1, July 1 and October 1, 2009.
	 
	D.	 	As soon as practicable following the termination or expiration of this Contract, the Company
shall furnish to the Subscribing Reinsurer a statement of its gross net

					
	 	 	 	 	 
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	 	 	written premium, as
defined herein, for the term of this Contract. If the actual gross net written premium of the
Company is greater than $1,651,790,196 and the actual gross net written premium of the Company
and the LMG Companies combined is greater than $5,275,768,874, the Company shall pay additional premium.
	 
	E.	 	The additional premium shall be calculated assuming the LMG Companies have the same
co-participation as the Company. The Total Additional Premium shall be calculated at a rate
of .1564% times the actual gross written premium of the Company and the LMG Companies combined
in excess of $5,275,768,874. The Total Additional Premium shall be allocated to the
Company in the same ratio that the Company’s actual gross net written premium exceeding $1,651,790,196
bears to any LMG Company whose actual gross written premium was more than 110%
of its estimated gross written premium.

SECTION 3 — REINSTATEMENT

	A.	 	If all or any portion of the coverage limit under this Exhibit is reduced by a Loss
Occurrence, the amount that coverage limit is reduced is automatically reinstated from the
time of the Loss Occurrence. The Company shall pay to the Subscribing Reinsurer premium
calculated at one hundred percent (100%) of the deposit premium under this Exhibit, multiplied
by the percentage of the original $200,000,000 limits being reinstated. For purposes of
calculating reinstatement premium, the reinsurance premium is deemed to be $8,250,000, multiplied
by the ratio that the Company’s reinsurance recovery bears to the total reinsurance
recovery of the Company and the LMG Companies. The reinstatement premium shall be calculated
assuming the LMG Companies have the same co-participation as the Company.
	 
	B.	 	Regardless of the number of reinstatements under this Exhibit, the Subscribing Reinsurer’s
liability shall not exceed $400,000,000 in the aggregate for all Loss Occurrences during the
term of this Contract.
	 
	C.	 	In the event of a paid loss hereunder, there shall be simultaneous settlement of
reinstatement premium by the Company. In the event a reinstatement premium is paid prior to
the calculation of the annual premium in accordance with the first paragraph of SECTION 2 of
this Exhibit, the reinstatement premium shall be provisionally calculated upon the deposit
premium and adjusted subsequently when the premium adjustment is made.

					
	 	 	 	 	 
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EXHIBIT E

FIFTH WORKERS’ COMPENSATION

CATASTROPHE EXCESS OF LOSS REINSURANCE

$300,000,000 excess $700,000,000) (ALL PERILS)

SECTION 1— LIMIT AND RETENTION

	A.	 	Under this Exhibit the Subscribing Reinsurer shall be liable for the Ultimate Net Loss in
excess of $700,000,000 each Loss Occurrence (regardless of the number of policies under which
such loss is payable or the number of different interests insured) subject to a limit of
$300,000,000 each Loss Occurrence. The maximum contribution to the Ultimate Net Loss shall be
limited to a maximum per life recovery of $10,000,000 (discounted to net present value in
accordance with the provisions of Article 10 — Commutation).
	 
	B.	 	Notwithstanding Subscribing Reinsurer’s liability on each Loss Occurrence, Subscribing
Reinsurer’s liability shall further be limited to $600,000,000 for all such loss occurrences
recoverable during the term of this Contract.
	 
	C.	 	It is understood and agreed that the limit and retention described above applies to both the
Company, and to Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company, and
all of their affiliates (other than the Company and the Legal Entities) (hereinafter “the LMG
Companies”). Any loss occurrence affecting both the LMG Companies, on the one hand, and the
Company and the Legal Entities, on the other, shall be combined with respect to the
application of the limit and retention set forth herein. The reinsurance recovery will be
calculated assuming the LMG Companies have the same co-participation as the Company. The
recovery will then be allocated to the Company in the same ratio that the Ultimate Net Loss
bears to the total Ultimate Net Loss of the Company and the Legal Entities, on the one hand,
and the LMG Companies, on the other hand.

SECTION 2 — PREMIUM

	A.	 	The estimated premium to be paid to the Subscribing Reinsurer under this Exhibit shall be
$830,700.
	 
	B.	 	The term “gross net written premium” shall mean gross written premiums less return premiums
for cancellations and reductions in rates and less premium paid for reinsurance inuring to the
Subscribing Reinsurer’s benefit, if any.
	 
	C.	 	The Company shall pay to the Subscribing Reinsurer a minimum and deposit premium of $830,700 in
equal quarterly installments of $207,675 on January 1, April 1, July 1 and
October 1, 2009.
	 
	D.	 	As soon as practicable following the termination or expiration of this Contract, the Company
shall furnish to the Subscribing Reinsurer a statement of its gross net

					
	 	 	 	 	 
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	 	 	written premium, as
defined herein, for the term of this Contract. If the actual gross net written premium of the
Company is greater than $1,651,790,196 and the actual gross net written premium of the
Company and the LMG Companies combined is greater than $5,275,768,874, the Company shall pay
additional premium.

	E.	 	The additional premium shall be calculated assuming the LMG Companies have the same
co-participation as the Company. The Total Additional Premium shall be calculated at a rate
of .2464% times the actual gross written premium of the Company and the LMG Companies combined
in excess of $5,275,768,874. The Total Additional Premium shall be allocated to the
Company in the same ratio that the Company’s actual gross net written premium exceeding $1,651,790,196
bears to any LMG Company whose actual gross written premium was more than 110% of its
estimated gross written premium.

SECTION 3 — REINSTATEMENT

	A.	 	If all or any portion of the coverage limit under this Exhibit is reduced by a Loss
Occurrence, the amount that coverage limit is reduced is automatically reinstated from the
time of the Loss Occurrence. The Company shall pay to the Subscribing Reinsurer reinstatement
premium calculated at one hundred percent (100%) of the deposit premium under this Exhibit,
multiplied by the percentage of the original $300,000,000 limits being reinstated. For
purposes of calculating reinstatement premium, the reinsurance premium is deemed to be
$9,000,000, multiplied by the ratio that the Company’s reinsurance recovery bears to the total
reinsurance recovery of the Company and the LMG Companies. The reinstatement premium shall be
calculated assuming the LMG Companies have the same co-participation as the Company.
	 
	B.	 	Regardless of the number of reinstatements under this Exhibit, the Subscribing Reinsurer’s
liability shall not exceed $600,000,000 in the aggregate for all Loss Occurrences during the
term of this Contract.
	 
	C.	 	In the event of a paid loss hereunder, there shall be simultaneous settlement of
reinstatement premium by the Company. In the event a reinstatement premium is paid prior to
the calculation of the annual premium in accordance with the first paragraph of SECTION 2 of
this Exhibit, the reinstatement premium shall be provisionally calculated upon the deposit
premium and adjusted subsequently when the premium adjustment is made.

					
	 	 	 	 	 
	Effective: January 1, 2008
	 	Page 40 of 44
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EXHIBIT F

SIXTH WORKERS’ COMPENSATION

CATASTROPHE EXCESS OF LOSS REINSURANCE

$200,000,000 excess $1,000,000,000) (ALL PERILS)

SECTION 1— LIMIT AND RETENTION

	A.	 	Under this Exhibit the Subscribing Reinsurer shall be liable for the Ultimate Net Loss in
excess of $1,000,000,000 each Loss Occurrence (regardless of the number of policies under
which such loss is payable or the number of different interests insured) subject to a limit of
$200,000,000 each Loss Occurrence. The maximum contribution to the Ultimate Net Loss shall be
limited to a maximum per life recovery of $10,000,000 (discounted to net present value in
accordance with the provisions of Article 10 — Commutation).
	 
	B.	 	Notwithstanding Subscribing Reinsurer’s liability on each Loss Occurrence, Subscribing
Reinsurer’s liability shall further be limited to $400,000,000 for all such loss occurrences
recoverable during the term of this Contract.
	 
	C.	 	It is understood and agreed that the limit and retention described above applies to both the
Company, and to Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company, and
all of their affiliates (other than the Company and the Legal Entities) (hereinafter “the LMG
Companies”). Any loss occurrence affecting both the LMG Companies, on the one hand, and the
Company and the Legal Entities, on the other, shall be combined with respect to the
application of the limit and retention set forth herein. The reinsurance recovery will be
calculated assuming the LMG Companies have the same co-participation as the Company. The
recovery will then be allocated to the Company in the same ratio that the Ultimate Net Loss
bears to the total Ultimate Net Loss of the Company and the Legal Entities, on the one hand,
and the LMG Companies, on the other hand.

SECTION 2 — PREMIUM

	A.	 	The estimated premium to be paid to the Subscribing Reinsurer under this Exhibit shall be
$369,200.
	 
	B.	 	The term “gross net written premium” shall mean gross written premiums less return premiums
for cancellations and reductions in rates and less premium paid for reinsurance inuring to the
Subscribing Reinsurer’s benefit, if any.
	 
	C.	 	The Company shall pay to the Subscribing Reinsurer a minimum and deposit premium of $369,200 in
equal quarterly installments of $92,300 on January 1, April 1, July 1 and October 1, 2009.
	 
	D.	 	As soon as practicable following the termination or expiration of this Contract, the Company
shall furnish to the Subscribing Reinsurer a statement of its gross net 

					
	 	 	 	 	 
	Effective: January 1, 2008
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	 	 	written premium, as defined herein, for the term of this Contract. If the actual gross net written premium of the
Company is greater than $1,651,790,196 and the actual gross net written premium of the Company and the
LMG Companies combined is greater than $5,275,768,874, the Company shall pay additional premium.
	 
	E.	 	The additional premium shall be calculated assuming the LMG Companies have the same
co-participation as the Company. The Total Additional Premium shall
be calculated at a rate of .2464% times the actual gross written premium of the Company and
the LMG Companies combined in excess of $5,275,768,874. The Total Additional Premium shall be
allocated to the Company in the same ratio that the Company’s actual gross net written
premium exceeding $1,651,790,196 bears to any LMG Company whose actual gross written premium was
more than 110% of its estimated gross written premium.

SECTION 3 — REINSTATEMENT

	A.	 	If all or any portion of the coverage limit under this Exhibit is reduced by a Loss
Occurrence, the amount that coverage limit is reduced is automatically reinstated from the
time of the Loss Occurrence. The Company shall pay to the Subscribing Reinsurer reinstatement
premium calculated at one hundred percent (100%) of the deposit premium under this Exhibit,
multiplied by the percentage of the original $200,000,000 limits being reinstated. For
purposes of calculating reinstatement premium, the reinsurance premium is deemed to be
$4,000,000, multiplied by the ratio that the Company’s reinsurance recovery bears to the total
reinsurance recovery of the Company and the LMG Companies. The reinstatement premium shall be
calculated assuming the LMG Companies have the same co-participation as the Company.
	 
	B.	 	Regardless of the number of reinstatements under this Exhibit, the Subscribing Reinsurer’s
liability shall not exceed $400,000,000 in the aggregate for all Loss Occurrences during the
term of this Contract.
	 
	C.	 	In the event of a paid loss hereunder, there shall be simultaneous settlement of
reinstatement premium by the Company. In the event a reinstatement premium is paid prior to
the calculation of the annual premium in accordance with the first paragraph of SECTION 2 of
this Exhibit, the reinstatement premium shall be provisionally calculated upon the deposit
premium and adjusted subsequently when the premium adjustment is made.

					
	 	 	 	 	 
	Effective: January 1, 2008
	 	Page 42 of 44
	 	2009 Agency Markets Workers’
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WAR AND TERRORISM EXCLUSION ENDORSEMENT (NBCR) (LM-03200-2008.08.06-W)

Notwithstanding any provision to the contrary within this reinsurance or any endorsement
thereto it is agreed that this reinsurance excludes all actual or alleged losses, liabilities,
damage, injuries, defense costs, costs or expense(s) directly or indirectly arising out of,
contributed by, caused by, resulting from, or in connection with any action taken in controlling,
preventing, suppressing, retaliating against, or responding to any of the following regardless of
any other cause or event contributing concurrently or in any other sequence to the loss:

	(1)	 	War, invasion, acts of foreign enemies, hostilities or warlike operations (whether war be
declared or not), civil war, mutiny, revolution, rebellion, insurrection, uprising, military
or usurped power, confiscation by order of any public authority or government de jure or de
facto, martial law; or
	 
	(2)	 	A “Certified Act of Terrorism” under the terms of the Terrorism Risk Insurance Act of 2002,
as amended by the Terrorism Risk Insurance Extension Act of 2005 and the Terrorism Risk
Insurance Program Reauthorization Act of 2007 hereafter (“TRIA”) but only if one or more of
the following are attributable to such Certified Act of Terrorism:

	 	a.	 	It involves the use, release or escape of nuclear materials, or
directly or indirectly results in nuclear reaction or radiation or radioactive
contamination; or
	 
	 	b.	 	It is carried out by means of the dispersal or application of
pathogenic or poisonous biological or chemical materials; or
	 
	 	c.	 	Pathogenic or poisonous biological or chemical materials are
released, and it appears that one purpose of the Certified Act of Terrorism was
to release such materials.

“Certified Act of Terrorism” shall have the meaning currently set forth in Section 102(1)(A) of
TRIA or as hereafter amended.

					
	 	 	 	 	 
	Effective: January 1, 2008
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INTERESTS AND LIABILITIES AGREEMENT

(hereinafter referred to as the “Agreement”)

to the

WORKERS’ COMPENSATION CATASTROPHE EXCESS OF LOSS

REINSURANCE CONTRACT

(hereinafter referred to as the “Contract”)

between

PEERLESS INSURANCE COMPANY

(hereinafter referred to as the “Company”)

and

LIBERTY MUTUAL INSURANCE COMPANY

(hereinafter referred to as the “Subscribing Reinsurer”)

It is hereby agreed by and between the Company on the one part and the Subscribing Reinsurer on the
other part that the Subscribing Reinsurer’s share in the interests and liabilities of the
reinsurers as set forth in the attached Workers’ Compensation Catastrophe Excess of Loss
Reinsurance Contract No. 2009300, effective 12:01 a.m., Local Standard Time, January 1, 2009, to
which this Agreement is attached shall be for:

	 	 	 	 	 	 	 	 	 

	Exhibit A — First Excess of Loss
	 	 	—	 	 	 	50.00	%
	 
	 	 	 	 	 	 	 	 
	Exhibit B — Second Excess of Loss
	 	 	—	 	 	 	75.00	%
	 
	 	 	 	 	 	 	 	 
	Exhibit C — Third Excess of Loss
	 	 	—	 	 	 	75.00	%
	 
	 	 	 	 	 	 	 	 
	Exhibit D — Fourth Excess of Loss
	 	 	—	 	 	 	100.00	%
	 
	 	 	 	 	 	 	 	 
	Exhibit E — Fifth Excess of Loss
	 	 	—	 	 	 	100.00	%
	 
	 	 	 	 	 	 	 	 
	Exhibit F — Sixth Excess of Loss
	 	 	—	 	 	 	100.00	%

The share of the Subscribing Reinsurer in the interests and liabilities of all reinsurers
participating in said Contract shall be separate and apart from the shares of such other reinsurers
to the said Contract. The interests and liabilities of the Subscribing Reinsurer shall not be
joint with those of the other reinsurers and in no event shall the Subscribing Reinsurer
participate in the interests and liabilities of the any other reinsurers participating in said
Contract.

					
	 	 	 	 	 
	Workers’ Compensation Catastrophe Excess Of Loss Reinsurance Contract
	Effective: 01/01/2009	 	 	 	 
	Contract No. 2009300
	 	Page 1 of 2
	 	 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement and the attached Workers’
Compensation Catastrophe Excess of Loss Reinsurance Contract to be executed in duplicate by their
respective duly authorized officers;

In Keene, New Hampshire, this 6th day of July, 2009, for and on behalf of:

	 	 	 	 	 
	PEERLESS INSURANCE COMPANY

 	 	 
	Signature  	/s/ Nancy C. Callender
 	 	 
	 	Name  	Nancy C. Callender 	 	 
	 	Title  	Agency Markets AVP, Manager — Reinsurance Management 	 	 
	 

And in Boston, Massachusetts, this 22nd day of May, 2009, for and on behalf
of:

	 	 	 	 	 
	LIBERTY MUTUAL INSURANCE COMPANY

 	 	 
	Signature  	/s/ Elaine Caprio Brady
 	 	 
	 	Name  	Elaine Caprio Brady 	 	 
	 	Title  	Vice President 	 	 
	 

					
	 	 	 	 	 
	Workers’ Compensation Catastrophe Excess Of Loss Reinsurance Contract
	Effective: 01/01/2009	 	 	 	 
	Contract No. 2009300
	 	Page 2 of 2

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