Document:

EX-10.7

 Exhibit 10.7 

EXECUTIVE EMPLOYMENT AGREEMENT 

THIS AGREEMENT, dated November 23, 2016, is by and between HCI Group, Inc. (the “Company”), a Florida corporation having its
principal place of business at 5300 West Cypress Street, Suite 100, Tampa, Florida 33607, and Mark Harmsworth (the “Executive”).     

BACKGROUND STATEMENT 
 The
Company is publicly held. Its common shares trade on the New York Stock Exchange. The Company, primarily through its Affiliated Entities (as defined in this Agreement), is engaged in numerous business-related activities, including insurance,
investments, real estate, software technology and reinsurance. As of the date of this Agreement the Company is principally engaged in the business of providing property and casualty insurance to Florida homeowners. The Company contemplates that it
will engage in other lines of insurance business and other business activities as well. (All such business and investment activities, present and future, whether engaged in by the Company or an Affiliated Entity are referred to in this
Agreement as the “Business”). The Company has developed and expects to develop trade secrets, methods of doing business, business plans, computer software and other items, all of which are worthy of protection. The Company considers
it to be in its best interests to have the benefit of the Executive’s services as provided in this Agreement and the Executive is willing to render such services to the Company in accordance with the provisions of this Agreement. 

NOW THEREFORE, in consideration of and reliance upon the foregoing background statement and the representations and warranties contained in
this Agreement, the Company and the Executive agree to the following terms and conditions:     
 TERMS AND CONDITIONS

 1.    Employment and Title. The Company agrees to employ the Executive, and the Executive agrees to serve,
initially as a senior vice president of finance for the Company and later as the Company’s chief financial officer, upon the terms and conditions set forth in this Agreement. He will assume the role chief financial officer within 30 days after
the Company files its U.S. Securities and Exchange Commission form 10-K annual report for the year ended December 31, 2016. 

2.    Duties, Responsibilities and Authority. During the term of his employment under this Agreement, the Executive
will have the duties, responsibilities and authorities set forth in the Company’s bylaws and as otherwise assigned to him by the Company’s board of directors and its president. The Executive agrees to devote his best efforts and
substantially all his business time, energies and skills, diligently and in good faith, to perform his duties, fulfill his responsibilities, and exercise his authority 

 
hereunder for the exclusive benefit of the Company. In promoting the interests of the Company and without additional compensation, the Executive will serve any of the Affiliated Entities, in such
capacities as the Company’s board of directors may from time to time direct. The Executive will cooperate fully with the Company’s president in advancing the best interests of the Company. The Executive will read and use reasonable efforts
to abide by any policy, code or practice the Company has or may hereafter adopt that is applicable to executives or executive officers in general, including policies and rules contained in the Company’s employee handbook and code of conduct.

 3.    Location. The Executive’s principal place of employment will 5300 West Cypress Street in Tampa,
Florida or such other place to which the parties agree, but in no event more than 50 miles from Tampa, Florida. 

4.    Term. The initial term of the Executive’s employment hereunder will commence on or about
December 5, 2016 and continue for a period of four years, unless earlier terminated pursuant to the terms of this Agreement. The Executive’s employment hereunder will continue and automatically renew for additional one-year terms unless either party delivers written notice of non-renewal at least 90 days before expiration of the initial term or any renewal term. The initial term and any
renewal term are hereinafter collectively referred to as the “Term.” 

5.    Compensation. 

5.1.    Base Salary. As compensation for the services to be rendered by the Executive hereunder, the Company will
pay the Executive, during the Term, an annual base salary of $300,000 (or a higher amount as may be set from time to time by the Company’s board of directors), which base salary will accrue and be paid in accordance with the Company’s
standard payroll practices. 
 5.2.    Bonus Compensation. Solely in exchange for signing this Agreement, the
Executive will be entitled to a bonus of $15,000 upon signing this Agreement and $25,000 one month after his employment commences. Provided he remains employed by the Company, the Executive will be entitled to participate in any senior executive
bonus plan to the same extent as all other senior executives of the Company (other than the chief executive officer). However, notwithstanding the terms of any such senior executive bonus plan, the Executive will be entitled to a bonus for 2017 of
not less than $100,000, which will be paid no later than December 31, 2017 and will reduce by an equal amount any bonus otherwise payable to the Executive under the senior executive bonus plan.    The Executive will be
entitled to any additional compensation provided by resolution of the Company’s board of directors or applicable committee of the board of directors or any bonus compensation plan adopted by the board of directors or applicable committee of the
board of directors. 
 5.3.    Restricted Stock. The Company will award to the Executive 40,000 shares of
restricted stock under terms substantially as set forth on the restricted stock award contract appearing as Exhibit A to this Agreement. 

  
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 5.4. Benefits. During the Term, the Executive will be entitled to (i) medical,
dental, life, vision, disability and retirement benefits, if any, upon substantially the same terms and conditions generally applicable to all the Company’s senior executive officers; and (ii) 20 days paid time off annually, which will accrue
and be paid in accordance with the Company’s standard payroll practices. 
 5.4. Reimbursement of Expenses. The Company will
reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive’s duties hereunder, subject to, and in accordance with, any expense reimbursement policies and expense
documentation requirements of the Company that may be in effect from time to time. 
 5.6. Withholding. Any and all amounts payable
under this Agreement will be subject to any federal, state and local tax and other withholdings or deductions required by applicable law, rule or regulation. 

6.    Working Facilities. The Company will provide the Executive with an office at the Executive’s principal
work location or at such other location as agreed to by the Executive and the Company. 
 7.    Incapacity. 

7.1 Right to Terminate. Notwithstanding anything else to the contrary contained in this Agreement, except as provided by this
Section 7 the Company will have no right to terminate the Executive’s employment while the Executive suffers Incapacity (as defined below). If the Executive suffers Incapacity for a period exceeding six
consecutive months, then the Company will have the right to terminate the Executive’s employment hereunder 30 days after delivery of written notice of termination. A termination of employment under this Section 7 will
be deemed a termination without “Good Cause” as described in Section 8.4 hereof. 
 7.2 Right
to Replace. If the Executive suffers Incapacity for 30 or more consecutive days, the Company will have the right to designate a person to temporarily perform the Executive’s duties. 

7.3 Rights Prior to Termination. During a period of Incapacity, the Executive will be entitled to his full base salary under
Section 5.1 hereof and full benefits under Section 5.3 hereof until employment is terminated as described in Section 8.1. The Executive will be entitled to reasonable
accommodations from the Company so that the Executive is not prevented from performing his duties by illness or injury. 
 7.4 Incapacity
Defined. For purposes of this Section 7, the term “Incapacity” means the Executive’s inability to perform his duties hereunder substantially on a full-time basis because of physical or mental
illness or physical injury as determined by the Company’s board of directors, in its reasonable discretion, based upon competent medical evidence. Upon the Company’s written request, the Executive will submit to reasonable medical and
other examinations to provide the evidence required hereunder. 

  
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 8.    Termination of Employment. 

8.1    Termination by the Company. The Company may terminate the Executive’s employment under this Agreement
without Good Cause anytime not fewer than 30 days nor more than 45 days after delivering written notice of termination to the Executive. The Company may terminate the Executive’s employment hereunder for Good Cause anytime by
delivery of written notice of termination. Termination will be effective upon the date set forth in the notice of termination. Good Cause will be limited to the following circumstances: 

(i) The Executive commits any fraud, dishonesty, misappropriation or similar act against the Company or others; 

(ii) The Executive materially defaults in the performance of his obligations, services or duties hereunder; 

(iii) The Executive is grossly negligent or commits willful misconduct in the performance of his duties hereunder; 

(iv) The Executive has been adjudicated guilty by, or enters a plea of guilty or no contest before, a court of competent jurisdiction of
illegal activities or found by a court of competent jurisdiction to have engaged in other wrongful conduct and such illegal activities or wrongful conduct, individually or in the aggregate, has (or could be reasonably expected to have) a material
adverse effect on the Company, its prospects, earnings or financial condition; and 
 (v) Any federal or state regulatory authority
determines that the Executive is not qualified to serve as the chief financial officer of the Company or an Affiliated Entity. 
 8.2
Effect of Termination for Good Cause. If the Executive’s employment is terminated by the Company for Good Cause— 

(i) the Executive will be entitled to accrued base salary under Section 5.1 and accrued paid time off, each through
the date of termination; and 
 (ii) the Executive will be entitled to reimbursement for expenses accrued through the date of termination
in accordance with the provisions of Section 5.4 hereof; and 

  
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 8.3 Effect of Termination without Good Cause. If the Company terminates the
Executive’s employment without Good Cause— 
 (i) the Executive will be entitled to accrued base salary under
Section 5.1 and accrued paid time off, each through the date of termination; 
 (ii) the Executive will be
entitled to reimbursement for expenses accrued through the date of termination in accordance with the provisions of Section 5.4 hereof; 

(iii) the Executive will be entitled to 12 months’ base salary as described at Section 5.1, which will accrue
and be paid in accordance with Company’s normal payroll practices as if the Executive’s employment had not been terminated; 

(iv) the Executive will be entitled to an amount equal to the bonus the Executive would have been entitled to under any senior bonus plan in
effect for the year of termination had termination not occurred, which amount will be paid at the time and in the manner bonuses are paid to other senior executives (other than the chief executive officer): and 

(v) The provisions of Section 12 will no longer apply to the Executive. 

8.4 Deemed Termination without Good Cause. The Executive’s death will be deemed a termination without Good Cause as of the
date of death. Termination by reason of the Executive’s Incapacity as set forth in Section 7.1 will be deemed a termination without Good Cause. The expiration of the Term after the Company
delivers written notice of non-renewal as described in Section 5 will be deemed a termination without Good Cause. In addition, after the occurrence of any of the following
events, the Executive, at his sole option, may declare by 30 days’ written notice to the Company that his employment hereunder has been terminated by the Company, and such termination will for all purposes of this Agreement be deemed a
termination by the Company without Good Cause: 
 (i) The Company materially changes the Executive’s reporting requirements;

 (iii) The Company fails to afford the Executive the power and authority generally commensurate with the position of chief financial
officer (after the Executive becomes chief financial officer; 
 (iv) The Company moves the Executive’s principal place of employment
beyond 50 miles from Tampa, Florida; or 
 (v) The Company breaches any material provision of this Agreement. 

8.5 Termination by Executive. The Executive may terminate his employment hereunder by delivery of not less than 30 days’ written
notice to the Company. 

  
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 8.5 Effect of Termination by Executive. If the Executive terminates his employment
pursuant to Section 8.5 hereof — 
 (i) the Executive will be entitled to accrued base salary under
Section 5.1 and accrued paid time off, each through the date of termination; and 
 (ii) the Executive will be
entitled to reimbursement for expenses accrued through the date of termination in accordance with the provisions of Section 5.4 hereof. 

9.    Board Approval. This Agreement and the obligations it contains are contingent upon and subject to approval by
the Company’s board of directors. If the Board of Directors fails to approved this Agreement on or before the date the Executive commences his employment, then the Executive’s employment will be deemed terminated without Good Cause,
except Section 8.3 (iii) will not apply, the Executive will be entitled to retain the $15,000 signing bonus described at Section 5.2, and the Executive will be entitled to receive $25,000 signing
bonus described at Section 5.2. 
 10.    Trade Secrets. 

10.1. Confidential Information. For the purposes of this Agreement, “Confidential Information” means information or
materials that, in the Company’s view, provide advantage to the Company (or an Affiliated Entity) over others not having such information or materials and includes (i) customer information, supplier information, sales channel and
distributor information, material terms of any contracts, marketing philosophies, strategies, techniques and objectives (including service roll-out dates and volume estimates), legal and regulatory positions
and strategies, advertising and promotional copy, competitive advantages and disadvantages, non-published financial data, network configurations, product or service plans, designs, costs, prices and names,
inventions, discoveries, improvements, technological developments, know-how, software code, business opportunities (including planned or proposed financings, mergers, acquisitions, ventures and partnerships)
and methodologies and processes (including the look and feel of computer screens and reports) for customer assistance, order acceptance and tracking, repairs, and commissions; (ii) information designated in writing or conspicuously marked as
“confidential” or “proprietary” or likewise designated or marked with words of similar import; (iii) information for which the Company has an obligation of confidentiality so long as such obligation is known to the
Executive; and (iv) information that by its nature or the circumstances of its delivery or disclosure a reasonable person would conclude that it is confidential or proprietary. The Executive is specifically aware of the legal obligations of
confidentiality afforded to customers of financial institutions, including obligations to insurance policyholders. 

  
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 10.2. Confidentiality. The Executive will hold Confidential Information in confidence and
trust and limit disclosure of Confidential Information strictly to persons who have a need to know such Confidential Information in connection with the Business. The Executive will not disclose, use, or permit the use or
disclosure of Confidential Information, except in satisfying his obligations under this Agreement. The Executive will use reasonable care to protect Confidential Information from inappropriate disclosure, whether inadvertent or
intentional. The Executive understands that the misappropriation of a trade secret is a criminal offense under state and federal laws. Notwithstanding the foregoing, the Executive may disclose Confidential Information if such disclosure is
required by a court order or an order of a similar judicial or administrative body; provided, however, that the Executive notifies the Company of such requirement immediately and in writing, and cooperates reasonably with the Company
in obtaining a protective or similar order with respect thereto. 
 10.3. Notification of Third Party Disclosure Requests. If the
Executive receives any written or oral third party request, order, instruction or solicitation for the disclosure of Confidential Information not in conformance with this Agreement or if the Executive becomes aware of any attempt by a third
party to improperly gain Confidential Information, the Executive will immediately notify the Company’s general counsel and the Company’s board of directors of such request, order, instruction or solicitation or of such attempt and
fully disclose the details surrounding such request, order, instruction or solicitation or such attempt. 
 10.4. Non-Removal of Records. All documents, files, records, data, papers, materials, notes, books, correspondence, drawings and other written, graphic or electronic records of the Business and all computer
software of the Company which the Executive will prepare or use, or come into contact with, will be and remain the exclusive property of the Company, in its discretion, and will not be physically, electronically, telephonically or otherwise removed
from the Company’s premises without the Company’s prior written consent. 
 10.5. Return or Destruction of Confidential
Information. Confidential Information gained, received or developed by the Executive or in which the Executive participated in developing will remain the exclusive property of the Company, in its sole discretion. The Executive will
promptly return to the Company or destroy or erase all records, books, documents or any other materials whatsoever (including all copies thereof) containing such Confidential Information in his possession or control upon the earlier of
(i) the receipt of a written request from the Company for return or destruction of Confidential Information or (ii) the termination of the Executive’s employment hereunder. 

10.6. Trade Secrets of Others. In the course of his employment hereunder the Executive will not use any information or materials
that belong to any former employer or any other person or entity and for which he has a duty of confidentiality; nor will the Executive use or allow the use of any illegally obtained confidential or secret information or materials. 

  
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 11.    Intellectual Property. All Confidential Information,
computer software, video and sound recordings, scripts, creations, inventions, improvements, designs and discoveries conceived, created, invented, authored, developed, produced or discovered by the Executive while employed by the Company, whether
alone or with others, whether during or after regular work hours, whether before or during the term of employment under this Agreement, are and will be the Company’s property exclusively, in its sole discretion. All such items were and will be
produced as “work for hire.” The Executive hereby assigns to the Company all copyrights, trademarks and other rights of authorship or ownership he may have with respect to such items. Moreover, at any time, without additional
consideration, the Executive will execute and deliver any documents or instruments that the Company may request in order to effectively convey and transfer good title and right to, and put the Company in possession of, such items. 

12.    Restrictions on Competition and Solicitation. 

12.1. Noncompetition. The Executive agrees that during the course of his employment with the Company and for a period of one year after
his employment ends, the Executive will not, directly or indirectly, as an executive, agent, independent contractor, consultant, partner, joint venturer or otherwise, within any state in the United States within which the Company or an Affiliated
Entity has conducted the Business within the 12 months preceding the date of the termination of the Executive’s employment with the Company, enter into, engage in, be employed by or consult with (or solicit to enter into, engage in, be
employed by or consult with) any business which competes with the Company or an Affiliated Entity by providing property, casualty or flood insurance to homeowners within the 12 month period preceding the termination of the Executive’s
employment with the Company, including (a) participating as an officer, director, stockholder, member, employee, agent, independent contractor, consultant, representative or partner of, or having any direct or indirect financial interest
(including the interest of a creditor) in, any such competitor or (b) assisting any other individual or business entity, of whatever type or description, in providing any such competing services. The provisions of this section will not apply to
the ownership by the Executive of less than 5% of any publicly held corporation or other business entity solely as an investor and under circumstances in which the Executive neither provides services nor assists anyone else to provide any services
to or on behalf of any such entity. The Executive further agrees that upon a violation of this section of this Agreement, the period during which the Executive’s covenants in this section apply will be extended by the number of days equal to
the period of such violation. 
 12.2.
Non-Solicitation/Non-Acceptance. The Executive agrees, during the course of his employment with the Company and for a period of one year after termination
of that employment, the Executive will refrain from and will not, directly or indirectly, as employee, agent, independent contractor, consultant, partner, joint venturer or otherwise (a) solicit or counsel any third person, partnership, joint
venture, company, corporation, association, or other organization that is or was a current or prospective customer of the Company or an Affiliated Entity within the 12 months preceding the termination of the Executive’s employment with
the Company and with which the 

  
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Executive had a substantial relationship within such preceding 12 month period, regardless of such person’s or entity’s location, to terminate any existing or prospective business
relationship with the Company or an Affiliated Entity or commence a similar business relationship with any other individual or business entity; (b) accept, with or without solicitation, any business from any third person, partnership,
joint venture, company, corporation, association or other organization that is or was a current or prospective customer of the Company or an Affiliated Entity with which the Executive had a substantial relationship within the preceding 12
month period, regardless of such person’s or entity’s location; or (c) solicit any of the employees, agents, independent contractors or consultants of the Company or an Affiliated Entity, regardless of such person’s or
entity’s location, to terminate any business relationship with the Company or an Affiliated Entity. The Executive further agrees that upon a violation of this section of this Agreement, the period during which the Executive’s
covenants in this section apply will be extended by the number of days equal to the period of such violation. 
 12.3. No
Circumvention. The Executive will not make any attempt, or use any artifice, scheme or device, including the use of any agent, representative, associate, advisor, relative or business entity, to circumvent the purposes of the restrictive
covenants contained in Section 12. 
 12.4. Acknowledgements. The Executive acknowledges that the foregoing
restrictive covenants are reasonable and necessary in light of the circumstances, including the Company’s interest in protecting the Confidential Information to which he has been exposed and the business relationships with the customers,
partners, and others he has helped develop. The Executive further acknowledges that the foregoing restrictive covenants are a material inducement for the Company to enter into this Agreement, and that the covenants are given as an integral part of
this Agreement. 
 12.5. Counterclaims. The existence of any claim or cause of action the Executive may have against the Company will
not at any time constitute a defense to the enforcement by the Company of the restrictions or rights provided by this Section 12.

13.    Equitable Remedies. The Executive and the Company agree that the services to be rendered by the Executive
pursuant to this Agreement, and the rights and interests granted and the obligations to be performed by the Executive to the Company pursuant to this Agreement, are of a special, unique, extraordinary and intellectual character, which gives them a
peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in any action at law, and that a breach by the Executive of any of the terms of this Agreement will cause the Company great and irreparable injury and
damage. The Executive hereby expressly recognizes and agrees that the Company has the right to seek entry of a temporary restraining order, preliminary injunction and permanent injunction, and that such orders and injunctions may be issued against
the Executive, to prevent or address a breach of Sections 10 through 12 of this Agreement. The existence of any claim or cause of action the Executive may have against the Company will not at any time constitute a defense to the request for
such relief. 

  
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 14.    Compliance with Other Agreements. The Executive represents and
warrants to the Company that he is free to enter this Agreement and that the execution of this Agreement and the performance of the obligations under this Agreement will not, as of the date of this Agreement or with the passage of time, conflict
with, cause a breach of or constitute a default under any agreement to which the Executive is a party or by which he may be bound. 

15.    Severability. Every provision of this Agreement is intended to be severable. If any provision or portion of
a provision is illegal, invalid or unenforceable, including as to geographic or temporal scope, then the remainder of this Agreement will not be affected. Moreover, any provision or portion of a provision of this Agreement which is determined to be
unreasonable, arbitrary or against public policy, including as to geographic or temporal scope, will be modified by a court or arbitrator as appropriate so that it is not unreasonable, arbitrary or against public policy. 

16.    Rights and Remedies Preserved. Nothing in this Agreement will limit any right or remedy the Company or the
Executive may have under this Agreement or pursuant to law for any breach of this Agreement by the other party. The rights granted to the parties herein are cumulative, and the election of one will not constitute a waiver of such party’s right
to assert all other legal remedies available under the circumstances. 
 17.    Waiver. No failure or delay on
the of part either party to this Agreement in the exercise of any right, power or remedy the party may have will operate as a waiver, nor will any single or partial exercise of any right, power or remedy by either party preclude any other or further
exercise of that right, power or remedy or the exercise of any other right, power or remedy. No express waiver or assent by any party to any breach of or default in any term or condition of this Agreement will constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or conditions of this Agreement. 
 18.    Notices.
Any notices or deliveries permitted or required by this Agreement will be deemed given (i) when delivered in person or by messenger, if a receipt is obtained for delivery, (ii) when delivered by Federal Express, United Parcel Service,
Airborne Express, U.S. Express Mail or similar nationally recognized overnight delivery service, if a confirmation of delivery is obtained, or (iii) five days after mailing, if mailed via certified or registered U.S. mail, return receipt
requested, provided the notice is delivered or mailed to the party’s address as set forth below: 
 If to the Company: 

HCI Group, Inc. 
 Suite 100 

5300 West Cypress Street 
 Tampa,
FL 33607 
 ATT: General Counsel 

  
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 If to the
Executive:                 
 The
Executive’s most recent address on file with the Company. 
 The parties may change addresses to which notices are to be delivered by giving notice of
the change of address in the manner set forth above; except, however, that notwithstanding the foregoing provision, notice of a change of address will be deemed made upon actual receipt of the notice by the other party. Notices deemed given or
delivered as set forth above on a Saturday, Sunday, or legal holiday will instead be deemed given or delivered on the next succeeding day which is not a Saturday, Sunday or legal holiday. 

19.    Successors and Assigns. The rights and obligations of the Company under this Agreement will inure to the
benefit of and be binding upon the successors and assigns of the Company, including the survivor upon any merger, consolidation, share exchange or combination of the Company. The Executive will not have the right to assign this Agreement or to
assign, delegate or otherwise transfer any duty or obligation to be performed by him hereunder. 
 20.    Entire
Agreement. With respect to its subject matter, this Agreement contains all the understandings and agreements of the parties and supersedes all previous and all contemporaneous agreements, understandings, discussions and negotiations between the
parties, whether written or oral. The parties agree that no previous drafts of this Agreement will be admissible as evidence (whether in any arbitration or court of law) in any proceeding which involves the interpretation of any provisions of this
Agreement. 
 21.    Amendments. Except as otherwise provided herein as to terms that are unreasonable, arbitrary
or against public policy, this Agreement will not be modified or amended except by an instrument in writing signed by the parties. 

22.    Governing Law. This Agreement will be governed by and construed in accordance with the internal laws of the
State of Florida without reference to conflicts of law principles. 
 23.    Further Assurances. Each party
hereto will cooperate and will take such further action and will execute and deliver such further documents as may be reasonably requested by the other party in order to carry out the provisions and purposes of this Agreement. 

24.    Construction. This Agreement was negotiated at arm’s-length,
with each party having the assistance of independent legal counsel. No court, arbitrator or finder of fact should construe this Agreement more strongly against either party on the basis of which party was responsible for the Agreement’s
preparation. Wherever from the context it appears appropriate, each term stated in either the singular or the plural will include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender will include the other
genders. The words “Agreement,” “hereof,” “herein” 

  
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and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole, including Exhibits, and not to any particular provision of this Agreement.
Whenever the word “include,” “includes” or “including” is used in this Agreement, it will be deemed to be followed by the words “without limitation.” The various headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of any of the provisions of this Agreement. 

25.    Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together will
be deemed one original. 
 26.    Affiliated Entities. For the purposes of this Agreement, the capitalized term
“Affiliated Entity” means any association or entity, including any corporation, partnership, joint venture, or limited liability company, controlled by or under common control with the Company. 

27.    Confidential Arbitration. The parties hereto agree that any dispute concerning or arising out of the
provisions of this Agreement, the Executive’s employment or the termination of the Executive’s employment will be resolved by confidential arbitration in accordance with the rules of the American Arbitration Association. Such confidential
arbitration will be held in Tampa, Florida and the decision of the arbitrator or arbitrators will be conclusive and binding on the parties and will be enforceable in any court of competent jurisdiction. In rendering a decision, the arbitrator will
have the discretion to award attorneys’ fees and costs. Notwithstanding the foregoing, if any dispute arises hereunder as to which a party desires to exercise any equitable rights or remedies under this Agreement, such party may, in its
discretion, in lieu of submitting the matter to arbitration, bring an action thereon in any court of competent jurisdiction in Florida, which court may grant any and all relief available in equity or at law for any and all claims made by such party
based on or arising from the provisions of this Agreement. In any such action, the prevailing party will be entitled to reasonable attorneys’ fees and costs as may be awarded by the court. 

28.    Survival. The warranties and representations in this Agreement will survive the execution of this Agreement
and continue without limitation. The Executive has incurred the obligations set forth in Sections 10 through 12 solely in consideration of the Company’s execution of this Agreement and such obligations and this
Section 28 will survive and continue notwithstanding the termination, rescission or expiration of this Agreement or any provision of this Agreement. 

29. Exhibits. All exhibits, schedules and other attachments to this Agreement are hereby incorporated by this reference as integral
parts of this Agreement. 
 30.    Saturday, Sunday or Legal Holiday. When the last day of a period during which
an act may be performed under this Agreement falls on a Saturday, Sunday, or legal holiday that period will be deemed to end on the next succeeding day which is not a Saturday, Sunday or legal holiday. 

  
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 31.    Electronic Signatures. Signed copies of this Agreement,
addenda, attachments and exhibits delivered electronically via Internet (e-mail) or telephone (fax) will legally bind the parties to the same extent as original documents. 

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date first set forth above. 

 

			
		 	EXECUTIVE
		
		 	  

		 	Mark Harmsworth
		
		 	HCI Group, Inc.
		
	By:	 	  

		 	Paresh Patel, as Chief Executive Officer

  
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 Exhibit A 

HCI GROUP, INC. 
 2012
OMNIBUS INCENTIVE PLAN 
 RESTRICTED STOCK AWARD CONTRACT 

Mark Harmsworth 
 101 West Beach Place 

Unit 1700 
 Tampa, Florida 33606 

Dear Mr. Harmsworth: 
 You have been granted a Restricted
Stock award for shares of common stock of HCI Group, Inc. (the “Company”) under the HCI Group, Inc. 2012 Omnibus Incentive Plan (the “Plan”) with the following terms and conditions. For the purposes of this contract
“Restricted Shares” means Restricted Stock awarded pursuant to the Plan and this contract. 
  

			
	Grant Date:	  	December 5, 2016
		
	Number of Shares:	  	40,000 Shares
		
	Vesting Schedule:	  	 Your Restricted Shares will initially be subject to a Restriction Period. The Restriction Period will lapse and the Restricted Shares will
vest as follows:
  

One-fourth of your Restricted Shares on December 5, 2017,
one-fourth on December 5, 2018, one-fourth on December 5, 2019 and the remaining shares on December 5, 2020. Fractional shares will be rounded down to the
nearest whole number until the last vesting date.
  
 If your service to the Company ends
for any reason other than (i) a termination for “Good Cause” as described in your employment agreement, (ii) Retirement, (iii) death or (iv) Disability, then for one-fourth of the
Restricted Shares (if any remain) the Restriction Period will lapse and those Restricted Shares will vest. For clarity, this provision supersedes the terms “Cause” and “Inimical “Conduct” as defined in the Plan and as they
relate to the vesting or forfeiture of your Restricted Shares.
  
 All your Restricted
Shares will vest and the Restriction Period will lapse upon a Change of Control as defined in the Plan.
  

The lapse of your Restriction Period and vesting may be suspended or delayed as a result of a leave of
absence.

 Exhibit A 
  

			
	Form of Issuance:	  	The Company will instruct its transfer agent to evidence the Restricted Shares by electronic entry on the transfer agent’s books and to indicate the Restriction Period (and any other restrictions the Company may require to
ensure compliance with the Securities Act and state and other securities laws) and the risks of forfeiture within those book entries. Upon the lapse of a Restriction Period, provided you have paid applicable withholding taxes, the Company will
instruct the transfer agent to deliver the applicable shares, without restriction, to a brokerage account established in your name.
		
	 Transferability of
 Restricted Shares:
	  	You may not assign, sell, transfer, pledge, encumber or otherwise alienate or hypothecate any of your Restricted Shares until they are vested. In addition, by accepting this Award, you agree not to sell any Restricted Shares
acquired under this Award at a time when applicable laws, Company policies or any agreement between the Company and its underwriters prohibits a sale. You will not sell your shares except during an open trading window as described in the
Company’s Insider Trading Policy.
		
	Forfeiture	  	Unvested Restricted Shares will be forfeited when your service to the Company ends. Forfeiture may also occur under other circumstances described in the Plan.
		
	Voting and Dividends:	  	You may exercise full voting rights and will receive all dividends and other distributions paid with respect to the Restricted Shares, in each case so long as the applicable record date occurs before you forfeit such Shares. If,
however, any such dividends or distributions are paid in Shares, such Shares will be subject to the same risk of forfeiture, restrictions on transferability and other terms of this Award as are the Restricted Stock with respect to which they were
paid. Dividends on unvested Restricted Shares will be treated as wages for federal income tax purposes and will therefore be subject to federal income tax, Social Security tax, and Medicare tax withholdings.
		
	Tax Withholding:	  	You understand that you (and not the Company or any Affiliate) will be responsible for your own federal, state, local or foreign tax liability and any of your other tax consequences that may arise as a result of the transactions
contemplated by this Award. You shall rely solely on the determinations of your tax advisors or your own determinations, and not on any statements or representations by the Company, its Affiliates or any of their agents, with regard to all such tax
matters. You may be able to alter the tax consequences of the acquisition of the Shares by filing an election under Section 83(b) of the Internal Revenue Code of 1986, as

 Exhibit A 
  

			
		  	 amended (the “Code”). Such election may be filed only within thirty (30) days after the date of this Award. You should
consult with your tax advisor to determine the tax consequences of acquiring the Shares and the advantages and disadvantages of filing the Code Section 83(b) election. You acknowledge that it is your sole responsibility, and not the
Company’s, to file a timely election under Code Section 83(b), even if you request the Company or its representatives make this filing on your behalf.
  

To the extent that the receipt of the Restricted Stock or the vesting of the Restricted Stock results in income to you for Federal, state or local income tax
purposes, you shall surrender to the Company (or any Affiliate) at the time the Company (or its Affiliate) is obligated to withhold taxes in connection with such receipt or vesting, as the case may be, such number of Restricted Shares as the Company
(or its Affiliate) requires to meet its withholding obligation under applicable tax laws or regulations, and if you fail to do so, the Company (and its Affiliate) has the right and authority to deduct or withhold from other compensation payable to
you an amount sufficient to satisfy its withholding obligations. You will surrender that number of Restricted Shares having an aggregate Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax that the
Company (or its Affiliate) must withhold in connection with the vesting of such Shares. The Company, in its discretion, may permit a larger number of shares to be surrendered in connection with tax withholding.

		
	Miscellaneous:	  	 •    This Restricted Stock Award may be amended only by written consent
signed by you and the Company, except if the amendment is not to your detriment or as otherwise permitted by the terms of the Plan.
  

•    As a condition of the granting of this Award, you agree, for yourself and your legal
representatives or guardians, that this contract and the Plan shall be interpreted by the Committee and that any interpretation by the Committee of the terms of this contract or the Plan and any determination made by the Committee pursuant to this
contract or the Plan shall be final, binding and conclusive.
  

•    This contract may be executed in counterparts.

 This Restricted Stock Award is granted under and governed by the terms and conditions of the Plan. Additional provisions
regarding your Award and definitions of capitalized terms used and not defined in this Award can be found in the Plan. 

 Exhibit A 
  

 BY SIGNING BELOW AND ACCEPTING THIS RESTRICTED STOCK AWARD, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED HEREIN AND IN THE PLAN. YOU ALSO ACKNOWLEDGE THAT YOU HAVE READ THIS AGREEMENT, THE PLAN AND THE PROSPECTUS DESCRIBING THE PLAN. 
  

									
		 	  
	 		  	  
	  	
		 	Paresh Patel	 		  	Mark Harmsworth	  	
		 	Chief Executive Officer	 		  		  	
		 	HCI Group, Inc.EX-10.16

 

 
  
 EXHIBIT 10.16 

**** indicates material that has been omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the U.S.
Securities and Exchange Commission. 
 WORKING LAYER CATASTROPHE EXCESS OF LOSS 

SPECIFIC RETROCESSION CONTRACT 

issued to 
 CLADDAUGH CASUALTY
INSURANCE COMPANY, LTD. 
 Hamilton, Bermuda 

  

					
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 WORKING LAYER CATASTROPHE EXCESS OF LOSS 

SPECIFIC RETROCESSION CONTRACT 

TABLE OF CONTENTS 
  

							
	 Article
	 	 	  	Page	 
		 	Preamble	  	 	3	 
	   1
	 	Business Covered	  	 	3	 
	   2
	 	Concurrency of Conditions	  	 	3	 
	   3
	 	Term	  	 	3	 
	   4
	 	Special Termination	  	 	4	 
	   5
	 	Retention and Limit	  	 	5	 
	   6
	 	Premium	  	 	5	 
	   7
	 	Definitions	  	 	6	 
	   8
	 	Extra Contractual Obligations/Excess of Original Contract Limits	  	 	6	 
	   9
	 	No Third Party Rights	  	 	7	 
	 10
	 	Notice of Loss and Loss Settlements	  	 	7	 
	 11
	 	Late Payments	  	 	8	 
	 12
	 	Offset	  	 	9	 
	 13
	 	Currency	  	 	9	 
	 14
	 	Unauthorized Reinsurance	  	 	10	 
	 15
	 	Taxes	  	 	12	 
	 16
	 	Access to Records	  	 	12	 
	 17
	 	Confidentiality	  	 	13	 
	 18
	 	Indemnification and Errors and Omissions	  	 	14	 
	 19
	 	Insolvency	  	 	15	 
	 20
	 	Arbitration	  	 	16	 
	 21
	 	Service of Suit	  	 	17	 
	 22
	 	Governing Law	  	 	18	 
	 23
	 	Entire Agreement	  	 	18	 
	 24
	 	Non-Waiver	  	 	18	 
	 25
	 	Intermediary	  	 	19	 
	 26
	 	Mode of Execution	  	 	19	 
		 	Retrocedent Signing Block	  	 	20	 
			
	 Attachments
	 	 	  	 	 
		 	Trust Agreement Requirements Clause	  	 	21	 

 WORKING LAYER CATASTROPHE EXCESS OF LOSS 

SPECIFIC RETROCESSION CONTRACT 

(the “Contract”) 

  

					
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 issued to 

CLADDAUGH CASUALTY INSURANCE COMPANY LTD. 

Hamilton, Bermuda 
 (the
“Retrocedent”) 
 by 

THE SUBSCRIBING RETROCESSIONAIRE(S) IDENTIFIED IN THE 

INTERESTS AND LIABILITIES AGREEMENT(S) ATTACHED TO 

AND FORMING PART OF THIS CONTRACT 

(the “Retrocessionaire”) 

ARTICLE 1 
 BUSINESS COVERED 

This Contract is to indemnify the Retrocedent in respect of the liability that may accrue to the Retrocedent as a result of loss or losses under the Working
Layer Catastrophe Excess of Loss Reinsurance Contract, issued to Homeowners Choice Property & Casualty Insurance Company, Tampa, Florida (the “Original Reinsured”), for the Contract Year effective June 1, 2017 (“Original
Contract”), subject to the terms and conditions herein contained. 
 ARTICLE 2 

CONCURRENCY OF CONDITIONS 
 This Contract shall be
effective June 1, 2017 and shall follow in all respects the terms and conditions of the Original Contract, and any amendment added thereto, except as otherwise specified herein. The Retrocessionaire shall follow the Retrocedent in all matters
pertaining to the Original Contract. 
 ARTICLE 3 

TERM 
 This Contract shall take effect June 1, 2017,
and shall remain in effect until May 31, 2018, both days inclusive, applying to Loss Occurrences commencing during the term of this Contract. 

  

					
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 ARTICLE 4 

SPECIAL TERMINATION 
  

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

  

	 	1.	The Subscribing Retrocessionaire ceases underwriting operations. 

  

	 	2.	A state insurance department or other legal authority orders the Subscribing Retrocessionaire to cease writing business, or the Subscribing Retrocessionaire is placed under regulatory supervision. 

 

	 	3.	The Subscribing Retrocessionaire has become insolvent or has been placed into liquidation or receivership (whether voluntary or involuntary), or there have been instituted against it proceedings for the appointment of a
receiver, liquidator, rehabilitator, conservator, trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations. 

 

	 	4.	The Subscribing Retrocessionaire’s policyholders’ surplus (or the equivalent under the Subscribing Retrocessionaire’s accounting system) as reported in such financial statements of the Subscribing
Retrocessionaire as designated by the Retrocedent, has been reduced by 20% of the amount thereof at any date during the prior 12-month period (including the period prior to the inception of this Contract). 

 

	 	5.	The Subscribing Retrocessionaire has merged with or has become acquired or controlled by any Retrocedent, corporation, or individual(s) not controlling the Subscribing Retrocessionaire’s operations at the inception
of this Contract. 

  

	 	6.	The Subscribing Retrocessionaire has retroceded its entire liability under this Contract without the Retrocedent’s prior written consent, except for retrocessions to members of the Subscribing
Retrocessionaire’s holding Retrocedent group. 

  

	 	7.	The Subscribing Retrocessionaire has been assigned an A.M. Best’s rating of less than “A-” and/or an S&P rating of less than “BBB+.” However, as respects Underwriting Members of
Lloyd’s, London, a Lloyd’s Market Rating of less than “A-” by A.M. Best and/or less than “BBB+” by S&P shall apply. 

  

	 	8.	The Subscribing Retrocessionaire has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid.

  

	B.	 Termination shall be effected on a cut-off basis and the Subscribing Retrocessionaire shall have no liability for
Loss Occurrences commencing after the date of termination. The reinsurance premium due the Subscribing Retrocessionaire hereunder (including any 

  

					
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minimum reinsurance premium) shall be prorated based on the period of the Subscribing Retrocessionaire’s participation hereon, and the Subscribing Retrocessionaire shall immediately return
any excess reinsurance premium received. Reinstatement premium, if any, shall be calculated based on the Subscribing Retrocessionaire’s reinsurance premium earned during the period of the Subscribing Retrocessionaire’s participation
hereon. 

  

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

  

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

ARTICLE 5 
 RETENTION AND LIMIT

  

	A.	The Retrocessionaire shall be liable in respect of each Loss Occurrence, for an amount of Ultimate Net Loss of up to **** for each such Loss Occurrence, and subject further to a limit of liability of **** for all Loss
Occurrences commencing during the term of this Contract. The coverage provided hereunder shall not apply unless and until the Retrocedent shall have retained an aggregate deductible of **** (i.e., the total of Ultimate Net Loss otherwise subject to
this Article pursuant to the terms of the Original Contract) for Loss Occurrences commencing during the term of this Contract. 

  

	B.	No Loss Occurrence shall be covered hereunder unless it involves two or more risks subject to this Contract. The Retrocedent shall be the sole judge of what constitutes one risk for purposes of this Contract.

 ARTICLE 6 
 PREMIUM

  

	A.	The Retrocedent shall pay the Retrocessionaire an annual premium of **** for coverage provided under this Contract to be paid on June 1, 2017. 

  

					
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	B.	The Retrocedent shall furnish the Retrocessionaire with such reasonably available information as may be reasonably required by the Retrocessionaire for completion of the Retrocessionaire’s financial statements.

 ARTICLE 7 

DEFINITIONS 
  

	 A. 
	1.	 “Ultimate Net Loss” means the actual loss paid by the Retrocedent or which the Retrocedent becomes liable to pay, such loss to
include loss adjustment expense, 100% of any extra contractual obligations and 100% of any loss in excess of policy limits as defined in the Original Contract, and 100% of any Extra Contractual Obligations and 100% of any Loss in Excess of Original
Contract Limit, as provided in the Extra Contractual Obligations/Loss in Excess of Original Contract Limits Article. 

  

	 	2.	Salvages and all recoveries (including amounts due from all reinsurances that inure to the benefit of this Contract, whether recovered or not), shall be first deducted from such loss to arrive at the amount of liability
attaching hereunder. 

  

	 	3.	All salvages, recoveries or payments recovered or received subsequent to loss settlement hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and all necessary adjustments shall be
made by the parties hereto. 

  

	 	4.	The Retrocedent shall be deemed to be “liable to pay” a loss when a judgment has been rendered that the Retrocedent does not plan to appeal, and/or the Retrocedent has obtained a release, and/or the
Retrocedent has accepted a proof of loss. 

  

	 	5.	Nothing in this clause shall be construed to mean that losses are not recoverable hereunder until the Retrocedent’s “Ultimate Net Loss” has been ascertained. 

 

	B.	“Loss Occurrence” shall follow the definition contained in the Original Contract. 

ARTICLE 8 
 EXTRA CONTRACTUAL
OBLIGATIONS/EXCESS OF ORIGINAL CONTRACT LIMITS 
  

	A.	This Contract shall cover Extra Contractual Obligations, as provided in the definition of Ultimate Net Loss. “Extra Contractual Obligations” shall be defined as those liabilities not covered under any other
provision of this Contract and that arise from the handling of any claim on business covered hereunder, such liabilities arising because of, but not limited to, the following: failure by the Retrocedent to settle within the Original Contract limit,
or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of any action against its reinsured or in the preparation or prosecution of an appeal
consequent upon such action. 

  

					
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	B.	This Contract shall cover Loss in Excess of Original Contract Limits, as provided in the definition of Ultimate Net Loss. “Loss in Excess of Original Contract Limits” shall be defined as Loss in excess of the
Original Contract limit, having been incurred because of, but not limited to, failure by the Retrocedent to settle within the Original Contract limit or by reason of alleged or actual negligence, fraud or bad faith in rejecting an offer of
settlement or in the preparation of the defense or in the trial of any action against its reinsured or in the preparation or prosecution of an appeal consequent upon such action. 

 

	C.	An Extra Contractual Obligation and/or Loss in Excess of Original Contract Limits shall be deemed to have occurred on the same date as the loss covered under the Original Contract, and shall constitute part of the
original loss. 

  

	D.	For the purposes of the Loss in Excess of Original Contract Limits coverage hereunder, the word “Loss” shall mean any amounts for which the Retrocedent would have been contractually liable to pay had it not
been for the limit of the Original Contract. 

  

	E.	However, this Article shall not apply where the loss has been incurred due to final legal adjudication of fraud of a member of the Board of Directors or a corporate officer of the Retrocedent 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. 

 

	F.	In no event shall coverage be provided to the extent not permitted under law. 

 ARTICLE 9

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

ARTICLE 10 
 NOTICE OF LOSS AND LOSS
SETTLEMENTS 
  

	A.	The Retrocedent shall advise the Retrocessionaire promptly if paid and estimated Ultimate Net Loss is in excess of 75% of the Retrocedent’s retention, or if, in the opinion of the Retrocedent, such Ultimate Net
Loss may result in a claim hereunder. Thereafter, the Retrocedent shall advise the Retrocessionaire, at least monthly, of all subsequent developments thereto that may materially affect the position of the Retrocessionaire. 

 

	B.	The Retrocedent alone and at its full discretion shall adjust, settle or compromise all claims and losses. 

  

					
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	C.	As respects losses subject to this Contract, all loss settlements made by the Retrocedent, whether under strict Policy terms or by way of compromise, and any Extra Contractual Obligations and/or Loss in Excess of Policy
Limits, shall be binding upon the Retrocessionaire. The Retrocessionaire agrees to pay or allow, as the case may be, its share of each such settlement immediately upon receipt of reasonable evidence of the amount paid by the Retrocedent or that
the Retrocedent estimates it will pay within the next 14 days. Within 30 days after receipt of the Retrocessionaire’s payment, the Retrocedent shall report to the Retrocessionaire the Retrocessionaire’s payment, minus the
Retrocessionaire’s share of losses subject to this Contract that the Retrocedent has paid, or become liable to pay, as of the date of the report. Any positive difference shall be remitted to the Retrocessionaire with the Retrocedent’s
report. 

 ARTICLE 11 

LATE PAYMENTS 
  

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

  

	 	1.	The number of full days that have expired since the overdue date or the last monthly calculation, whichever the lesser; times 

  

	 	2.	1/365th of the sum of the six-month United States Treasury Bill rate as quoted in The Wall Street Journal on the first business day of the month for which the calculation is made, plus 1%; times

  

	 	3.	The amount past due, including accrued interest. 

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

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

  

	 	1.	Payments from the Retrocessionaire to the Retrocedent shall be due on the date on which the demand for payment (including delivery of bordereaux or quarterly or monthly reports) is received by the Retrocessionaire, and
shall be overdue 30 days thereafter. 

  

	 	2.	 Payments from the Retrocedent to the Retrocessionaire shall be due on the dates specified within this Contract.
Payments shall be overdue 30 days thereafter except for the first installment of premium, if applicable, which shall be overdue 60 days from inception or 30 days from final line-signing, whichever the later. Reinstatement premium, if
applicable, shall have as a due date the date when the Retrocedent 

  

					
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receives payment for the claim giving rise to such reinstatement premium, and payment shall be overdue 30 days thereafter. In the event a due date is not specifically stated for a given
payment, the overdue date shall be 30 days following the date of billing. 

  

	C.	If the information contained in the Retrocedent’s demand for payment is insufficient or not in accordance with the conditions of this Contract, then within 30 days the Retrocessionaire shall request from the
Retrocedent all additional information necessary to validate its claim and the payment due date as defined in paragraph B shall be deemed to be the date upon which the Retrocessionaire received the requested additional information. This paragraph is
only for the purpose of establishing when a payment is overdue, and shall not alter the provisions of the Notice of Loss and Loss Settlements Article or other pertinent contractual stipulations. 

 

	D.	In the event arbitration is necessary to settle a dispute, the panel shall have the authority to make a determination awarding interest to the prevailing party. Interest, if any, awarded by the panel shall supersede the
interest amounts outlined herein. 

  

	E.	Any interest owed pursuant to this Article may be waived by the party to which it is owed. Waiver of such interest, however, shall not affect the waiving party’s rights to other interest amounts due as a result of
this Article. 

 ARTICLE 12 

OFFSET 
 Each party hereto shall have, and may exercise at
any time and from time to time, the right to offset any and all balances due from a party to the other arising under this Contract. In the event of the insolvency of a party hereto, offsets shall only be allowed in accordance with the provisions of
any applicable law governing offset entitlement. 
 ARTICLE 13 

CURRENCY 
  

	A.	Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars. 

 

	B.	For purposes of this Contract, where the Retrocedent receives premiums or pays losses in currencies other than United States Dollars, such premiums or losses shall be converted into United States Dollars at the actual
rates of exchange at which these premiums or losses are entered in the Retrocedent’s books. 

  

					
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 ARTICLE 14 

UNAUTHORIZED REINSURANCE 
  

	A.	This Article applies only to the extent a Subscribing Retrocessionaire does not qualify for credit with any insurance regulatory authority having jurisdiction over the Retrocedent’s reserves. 

 

	B.	The Retrocedent agrees, in respect of its Policies or bonds falling within the scope of this Contract, that when it files with its insurance regulatory authority, or sets up on its books liabilities as required by law,
it shall forward to the Retrocessionaire a statement showing the proportion of such liabilities applicable to the Retrocessionaire. The “Retrocessionaire’s Obligations” shall be defined as follows: 

 

	 	1.	unearned premium (if applicable); 

  

	 	2.	known outstanding losses that have been reported to the Retrocessionaire and Loss Adjustment Expense relating thereto; 

  

	 	3.	losses and Loss Adjustment Expense paid by the Retrocedent but not recovered from the Retrocessionaire; 

  

	 	4.	losses incurred but not reported and Loss Adjustment Expense relating thereto; 

  

	 	5.	all other amounts for which the Retrocedent cannot take credit on its financial statements unless funding is provided by the Retrocessionaire. 

 

	C.	The Retrocessionaire’s Obligations shall be funded by funds withheld, cash advances, Trust Agreement or a Letter of Credit (LOC). The Retrocessionaire shall have the option of determining the method of funding
provided it is acceptable to the insurance regulatory authorities having jurisdiction over the Retrocedent’s reserves. 

  

	D.	When funding by Trust Agreement, the Retrocessionaire shall ensure that the Trust Agreement complies with the provisions of the “Trust Agreement Requirements Clause” attached hereto. When funding by an LOC,
the Retrocessionaire agrees to apply for and secure timely delivery to the Retrocedent of a clean, irrevocable and unconditional LOC issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction
over the Retrocedent’s reserves in an amount equal to the Retrocessionaire’s Obligations. Such LOC shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any
future expiration date unless 30 days (or such other time period as may be required by insurance regulatory authorities), prior to any expiration date the issuing bank shall notify the Retrocedent by certified or registered mail that the
issuing bank elects not to consider the LOC extended for any additional period. 

  

					
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	E.	The Retrocessionaire and the Retrocedent agree that any funding provided by the Retrocessionaire 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 Retrocedent or any successor, by operation of law, of the Retrocedent including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Retrocedent, for the following purposes, unless
otherwise provided for in a separate Trust Agreement: 

  

	 	1.	to reimburse the Retrocedent for the Retrocessionaire’s Obligations, the payment of which is due under the terms of this Contract and that has not been otherwise paid; 

 

	 	2.	to make refund of any sum that is in excess of the actual amount required to pay the Retrocessionaire’s Obligations under this Contract (or in excess of 102% of the Retrocessionaire’s Obligations, if funding
is provided by a Trust Agreement); 

  

	 	3.	to fund an account with the Retrocedent for the Retrocessionaire’s Obligations. Such cash deposit shall be held in an interest bearing account separate from the Retrocedent’s other assets, and interest thereon
not in excess of the prime rate shall accrue to the benefit of the Retrocessionaire. Any taxes payable on accrued interest shall be paid out of the assets in the account that are in excess of the Retrocessionaire’s Obligations (or in excess of
102% of the Retrocessionaire’s Obligations, if funding is provided by a Trust Agreement). If the assets are inadequate to pay taxes, any taxes due shall be paid or reimbursed by the Retrocessionaire; 

 

	 	4.	to pay the Retrocessionaire’s share of any other amounts the Retrocedent claims are due under this Contract. 

  

	F.	If the amount drawn by the Retrocedent is in excess of the actual amount required for E(1) or E(3), or in the case of E(4), the actual amount determined to be due, the Retrocedent shall promptly return to the
Retrocessionaire the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Retrocedent or the Retrocessionaire. 

 

	G.	The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Retrocedent or the disposition of funds withdrawn, except to ensure that withdrawals are made only
upon the order of properly authorized representatives of the Retrocedent. 

  

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

  

	 	1.	 If the statement shows that the Retrocessionaire’s Obligations exceed the balance of the LOC as of the
statement date, the Retrocessionaire shall, within 30 days after receipt of the statement, secure delivery to the Retrocedent of an amendment to the 

  

					
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LOC increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Retrocessionaire shall, within the time period outlined above, increase such
funding by the amount of such difference. 

  

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

 ARTICLE 15 
 TAXES

  

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

  

	 B. 
	1.	 Each Subscribing Retrocessionaire has agreed to allow, for the purpose of paying the Federal Excise Tax, the applicable percentage of the
premium payable hereon (as imposed under the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax. 

  

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

 ARTICLE 16 

ACCESS TO RECORDS 
  

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

  

					
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	B.	Notwithstanding the above, the Retrocedent reserves the right to withhold from the Retrocessionaire any Privileged Documents. However, the Retrocedent shall permit and not object to the Retrocessionaire’s access to
Privileged Documents 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;
the Retrocedent may defer release of such Privileged Documents if there are subrogation, contribution, or other third party actions with respect to that claim or case, and the Retrocedent’s defense might be jeopardized by release of such
Privileged Documents. In the event that the Retrocedent seeks to defer release of such Privileged Documents, it shall, in consultation with the Retrocessionaire, take other steps as reasonably necessary to provide the Retrocessionaire with the
information it reasonably requires to indemnify the Retrocedent without causing a loss of such privileges or protections. The Retrocessionaire shall not have access to Privileged Documents relating to any dispute between the Retrocedent and the
Retrocessionaire. 

  

	C.	For purposes of this Article: 

  

	 	1.	“Privileged Documents” means any documents that are Attorney-Client Privilege Documents and/or Work Product Privilege Documents. 

 

	 	2.	“Attorney-Client Privilege Documents” means communications of a confidential nature between (a) the Retrocedent, or anyone retained by or at the direction of the Retrocedent, or its in-house or outside legal counsel, or anyone in the control of such legal counsel, and (b) any in-house or outside legal counsel, if such communications relate to legal advice being sought by the Retrocedent
and/or contain legal advice being provided to the Retrocedent. 

  

	 	3.	“Work Product Privilege Documents” means communications, written materials and tangible things prepared by or for in-house or outside counsel, or prepared by or for the Retrocedent, in anticipation of or in
connection with litigation, arbitration, or other dispute resolution proceedings. 

 ARTICLE 17 

CONFIDENTIALITY 
  

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

 

	 	1.	are publicly known or have become publicly known through no unauthorized act of the Retrocessionaire; 

  

					
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	 	2.	have been rightfully received from a third person without obligation of confidentiality; or 

  

	 	3.	were known by the Retrocessionaire prior to the placement of this Contract without an obligation of confidentiality. 

  

	B.	Absent the written consent of the Retrocedent, the Retrocessionaire shall not disclose any Confidential Information to any third parties, including any affiliated companies (except to the extent necessary to enable
affiliated companies or third parties engaged by the Retrocessionaire to perform services related to this Contract on behalf of the Retrocessionaire), except: 

  

	 	1.	when required by retrocessionaires as respects business ceded to this Contract; 

  

	 	2.	when required by regulators performing an audit of the Retrocessionaire’s records and/or financial condition; or 

  

	 	3.	when required by external auditors performing an audit of the Retrocessionaire’s records in the normal course of business. 

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

	C.	Notwithstanding the above, in the event that the Retrocessionaire is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the
Retrocessionaire agrees to provide the Retrocedent with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Retrocedent in maintaining the confidentiality provided for in this
Article. 

  

	D.	The provisions of this Article shall extend to the officers, directors and employees of the Retrocessionaire and its affiliates, and shall be binding upon their successors and assigns. 

ARTICLE 18 
 INDEMNIFICATION AND ERRORS
AND OMISSIONS 
  

	A.	The Retrocessionaire is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Retrocedent under any Policy. The Retrocedent shall be the sole judge as to: 

 

	 	1.	what shall constitute a claim or loss covered under any Policy; 

  

	 	2.	the Retrocedent’s liability thereunder; 

  

	 	3.	the amount or amounts that it shall be proper for the Retrocedent to pay thereunder. 

  

					
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	B.	The Retrocessionaire shall be bound by the judgment of the Retrocedent as to the obligation(s) and liability(ies) of the Retrocedent under any Policy. 

 

	C.	Any inadvertent error, omission or delay in complying with the terms and conditions of this Contract shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such error,
omission or delay had not been made, provided such error, omission or delay is rectified immediately upon discovery. 

  

	D.	Nothing in this Article shall be construed to override any of the other terms and conditions of this Contract. 

ARTICLE 19 
 INSOLVENCY 

 

	A.	If more than one reinsured company is referenced within the definition of “Retrocedent” 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 covered hereunder. In the event of a conflict between any provision of this Article and the laws of the domiciliary state of any company covered hereunder, that
domiciliary state’s laws shall prevail. 

  

	B.	In the event of the insolvency of the Retrocedent, this reinsurance (or the portion of any risk or obligation assumed by the Retrocessionaire, if required by applicable law) shall be payable directly to the Retrocedent,
or to its liquidator, receiver, conservator or statutory successor, either: (1) on the basis of the liability of the Retrocedent, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by
applicable statute, without diminution because of the insolvency of the Retrocedent or because the liquidator, receiver, conservator or statutory successor of the Retrocedent has failed to pay all or a portion of any claim. It is agreed, however,
that the liquidator, receiver, conservator or statutory successor of the Retrocedent shall give written notice to the Retrocessionaire of the pendency of a claim against the Retrocedent indicating the Policy or bond reinsured, which claim would
involve a possible liability on the part of the Retrocessionaire within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the
Retrocessionaire may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Retrocedent or its liquidator, receiver, conservator or
statutory successor. The expense thus incurred by the Retrocessionaire shall be chargeable, subject to the approval of the court, against the Retrocedent as part of the expense of conservation or liquidation to the extent of a pro rata share of the
benefit that may accrue to the Retrocedent solely as a result of the defense undertaken by the Retrocessionaire. 

  

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

  

					
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	D.	As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Contract, the reinsurance shall be payable as set forth above by the Retrocessionaire to the Retrocedent or to its liquidator,
receiver, conservator or statutory successor, (except as provided by Section 4118(a)(1)(A) of the New York Insurance Law, provided the conditions of 1114(c) of such law have been met, if New York law applies) or except (1) where the
Contract specifically provides another payee in the event of the insolvency of the Retrocedent, or (2) where the Retrocessionaire, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Retrocedent as
direct obligations of the Retrocessionaire to the payees under such Policies and in substitution for the obligations of the Retrocedent to such payees. Then, and in that event only, the Retrocedent, with the prior approval of the certificate of
assumption on New York risks by the Superintendent of Financial Services of the State of New York, or with the prior approval of such other regulatory authority as may be applicable, is entirely released from its obligation and the Retrocessionaire
shall pay any loss directly to payees under such Policy. 

 ARTICLE 20 

ARBITRATION 
  

	A.	Any dispute arising out of the interpretation, performance or breach of this Contract, including the formation or validity thereof, shall be submitted for decision to a panel of three arbitrators. Notice requesting
arbitration shall be in writing and sent certified or registered mail, return receipt requested. 

  

	B.	One arbitrator shall be chosen by each party and the two arbitrators shall then choose an impartial third arbitrator who shall preside at the hearing. If either party fails to appoint its arbitrator within 30 days
after being requested to do so by the other party, the latter, after 10 days’ prior notice by certified or registered mail of its intention to do so, may appoint the second arbitrator. 

 

	C.	If the two arbitrators do not agree on a third arbitrator within 60 days of their appointment, the third arbitrator shall be chosen in accordance with the procedures for selecting the third arbitrator in force on
the date the arbitration is demanded, established by the AIDA Reinsurance and Insurance Arbitration Society – U.S. (ARIAS). The arbitrators shall be persons knowledgeable about insurance and reinsurance who have no personal or financial
interest in the result of the arbitration. If a member of the panel dies, becomes disabled or is otherwise unwilling or unable to serve, a substitute shall be selected in the same manner as the departing member was chosen and the arbitration shall
continue. 

  

	D.	Within 30 days after all arbitrators have been appointed, the panel shall meet and determine timely periods for briefs, discovery procedures and schedules of hearings. 

  

					
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	E.	The panel shall be relieved of all judicial formality and shall not be bound by the strict rules of procedure and evidence. Notwithstanding anything to the contrary in this Contract, the arbitrators may at their
discretion, consider underwriting and placement information provided by the Retrocedent to the Retrocessionaire, as well as any correspondence exchanged by the parties that is related to this Contract. The arbitration shall take place in Tampa,
Florida, or at such other place as the parties shall agree. The decision of any two arbitrators shall be in writing and shall be final and binding. The panel is empowered to grant interim relief as it may deem appropriate. 

 

	F.	The panel shall interpret this Contract as an honorable engagement rather than as merely a legal obligation and shall make its decision considering the custom and practice of the applicable insurance and reinsurance
business as promptly as possible after the hearings. Judgment upon an award may be entered in any court having jurisdiction thereof. 

  

	G.	Each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the other party the cost of the third arbitrator. The remaining costs of the arbitration shall be allocated by the panel.
The panel may, at its discretion, award such further costs and expenses as it considers appropriate, including but not limited to attorneys’ fees, to the extent permitted by law. 

ARTICLE 21 
 SERVICE OF SUIT 

 

	A.	This Article applies only to those Subscribing Retrocessionaires not domiciled in the United States of America, and/or not authorized in any state, territory and/or district of the United States of America where
authorization is required by insurance regulatory authorities. 

  

	B.	This Article shall not be read to conflict with or override the obligations of the parties to arbitrate their disputes as provided for in the Arbitration Article. This Article is intended as an aid to compelling
arbitration or enforcing such arbitration or arbitral award, not as an alternative to the Arbitration Article for resolving disputes arising out of this Contract. 

 

	C.	In the event of the failure of the Retrocessionaire to perform its obligations hereunder, the Retrocessionaire, at the request of the Retrocedent, shall submit to the jurisdiction of a court of competent jurisdiction
within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Retrocessionaire’s rights to commence an action in any court of competent jurisdiction in the United States, to remove an action
to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. The Retrocessionaire, once the appropriate court is selected, whether such court
is the one originally chosen by the Retrocedent and accepted by the Retrocessionaire or is determined by removal, transfer, or otherwise, as provided for above, shall comply with all requirements necessary to give said court jurisdiction and, in any
suit instituted against the Retrocessionaire upon this Contract, shall abide by the final decision of such court or of any appellate court in the event of an appeal. 

  

					
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	D.	Service of process in such suit may be made upon Messrs. Mendes and Mount, 750 Seventh Avenue, New York, New York 10019-6829, or another party specifically designated in the applicable Interests and Liabilities
Agreement attached hereto. The above-named are authorized and directed to accept service of process on behalf of the Retrocessionaire in any such suit. 

  

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

ARTICLE 22 
 GOVERNING LAW 

This Contract shall be governed as to performance, administration and interpretation by the laws of Bermuda, exclusive of conflict of law rules. However, with
respect to credit for reinsurance, the rules of all applicable jurisdictions shall apply. 
 ARTICLE 23 

ENTIRE AGREEMENT 
 This Contract sets forth all of the
duties and obligations between the Retrocedent and the Retrocessionaire and supersedes any and all prior or contemporaneous written agreements with respect to matters referred to in this Contract. This Contract may not be modified or changed except
by an amendment to this Contract in writing signed by both parties. However, this Article shall not be construed as limiting the admissibility of evidence regarding the formation, interpretation, purpose or intent of this Contract. 

ARTICLE 24 
 NON-WAIVER 

The failure of the Retrocedent or the Retrocessionaire to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not
constitute a waiver of any rights contained in this Contract nor prevent either party from thereafter demanding full and complete compliance nor prevent either party from exercising such remedy in the future. 

  

					
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 ARTICLE 25 

INTERMEDIARY 
 Guy Carpenter & Company, LLC, is
hereby recognized as the Intermediary negotiating this Contract for all business hereunder. All communications (including notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expenses, salvages, and loss
settlements) relating thereto shall be transmitted to the Retrocedent or the Retrocessionaire through the Intermediary. Payments by the Retrocedent to the Intermediary shall be deemed payment to the Retrocessionaire. Payments by the Retrocessionaire
to the Intermediary shall be deemed payment to the Retrocedent only to the extent that such payments are actually received by the Retrocedent. 

ARTICLE 26 
 MODE OF EXECUTION 

 

	A.	This Contract may be executed by: 

  

	 	1.	an original written ink signature of paper documents; 

  

	 	2.	an exchange of facsimile copies showing the original written ink signature of paper documents; 

  

	 	3.	electronic signature technology employing computer software and a digital signature or digitizer pen pad to capture a person’s handwritten signature in such a manner that the signature is unique to the person
signing, is under the sole control of the person signing, is capable of verification to authenticate the signature and is linked to the document signed in such a manner that if the data is changed, such signature is invalidated. 

 

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

  

					
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 IN WITNESS WHEREOF, the Retrocedent has caused this Contract to be executed by its duly authorized
representative(s), who also confirms the Retrocedent’s review of and agreement to be bound by the terms and conditions of the Interests and Liabilities Agreements attached to and forming part of this Contract, this     day
of         , in the year of         . 
 CLADDAUGH
CASUALTY INSURANCE COMPANY LTD. 
  
  

WORKING LAYER CATASTROPHE EXCESS OF LOSS 

SPECIFIC RETROCESSION CONTRACT 

  

					
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 TRUST AGREEMENT REQUIREMENTS CLAUSE 

 

	A.	Except as provided in paragraph B of this Clause, if the Retrocessionaire satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Retrocessionaire shall ensure
that the Trust Agreement: 

  

	 	1.	Requires the Retrocessionaire to establish a trust account for the benefit of the Retrocedent, and specifies what the Trust Agreement is to cover; 

 

	 	2.	Stipulates that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash (United States legal tender), and certificates of deposit (issued by a
United States bank and payable in United States legal tender), or any combination of the two, provided that the investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Retrocessionaire or the
Retrocedent; 

  

	 	3.	Requires the Retrocessionaire, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets
requiring assignments, in order that the Retrocedent, or the trustee upon the direction of the Retrocedent, may whenever necessary negotiate these assets without consent or signature from the Retrocessionaire or any other entity; 

 

	 	4.	Requires that all settlements of account between the Retrocedent and the Retrocessionaire be made in cash or its equivalent; and 

  

	 	5.	Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the Retrocedent or the Retrocessionaire. 

 

	B.	If a ceding insurer is domiciled in California and the Retrocessionaire satisfies its funding obligations under the Unauthorized Reinsurance Article by providing a Trust Agreement, the Retrocessionaire shall ensure that
the Trust Agreement: 

  

	 	1.	Provides that assets deposited in the trust account shall be valued according to their current fair market value and shall consist only of cash in United States dollars, certificates of deposit issued by a United States
financial institution as defined in California Insurance Code Section 922.7(a) and payable in United States dollars, and investments permitted by the California Insurance Code, or any combination of the above. 

 

	 	2.	Provides that investments in or issued by an entity controlling, controlled by or under common control with either the grantor or the beneficiary of the trust shall not exceed 5% of total investments. 

  

					
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	 	3.	Requires the Retrocessionaire, prior to depositing assets with the trustee, to execute assignments or endorsements in blank, or to transfer legal title to the trustee of all shares, obligations or any other assets
requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may, whenever necessary, negotiate these assets without consent or signature from the Retrocessionaire or any other entity.

  

	 	4.	Provides that assets in the trust account shall be withdrawn only as permitted in this Contract, without diminution because of the insolvency of the ceding insurer or the Retrocessionaire. 

 

	C.	If there are multiple ceding insurers that collectively comprise the Retrocedent, “regulatory authorities” as referenced in subparagraph A(2) above, shall mean the individual ceding insurer’s domestic
regulator. 

  

					
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