Document:

exv10w140

EXHIBIT
10.140

PROPERTY & CASUALTY QUOTA SHARE

RETROCESSION AGREEMENT

(the “Agreement”)

entered into by and between

Peerless Insurance Company

(the “Retrocedent”)

and

Liberty Mutual Insurance Company

(the “Retrocessionare”)

Recitals

A. The Retrocedent is the lead reinsurer under that certain Reinsurance Agreement originally dated
as of January 1, 1996, and amended as of December 31, 1998, under which it assumes business ceded
to it by certain of its subsidiaries and affiliates and retrocedes a portion of such business back
to certain of those subsidiaries and affiliates in specified percentages (the “Peerless Pooling
Agreement”).

B. Liberty Insurance Underwriters Inc. (“LIU”) (formerly known as “Albany Insurance Company”) cedes
risks to its parent company, Atlas Assurance Company of America (“Atlas”), on a 100% quota share
basis pursuant to that certain Property & Casualty Quota Share Reinsurance Agreement effective as
of January 1, 1996 (the “Atlas Reinsurance Agreement”) and which was terminated as to policies
in-force, written or assumed by LIU on or after January 1, 2000.

C. LIU indirectly cedes risks to the Retrocedent under the Pooling Agreement through its cession of
risks to Atlas, who, in turn is a participant in the Peerless Pooling Agreement.

D. The Retrocedent desires to cede to the Retrocessionaire, and the Retrocessionaire desires to
assume, 100% of those risks ceded to the Retrocedent by Atlas under the Peerless Pooling Agreement
and which risks are specifically attributable to policies of insurance issued or assumed by LIU
prior to January 1, 2000.

NOW, THEREFORE, in consideration of the mutual covenants and promises set forth herein, the parties
hereby agree as follows:

 

 

Article I

Business Reinsured

A. The Retrocedent hereby retrocedes and the Retrocessionaire hereby assumes 100% of the Ultimate
Net Liability for Net Losses payable for LIU under the Peerless Pooling Agreement with respect to
policies in-force, issued or assumed by LIU and which risks are ceded to Atlas, which are, in turn,
ceded to the Retrocedent under the Peerless Pooling Agreement.

B. Premium to the Retrocessionaire for reinsurance provided hereunder shall be 100% of the Net
Written Premium received by Retrocedent and which is specifically allocable to LIU for each and
every risk assumed by Retrocedent and attributable to policies of insurance in-force, issued or
assumed by LIU under the Peerless Pooling Agreement.

C. The crediting of ceding commissions, net reserves, premium and expenses, to and from
Retrocedent, with respect to LIU’s risks, shall follow the applicable expense reimbursement
provisions under the Peerless Pooling Agreement.

Article II

Mutual Rights and Obligations

A. This Agreement shall be subject in all respects to the same terms, rates, conditions,
modifications, alterations and cancellations as the Peerless Pooling Agreement.

B. The parties shall not be prejudiced in any way by inadvertent errors or omissions, provided that
such errors or omissions are corrected immediately upon discovery.

C. The Retrocedent shall furnish to the Retrocessionaire within thirty (30) days of the end of each
calendar quarter, an account to which shall be credited Net Premiums, less ceding commission
thereon for the quarter in question, less net expenses and net losses paid during the quarter in
question.

D. The Retrocedent shall furnish the Retrocessionaire, within thirty (30) days of the end of each
calendar quarter, statistical data sufficient for the completion of financial statements.

E. The parties agree that they may, upon request, inspect each other’s books and all records and
documents insofar as they may include or affect the business ceded under this Agreement.

F. The terms used in this Agreement shall have the same meaning as such terms have under the
Peerless Pooling Agreement.

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Article III

Effective Date

A. This Agreement shall be effective as of 12:01 am, January 1, 2001 and shall remain in force
unless modified by mutual agreement or terminated as provided for in the Peerless Pooling
Agreement. In the event of termination of this Agreement, the parties shall continue to participate
in all liability coming within the terms of this Agreement during the termination notice period and
shall remain liable up to the natural expiration date of all such business in force on the
termination date of this Agreement.

B. Notwithstanding paragraph A, above, this Agreement shall not be effective until all required
regulatory approvals of this Agreement have been obtained.

Article IV

Insolvency

In the event of the insolvency of the Retrocedent, the Retrocessionaire agrees that the reinsurance
shall be payable by it on the basis of the claims allowed against the Retrocedent in the insolvency
proceedings, under contract or contracts reinsured without diminution because of the insolvency of
the ceding insurer. Payments made by the Retrocessionaire shall be made directly to the ceding
insurer or its domiciliary liquidator or receiver except (a) where the contract specifically
provides another payee of such reinsurance in the event of the insolvency of the Retrocedent; or
(b) where the Retrocessionaire with the consent of the direct insured or insured 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 to the Retrocedent to such payees. The
portion of any risk or obligation assumed by the Retrocessionaire, when such portion is
ascertained, shall be payable on demand of the Retrocedent, at the same time as the Retrocedent
shall pay its net retained portion of such risk or obligation, with reasonable provision for
verification before payment.

The domiciliary liquidator or receiver of the insolvency Retrocedent shall, within a specified or
reasonable time after the claim is filed in court or in the receivership, give written notice to
the Retrocessionaire of all or part of any claim against the Retrocedent on the policy or bond
reinsured. During the pendency of the claim, the Retrocessionaire may investigate the claim and
intervene in the proceeding in which the claim is pending and interpose any defenses it considers
available which have not been raised by the Retrocedent, its liquidator or receiver. The expenses
incurred by the Retrocessionaire in this type of action are payable up to the amount of the
expenses or the amount of the

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benefit produced, whichever is less, as expenses of the receivership. If two or more
Retrocessionaires have potential liability because of the same claim, the expenses shall be
apportioned among them in proportion to the benefit received.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized officers as of the day and year first written above.

	 	 	 	 	 	 	 	 	 	 	 

	PEERLESS INSURANCE COMPANY	 	 	 	LIBERTY MUTUAL INSURANCE COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/
	 	 	 	By:
	 	/s/ 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Its:
	 	 	 	 
	 	Its: 	 	 

4exv10w141

EXHIBIT
10.141

REINSURANCE AGREEMENT

          Reinsurance Agreement (“Agreement”), effective as of the 2nd day of December, 2002
(the “Effective Date”) by and between Liberty Mutual Insurance Company, a Massachusetts stock
insurance company (the “Reinsurer”), and Liberty County Mutual Insurance Company, a Texas county
mutual insurance company (the “Company”).

SECTION 1 — REINSURANCE OBLIGATION

          1.1 The Company agrees to cede to the Reinsurer, and the Reinsurer agrees to accept as quota
share reinsurance of the Company, one hundred percent (100%) of the Company’s Ultimate Net
Liability under the Reinsured Policies written during the term of this Agreement (as further
described in Sections 1.2 and 1.3) by the Company. For purposes of this Agreement:

“Ultimate Net Liability” means the liability under the Reinsured Policies after all claims have
been settled and all expenses have been paid.

“Reinsured Policies” means, all policies, binders, bonds, insurance, contracts, or insurance
agreements where the agent for the Company with respect to such policy, binder, bond, contract,
or agreement is also licensed as an agent for the Reinsurer and/or one or more of its Non-RAM
Affiliates.

“Non-RAM Affiliates” means all of Liberty Mutual Insurance Company’s affiliated
property-casualty insurance companies except companies in the Regional Agency Markets business
unit.

          1.2 The Reinsurer’s liability shall apply to all losses and expenses under the Reinsured
Policies written on or after the Effective Date.

          1.3 The business reinsured under this Agreement shall include every rewrite, renewal or
extension (whether before or after the termination of this Agreement) required by statute or
regulation of any authority having competent jurisdiction, of any Reinsured Policy originally ceded
hereunder by the Company to the Reinsurer.

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          1.5 It is the intention of the parties that the fortunes of the Reinsurer shall follow the
fortunes of the Company under the Reinsured Policies in every respect. All reinsurance under this
Agreement shall be subject to the same rates, terms, conditions, waivers, modifications,
endorsements and cancellations as the respective Reinsured Policies of the Company.

          1.6 The Company shall pay the Reinsurer one hundred percent (100%) of the collected premiums
attributable to the Reinsured Policies.

SECTION 2 — TERM AND RUN-OFF CANCELLATION

          2.1 This Agreement shall take effect on the Effective Date as of 12:00:01 a.m., Dallas, Texas
local time. This Agreement shall remain continuously in force until terminated in accordance with
Section 2.2.

          2.2 This Agreement may be terminated by either party giving the other at least 90 days advance
written notice, or otherwise by mutual agreement of both parties.

          2.3 When this Agreement terminates for any reason, the Reinsurer shall continue to remain
liable hereunder for claims on (a) Reinsured Policies in force at the time of termination until
expiration or cancellation of such Reinsured Policies, and (b) Reinsured Policies written by the
Company before the effective time of termination. It is understood that any Reinsured Policies with
effective dates prior to the termination date but issued after the termination date are covered
under the Agreement. Additionally, the reinsurance hereunder shall continue to apply to Reinsured
Policies which must be issued or renewed by the Company, as required by statute or regulation,
until the expiration of said Reinsured Policies.

          2.4 Upon termination of this Agreement, the Reinsurer and the Company shall not be relieved of
or released from any obligation created by or under this Agreement in relation to payment,
expenses, reports, accounting or claims handling, relating to Reinsured Policies existing and in
effect on the date of such termination. The parties hereto expressly covenant and agree that they
will cooperate with each other in the handling of all such obligations until all Reinsured Policies
have expired either by cancellation or by the terms of such Reinsured Policies and until there is a
final accounting and settlement for all outstanding losses and loss adjustment expenses. While by
law the Company recognizes its primary obligations to holders of its Reinsured Policies, the
parties intend that the Reinsurer, and not the Company, shall bear the cost of servicing such
obligations.

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SECTION 3 — EXPENSES;

REPORTS; REMITTANCES; OFFSET

          3.1 The amount of expense reimbursement granted to the Company shall be equal to the amount of
(a) premium taxes incurred on Reinsured Policies and (b) agent commissions incurred on Reinsured
Policies. In addition to the Reinsurer’s obligation to pay losses and expenses attributable to a
claim under the Reinsured Policies as set forth in Section 4 herein, the Reinsurer shall make
direct payments of all other expenses which the Company incurs or is responsible for with respect
to the Reinsured Policies, including but not limited to any (i) loss expenses not attributable to a
claim under the Reinsured Policies and (ii) other underwriting expenses accrued on Reinsured
Policies. The Company shall promptly forward to the Reinsurer all notices or invoices concerning
such expenses.

          3.2 The net amount owed by each party to the other under this Agreement shall be determined no
less frequently than on a quarterly basis; and such amount shall be paid on presentation of invoice
covering settlement within 45 days after the close of the period to which the determination
applies. Advances may be made as needed to comply with statutory requirements. Reports of premiums
and losses and payment of losses shall be provided no less frequently than on a monthly basis.
Monthly reports shall consist of premiums, losses, dividends, taxes and other expenses in such
detail as to enable each party to comply with statutory accounting practices. The periodic
accounting and cash settlement required under this Agreement shall be unconditional upon the
performance of any other agreement or person.

          3.3 Each party shall have, and may exercise at any time and from time to time, the right to
offset any balance or balances, whether on account of premiums, losses, expenses, assessments,
taxes or otherwise, due from such party to the other party under this Agreement, and may offset the
same against any balance or balances due to the former party from the latter party under this
Agreement or any other reinsurance agreement which may hereafter be entered into between the
Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.

SECTION 4 — LOSS SETTLEMENTS

          4.1 The Reinsurer shall be solely and directly liable for one hundred percent (100%) of all
net losses, judgments, settlements, and expenses (including but not limited to all legal fees and
interest on judgments) attributable to a claim under the Reinsured Policies. The Reinsurer assumes
sole responsibility for the reimbursement of the Company for the claims or losses under the
Reinsured Policies. The Reinsurer shall

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be reimbursed for one hundred percent (100%) of any net amounts received by the Company as salvage
or subrogation recovery.

          4.2 The Reinsurer hereby empowers the Company, in the Company’s discretion and under its
supervision, to appoint agents to accept notice of and investigate any claim arising under any of
the Reinsured Policies and to pay, adjust, settle, resist, or compromise any such claim. All such
loss settlements, whether strictly under the terms and conditions of a Reinsured Policy or by way
of compromise, shall be unconditionally binding upon the Reinsurer. If the Company is ordered or
instructed by any regulatory agency of competent jurisdiction to take any action or refrain from
taking any action with regard to any claim, the Reinsurer shall be bound by and shall follow the
order or instructions of such regulatory agency as though the Reinsurer were (he object of such
order or instruction.

          4.3 The Company shall notify the Reinsurer of any claim, suit, or action against the Company
under any Reinsured Policy within a reasonable time after actual knowledge of said claim, suit, or
action. Unless otherwise instructed by the Reinsurer, the Company will promptly furnish to the
Reinsurer or its designated representative all summonses, citations, complaints, petitions,
counterclaims, and other pleadings and legal instruments served upon or delivered to the Company in
connection with any Reinsured Policy. The Company hereby further empowers the Reinsurer to
associate with the Company in the defense and control of any claim, suit, or action and to enforce
(by the institution of suit for damages or otherwise) any right of the Company against any person
or organization for any loss under any Reinsured Policy, and to employ legal counsel when
necessary, All sums received as a result of such authorized actions by the Reinsurer shall be
treated as current loss recoveries by the Company and the Reinsurer. The Company agrees to execute
and deliver to the Reinsurer any and all legal instruments necessary to implement the foregoing
authorizations. Upon request, the Reinsurer shall furnish to the Company any and all documents and
correspondence relating to the subject matter hereof. Drafts in payment of losses insured under any
Reinsured Policy may be drawn on the Reinsurer’s account, provided that the accounts and records of
each party are so maintained as to clearly and accurately disclose the nature of the transaction.
Notwithstanding this Section 4.3 or any other provision of this Agreement to the contrary, this
Agreement shall not be construed or deemed to create any direct right of action or privity of
contract between a policyholder under a Reinsured Policy and the Reinsurer.

          4.4 All records pertaining to claims arising under the Reinsured Policies shall be retained by
Company, subject to any record destruction policies of the Company which preserve records for at
least as long as the record destruction policies of the Reinsurer.

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SECTION 5 — ERRORS AND OMISSIONS

     Any inadvertent error or omission shall not be held to relieve any party hereto from any
liability which would attach to it hereunder if such error or omission had not been made. Any such
error or omission shall be rectified as soon as may be reasonably practicable after discovery.

SECTION 6 — INSPECTION OF RECORDS

     The books and records pertaining to liability and losses under this Agreement maintained by
either party hereto shall at all times during regular business hours be subject to inspection by an
authorized representative of the other party. This provision shall survive the termination of this
Agreement.

SECTION 7 — PREMIUM COLLECTION;

OTHER DUTIES OF THE REINSURER AND COMPANY

          With respect to any duties or responsibilities of the Company for the administration of the
business being reinsured hereunder, including but not limited to the collection of premiums from
policyholders, policyholder services and the underwriting and issuance of Reinsured Policies, the
Company hereby empowers the Reinsurer to act on its behalf to perform such duties or
responsibilities directly to the extent that the Reinsurer is liable for payment of the expenses of
performing such duties or responsibilities as set forth in Section 3, provided that the accounts
and records of each party are so maintained as to clearly and accurately disclose the nature of the
transaction.

SECTION 8 — COMPLIANCE WITH LAW

          The Reinsurer and the Company shall perform their obligations under this Agreement in
compliance with Texas law, including all regulations or directives duly promulgated by the Texas
Department of Insurance, and the laws of any other applicable regulatory authority, and the
Reinsurer shall cooperate with the Company to the extent necessary to enable the Company to comply
with such laws, regulations and directives.

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SECTION 9 — ASSESSMENTS OR ASSIGNMENTS

     The Reinsurer hereby assumes liability for any and all assessments and assignments (whether
before or after the termination of this Agreement) imposed as a result of Reinsured Policies levied
or made by a guaranty fund, insolvency fund, plan, pool, association, or other arrangement created
by statute or regulation.

SECTION 10 — INSOLVENCY

     In the event of the insolvency of the Company (including any appointment of a receiver or
liquidator), this reinsurance shall be payable directly to the Company, or to its liquidator,
receiver, conservator or statutory successor on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator, receiver,
conservator or statutory successor of the Company has failed to pay all or a portion of any claim.
Payments by the Reinsurer shall be made directly to the Company or to its liquidator, receiver,
conservator or statutory successor, except

	 	(1)	 	where the Reinsured Policy specifically provides another payee of such reinsurance in
the event of the insolvency of the Company, or
	 
	 	(2)	 	where the Reinsurer, with the consent of the direct insured, has assumed the policy
obligations of the Company as direct obligations of the Reinsurer to the payee under the
Reinsured Policy and in substitution for the obligations of the Company to the payee.

The liquidator, receiver, conservator or statutory successor of the Company shall give written
notice to the Reinsurer of the pendency of a claim against the Reinsurer or the Company indicating
the Reinsured Policy and whether the claim could involve a possible liability on the part of the
Reinsurer within a reasonable time after such claim is filed in the liquidation, conservation or
receivership proceeding. During the pendency of such claim, the Reinsurer may investigate such
claim, associate in the defense, and interpose in the proceeding where such claim is to be
adjudicated any defenses that it may deem available to the Company or its liquidator, receiver,
conservator or statutory successor. Subject to court approval, the expense thus incurred by the
Reinsurer shall be chargeable against the insolvent Company as part of the expense of liquidation,
to the extent of a proportionate share of the benefit which may accrue to the Company solely as a
result of the defense undertaken by the Reinsurer.

SECTION 11 — MISCELLANEOUS

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     11.1 Notices. Any notices or other communications required or permitted hereunder
shall be deemed to have been duly given only when received by the party to whom such notice or
communication is addressed at the following addresses (or at such other address for a party as
shall be specified by like notice)

	 	 	 

	To Company:

	 	Michael J. Mott
	 

	 	President
	 

	 	Liberty County Mutual Insurance Company
	 

	 	2100 Walnut Hill Lane
	 

	 	Irving, TX 75038
	 
	 	 
	To Reinsurer:

	 	Dennis J. Langwell
	 

	 	Vice President and Comptroller
	 

	 	Liberty Mutual Insurance Company
	 

	 	175 Berkeley Street
	 

	 	Boston, MA 02117-0140

     11.2 Gender and Number. All words or terms used in this Agreement, regardless of the
number or gender in which they are used, shall be deemed to include any other number and any other
gender as the context may require.

     11.3 Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the respective successors and assigns of the parties hereto but shall not be
assigned by either of the parties without the prior written consent of the other.

     11.4 Waiver. The failure of any party at any time or times to require performance of
any provisions hereof shall in no manner affect such party’s right at a later date to enforce the
same. No waiver by either party of a condition or a breach of any term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed or construed as a further or continuing waiver of such condition, breach
or waiver of any condition or of the breach of any other term, covenant, representation or warranty
of this Agreement.

     11.5 Entire Agreement; Amendments. This Agreement constitutes the entire agreement
between the Reinsurer and the Company with respect to the business being reinsured hereunder. It
supersedes all prior agreements, arrangements and communications, whether oral or written, between
the Reinsurer and the Company with respect to the business being reinsured hereunder. This
Agreement shall not be changed, modified or amended other than by a written amendment signed by the
Reinsurer and the Company. No other oral or written understandings, agreements or contracts with
respect to the business being reinsured hereunder currently exist, or are

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contemplated to be legally binding, between the parties. This Agreement provides no guarantee of
profit, directly or indirectly, from the Reinsurer to the Company or from the Company to the
Reinsurer. Captions appearing in this Agreement are for convenience of reference only and shall not
be deemed to explain, limit or amplify the provisions hereof. This Agreement may be executed in
multiple counterparts, each of which, when so executed and delivered, shall be an original; but
such counterparts shall together constitute one and the same instrument and agreement.

     11.6 Governing Law. This Agreement shall be governed by, construed in accordance with,
the laws of the Commonwealth of Massachusetts.

     11.7 Arbitration. As a condition precedent to any right of action hereunder, any
dispute arising out of this Agreement shall be submitted to a board of arbitration composed of
three arbiters, one arbiter to be appointed by each of the parties and the third to be appointed by
the first two so appointed. The board shall meet in Boston, Massachusetts, unless otherwise agreed.
The claimant shall submit its initial brief within 20 days after the appointment of the last
arbiter. The respondent shall submit its brief within 20 days after receipt of the claimant’s
brief. The claimant may submit a reply brief within 10 days after receipt of the respondent’s
brief. The board shall issue its decision following a hearing in which evidence may be introduced
without following strict rules of evidence but in which cross examination and rebuttal shall be
allowed. The board shall make its decision having regard for the custom and usage of the
property-casualty insurance and reinsurance business and within 60 days after the end of the
hearing, unless the parties agree otherwise. A decision by a majority of the board shall be final
and binding upon the parties. The board shall not authorize any punitive; exemplary or
consequential damages between the parties. Judgment may be entered upon the decision of the board
in any court of competent jurisdiction. Each party shall bear the expenses of its own arbiter and
its own legal and expert fees and expenses, and both parties shall equally share any other expenses
of the arbitration proceedings.

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          IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

	 	 	 	 	 
	LIBERTY MUTUAL INSURANCE COMPANY

 	 	 
	By:  	/s/ Dennis J. Langwell
 	 	 
	 	Name:  	Dennis J. Langwell 	 	 
	 	Title:  	Vice President and Comptroller 	 	 
	 
	LIBERTY COUNTY MUTUAL INSURANCE COMPANY

 	 	 
	By:  	/s/ Michael J. Mott
 	 	 
	 	Name:  	Michael J. Mott 	 	 
	 	Title:  	President 	 	 
	 

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