Document:

Reimbursement Contract

 Exhibit 10.3 
  

					
	

	  	 STATE BOARD OF ADMINISTRATION

OF FLORIDA
  

1801 HERMITAGE BOULEVARD TALLAHASSEE, FLORIDA 32308

(850) 488-4406
  

POST OFFICE BOX 13300

32317-3300
	  	 RICK SCOTT

GOVERNOR
 CHAIR

 
 JEFF ATWATER

CHIEF FINANCIAL OFFICER
  

PAM BONDI
 ATTORNEY
GENERAL
  
 ASH WILLIAMS

EXECUTIVE DIRECTOR & CIO

 REIMBURSEMENT CONTRACT 

Effective: June 1, 2014 

(Contract) 
 between 

 

					
	HOMEOWNERS CHOICE PROPERTY AND CASUALTY INSURANCE COMPANY
		  	(Company)	  	 

		  	NAIC # 12944	  
		  	and	  

 THE STATE BOARD OF ADMINISTRATION OF THE STATE OF FLORIDA (SBA) 

WHICH ADMINISTERS THE FLORIDA HURRICANE CATASTROPHE FUND (FHCF) 

PREAMBLE 
 The Legislature of the State of Florida has
enacted Section 215.555, Florida Statutes (Statute), which directs the SBA to administer the FHCF. This Contract, consisting of the principal document entitled Reimbursement Contract, addressing the mandatory FHCF coverage, and Addenda, is
subject to the Statute and to any administrative rule adopted pursuant thereto, and is not intended to be in conflict therewith. All provisions in the principal document are equally applicable to each Addendum unless specifically superseded by one
of the Addenda. 
 In consideration of the promises set forth in this Contract, the parties agree as follows: 

ARTICLE I - SCOPE OF AGREEMENT 
 As a condition precedent
to the SBA’s obligations under this Contract, the Company, an Authorized Insurer or an entity writing Covered Policies under Section 627.351, Florida Statutes, in the State of Florida, shall report to the SBA in a specified format the
business it writes which is described in this Contract as Covered Policies. 
 The terms of this Contract shall determine the rights and obligations of the
parties. This Contract provides reimbursement to the Company under certain circumstances, as described herein, and does not provide or extend insurance or reinsurance coverage to any person, firm, corporation or other entity. The SBA shall reimburse
the Company for its Ultimate Net Loss on Covered Policies, which were in force and in effect at the time of the Covered Event causing the loss, in excess of the Company’s Retention as a result of each Loss Occurrence commencing during the
Contract Year, to the extent funds are available, all as hereinafter defined. 

  

					
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 ARTICLE II - PARTIES TO THE CONTRACT 

This Contract is solely between the Company and the SBA which administers the FHCF. In no instance shall any insured of the Company or any claimant against an
insured of the Company, or any other third party, have any rights under this Contract, except as provided in Article XIV. The SBA will only disburse funds to the Company, except as provided for in Article XIV of this Contract. The Company shall not,
without the prior approval of the Office of Insurance Regulation, sell, assign, or transfer to any third party, in return for a fee or other consideration any sums the FHCF pays under this Contract or the right to receive such sums. 

ARTICLE III - TERM 
 This Contract shall apply to Loss
Occurrences which commence during the period from 12:00:01 a.m., Eastern Time, June 1, 2014, to 12:00 midnight, Eastern Time, May 31, 2015 (Contract Year). 

The Company must designate a coverage level, make the required selections, and return this fully executed Contract (two originals) to the FHCF Administrator
so that the Contract is received by the FHCF Administrator no later than 5 p.m., Central Time, March 1, 2014. Failure to do so may result in a referral to the Office of Insurance Regulation within the Department of Financial Services for
administrative action. Furthermore, the Company’s coverage level under this Contract will be deemed as follows: 
  

	(1)	For Companies that are a member of a National Association of Insurance Commissioners (NAIC) group, the same coverage level selected by the other Companies of the same NAIC group shall be deemed. If executed Contracts
for none of the members of an NAIC group have been received by the FHCF Administrator, the coverage level from the prior Contract Year shall be deemed. 

  

	(2)	For Companies that are not a member of an NAIC group under which other Companies are active participants in the FHCF, the coverage level from the prior Contract Year shall be deemed. 

 

	(3)	For New Participants, as that term is defined in Article V(21), that are a member of an NAIC group, the same coverage level selected by the other Companies of the same NAIC group shall be deemed. 

 

	(4)	For New Participants that are not a member of an NAIC group under which other Companies are active participants in the FHCF, the 45%, 75% or 90% coverage levels may be selected providing that the FHCF Administrator
receives executed Contracts within 30 calendar days of the effective date of the first Covered Policy, otherwise, the 45% coverage level shall be deemed. 

Pursuant to the terms of this Contract, the SBA shall not be liable for Loss Occurrences which commence after the effective time and date of expiration or
termination. Should this Contract expire or terminate while a Loss Occurrence covered hereunder is in progress, the SBA shall be responsible for such Loss Occurrence in progress in the same manner and to the same extent it would have been
responsible had the Contract expired the day following the conclusion of the Loss Occurrence in progress. 
 ARTICLE IV - LIABILITY OF THE FHCF 

 

	(1)	The SBA shall reimburse the Company, with respect to each Loss Occurrence commencing during the Contract Year for the “Reimbursement Percentage” elected, this percentage times the amount of Ultimate Net Loss
paid by the Company in excess of the Company’s Retention, as adjusted pursuant to Article V(28), plus 5% of the reimbursed losses for Loss Adjustment Expense Reimbursement. 

 

	(2)	The Reimbursement Percentage will be 45% or 75% or 90%, at the Company’s option as elected under Article XVIII. 

  

					
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	(3)	The aggregate liability of the FHCF with respect to all Reimbursement Contracts covering this Contract Year shall not exceed the limit set forth under Section 215.555(4)(c)1., Florida Statutes. For specifics
regarding loss reimbursement calculations, see section (3)(c) of Article X herein. 

  

	(4)	Upon the occurrence of a Covered Event, the SBA shall evaluate the potential losses to the FHCF and the FHCF’s capacity at the time of the event. The initial Projected Payout Multiple used to reimburse the Company
for its losses shall not exceed the Projected Payout Multiple as calculated based on the capacity needed to provide the FHCF’s mandatory coverage. If it appears that the Estimated Claims-Paying Capacity may be exceeded, the SBA shall reduce the
projected payout factors or multiples for determining each participating insurer’s projected payout uniformly among all insurers to reflect the Estimated Claims-Paying Capacity. 

 

	(5)	Reimbursement amounts shall not be reduced by reinsurance paid or payable to the Company from other sources. 

  

	(6)	After the end of the calendar year, the SBA shall notify insurers of the estimated Borrowing Capacity and the Balance of the Fund as of December 31. In May and October of each year, the SBA shall publish in the
Florida Administrative Weekly a statement of the FHCF’s estimated Borrowing Capacity, Estimated Claims-Paying Capacity, and the projected Balance of the Fund as of December 31. 

 

	(7)	The obligation of the SBA with respect to all Contracts covering a particular Contract Year shall not exceed the Balance of the Fund as of December 31 of that Contract Year, together with the maximum amount the SBA
is able to raise through the issuance of revenue bonds or through other means available to the SBA under Section 215.555, Florida Statutes, up to the limit in accordance with Section 215.555(4)(c)1., Florida Statutes. The obligations and
the liability of the SBA are more fully described in Rule 19-8.013, Florida Administrative Code (FA.C.). 

 ARTICLE V - DEFINITIONS

  

	(1)	Actual Claims-Paying Capacity of the FHCF 

 This term means the sum of the Balance of the
Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the FHCF, plus the amount the SBA is able to raise through the issuance of revenue bonds, or through other means available by law to the SBA, up to the limit in
accordance with Section 215.555(4)(c)1. and (6), Florida Statutes. 
  

	(2)	Actuarially Indicated 

 This term means, with respect to Premiums paid by Companies for
reimbursement provided by the FHCF, an amount determined in accordance with the definition provided in Section 215.555(2)(a), Florida Statutes. 
  

	(3)	Additional Living Expense (ALE) 

 ALE losses covered by the FHCF are not to exceed 40
percent of the insured value of a Residential Structure or its contents based on the coverage provided in the policy. Fair rental value, loss of rents, or business interruption losses are not covered by the FHCF. 

 

	(4)	Administrator 

 This term means the entity with which the SBA contracts to perform
administrative tasks associated with the operations of the FHCF. The Administrator is Paragon Strategic Solutions Inc., 8200 Tower, 5600 West 83rd Street, Suite 1100, Minneapolis, Minnesota 55437.
The telephone number is (800) 689-3863, and the facsimile number is (800) 264-0492. 
  

	(5)	Authorized Insurer 

 This term is defined in Section 624.09(1), Florida Statutes.

  

	(6)	Borrowing Capacity 

 This term means the amount of funds which are able to be raised by
the issuance of revenue bonds or through other financing mechanisms, less bond issuance expenses and reserves. 

  

					
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	(7)	Citizens Property Insurance Corporation (Citizens) 

 This term means the entity formed
under Section 627.351(6), Florida Statutes, and refers to both Citizens Property Insurance Corporation Coastal Account and Citizens Property Insurance Corporation Personal Lines and Commercial Lines Accounts. 

 

	(8)	Contract 

 This term means this Reimbursement Contract for the current Contract Year.

  

	(9)	Covered Event 

 This term means any one storm declared to be a hurricane by the National
Hurricane Center which causes insured losses in Florida. A Covered Event begins when a hurricane causes damage in Florida while it is a hurricane and continues throughout any subsequent downgrades in storm status by the National Hurricane Center
regardless of whether the hurricane makes landfall. Any storm, including a tropical storm, which does not become a hurricane is not a Covered Event. 
  

	(10)	Covered Policy or Covered Policies 

  

	 	(a)	Covered Policy, as defined in Section 215.555(2)(c), Florida Statutes, is further clarified to mean only that portion of a binder, policy or contract of insurance that insures real or personal property located in
the State of Florida to the extent such policy insures a Residential Structure, as defined in definition (27) herein, or the contents of a Residential Structure, located in the State of Florida. 

 

	 	(b)	Due to the specialized nature of the definition of Covered Policies, Covered Policies are not limited to only one line of business in the Company’s annual statement required to be filed by Section 624,424,
Florida Statutes. Instead, Covered Policies are found in several lines of business on the Company’s annual statement. Covered Policies will at a minimum be reported in the Company’s statutory annual statement as: 

 

	 	1.	Fire 

  

	 	2.	Allied Lines 

  

	 	3.	Farmowners Multiple Peril 

  

	 	4.	Homeowners Multiple Peril 

  

	 	5.	Commercial Multiple Peril (non liability portion, covering condominiums and apartments) 

  

	 	6.	Inland Marine 

 Note that where particular insurance exposures, e.g., mobile homes, are reported
on an annual statement is not dispositive of whether or not the exposure is a Covered Policy. 
  

	 	(c)	This definition applies only to the first-party property section of a policy pertaining strictly to the structure, its contents, appurtenant structures, or ALE coverage. 

 

	 	(d)	Covered Policy also includes any collateral protection insurance policy covering personal residences which protects both the borrower’s and the lender’s financial interest, in an amount at least equal to the
coverage for the dwelling in place under the lapsed homeowner’s policy, if such policy can be accurately reported as required in Section 215.555(5), Florida Statutes. A Company will be deemed to be able to accurately report data if the
required data, as specified in the Premium Formula adopted in Section 215.555(5), Florida Statutes, is available. 

  

	 	(e)	See Article VI of this Contract for specific exclusions. 

  

	(11)	Deductible Buy-Back Policies 

 This term means a specific policy that provides coverage
to a policyholder for some portion of the policyholder’s deductible under a policy issued by another insurer. 
  

	(12)	Estimated Claims-Paying Capacity of the FHCF 

 This term means the sum of the projected
Balance of the Fund as of December 31 of a Contract Year, plus any reinsurance purchased by the FHCF, plus the most recent estimate of the Borrowing Capacity of the FHCF, determined pursuant to Section 215.555(4)(c), Florida Statutes. 

  

					
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	(13)	Excess Policies 

 This term, for the purposes of this Contract, means a policy that
provides insurance protection for large commercial property risks and that provides a layer of coverage above a primary layer (which is insured by a different insurer) that acts much the same as a very large deductible. 

 

	(14)	Florida Department of Financial Services (Department) 

 This term means the Florida
regulatory agency, created pursuant to Section 20.121, Florida Statutes, which is charged with regulating the Florida insurance market and administering the Florida Insurance Code. 

 

	(15)	Florida Insurance Code 

 This term means those chapters identified in
Section 624.01, Florida Statutes, which are designated as the Florida Insurance Code. 
  

	(16)	Formula or the Premium Formula 

 This term means the Formula approved by the SBA for the
purpose of determining the Actuarially Indicated Premium to be paid to the FHCF. The Premium Formula is defined as an approach or methodology which leads to the creation of premium rates. The resulting rates are therefore incorporated as part of the
Premium Formula. The Formula, shall, pursuant to Section 215.555(5)(b), Florida Statutes, include a cash build-up factor in the amount specified therein. 
  

	(17)	Fund Balance or Balance of the Fund as of December 31 

 These terms mean the amount
of assets available to pay claims, not including any bonding proceeds, resulting from Covered Events which occurred during the Contract Year. 
  

	(18)	Insurer Group 

 For purposes of the coverage option election in
Section 215.555(4)(b), Florida Statutes, Insurer Group means the group designation assigned by the National Association of Insurance Commissioners (NAIC) for purposes of filing consolidated financial statements. A Company is a member of a group
as designated by the NAIC until such Company is assigned another group designation or is no longer a member of a group recognized by the NAIC. 
  

	(19)	Loss Occurrence 

 This term means the sum of individual insured Losses incurred under
Covered Policies resulting from the same Covered Event. “Losses” means all incurred losses under Covered Policies, including Additional Living Expenses not to exceed 40 percent of the insured value of a Residential Structure or its
contents and amounts paid as fees on behalf of or inuring to the benefit of a policyholder, and excludes allocated or unallocated Loss Adjustment Expenses. 
  

	(20)	Loss Adjustment Expense Reimbursement 

  

	 	(a)	Loss Adjustment Expense Reimbursement shall be 5% of the reimbursed losses under this Contract as provided in Article IV, pursuant to Section 215.555(4)(b)1., Florida Statutes. 

 

	 	(b)	To the extent that loss reimbursements are limited to the Payout Multiple applied to each Company, the 5% Loss Adjustment Expense is included in the total Payout Multiple applied to each Company. 

 

	(21)	New Participant(s) 

 This term means all Companies which begin writing Covered Policies
on or after the beginning of the Contract Year. A Company that removes exposure from either Citizens entity, as that term is defined in (7) above, pursuant to an assumption agreement effective on or after June 1 and had written no other
Covered Policies before June 1 is also considered a New Participant. 
  

	(22)	Office of Insurance Regulation 

 This term means that office within the Department of
Financial Services and which was created in Section 20.121(3), Florida Statutes. 
  

	(23)	Payout Multiple 

 This term means the multiple as calculated in accordance with
Section 215.555(4)(c), Florida Statutes, which is derived by dividing the single season Claims-Paying Capacity of the FHCF by the total aggregate industry Reimbursement Premium for the FHCF for the Contract Year billed as of December 31 of
the Contract Year. The final Payout Multiple is determined once Reimbursement Premiums have been billed as of December 31 and the amount of bond proceeds has been determined. 

  

					
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	(24)	Premium 

 This term means the same as Reimbursement Premium. 

 

	(25)	Projected Payout Multiple 

 The Projected Payout Multiple is used to calculate a
Company’s projected payout pursuant to Section 215.555(4)(d)2., Florida Statutes. The Projected Payout Multiple is derived by dividing the estimated single season Claims-Paying Capacity of the FHCF by the estimated total aggregate industry
Reimbursement Premium for the FHCF for the Contract Year. The Company’s Reimbursement Premium as paid to the SBA for the Contract Year is multiplied by the Projected Payout Multiple to estimate the Company’s coverage from the FHCF for the
Contract Year. 
  

	(26)	Reimbursement Premium 

 This term means the Premium determined by multiplying each $1,000
of insured value reported by the Company in accordance with Section 215.555(5)(b), Florida Statutes, by the rate as derived from the Premium Formula, as described in Rule 19-8.028, F.A.C. 

 

	(27)	Residential Structures 

 This term means units or buildings used for dwelling or
habitational occupancies, including the primary structure and appurtenant structures insured under the same policy and any other structures covered under endorsements associated with a policy covering a residential structure. Covered
Residential Structures do not include any structures listed under Article VI herein or structures used solely for non-residential purposes. 
  

	(28)	Retention 

 The Company’s Retention means the amount of hurricane losses under
Covered Policies which must be incurred by the Company before it is eligible for reimbursement from the FHCF. 
  

	 	(a)	When the Company experiences covered losses from one or two Covered Events during the Contract Year, the Company’s full Retention shall be applied to each of the Covered Events. 

 

	 	(b)	When the Company experiences covered losses from more than two Covered Events during the Contract Year, the Company’s full Retention shall be applied to each of the two Covered Events causing the largest covered
losses for the Company. For each other Covered Event resulting in covered losses, the Company’s Retention shall be reduced to one-third of its full Retention and applied to all other Covered Events. 

 

	 	1.	All reimbursement of covered losses for each Covered Event shall be based on the Company’s full Retention until December 31 of the Contract Year. Adjustments to reflect a reduction to one-third of the full
Retention shall be made on or after December 31 of the Contract Year provided the Company reports its losses as specified in this Contract. 

  

	 	2.	Adjustments to the Company’s Retention shall be based upon its paid and outstanding losses as reported on the Company’s Proof of Loss Reports but shall not include incurred but not reported losses. The
Company’s Proof of Loss Reports shall be used to determine which Covered Events constitute the Company’s two largest Covered Events, and the reduction to one-third of the full Retention shall be applied to all other Covered Events for the
Contract Year. After this initial determination, any subsequent adjustments shall be made by the SBA only if the quarterly loss reports reveal that loss development patterns have resulted in a change in the order of Covered Events entitled to the
reduction to one-third of the full Retention. 

  

	 	(c)	The Company’s full Retention is established in accordance with the provisions of Section 215.555(2)(e), Florida Statutes, and shall be determined by multiplying the Retention Multiple by the Company’s
Reimbursement Premium for the Contract Year. 

  

	 	(d)	Once the Company’s limit of coverage has been exhausted, the Company will not be entitled to further reimbursements. 

  

					
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	(29)	Retention Multiple 

  

	 	(a)	The Retention Multiple is applied to the Company’s Reimbursement Premium to determine the Company’s Retention. The Retention Multiple for the 2014/2015 Contract Year shall be equal to $4.5 billion, adjusted
based upon the reported exposure for the 2012/2013 Contract Year to reflect the percentage growth in exposure to the FHCF since 2004, divided by the estimated total industry Reimbursement Premium at the 90% reimbursement percentage level for the
Contract Year as determined by the SBA. 

  

	 	(b)	The Retention Multiple as determined under (29)(a) above shall be adjusted to reflect the reimbursement percentage elected by the Company under this Contract as follows: 

 

	 	1.	If the Company elects a 90% reimbursement percentage, the adjusted Retention Multiple is 100% of the amount determined under (29)(a) above; 

 

	 	2.	If the Company elects a 75% reimbursement percentage, the adjusted Retention Multiple is 120% of the amount determined under (29)(a) above; or 

 

	 	3.	If the Company elects a 45% reimbursement percentage, the adjusted Retention Multiple is 200% of the amount determined under (29)(a) above. 

 

	(30)	Ultimate Net Loss 

  

	 	(a)	This term means all Losses of the Company under Covered Policies in force at the time of a Covered Event, as defined under (9) above, prior to the application of the Company’s FHCF Retention, as defined under
(28) above, and reimbursement percentage, and excluding loss adjustment expense and any exclusions under Article VI herein, arising from each Loss Occurrence during the Contract Year, provided, however, that the Company’s Ultimate Net Loss
shall be determined in accordance with the deductible level written under the policy sustaining the loss. 

  

	 	(b)	Salvages and all other recoveries, excluding reinsurance recoveries, shall be first deducted from such loss to arrive at the amount of liability attaching hereunder. 

 

	 	(c)	All salvages, recoveries or payments recovered or received subsequent to a loss settlement under this Contract shall be applied as if recovered or received prior to the aforesaid settlement and all necessary adjustments
shall be made by the parties hereto. 

  

	 	(d)	Nothing in this clause shall be construed to mean that losses under this Contract are not recoverable until the Company’s Ultimate Net Loss has been ascertained. 

 

	 	(e)	The SBA shall be subrogated to the rights of the Company to the extent of its reimbursement of the Company. The Company agrees to assist and cooperate with the SBA in all respects as regards such subrogation. The
Company further agrees to undertake such actions as may be necessary to enforce its rights of salvage and subrogation, and its rights, if any, against other insurers as respects any claim, loss, or payment arising out of a Covered Event.

 ARTICLE VI - EXCLUSIONS 
 This Contract
does not provide reimbursement for: 
  

	(1)	Any losses not defined as being within the scope of a Covered Policy. 

  

	(2)	Any policy which excludes wind or hurricane coverage. 

  

	(3)	Any Excess Policy or Deductible Buy-Back Policy that requires individual ratemaking, as determined by the FHCF. 

  

					
	(4)	  	(a)	  	Any policy for Residential Structures, as defined in Article V(27) herein, that provides a layer of coverage underneath an Excess Policy, as defined in Article V(13) herein, issued by a different insurer; or
			
		  	(b)	  	Any other policy providing a layer of windstorm or hurricane coverage for a particular structure above or below a layer of windstorm or hurricane coverage under a separate policy issued by a different insurer, or any other
circumstance in which two or more insurers provide primary windstorm or hurricane coverage for a single structure using separate policy forms.
			
		  	(c)	  	The exclusions in this subsection do not apply to primary quota share policies written by Citizens Property Insurance Corporation under Section 627.351(6)(c)2., Florida Statutes.

	

  

					
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	(5)	Any liability of the Company attributable to losses for fair rental value, loss of rent or rental income, or business interruption. 

  

	(6)	Any collateral protection policy that does not meet the definition of Covered Policy as defined in Article V(10)(d) herein. 

  

	(7)	Any reinsurance assumed by the Company. 

  

	(8)	Any exposure for hotels, motels, timeshares, shelters, camps, retreats, and any other rental property used solely for commercial purposes. 

 

	(9)	Any exposure for homeowner associations if no habitational structures are insured under the policy. 

  

	(10)	Any exposure for homes and condominium structures or units that are non-owner occupied and rented for six (6) or more rental periods by different parties during the course of a twelve (12) month period.

  

	(11)	Commercial healthcare facilities and nursing homes; however, a nursing home which is an integral part of a retirement community consisting primarily of habitational structures that are not nursing homes will not be
subject to this exclusion. 

  

	(12)	Any exposure under commercial policies covering only appurtenant structures or structures that do not function as a habitational structure (e.g., a policy covering only the pool of an apartment complex).

  

	(13)	Policies covering only Additional Living Expense. 

  

	(14)	Any exposure for barns or barns with apartments. 

  

	(15)	Any exposure for builders risk coverage or new Residential Structures still under construction. 

  

	(16)	Any exposure for recreational vehicles, golf carts, or boats (including boat related equipment) requiring licensing and written on a separate policy or endorsement. 

 

	(17)	Any liability of the Company for extra contractual obligations or liabilities in excess of original policy limits. This exclusion includes, but is not limited to, amounts paid as bad faith awards, punitive damages
awards, or other court-imposed fines, sanctions, or penalties; or other amounts in excess of the coverage limits under the Covered Policy. 

  

	(18)	Any losses paid in excess of a policy’s hurricane limit in force at the time of each Covered Event, including individual coverage limits (i.e., building, appurtenant structures, contents, and additional living
expense), or other amounts paid as the result of a voluntary expansion of coverage by the insurer, including, but not limited to, a waiver of an applicable deductible. This exclusion includes overpayments of a specific individual coverage limit even
if total payments under the policy are within the aggregate policy limit. 

  

	(19)	Any losses paid under a policy for Additional Living Expense, written as a time element coverage, in excess of the Additional Living Expense exposure reported for that policy under the Data Call for the applicable
Contract Year (unless policy limits have changed effective after June 30 of the Contract Year). 

  

	(20)	Any losses for which the Company’s claims files do not adequately support. Claim file support shall be deemed adequate if in compliance with the Records Retention Requirements outlined on the Form FHCF-LIB (Proof
of Loss Report) applicable to the Contract Year. 

  

	(21)	Any exposure for, or amounts paid to reimburse a policyholder for, condominium association loss assessments or under similar coverages for contractual liabilities. 

 

	(22)	Losses in excess of the sum of the Balance of the Fund as of December 31 of the Contract Year and the amount the SBA is able to raise through the issuance of revenue bonds or by the use of other financing
mechanisms, up to the limit pursuant to Section 215.555(4)(c), Florida Statutes. 

  

	(23)	Any liability assumed by the Company from Pools, Associations, and Syndicates. Exception: Covered Policies assumed from Citizens under the terms and conditions of an executed assumption agreement between the Authorized
Insurer and Citizens are covered by this Contract. 

  

	(24)	All liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund. “Insolvency fund”

  

  

					
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includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, howsoever denominated, established or governed, which provides for any assessment of or payment or
assumption by the Company of part or all of any claim, debt, charge, fee, or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to
meet any claim, debt, charge, fee or other obligation in whole or in part. 

  

	(25)	Property losses that are proximately caused by any peril other than a Covered Event, including, but not limited to, fire, theft, flood or rising water, or windstorm that does not constitute a Covered Event, or any
liability of the Company for loss or damage caused by or resulting from nuclear reaction, nuclear radiation, or radioactive contamination from any cause, whether direct or indirect, proximate or remote, and regardless of any other cause or event
contributing concurrently or in any other sequence to the loss. 

  

	(26)	The FHCF does not provide coverage for water damage which is generally excluded under property insurance contracts and has been defined to mean flood, surface water, waves, tidal water, overflow of a body of water,
storm surge, or spray from any of these, whether or not driven by wind. 

  

	(27)	Policies and endorsements predominantly covering Specialized Fine Arts Risks or collectible types of property meeting the following requirements: 

 

	 	(a)	A policy or endorsement covering Specialized Fine Arts Risks and not covering any Residential Structure and/or contents thereof (other than such specialized fine arts items covered in the Specialized Fine Arts policy or
endorsement) if it meets the description in subparagraph 1 and if all the conditions in subparagraphs 2. through 4. immediately below are met. 

  

	 	1.	For purposes of this exemption, a Specialized Fine Arts Risk policy or endorsement is a policy or endorsement that: 

  

	 	a.	Insures works of art, of rarity, or of historic value, such as paintings, works on paper, etchings, art glass windows, pictures, statuary, sculptures, tapestries, antique furniture, antique silver, antique rugs, rare
books or manuscripts, jewelry, or other similar items; 

  

	 	b.	Charges a minimum premium of $500; 

  

	 	c.	Insures scheduled items valued, in the aggregate, at no less than $100,000; and 

  

	 	d.	Requires an investment by the insured in loss control measures to protect the Specialized Fine Arts Risks being insured. 

  

	 	2.	The insurer must perform a periodic and thorough specialized inspection and must provide a specialized loss prevention service designed to prevent or minimize loss. 

 

	 	3.	The structure and its fine arts contents must be provided with satisfactory watchman or alarm service or its equivalent where necessary. 

 

	 	4.	The insurer must maintain a force of trained and competent loss prevention specialists, who perform the following tasks: 

  

	 	a.	Make loss prevention surveys of each Specialized Fine Arts Risk; 

  

	 	b.	Make available a specialized loss prevention service for the purpose of providing consultation regarding hazards to the fine arts being insured; 

 

	 	c.	Confirm through periodic inspections that loss prevention devices are properly maintained; 

  

	 	d.	Investigate reported losses; and 

  

	 	e.	Confer with the policyholder and confirm through periodic and unannounced inspections that recommended safety and loss control improvements are actually made. 

 

	 	(b)	 Any individual policy written to solely cover personal property, scheduled or written under a blanket limit, with a policy limit equal to or exceeding
$500,000 and which predominantly covers one or more classes of collectible types of property shall be exempt from coverage under the Fund. Generally such classes of collectible property have unusually high values due to their investible, artistic,
or unique intrinsic nature. Additionally, such exempt policy may also include coverage for incidental items of personal property that may also be scheduled although such property may not be considered as a collectible. The predominant class of
property covered 

  

					
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Rule 19-8.010 F.A.C.

	 	
under such excluded policy represents an unusually high exposure value and such policy is intended to provide coverage for a class or classes of property that is not typical for the contents
coverage under residential property insurance policies. In many cases property may be located at various locations either in or outside the state of Florida or the location of the property may change from time to time. The investment nature of such
property distinguishes this type of exposure from the typical contents associated with a Covered Policy. 

  

	(28)	Any losses under liability coverages. 

 ARTICLE VII - MANAGEMENT OF CLAIMS AND LOSSES 

The Company shall investigate and settle or defend all claims and losses. All payments of claims or losses by the Company within the terms and limits of the
appropriate coverage parts of Covered Policies shall be binding on the SBA, subject to the terms of this Contract, including the provisions in Article XIII relating to inspection of records and examinations. 

ARTICLE VIII - LOSS REIMBURSEMENT ADJUSTMENTS 
  

	(1)	Offsets 

 The SBA reserves the right to offset amounts payable to the SBA from the
Company, including amounts payable under any Contract Year and the Company’s full Premium for the current Contract Year (regardless of installment due dates), against any reimbursement or advance amounts, or amounts agreed to in a commutation
agreement, which are due and payable to the Company from the SBA as a result of the liability of the SBA. 
  

	(2)	Reimbursement Adjustments 

 Section 215.555(4)(d) and (e), Florida Statutes,
provides the SBA with the right to seek the return of excess loss reimbursements which have been paid to the Company along with interest thereon. Excess loss reimbursements are those payments made to the Company by the SBA that are in excess of the
Company’s coverage under the Contract Year. Excess loss reimbursements may result from adjustments to the Projected Payout Multiple or the Payout Multiple, incorrect exposure (Data Call) submissions or resubmissions, incorrect calculations of
Reimbursement Premiums or Retentions, incorrect Proof of Loss Reports, incorrect calculation of reinsurance recoveries, or subsequent readjustment of policyholder claims, including subrogation and salvage, or any combination of the foregoing. The
Company will be sent an invoice showing the due date for adjustments along with the interest due thereon through the due date. The applicable interest rate for interest credits, and for interest charges for adjustments beyond the Company’s
control, will be the average rate earned by the SBA for the FHCF for the first four months of the Contract Year. The applicable interest rate for interest charges on excess loss reimbursements due to adjustments resulting from incorrect exposure
submissions or Proof of Loss Reports will accrue at this rate plus 5%. All interest will continue to accrue if not paid by the due date. 
 ARTICLE IX -
REIMBURSEMENT PREMIUM 
  

	(1)	The Company shall, in a timely manner, pay the SBA its Reimbursement Premium for the Contract Year. The Reimbursement Premium for the Contract Year shall be calculated in accordance with Section 215.555, Florida
Statutes, with any rules promulgated thereunder, and with Article X(2). 

  

	(2)	 The Company’s Reimbursement Premium is based on its June 30 exposure in accordance with Article X, except as provided for New Participants
under Article X, and is not adjusted to reflect an increase or decrease in exposure for Covered Policies effective after June 30 nor is the Reimbursement Premium adjusted when the Company cancels policies or is liquidated or otherwise changes
its business status (merger, acquisition, or termination) or stops writing new business (continues in business with its policies in a runoff mode). Similarly, new business written after June 30 will not increase or decrease the Company’s
FHCF Reimbursement Premium or impact its FHCF 

  

					
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Rule 19-8.010 F.A.C.

	 	
coverage. FHCF Reimbursement Premiums are required of all companies based on their writing Covered Policies in Florida as of June 30, and each company’s FHCF coverage as based on the
definition in Section 215.555(2)(m), Florida Statutes, shall exist for the entirety of the Contract Year regardless of exposure changes, except as provided for New Participants under Article X. 

 

	(3)	Since the calculation of the Actuarially Indicated Premium assumes that the Companies will pay their Reimbursement Premiums timely, interest charges will accrue under the following circumstances. A Company may choose to
estimate its own Premium installments. However, if the Company’s estimation is less than the provisional Premium billed, an interest charge will accrue on the difference between the estimated Premium and the final Premium. If a Company
estimates its first installment, the Administrator shall bill that estimated Premium as the second installment as well, which will be considered as an estimate by the Company. No interest will accrue regarding any provisional Premium if paid as
billed by the FHCF’s Administrator, except in the case of an estimated second installment as set forth in this Article. Also, if a Company makes an estimation that is higher than the provisional Premium billed but is less than the final
Premium, interest will not accrue. If the Premium payment is not received from a Company when it is due, an interest charge will accrue on a daily basis until the payment is received. Interest will also accrue on Premiums resulting from submissions
or resubmissions finalized after December 1 of the Contract Year. An interest credit will be applied for any Premium which is overpaid as either an estimate or as a provisional Premium. Interest shall not be credited past December 1 of the
Contract Year. The applicable interest rate for interest credits will be the average rate earned by the SBA for the FHCF for the first four months of the Contract Year. The applicable interest rate for interest charges will accrue at this rate plus
5%. 

 ARTICLE X - REPORTS AND REMITTANCES 
  

	(1)	Exposures 

  

	 	(a)	If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall report to the SBA, unless otherwise provided in Rule 19-8.029, F.A.C., no later than the statutorily required date of
September 1 of the Contract Year, by ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of June 30 of the Contract Year as outlined in the annual reporting of insured values
form, FHCF- D1A (Data Call) adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA. 

  

	 	(b)	If the Company first begins writing Covered Policies on or after June 1 but prior to December 1 of the Contract Year, the Company shall report to the SBA, no later than February 1 of the Contract Year, by
ZIP Code or other limited geographical area as specified by the SBA, its insured values under Covered Policies as of November 30 of the Contract Year as outlined in the Supplemental Instructions for New Participants section of the Data Call
adopted for the Contract Year under Rule 19-8.029, F.A.C., and other data or information in the format specified by the SBA. 

  

	 	(c)	If the Company first begins writing Covered Policies on December 1 through and including May 31 of the Contract Year, the Company shall not report its exposure data for the Contract Year to the SBA.

  

	 	(d)	The requirement that a report is due on a certain date means that the report shall be received by the SBA no later than 4 p.m. Eastern Time on the due date. If the applicable due date is a Saturday, Sunday or legal
holiday, then the actual due date will be the day immediately following the applicable due date which is not a Saturday, Sunday or legal holiday. For purposes of the timeliness of the submission, neither the United States Postal Service postmark nor
a postage meter date is in any way determinative. Reports sent to the FHCF Administrator in Minneapolis, Minnesota, will be returned to the sender. Reports not in the physical possession of the SBA by 4 p.m., Eastern Time, on the applicable due date
are late. 

  

					
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Rule 19-8.010 F.A.C.

	(2)	Reimbursement Premium 

  

	 	(a)	If the Company writes Covered Policies before June 1 of the Contract Year, the Company shall pay the FHCF its Reimbursement Premium in installments due on or before August 1, October 1, and
December 1 of the Contract Year in amounts to be determined by the FHCF. However, if the Company’s Reimbursement Premium for the prior Contract Year was less than $5,000, the Company’s full provisional Reimbursement Premium, in an
amount equal to the Reimbursement Premium paid in the prior year, shall be due in full on or before August 1 of the Contract Year. The Company will be invoiced for amounts due, if any, beyond the provisional Reimbursement Premium payment, on or
before December 1 of the Contract Year. 

  

	 	(b)	If the Company is under administrative supervision, or if any control or oversight of the Company has been transferred through any legal or regulatory action to a state regulator or court appointed receiver or
rehabilitator (referred to in the aggregate as “state action”): 

  

	 	1.	The full annual provisional Reimbursement Premium as billed and any outstanding balances will be due and payable on August 1, or the date that such State action occurs after August 1 of the Contract Year.

  

	 	2.	Failure by such Company to pay the full annual provisional Reimbursement Premium as specified in 1. above by the applicable due date(s) shall result in the 45% coverage level being deemed for the complete Contract Year
regardless of the level selected for the Company through the execution of this Contract and regardless of whether a hurricane event occurred or triggered coverage. 

 

	 	3.	The provisions required in 1. and 2. above will not apply when the state regulator, receiver, or rehabilitator provides a letter of assurance to the FHCF that the Company will have the resources and will pay the full
Reimbursement Premium for the coverage level selected through the execution of this Contract. 

  

	 	4.	When control or oversight has been transferred, in whole or in part, through a legal or regulatory action, the controlling management of the Company shall specify by August 1 or as soon thereafter as possible (but
not to exceed two weeks after any regulatory or legal action) in a letter to the FHCF as to the Company’s intentions to either pay the full FHCF Reimbursement Premium as specified in 1. above, to default to the 45% coverage being deemed as
specified in 2. above, or to provide the assurances as specified in 3. above. 

  

	 	(c)	A New Participant that first begins writing Covered Policies on or after June 1 but prior to December 1 of the Contract Year shall pay the FHCF a provisional Reimbursement Premium of $1,000 upon execution of
this Contract The Administrator shall calculate the Company’s actual Reimbursement Premium for the period based on its actual exposure as of November 30 of the Contract Year, as reported on or before February 1 of the Contract Year.
To recognize that New Participants have limited exposure during this period, the actual Premium as determined by processing the Company’s exposure data shall then be divided in half, the provisional Premium shall be credited, and the resulting
amount shall be the total Premium due for the Company for the remainder of the Contract Year. However, if that amount is less than $1,000, then the Company shall pay $1,000. The Premium payment is due no later than April 1 of the Contract Year.
The Company’s Retention and coverage will be determined based on the total Premium due as calculated above. 

  

	 	(d)	A New Participant that first begins writing Covered Policies on or after December 1 through and including May 31 of the Contract Year shall pay the FHCF a Reimbursement Premium of $1,000 upon execution of this
Contract. 

  

	 	(e)	 The requirement that the Reimbursement Premium is due on a certain date means that the Premium shall be in the physical possession of the FHCF no
later than 2 p.m., Eastern Time, on the due date applicable to the particular installment. If remitted by check to the FHCF’s Post Office Box, the check shall be physically in the Post Office Box 100822, Atlanta, GA 30384-0822, as set out on
the invoice sent to the Company. If remitted by check by hand delivery, the check shall be physically on the premises of the FHCF’s bank in College Park, Georgia, as set 

  

					
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Rule 19-8.010 F.A.C.

	 	
out on the invoice sent to the Company. If remitted electronically, the wire transfer shall have been completed to the FHCF’s account at its bank in Tampa, Florida, as set out on the invoice
sent to the Company. If the applicable due date is a Saturday, Sunday or legal holiday, then the actual due date will be the day immediately following the applicable due date which is not a Saturday, Sunday or legal holiday. For purposes of the
timeliness of the remittance, neither the United States Postal Service postmark nor a postage meter date is in any way determinative. Premium checks sent to the SBA in Tallahassee, Florida, or to the FHCF’s Administrator in Minneapolis,
Minnesota, will be returned to the sender. Reimbursement Premiums not in the physical possession of the FHCF by 2 p.m., Eastern Time, on the applicable due date are late. 

 

	 	(f)	Except as required by Section 215.555(7)(c), Florida Statutes, or as described in the following sentence, Reimbursement Premiums, together with earnings thereon, received in a given Contract Year will be used only
to pay for losses attributable to Covered Events occurring in that Contract Year or for losses attributable to Covered Events in subsequent Contract Years and will not be used to pay for past losses or for debt service on revenue bonds. Pursuant to
Section 215,555(6)(a)1., Florida Statutes, Reimbursement Premiums and earnings thereon may be used for payments relating to revenue bonds in the event emergency assessments are insufficient If Reimbursement Premiums or earnings thereon are used
for debt service on revenue bonds, then the amount of the Reimbursement Premiums or earnings thereon so used shall be returned, without interest, to the Fund when emergency assessments or other legally available funds remain available after making
payment relating to the revenue bonds and any other purposes for which emergency assessments were levied. 

  

	(3)	Claims and Losses 

  

	 	(a)	In General 

  

	 	1.	Claims and losses resulting from Loss Occurrences commencing during the Contract Year shall be reported by the Company and reimbursed by the FHCF as provided herein and in accordance with the Statute, this Contract, and
any rules adopted pursuant to the Statute. For a Company participating in a quota share primary insurance agreement(s) with Citizens Property Insurance Corporation Coastal Account, Citizens and the Company shall report only their respective portion
of losses under the quota share primary insurance agreement(s). Pursuant to Section 215.555(4)(c), Florida Statutes, the SBA is obligated to pay for losses not to exceed the Actual Claims-Paying Capacity of the FHCF, up to the limit in
accordance with Section 215.555(4)(c)1., Florida Statutes, for any one Contract Year. 

  

	 	2.	If the Company is in non-compliance with Section 215.555, Florida Statutes for any Contract Year, including deadlines for sending in Contracts, addenda or attachments to Contracts, Data Call submissions or
resubmissions, loss reports, or in responding to SBA exam requirements, the SBA reserves the right to withhold any payments or advances until such time the Company becomes compliant. 

 

	 	(b)	Loss Reports 

  

	 	1.	At the direction of the SBA, the Company shall report its projected Ultimate Net Loss from each Loss Occurrence to provide information to the SBA in determining any potential liability for possible reimbursable losses
under the Contract on the Interim Loss Report, Form FHCF-L1A, adopted for the Contract Year under Rule 19-8.029, F.A.C. Interim Loss Reports (including subsequent Interim Loss Reports if required by the SBA) will be due in no less than fourteen days
from the date of the notice from the SBA that such a report is required. 

  

	 	2.	FHCF loss reimbursements will be issued based on Ultimate Net Loss information reported by the Company on the Proof of Loss Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8.029, F.A.C.

  

	 	a.	To qualify for reimbursement, the Proof of Loss Report must have the original signatures of two executive officers authorized by the Company to sign the report. 

  

					
		  	13	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

	 	b.	The Company must also submit a detailed claims listing (as outlined on the Proof of Loss Report) at the same time it submits its first Proof of Loss Report for a specific Covered Event that qualifies the Company for
reimbursement under that Covered Event, and should be prepared to supply a detailed claims listing for any subsequent Proof of Loss Report upon request. 

  

	 	c.	While a Company may submit a Proof of Loss Report requesting reimbursement at any time following a Loss Occurrence, all Companies shall submit a mandatory Proof of Loss Report for each Loss Occurrence no earlier than
December 1 and no later than December 31 of the Contract Year during which the Covered Event(s) occurs using the most current data available, regardless of the amount of Ultimate Net Loss or the amount of loss reimbursements or advances
already received. Reports may be faxed only if the Company does not qualify for a reimbursement. 

  

	 	d.	For the Proof of Loss Reports due by December 31 of the Contract Year, and the required subsequent quarterly and annual reports required under subparagraphs 3. and 4. below, the Company shall submit its Proof of
Loss Reports by each quarter-end or year-end using the most current data available. However, the date of such data shall not be more than sixty days prior to the applicable quarter-end or year-end date. 

 

	 	3.	Updated Proof of Loss Reports for each Loss Occurrence are due quarterly thereafter until all claims and losses resulting from a Loss Occurrence are fully discharged including any adjustments to such losses due to
salvage or other recoveries, or the Company has received its full coverage under the Contract Year , in which the Loss Occurrence(s) occurred. 

Guidelines follow: 
  

	 	a.	Quarterly Proof of Loss Reports are due by March 31 from an insurer whose losses exceed, or are expected to exceed, 50% of its FHCF Retention for a specific Loss Occurrence(s). 

 

	 	b.	Quarterly Proof of Loss Reports are due by June 30 from an insurer whose losses exceed, or are expected to exceed, 75% of its FHCF Retention for a specific Loss Occurrence(s). 

 

	 	c.	Quarterly Proof of Loss Reports are due by September 30 and quarterly thereafter from an insurer whose losses exceed, or are expected to exceed, its FHCF Retention for a specific Loss Occurrence(s).

 If the Company’s Retention must be recalculated as the result of an exposure resubmission, and if the recalculated
Retention changes the FHCF’s reimbursement obligations, then the Company shall submit additional Proof of Loss Reports for recalculation of the FHCF’s obligations. 
  

	 	4.	Annually after December 31 of the Contract Year, all Companies shall submit a mandatory year-end Proof of Loss Report for each Loss Occurrence, as applicable, using the most current data available, accompanied by a
detailed claims listing (as outlined on the Proof of Loss Report). This Proof of Loss Report shall be filed no earlier than December 1 and no later than December 31 of each year and shall continue until the earlier of the commutation
process described in (3)(d) below or until all claims and losses resulting from the Loss Occurrence are fully discharged including any adjustments to such losses due to salvage or other recoveries. 

 

	 	5.	The SBA, except as noted below, will determine and pay, within 30 days or as soon as practicable after receiving Proof of Loss Reports, the reimbursement amount due based on losses paid by the Company to date and
adjustments to this amount based on subsequent quarterly information. The adjustments to reimbursement amounts shall require the SBA to pay, or the Company to return, amounts reflecting the most recent determination of losses. 

 

	 	a.	The SBA shall have the right to consult with all relevant regulatory agencies to seek all relevant information, and shall consider any other factors deemed relevant, prior to the issuance of reimbursements.

  

					
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Rule 19-8.010 F.A.C.

	 	b.	The SBA shall require commercial self-insurance funds established under Section 624,462, Florida Statutes, to submit contractor receipts to support paid losses reported on a Proof of Loss Report, and the SBA may
hire an independent consultant to confirm losses, prior to the issuance of reimbursements. 

  

	 	c.	The SBA shall have the right to conduct a claims examination prior to the issuance of any advances or reimbursements submitted by Companies that have been placed under regulatory supervision by a State or where control
has been transferred through any legal or regulatory proceeding to a state regulator or court appointed receiver or rehabilitator. 

  

	 	6.	All Proof of Loss Reports received will be compared with the FHCF’s exposure data to establish the facial reasonableness of the reports. The SBA may also review the results of current and prior Contract Year
exposure and loss examinations to determine the reasonableness of the reported losses. Except as noted in paragraph 4, above, Companies meeting these tests for reasonableness will be scheduled for reimbursement. Companies not meeting these tests for
reasonableness will be handled on a case-by-case basis and will be contacted to provide specific information regarding their individual book of business. The discovery of errors in a Company’s reported exposure under the Data Call may require a
resubmission of the current Contract Year Data Call which, as the Data Call impacts the Company’s Premium, Retention, and coverage for the Contract Year, will be required before the Company’s request for reimbursement or an advance will be
fully processed by the Administrator. 

  

	 	(c)	Loss Reimbursement Calculations 

  

	 	1.	In general, the Company’s paid Ultimate Net Losses must exceed its full FHCF Retention for a specific Covered Event before any reimbursement is payable from the FHCF for that Covered Event. As described in Article
V(28)(b), Retention adjustments will be made on or after December 31 of the Contract Year. No interest is payable on additional payments to the Company due to this type of Retention adjustment. Each Company sustaining reimbursable losses will
receive the amount of reimbursement due under the Contract up to the amount of the Company’s payout. If more than one Covered Event occurs in any one Contract Year, any reimbursements due from the FHCF shall take into account the Company’s
Retention for each Covered Event. However, the Company’s reimbursements from the FHCF for all Covered Events occurring during the Contract Year shall not exceed, in aggregate, the Projected Payout Multiple or Payout Multiple, as applicable,
times the individual Company’s Reimbursement Premium for the Contract Year. 

  

	 	2.	In determining reimbursements under this Contract, the SBA shall reimburse each of the Companies, including entities created pursuant to Section 627.351(6), Florida Statutes, for the amount (if any) of
reimbursement due under the individual Company’s Contract, but not to exceed for all Loss Occurrences, an amount equal to the Projected Payout Multiple or the Payout Multiple, as applicable, times the individual Company’s Reimbursement
Premium for the Contract Year. 

  

	 	3.	Reserve established. When a Covered Event occurs in a subsequent Contract Year when reimbursable losses are still being paid for a Covered Event in a previous Contract Year, the SBA will establish a reserve for the
outstanding reimbursable losses for the previous Contract Year, based on the length of time the losses have been outstanding, the amount of losses already paid, the percentage of incurred losses still unpaid, and any other factors specific to the
loss development of the Covered Events involved. 

  

	 	(d)	Commutation 

  

	 	1.	 Not less than 36 months or more than 60 months after the end of the Contract Year, the Company shall file a final Proof of Loss Report(s), with the
exception of Companies having no reportable losses as described in paragraph (3)(d)1.a. below. Otherwise, the final Proof of Loss Report(s) is required as specified in paragraph (3)(d)1.b. below. The Company and

  

					
		  	15	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

	 	
SBA may mutually agree to initiate commutation after 36 months and prior to 60 months after the end of the Contract Year. The commutation negotiations shall begin at the later of 60 months after
the end of the Contract Year or upon completion of the FHCF loss examination for the Company and the resolution of all outstanding examination issues. 

  

	 	a.	If the Company’s most recently submitted Proof of Loss Report(s) indicate that it has no losses resulting from a Loss Occurrence(s) during the Contract Year, the SBA shall after 36 months request that the Company
execute a final commutation agreement. The final commutation agreement shall constitute a complete and final release of all obligations of the SBA with respect to all claims and losses. If the Company chooses not to execute a final commutation
agreement, the SBA shall be released from all obligations 60 months following the end of the Contract Year if no Proof of Loss Report(s) indicating reimbursable losses have been filed and the commutation shall be deemed concluded. However during
this time, if the Company determines that it does have losses to report for FHCF reimbursement, the Company must submit an updated Proof of Loss Report(s) prior to the end of 60 months after the Contract Year and the Company shall be required to
follow the commutation provisions and time frames otherwise specified in this section. 

  

	 	b.	If the Company has submitted a Proof of Loss Report(s) indicating that it does have losses resulting from a Loss Occurrence(s) during the Contract Year, the SBA may require the Company to submit within 30 days an
updated, current Proof of Loss Report(s) for each Loss Occurrence during the Contract Year. The Proof of Loss Report(s) must include all paid losses as well as all outstanding losses and incurred but not reported losses, which are not finally
settled and which may be reimbursable losses under this Contract, and must be accompanied by supporting documentation (at a minimum an adjuster’s summary report or equivalent details) and a copy of a written opinion on the present value of the
outstanding losses and incurred but not reported losses by the Company’s certifying actuary. Failure of the Company to provide an updated current Proof of Loss Report(s), supporting documentation, and an opinion by the date requested by the SBA
may result in referral to the Office of Insurance Regulation for a violation of the Contract. Increases in reported paid, outstanding, or incurred but not reported losses on original or corrected Proof of Loss Report filings received later than 60
months after the end of the Contract Year shall not be eligible for reimbursement or commutation. 

  

	 	2.	Determining the present value of outstanding claims and losses. 

  

	 	a.	If the Company exceeds or expects to exceed its Retention, the Company and the SBA or their respective representatives shall attempt, by mutual agreement, to agree upon the present value of all outstanding claims and
losses, both reported and incurred but not reported, resulting from Loss Occurrences during the Contract Year. Payment by the SBA of its portion of any amount or amounts so mutually agreed and certified by the Company’s certifying actuary shall
constitute a complete and final release of the SBA in respect of all claims and losses, both reported and unreported, under this Contract. 

  

	 	b.	If agreement on present value cannot be reached within 90 days of the FHCF’s receipt of the final Proof of Loss Report(s) and supporting documentation, the Company and the SBA may mutually appoint an actuary,
adjuster, or appraiser to investigate and determine such claims or losses. If both parties then agree, the SBA shall pay its portion of the amount so determined to be the present value of such claims or losses. 

 

	 	c.	If the parties fail to agree, then any difference shall be settled by a panel of three actuaries, as provided in this paragraph. 

  

	 	i.	One actuary shall be chosen by each party, and the third actuary shall be chosen by those two actuaries. If either party does not appoint an actuary within 30 days, the other party may appoint two actuaries. If the two
actuaries fail to agree on the 

  

					
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Rule 19-8.010 F.A.C.

	 	
selection of an independent third actuary within 30 days of their appointment, each of them shall name two, of whom the other shall decline one and the decision shall be made by drawing lots.

  

	 	ii.	All of the actuaries shall be regularly engaged in the valuation of property claims and losses and shall be members of the Casualty Actuarial Society and of the American Academy of Actuaries. 

 

	 	iii.	None of the actuaries shall be under the control of either party to this Contract. 

  

	 	iv.	Each party shall submit its case to the panel in writing on the 30th day after the appointment of the third actuary. Following the submission of the case to the
panel, the parties are prohibited from providing any further information or other communication except at the request of the panel. Such responses to requests from the panel must be in writing and simultaneously provided to the other party and all
members of the panel, except that the panel may require the response to be provided in a meeting or teleconference attended by both parties and all members of the panel. 

 

	 	v.	The decision in writing of any two actuaries, when filed with the parties hereto, shall be final and binding on both parties. 

  

	 	d.	The reasonable and customary expense of the actuaries and of the commutation (as a result of b. and c. above) shall be equally divided between the two parties. Said commutation shall take place in Tallahassee, Florida,
unless some other place is mutually agreed upon by the Company and the SBA. 

  

	(4)	Advances 

  

	 	(a)	In accordance with Section 215.555(4)(e), Florida Statutes, the SBA may make advances for loss reimbursements as defined herein, at market interest rates, to the Company in accordance with
Section 215.555(4)(e), Florida Statutes, An advance is an early reimbursement which allows the Company to continue to pay claims in a timely manner. Advances will be made based on the Company’s paid and reported outstanding losses for
Covered Policies (excluding all incurred but not reported [IBNR] losses) as reported on a Proof of Loss Report, and shall include Loss Adjustment Expense Reimbursement as calculated by the FHCF. In order to be eligible for an advance, the Company
must submit its exposure data for the Contract Year as required under paragraph (1) of this Article. Except as noted below, advances, if approved, will be made as soon as practicable after the SBA receives a written request, signed by two
officers of the Company, for an advance of a specific amount and any other information required for the specific type of advance under subparagraphs (c) and (e) below. All reimbursements due to a Company shall be offset against any amount
of outstanding advances plus the interest due thereon. 

  

	 	(b)	For advances or excess advances, which are advances that are in excess of the amount to which the Company is entitled, the market interest rate shall be the prime rate as published in the Wall Street Journal on the
first business day of the Contract Year. This rate will be adjusted annually on the first business day of each subsequent Contract Year, regardless of whether the Company executes subsequent Contracts. In addition to the prime rate, an additional 5%
interest charge will apply on excess advances. All interest charged will commence on the date the SBA issues a check for an advance and will cease on the date upon which the FHCF has received the Company’s Proof of Loss Report(s) for the
Covered Event(s) for which the Company qualifies for reimbursement(s). If such reimbursement(s) are less than the amount of outstanding advance(s) issued to the Company, interest will continue to accrue on the outstanding balance of the advance(s)
until subsequent Proof of Loss Reports qualify the Company for reimbursement under any Covered Event equal to or exceeding the amount of any outstanding advance(s). Interest shall be billed on a periodic basis. If it is determined that the Company
received funds in excess of those to which it was entitled, the interest as to those sums will not cease on the date of the receipt of the Proof of Loss Report but will continue until the Company reimburses the FHCF for the overpayment.

  

  

					
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Rule 19-8.010 F.A.C.

	 	(c)	If the Company has an outstanding advance balance as of December 31 of this or any other Contract Year, the Company is required to have an actuary certify outstanding and incurred but not reported losses as
reported on the applicable December Proof of Loss Report. 

  

	 	(d)	The specific type of advances enumerated in Section 215.555, Florida Statutes, follow. 

  

	 	1.	Advances to Companies to prevent insolvency, as defined under Article XIV of this Contract. 

  

	 	a.	Section 215.555(4)(e)1., Florida Statutes, provides that the SBA shall advance to the Company amounts necessary to maintain the solvency of the Company, up to 50 percent of the SBA’s estimate of the
reimbursement due to the Company. 

  

	 	b.	In addition to the requirements outlined in subparagraph (4)(a) above, the requirements for an advance to a Company to prevent insolvency are that the Company demonstrates it is likely to qualify for reimbursement
and that the immediate receipt of moneys from the SBA is likely to prevent the Company from becoming insolvent, and the Company provides the following information: 

 

	 	i.	Current assets; 

  

	 	ii.	Current liabilities other than liabilities due to the Covered Event; 

  

	 	iii.	Current surplus as to policyholders; 

  

	 	iv.	Estimate of other expected liabilities not due to the Covered Event; and 

  

	 	v.	Amount of reinsurance available to pay claims for the Covered Event under other reinsurance treaties. 

  

	 	c.	The SBA’s final decision regarding an application for an advance to prevent insolvency shall be based on whether or not, considering the totality of the circumstances, including the SBA’s obligations to
provide reimbursement for all Covered Events occurring during the Contract Year, granting an advance is essential to allowing the entity to continue to pay additional claims for a Covered Event in a timely manner. 

 

	 	2.	Advances to entities created pursuant to Section 627.351 (6), Florida Statutes, 

  

	 	a.	Section 215.555(4)(e)2., Florida Statutes, provides that the SBA may advance to an entity created pursuant to Section 627.351(6), Florida Statutes, up to 90% of the lesser of the SBA’s estimate of the
reimbursement due or the entity’s share of the actual aggregate Reimbursement Premium for that Contract Year, multiplied by the current available liquid assets of the FHCF, 

 

	 	b.	In addition to the requirements outlined in subparagraph (4)(a) above, the requirements for an advance to entities created pursuant to Section 627.351(6), Florida Statutes, are that the entity must demonstrate
to the SBA that the advance is essential to allow the entity to pay claims for a Covered Event. 

  

	 	3.	Advances to limited apportionment companies. 

 Section 215.555(4)(e)3., Florida Statutes,
provides that the SBA may advance the amount of estimated reimbursement payable to limited apportionment companies. 
  

	 	(e)	In determining whether or not to grant an advance and the amount of an advance, the SBA: 

  

	 	1.	Shall determine whether its assets available for the payment of obligations are sufficient and sufficiently liquid to fulfill its obligations to other Companies prior to granting an advance; 

 

	 	2.	Shall review and consider all the information submitted by such Companies; 

  

	 	3.	Shall review such Companies’ compliance with all requirements of Section 215.555, Florida Statutes; 

  

	 	4.	Shall consult with all relevant regulatory agencies to seek all relevant information; 

  

	 	5.	Shall review the damage caused by the Covered Event and when that Covered Event occurred; 

  

					
		  	18	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

	 	6.	Shall consider whether the Company has substantially exhausted amounts previously advanced; 

  

	 	7.	Shall consider any other factors deemed relevant; and 

  

	 	8.	Shall require commercial self-insurance funds established under section 624.462, Florida Statutes, to submit a copy of written estimates of expenses in support of the amount of advance requested. 

 

	 	(f)	Any amount advanced by the SBA shall be used by the Company only to pay claims of its policyholders for the Covered Event or Covered Events which have precipitated the immediate need to continue to pay additional claims
as they become due. 

  

	(5)	Delinquent Payments 

 Failure to submit a payment when due is a violation of the terms of
this Contract and Section 215.555, Florida Statutes. Interest on late payments shall be due as set forth in Article VIII(2) and Article IX(2) of this Contract. 
  

	(6)	Inadequate Data Submissions 

 If exposure data or other information required to be
reported by the Company under the terms of this Contract is not received by the FHCF in the format specified by the FHCF or is inadequate to the extent that the FHCF requires resubmission of data, the Company will be required to pay the FHCF a
resubmission fee of $1,000 for resubmissions that are not a result of an examination by the SBA. If a resubmission is necessary as a result of an examination report issued by the SBA, the first resubmission fee will be $2,000. If the Company’s
examination-required resubmission is inadequate and the SBA requires an additional resubmission(s), the resubmission fee for each subsequent resubmission shall be $2,000. A resubmission of exposure data may delay the processing of the Company’s
request for reimbursement or an advance. 
  

	(7)	Delinquent Submissions 

 Failure to submit an exposure submission, resubmission, loss
report, or commutation documentation when due is a violation of the terms of this Contract and Section 215.555, Florida Statutes. 
  

	(8)	Confidential Information/Trade Secret Information 

 Pursuant to the provisions of
Section 215.557, Florida Statutes, the reports of insured values under Covered Policies by ZIP Code submitted to the SBA pursuant to Section 215.555, Florida Statutes, are confidential and exempt from the provisions of
Section 119.07(1), Florida Statutes, and Section 24(a), Art. I of the State Constitution. If other information submitted by the Company to the FHCF could reasonably be ruled a “trade secret” as defined in Section 812.081,
Florida Statutes, such information must be clearly marked “Trade Secret Information.” 
 ARTICLE XI - TAXES 

In consideration of the terms under which this Contract is issued, the Company agrees to make no deduction in respect of the Premium herein when making premium
tax returns to the appropriate authorities. Should any taxes be levied on the Company in respect of the Premium herein, the Company agrees to make no claim upon the SBA for reimbursement in respect of such taxes. 

ARTICLE XII - ERRORS AND OMISSIONS 
 Any inadvertent
delay, omission, or error on the part of the SBA shall not be held to relieve the Company from any liability which would attach to it hereunder if such delay, omission, or error had not been made. 

ARTICLE XIII - INSPECTION OF RECORDS 
 The Company shall
allow the SBA to inspect, examine, and verify, at reasonable times, all records of the Company relating to the Covered Policies under this Contract, including Company files concerning claims, losses, or legal proceedings regarding subrogation or
claims recoveries which involve this Contract, including premium, loss records and reports involving exposure data or losses under Covered 

  

					
		  	19	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

 
Policies. This right by the SBA to inspect, examine, and verify shall survive the completion and closure of an exposure examination or loss examination file and the termination of the Contract.
The Company shall have no right to re-open an exposure or loss reimbursement examination once closed and the findings have been accepted by the Company; any re-opening shall be at the sole discretion of the SBA. If the State Board of Administration
Finance Corporation (formerly known as the FHCF Finance Corporation) has issued revenue bonds and relied upon the exposure and loss data submitted and certified by the Company as accurate to determine the amount of bonding needed, the SBA may choose
not to require, or accept, a resubmission if the resubmission will result in additional reimbursements to the Company. The SBA may require any discovered errors, inadvertent omissions, and typographical errors associated with the data reporting of
insured values, discovered prior to the closing of the file and acceptance of the examination findings by the Company, to be corrected to reflect the proper values. The Company shall retain its records in accordance with the requirements for records
retention regarding exposure reports and claims reports outlined herein, and in any administrative rules adopted pursuant to Section 215.555, Florida Statutes. Companies writing covered collateral protection policies, as defined in definition
(10)(d) of Article V herein, must be able to provide documentation that the policy covers personal residences, protects both the borrower’s and lender’s interest, and that the coverage is in an amount at least equal to the coverage
for the dwelling in place under the lapsed homeowner’s policy. 
  

	(1)	Purpose of FHCF Examination 

 The purpose of the examinations conducted by the SBA is to
evaluate the accuracy of the FHCF exposure or loss data reported by the Company. However, due to the limited nature of the examination, it cannot be relied upon as an assurance that a company’s data is reported accurately or in its entirety.
The company should not rely on the FHCF to identify every type of reporting error in its data. In addition, the reporting requirements are subject to change each Contract Year so it is the Company’s responsibility to be familiar with the
applicable Contract Year requirements and to incorporate any changes into its data for that Contract Year. It is also the Company’s responsibility to ensure that its data is reported accurately and to comply with Florida Statutes and any
applicable rules when reporting exposure data. The examination report is not intended to provide a legal determination of the Company’s compliance. 
  

	(2)	Examination Requirements for Exposure Verification 

 The Company shall retain complete
and accurate records, in policy level detail, of all exposure data submitted to the SBA in any Contract Year until the SBA has completed its examination of the Company’s exposure submissions. The Company shall also retain complete and accurate
records of any completed exposure examination for any Contract Year in which the Company incurred losses until the completion of the loss reimbursement examination and commutation for that Contract Year. The records to be retained are outlined in
the Data Call adopted for the Contract Year under Rule 19- 8.029, F.A.C. A complete list of records to be retained for the exposure examination is set forth in Form FHCF-EAP1, adopted for the Contract Year under Rule 19-8.030, F.A.C. 

 

	(3)	Examination Requirements for Loss Reports 

 The Company shall retain complete and
accurate records of all reported losses and/or advances submitted to the SBA until the SBA has completed its examination of the Company’s reimbursable losses and commutation for the Contract Year (if applicable) has been concluded. The records
to be retained are set forth as part of the Proof of Loss Report, Form FHCF-L1B, adopted for the Contract Year under Rule 19-8.029, F.A.C., and Form FHCF-LAP1, adopted for the Contract Year under Rule 19-8.030, F.A.C. 

 

	(4)	Examination Procedures 

  

	 	(a)	The FHCF will send an examination notice to the Company providing the commencement date of the examination, the site of the examination, any accommodation requirements of the examiner, and the reports and data which
must be assembled by the Company and forwarded to the FHCF upon request. The Company shall be prepared to choose one location in which to be examined, unless otherwise specified by the SBA. 

  

					
		  	20	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

	 	(b)	The reports and data are required to be forwarded to the FHCF as set forth in an examination notice letter. The information is then forwarded to the examiner. If the FHCF receives accurate and complete records as
requested, the examiner will contact the Company to inform the Company as to what policies or other documentation will be required once the examiner is on site. Any records not required to be provided to the examiner in advance shall be made
available at the time the examiner arrives on site. Any records to support reported losses which are provided after the examiner has left the work-site will, at the SBA’s discretion, result in an additional examination of exposure and/or loss
records or an extension or expansion of the examination already in progress. All costs associated with such additional examination or with the extension or expansion of the original examination shall be borne by the Company. 

 

	 	(c)	At the conclusion of the examiner’s work and the management review of the examiner’s report, findings, recommendations, and work papers, the FHCF will forward an examination report to the Company and require a
response from the Company by a date certain as to the examination findings and recommendations. 

  

	 	(d)	If the Company accepts the examination findings and recommendations, and there is no recommendation for additional information, the examination report will be finalized and the exam file closed. 

 

	 	(e)	If the Company disputes the examiner’s findings, the areas in dispute will be resolved by a meeting or a conference call between the Company and FHCF management. 

 

					
	(f)	 	1.	 	If the recommendation of the examiner is to resubmit the Company’s exposure data for the Contract Year in question, then the FHCF will send the Company a letter outlining the process for resubmission and including a deadline to
resubmit. Once the resubmission is received, the FHCF’s Administrator calculates a revised Reimbursement Premium for the Contract Year which has been examined. The SBA shall then review the resubmission with respect to the examiner’s
findings, and accept the resubmission or contact the Company with any questions regarding the resubmission. Once the SBA has accepted the resubmission as a sufficient response to the examiner’s findings, the exam is closed.

  

	 	2.	If the recommendation of the examiner is to give the Company the option to either resubmit the exposure data or to pay the estimated Premium difference, then the FHCF will send the Company a letter outlining the process
for resubmission or for paying the estimated Premium difference and including a deadline for the resubmission or the payment to be received by the FHCF’s Administrator. If the Company chooses to resubmit, the same procedures outlined in Article
XIII(3)(f)1. apply. 

  

	 	(g)	If the recommendation of the examiner is to update the Company’s Proof of Loss Report(s) for the Contract Year under review, the FHCF will send the Company a letter outlining the process for submitting the Proof of
Loss Report(s) and including a deadline to file. Once the Proof of Loss Report(s) is received by the FHCF Administrator, the FHCF’s Administrator will calculate a revised reimbursement. The SBA shall then review the submitted Proof of Loss
Report(s) with respect to the examiner’s findings, and accept the Proof of Loss Report(s) as filed or contact the Company with any questions. Once the SBA has accepted the corrected Proof of Loss Report(s) as a sufficient response to the
examiner’s findings, the exam is closed. 

  

	 	(h)	The examiner’s list of errors is made available in the examination report sent to the Company. Given that the examination was based on a sample of the Company’s policies or claims rather than the whole
universe of the Company’s Covered Policies or reported claims, the error list is not intended to provide a complete list of errors but is intended to indicate what information needs to be reviewed and corrected throughout the Company’s
book of Covered Policy business or claims information to ensure more complete and accurate reporting to the FHCF. 

  

	(4)	Costs of the Examinations 

 The costs of the examinations shall be borne by the SBA.
However, in order to remove any incentive for a Company to delay preparations for an examination, the SBA shall be reimbursed by 

  

					
		  	21	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

 
the Company for any examination expenses incurred in addition to the usual and customary costs, which additional expenses were incurred as a result of the Company’s failure, despite proper
notice, to be prepared for the examination or as a result of a Company’s failure to provide requested information. All requested information must be complete and accurate. 

ARTICLE XIV - INSOLVENCY OF THE COMPANY 
 Company shall
notify the FHCF immediately upon becoming insolvent. Except as otherwise provided below, no covered loss reimbursements will be made until the FHCF has completed and closed its examination of the insolvent Company’s losses, unless an agreement
is entered into by the court appointed receiver specifying that all data and computer systems required for FHCF exposure and loss examinations will be maintained until completion of the Company’s exposure and loss examinations. Except as
otherwise provided below, in order to account for potential erroneous reporting, the SBA shall hold back 25% of requested loss reimbursements until the exposure and loss examinations for the Company are completed. Only those losses supported by the
examination will be reimbursed. Pursuant to Section 215.555(4)(g), Florida Statutes, the FHCF is required to pay the “net amount of all reimbursement moneys” due an insolvent insurer to the Florida Insurance Guaranty Association
(FIGA) for the benefit of Florida policyholders. For the purpose of this Contract, a Company is insolvent when an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction. In light of the need for an
immediate infusion of funds to enable policyholders of insolvent companies to be paid for their claims, the SBA may enter into agreements with FIGA allowing exposure and loss examinations to take place immediately without the usual notice and
response time limitations and allowing the FHCF to make loss reimbursements (net of any amounts payable to the SBA from the Company or FIGA) to FIGA before the examinations are completed and before the response time expires for claims filing by
reinsurers and financial institutions, which have a priority interest in those funds pursuant to Section 215.555(4)(g), Florida Statutes. Such agreements must ensure the availability of the necessary records and adequate security must be
provided so that if the FHCF determines that it overpaid FIGA on behalf of the Company, or if claims are filed by reinsurers or financial institutions having a priority interest in these funds, that the funds will be repaid to the FHCF by FIGA
within a reasonable time. 
 ARTICLE XV - TERMINATION 

The FHCF and the obligations of both parties under this Contract can be terminated only as may be provided by law or applicable rules. 

ARTICLE XVI - VIOLATIONS 
 Pursuant to the provisions of
Section 215.555(10), Florida Statutes, any violation of the terms of this Contract by the Company constitutes a violation of the Insurance Code of the State of Florida. Pursuant to the provisions of Section 215.555(11), Florida Statutes,
the SBA is authorized to take any action necessary to enforce any administrative rules adopted pursuant to Section 215.555, Florida Statutes, and the provisions and requirements of this Contract. 

ARTICLE XVII - APPLICABLE LAW 
 This Contract shall be
governed by and construed according to the laws of the State of Florida in respect of any matter relating to or arising out of this Contract. 

  

					
		  	22	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

 ARTICLE XVIII – REIMBURSEMENT CONTRACT ELECTIONS 

 

	(1)	Reimbursement Percentage 

 For purposes of determining reimbursement (if any) due the
Company under this Contract and in accordance with the Statute, the Company has the option to elect a 45% or 75% or 90% reimbursement percentage under this Contract. If the Company is a member of an NAIC group, all members must elect the same
reimbursement percentage, and the individual executing this Contract on behalf of the Company, by placing his or her initials in the box under (a) below, affirms that the Company has elected the same reimbursement percentage as all members of
its NAIC group. If the Company is an entity created pursuant to Section 627.351, Florida Statutes, the Company must elect the 90% reimbursement percentage. The Company shall not be permitted to change its reimbursement percentage during the
Contract Year. The Company shall be permitted to change its reimbursement percentage at the beginning of a new Contract Year, but may not reduce its reimbursement percentage if a Covered Event required the issuance of revenue bonds, until the bonds
have been fully repaid. 
 IMPORTANT NOTE: The State Board of Administration Finance Corporation has issued revenue bonds as a result
of its liabilities for Coveted Events under the Contract Year effective June 1, 2005. As those bonds have not been fully repaid, the Company may not select a Reimbursement Percentage that is less than its selection under the prior Contract Year
effective June 1, 2013. 
 The Reimbursement Percentage elected by the Company for the prior Contract Year effective June 1, 2013
was as follows: Homeowners Choice Property and Casualty Insurance Company - 90% 
  

	 	(a)	NAIC Group Affirmation: Initial the following box if the Company is part of an NAIC Group: 

  

					
		 	

	 	

  

	 	(b)	Reimbursement Percentage Election: The Company hereby elects the following Reimbursement Percentage for the Contract Year from 12:00:01 a.m., Eastern Time, June 1, 2014, to 12:00 a.m., Eastern Time,
May 31, 2015, (the individual executing this Contract on behalf of the Company shall place his or her initials in the box to the left of the percentage elected for the Company): 

 

															
		 	 	 	45% OR	 	 	 	75% OR	 	

	 	90%	 	

  

	(2)	Reporting Exposure for a Single Structure, with a Mix of Commercial Habitational and Commercial Non-Habitational Exposure, Written on a Commercial Policy 

This section is applicable to all Companies which either have exposure for single structures with a mix of commercial habitational and
commercial non-habitational exposure written under a Commercial Policy, or have the authority to write such policies. If the Company does not have the authority to write this type of exposure, this section does not apply; initial the
N/A box at the end of this section, which completes this section of ARTICLE XVIII. If the Company does write, or has the authority to write, this type of exposure, please read and complete the remainder of this section. 

  

					
		  	23	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

 For the purpose of determining the predominant use of mixed-use single structures under this
Contract, the FHCF considers predominant use to be greater than 50% of the total insured value of the structure as justified by the company on the basis of number of floors, square footage, or other reasonable methodology presented to the
Administrator (e.g., a classification plan explaining how predominance is determined, and likely to include commercial residential and commercial non-residential or business class codes) for approval prior to the Data Call submission under this
Contract. Exposure shall be reported under the Company’s Data Call in accordance with the following: 
 Predominant Use is
Dwelling or Habitational Occupancies 
 If a single structure is used for both habitational and non-habitational purposes and the
predominant use is dwelling or habitational occupancies, the entire exposure for the structure should be reported to the FHCF under the Data Call, and the FHCF will reimburse losses for the entire structure. 

Predominant Use is Non-Dwelling or Non-Habitational Occupancies 

If a single structure is used for both habitational and non-habitational purposes and the predominant use is non-dwelling or non-habitational
occupancies, the habitational portion of that structure should be identified and reported to the FHCF under the Data Call. 
 However, in
recognition of the unusual nature of commercial structures with incidental habitational exposure and the hardship some companies may face in having to carve out such incidental habitational exposure, as well as the losses to such structures, the
FHCF will accommodate these companies by allowing them to exclude the entire exposure for the single structure from their Data Call submission, providing the following two conditions are met: 

 

	 	(a)	The decision to not carve out and report the incidental habitational exposure shall apply to all such structures insured by the Company; and 

 

	 	(b)	If the incidental habitational exposure is not reported to the FHCF, the Company agrees it shall not report losses to the structure and the FHCF shall not reimburse any losses to the structure. 

Initial the CARVING box below if the Company is able to carve out and report its incidental habitational exposure, OR, if this
requirement presents a hardship, the Company must communicate its decision to not carve out and to not report the incidental exposure by having the individual executing this Contract on behalf of the Company placing his or her initials in the NOT
CARVING box below. If the Company does not currently write such policies, but has the authority to write such policies after the start date of this Contract, the decision to carve or not carve out the incidental habitational exposure must be
indicated below. 
  

									
	 	  	OR	  	

	  	OR	  	 
	CARVING	  		  	NOT CARVING	  		  	 NOT

APPLICABLE

 By initialing the CARVING or NOT CARVING box above, the Company is making an irrevocable decision for
the corresponding Contract Year Data Call submission and any subsequent resubmissions. 
 Important Note: Since this election will
impact your Data Call submission, please share this decision with the individual(s) responsible for compiling your Data Call submission. 

  

					
		  	24	  	 FHCF-2014K

Rule 19-8.010 F.A.C.

	(3)	Additional Living Expense (ALE) Written as Time Element Coverage 

 If your Company writes
Covered Policies that provide ALE coverage on a time element basis (i.e., coverage is based on a specific period of time as opposed to a stated dollar limit), you must initial the ‘Yes – Time Element ALE’ box below. If your Company
does not write time element ALE coverage, initial ‘No – Time Element ALE’ box below. 
  

									
		 	 

	 	    OR    	  	 	  	
		 	 	 		  	 	  	
		 	Yes – Time	 		  	No – Time	  	
		 	Element ALE	 		  	Element ALE	  	

 ARTICLE XIX – SIGNATURES 

Approved by: 
  

									
	Florida Hurricane Catastrophe Fund	 		 		 	
	By:	 	State Board of Administration of the State of Florida	 		 		 	
					
	By:	 	 

	 		 	6/5/14	 	
		 	  
	 		 	  

		 	Ashbel C. Williams	 		 	Date	 	
		 	Executive Director & CIO	 		 		 	
				
	Approved as to legality:	 		 		 	
					
		 	APPROVED AS TO LEGALITY:	 		 		 	
					
	By:	 	 

	 		 	6/5/14	 	
		 	  
	 		 	  

		 	 CRAIG A. MEYER

ASSISTANT GENERAL COUNSEL
	 		 	Date	 	
					
		 	  
	 		 		 	
		 	Homeowners Choice Property and Casualty Insurance Company	 		 		 	
			
		 	 Scott R. Wallace – President
	 	
		 	Typed/Printed Name and Title	 	
					
	By:	 	 

	 		 	2/25/2014	 	
		 	  
	 		 	  

		 	Signature	 		 	Date	 	

  

					
		  	25	  	 FHCF-2014K

Rule 19-8.010 F.A.C.Catastrophe Aggregate Excess of Loss Reinsurance Contract

 EXHIBIT 10.8 
  

 
 ****** 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. 
 CATASTROPHE AGGREGATE EXCESS OF LOSS REINSURANCE CONTRACT

 EFFECTIVE: JUNE 1, 2014 

ISSUED TO 
 HOMEOWNERS
CHOICE PROPERTY & CASUALTY INSURANCE COMPANY, INC. 
 TAMPA, FLORIDA 

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

subject to prior agreement of Reinsurer to include any affiliates 
  

 

 

 
  
 CATASTROPHE AGGREGATE EXCESS OF
LOSS REINSURANCE CONTRACT 
 TABLE OF CONTENTS 
  

					
	 ARTICLE 1
	  			
	 BUSINESS COVERED
	  	 	1	 
	 ARTICLE 2
	  			
	 TERM
	  	 	1	 
	 ARTICLE 3
	  			
	 EXCLUSIONS
	  	 	2	 
	 ARTICLE 4
	  			
	 RETENTION AND LIMIT
	  	 	4	 
	 ARTICLE 5
	  			
	 INURING REINSURANCE
	  	 	4	 
	 ARTICLE 6
	  			
	 REINSURANCE PREMIUM
	  	 	7	 
	 ARTICLE 7
	  			
	 DEFINITIONS
	  	 	8	 
	 ARTICLE 8
	  			
	 LOSS OCCURRENCE DEFINITION
	  	 	10	 
	 ARTICLE 9
	  			
	 ACCESS TO RECORDS
	  	 	12	 
	 ARTICLE 10
	  			
	 AGENCY
	  	 	12	 
	 ARTICLE 11
	  			
	 ARBITRATION
	  	 	12	 
	 ARTICLE 12
	  			
	 CASH CALL
	  	 	13	 
	 ARTICLE 13
	  			
	 COLLATERAL
	  	 	14	 
	 ARTICLE 14
	  			
	 COLLATERAL RELEASE
	  	 	15	 
	 ARTICLE 15
	  			
	 CONFIDENTIALITY
	  	 	16	 
	 ARTICLE 16
	  			
	 CURRENCY
	  	 	18	 
	 ARTICLE 17
	  			
	 ENTIRE AGREEMENT
	  	 	18	 

  
 

 
 ARP-HCI-02-AGG-002-14 

DOC: June 3, 2014 

 

 
  

					
	 ARTICLE 18
	  			
	 ERRORS AND OMISSIONS
	  	 	18	 
	 ARTICLE 19
	  			
	 FEDERAL EXCISE TAX
	  	 	19	 
	 ARTICLE 20
	  			
	 GOVERNING LAW
	  	 	19	 
	 ARTICLE 21
	  			
	 INSOLVENCY
	  	 	19	 
	 ARTICLE 22
	  			
	 LATE PAYMENTS
	  	 	20	 
	 ARTICLE 23
	  			
	 LIABILITY OF THE REINSURER
	  	 	21	 
	 ARTICLE 24
	  			
	 LIMITED RECOURSE AND BERMUDA REGULATIONS
	  	 	22	 
	 ARTICLE 25
	  			
	 LOSS NOTICES AND SETTLEMENTS
	  	 	23	 
	 ARTICLE 26
	  			
	 NET RETAINED LINES
	  	 	23	 
	 ARTICLE 27
	  			
	 NON-WAIVER
	  	 	24	 
	 ARTICLE 28
	  			
	 NOTICES AND AGREEMENT EXECUTION
	  	 	24	 
	 ARTICLE 29
	  			
	 OFFSET
	  	 	25	 
	 ARTICLE 30
	  			
	 OTHER REINSURANCE
	  	 	25	 
	 ARTICLE 31
	  			
	 SALVAGE AND SUBROGATION
	  	 	25	 
	 ARTICLE 32
	  			
	 SANCTIONS
	  	 	26	 
	 ARTICLE 33
	  			
	 SERVICE OF SUIT
	  	 	26	 
	 ARTICLE 34
	  			
	 SEVERABILITY
	  	 	27	 
	 ARTICLE 35
	  			
	 TAXES
	  	 	27	 
	 ARTICLE 36
	  			
	 TERRITORY
	  	 	27	 
	 ARTICLE 37
	  			
	 INTERMEDIARY
	  	 	27	 

  
 

 
 ARP-HCI-02-AGG-002-14 

DOC: June 3, 2014 

 

 
  

			
	 ATTACHMENTS
	  	
		
	 Collateral Collection Table
	  	
	 Nuclear Incident Exclusion Clause - Physical Damage – Reinsurance U.S.A.
	  	
	 Trust Agreement
	  	

  
 

 
 ARP-HCI-02-AGG-002-14 

DOC: June 3, 2014 

 

 
  

 CATASTROPHE AGGREGATE EXCESS OF LOSS REINSURANCE CONTRACT 

(hereinafter called the “Contract”) 

EFFECTIVE: JUNE 1, 2014 

issued to 
 HOMEOWNERS CHOICE
PROPERTY & CASUALTY INSURANCE COMPANY, INC. 
 TAMPA, FLORIDA 

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

subject to prior agreement of Reinsurer to include any affiliates 

(hereinafter called the “Reinsured”) 

by 
 THE SUBSCRIBING
REINSURER(S) SPECIFIED IN THE INTERESTS AND LIABILITIES AGREEMENT 
 ATTACHED TO THIS CONTRACT 

(hereinafter called, with other participants, the “Reinsurer”) 

ARTICLE 1 
 BUSINESS COVERED

 This Contract is to indemnify the Reinsured in respect of its net excess liability as a result of any loss or losses which may occur during the
Term of this Contract under any policies, contracts and binders of insurance or reinsurance (hereinafter called “Policies”) not covered by the Reinsured’s flood contract, in force at the effective date hereof or issued or renewed on
or after that date, covering direct and assumed business classified by the Reinsured as the property perils of Homeowners, Condominium Owners, Renters and Dwelling, subject to the terms, conditions and limitations hereinafter set forth. 

ARTICLE 2 
 TERM 

 

	1.	This Contract shall become effective at 12:01 a.m., Local Standard Time, June 1, 2014, with respect to losses arising out of Loss Occurrences commencing at or after that time and date, and shall remain in force
until 12:01 a.m., Local Standard Time, June 1, 2015. “Local Standard Time” as used herein shall be defined as the local standard time at the location where the Loss Occurrence commences. 

 

	2.	If this Contract is terminated or expires while a Loss Occurrence covered hereunder is in progress, the Reinsurer’s liability hereunder shall, subject to the other terms and conditions of this Contract, be
determined as if the entire Loss Occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such Loss Occurrence is claimed against any renewal or replacement of this Contract. 

  
 

 
  

			
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	3.	Notwithstanding the provisions of paragraph (1) above, the Reinsured may reduce or terminate a Reinsurer’s percentage share in this Contract at any time by giving written notice to the Reinsurer in the event
any of the following circumstances occur: 

  

	 	a.	A State Insurance Department or other legal authority has ordered the Reinsurer to cease writing business; or 

  

	 	b.	The Reinsurer has reinsured its entire liability under this Contract without the Reinsured’s prior written consent, except that this provision shall not apply to any intercompany reinsurance or intercompany pooling
arrangements entered into by the Reinsurer. 

 ARTICLE 3 

EXCLUSIONS 
  

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

  

	 	a.	All excess of loss reinsurance assumed by the Reinsured. 

  

	 	b.	Reinsurance assumed by the Reinsured under obligatory reinsurance agreements, except intercompany reinsurance between the Reinsured and its affiliates and agency reinsurance where the Policies involved are to be
re-underwritten in accordance with the underwriting standards of the Reinsured and reissued as Policies of the Reinsured at the next anniversary or expiration date. 

 

	 	c.	Financial guarantee and insolvency. 

  

	 	d.	Insurance Policies classified by the Reinsured as Accident and Health, Fidelity and Surety, Boiler and Machinery, Workers’ Compensation, and Credit business. 

 

	 	e.	Flood and/or earthquake when written as such for standalone Policies where flood and/or earthquake is the only named peril. 

  

	 	f.	Nuclear risks as defined in the “Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance U.S.A.” attached to and forming part of this Contract. 

  
 

 
  

			
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	 	g.	Loss or damage caused by or resulting from war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or
public authority, but this exclusion shall not apply to loss or damage covered under a standard Policy with a standard War Exclusion Clause. 

  

	 	h.	Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the Florida Hurricane Catastrophe Fund or Citizens Property Insurance Corporation. 

 

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

  

	 	j.	Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke. Nevertheless, this exclusion does not preclude payment of the cost of
removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Reinsured’s property loss under the applicable original Policy. 

 

	 	k.	Loss, damage, cost or expense arising out of an act of terrorism involving the use of any biological, chemical, nuclear or radioactive agent, material, device or weapon. 

 

	 	l.	All liability arising out of mold, spores and/or fungus, but this exclusion shall not apply to those losses which follow as a direct result of a loss caused by a peril otherwise covered hereunder. 

 

	2.	With the exception of subparagraphs (c), (f), (g) and (k) of paragraph (1) above, should any judicial, regulatory or legislative entity having legal jurisdiction invalidate any exclusion on the
Reinsured’s policy, any amount of loss for which the Reinsured is liable because of such invalidation with not be excluded hereunder. 

  
 

 
  

			
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	3.	The Reinsured may submit to the Reinsurer, for special acceptance hereunder, business not covered by this Contract. Within seven days of receipt of such request, each Reinsurer shall accept such request, ask for
additional information, or reject the request. If a Reinsurer fails to respond to a special acceptance request within seven days, the Reinsurer shall be deemed to have agreed to the special acceptance. If said business is accepted by the Reinsurer,
it will be subject to the terms of this Contract, except as such terms are modified by such acceptance. Any special acceptance business covered under the reinsurance agreement being replaced by this Contract will be automatically covered hereunder.
Further, in the event a Reinsurer becomes a party to this Contract subsequent to the special acceptance of any business not normally covered hereunder, the Reinsurer shall automatically accept the same as being a part of this Contract.

 ARTICLE 4 

RETENTION AND LIMIT 
  

	1.	The Reinsured shall retain and be liable for the first $10,000,000 of Ultimate Net Loss arising out of each Loss Occurrence. The Reinsurer shall then be liable for the amount by which such Ultimate Net Loss exceeds the
Reinsured’s retention, but the liability of the Reinsurer shall not exceed ***% of $30,000,000 as respects any one Loss Occurrence, nor shall it exceed ***% of $30,000,000 as respects all Loss Occurrences commencing during the Term of this
Contract. 

  

	2.	Notwithstanding the provisions above, no claim shall be made hereunder as respects losses arising out of Loss Occurrences commencing during the Term of this Contract unless at least two risks insured or reinsured by the
Reinsured are involved in such Loss Occurrence. For purposes hereof, the Reinsured shall be the sole judge of what constitutes “one risk.” 

  

	3.	It is understood the Reinsured may maintain in force excess reinsurance, recoveries under which shall inure, unless otherwise stated in the Inuring Reinsurance Article, solely to the Reinsured’s benefit and be
entirely disregarded in applying all of the provisions of this Contract. 

 ARTICLE 5 

INURING REINSURANCE 
  

	1.	The Reinsured shall maintain property catastrophe excess of loss reinsurance, recoveries under which shall inure to the benefit of this Contract, for the following layers: 

 

	 	a.	$8,000,000 in excess of $10,000,000 any one Loss Occurrence, subject to an annual limit of $16,000,000; and 

  
 

 
  

			
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	 	b.	$20,000,000 in excess of $18,000,000 any one Loss Occurrence, subject to an annual limit of $40,000,000 and covering hurricane events only; and 

 

	 	c.	80.0% of $44,000,000 in excess of $38,000,000 any one Loss Occurrence, subject to an annual limit of $74,000,000; and 

  

	 	d.	20.0% of $44,000,000 in excess of $38,000,000 any one Loss Occurrence, subject to an annual limit of $44,000,000; and 

  

	 	e.	$122,000,000 in excess of $82,000,000 any one Loss Occurrence, subject to an annual limit of $244,000,000; and 

  

	 	f.	$54,600,000 in excess of $204,000,000 any one Loss Occurrence, subject to an annual limit of $109,200,000; and 

  

	 	g.	$200,000,000 in excess of $258,600,000 any one Loss Occurrence, subject to an annual limit of $400,000,000. 

  

	2.	The Reinsured shall provisionally purchase mandatory coverage from the Florida Hurricane Catastrophe Fund (FHCF) with the following limit and retention: 

 

	 	a.	90.0% of $597,100,000 excess of $223,400,000. 

 The provisional limit and retention above may
increase or decrease in accordance with the provisions of the reimbursement contract between the Reinsured and the State Board of Administration of the State of Florida (SBA). 

The FHCF Coverage shall cover both the Business Covered under this Contract and the business covered under the Reinsured’s flood contract.

 The FHCF Coverage shall be calculated based on the mandatory FHCF premium for both the Business Covered under this Contract and the
Reinsured’s business not covered under this Contract, evaluated as of June 30, 2014, and the 2014 FHCF Payout and Retention Multiples. 

  
 

 
  

			
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	3.	Any loss reimbursement paid or payable to the Reinsured for the mandatory coverage layer provided by the FHCF, (“FHCF loss reimbursement”) and resulting from Loss Occurrences commencing during the Term of this
Contract, shall inure to the benefit of this Contract, subject to the lesser of the following: 

  

	 	a.	The loss reimbursement paid or payable with a provisional FHCF limit and retention equal to 90.0% of $545,700,000 excess of $204,100,000, based on the mandatory FHCF premium for the Reinsured’s Business Covered
under this Contract evaluated as of June 30, 2014, and the 2014 FHCF Payout and Retention Multiples. The provisional limit and retention may increase or decrease in accordance with the provisions of the reimbursement contract between the
Reinsured and the State Board of Administration of the State of Florida (SBA); or 

  

	 	b.	The maximum recovery allowed in accordance with subparagraph (a) of paragraph (2) above. 

  

	4.	Any FHCF loss reimbursement shall be deemed paid to the Reinsured in accordance with the reimbursement contract between the Reinsured and the SBA at the full payout level set forth therein. It is further deemed that any
loss reimbursement shall not be reduced by any reduction or exhaustion of the actual claims paying capacity of the FHCF and that the FHCF fund balance is deemed funded to the fullest extent allowable by Florida statute. 

 

	5.	Prior to final calculation of the Reinsured’s FHCF retention and payout for the mandatory layer provided by the reimbursement contract between the Reinsured and the SBA, the Reinsurer’s liability hereunder
will provisionally be calculated based on the projected FHCF payout and in accordance with paragraph (3) above. Following the FHCF’s final calculation of the payout for the coverage layer provided by the reimbursement contract, the
Ultimate Net Loss under this Contract will be recalculated. If, as a result of such calculation, the loss to the Reinsurer hereunder in any one Loss Occurrence is less than the amount previously paid by the Reinsurer hereunder, the Reinsured shall
promptly remit the difference to the Reinsurer. If the loss to the Reinsurer in any one Loss Occurrence hereunder is greater than the amount previously paid by the Reinsurer, the Reinsurer shall promptly remit the difference to the Reinsured. For
purposes of both the provisional and final calculation of Reinsurer liability referenced above, it is deemed that any FHCF loss reimbursement shall not be reduced by any reduction or exhaustion of the actual claims paying capacity of the FHCF and
that the FHCF fund balance is deemed funded to the fullest extent allowable by Florida statute. 

  

	6.	 If an FHCF reimbursement amount is based on the Reinsured’s losses in more than one Loss Occurrence commencing during the Term of this Contract,
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designate the amount allocable to each Loss Occurrence, the FHCF reimbursement amount shall be prorated in the proportion that the Reinsured’s losses in each Loss Occurrence bear to the
Reinsured’s total losses arising out of all Loss Occurrences to which the FHCF reimbursement applies. 

 ARTICLE 6

 REINSURANCE PREMIUM 
  

	1.	As respects the reinsurance provided hereunder, the Reinsured shall pay the Reinsurer the greater of the following: 

  

	 	a.	***% of *******; or 

  

	 	b.	*******% of ***% of the Reinsured’s Total Insured Value as of September 30, 2014 (the “adjusted premium”). However, in the event the difference between the adjusted premium and the deposit premium is
less than or equal to 5.0% of the deposit premium, the premium due hereunder shall be ******% of $********. Further, in the event the adjusted premium hereunder is greater than *****% of $********, the premium due hereunder shall be equal to the
*******% of $********* plus the difference between the adjusted premium and ******% of $*********. Further, in the event the adjusted premium hereunder is less than *******% of $*********, the premium due hereunder shall be equal to *******% of
$******* less the difference between ******% of $********* and the adjusted premium. 

  

	2.	The Reinsured shall pay the Reinsurer a deposit premium installment of *****% of ******* on June 1, 2014 and the Adjusted Deposit Installment, defined in paragraph (3) below, on January 1, 2015. However,
if this Contract is terminated, no deposit premium installments shall be due after the effective date of termination. 

  

	3.	“Adjusted Deposit Installment” as used herein shall mean: 

  

	 	a.	The premium due hereunder, computed in accordance with paragraph (1) above; less 

  

	 	b.	*******% of *******. 

  

	4.	In the event this Contract is terminated in accordance with the provisions of paragraph (3) of the Term Article, the reinsurance premium due hereunder shall be prorated based on the period of the Reinsurer’s
participation hereunder. 

  
 

 
  

			
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	5.	No later than January 1, 2015 (or as promptly as possible following termination in the event this Contract is terminated prior to January 1, 2015), the Reinsured shall provide a report to the Reinsurer setting
forth the premium due hereunder, computed in accordance with paragraph (1) or (4) above (as applicable) and the adjusted deposit installment, computed in accordance with paragraph (3) above. In the event this Contract is terminated
prior to January 1, 2015, any additional premium due the Reinsurer or return premium due the Reinsured shall be remitted promptly. 

  

	6.	The Reinsured shall furnish the Reinsurer with such information as the Reinsurer may require to complete its Annual Convention Statement. 

 

	7.	“Total Insured Value” as used herein shall be defined as the sum of Coverage A, B, C and D on Business Covered as defined in the Business Covered Article. 

ARTICLE 7 
 DEFINITIONS 

ULTIMATE NET LOSS 
 The term “Ultimate Net Loss” as used
herein shall be defined as the sum or sums (including Loss in Excess of Policy Limits, Extra Contractual Obligations and Loss Adjustment Expense, as hereinafter defined) paid or payable by the Reinsured in settlement of claims and in satisfaction of
judgments rendered on account of such claims after deduction of all salvage, all recoveries, and all claims on inuring insurance or reinsurance, whether collectible or not. Nothing herein shall be construed to mean that losses under this Contract
are not recoverable until the Reinsured’s Ultimate Net Loss has been ascertained. 
 LOSS IN EXCESS OF POLICY LIMITS AND EXTRA CONTRACTUAL OBLIGATIONS

 The terms “Loss in Excess of Policy Limits” and “Extra Contractual Obligations” as used herein shall be defined as follows: 

 

	 	a.	“Loss in Excess of Policy Limits” shall be defined as any amount paid or payable by the Reinsured in excess of its Policy limits, but otherwise within the terms of its Policy, such loss in excess of the
Reinsured’s Policy limits having been incurred because of, but not limited to, failure by the Reinsured to settle within the Policy limits or by reason of the Reinsured’s 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 an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action. 

  
 

 
  

			
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	 	b.	“Extra Contractual Obligations” shall be defined as any punitive, exemplary, compensatory or consequential damages paid or payable by the Reinsured, not covered by any other provision of this Contract and
which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Reinsured to settle within the Policy limits or by reason of the Reinsured’s 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 an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an
action. An Extra Contractual Obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the Policy. 

Notwithstanding anything stated herein, this Contract shall not apply to any Loss in Excess of Policy Limits or any Extra Contractual
Obligation incurred by the Reinsured as a result of any fraudulent and/or criminal act by any officer or director of the Reinsured 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. 
 Further, any Loss in Excess of Policy Limits
and/or Extra Contractual Obligations that are made in connection with this Contract shall not exceed 25.0% of the contractual loss under all Policies involved in the Loss Occurrence hereunder. 

LOSS ADJUSTMENT EXPENSE 
 The term “Loss Adjustment
Expense” as used herein shall be defined as expenses assignable to the investigation, appraisal, adjustment, settlement, litigation, defense, and/or appeal of claims, regardless of how such expenses are classified for statutory reporting
purposes. Loss Adjustment Expense shall include, but not be limited to, interest on judgments, expenses of outside adjusters, expenses and a pro rata share of salaries of the Reinsured’s field employees and expenses of other employees of the
Reinsured who have been temporarily diverted from their normal and customary duties and assigned to the adjustment of losses covered by this Contract, expenses of the Reinsured’s officials incurred in connection with losses covered by this
Contract, and Declaratory Judgment Expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto. Loss Adjustment Expense shall not include normal office expenses or salaries of the
Reinsured’s employees or officials. 

  
 

 
  

			
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 DECLARATORY JUDGMENT EXPENSE 

The term “Declaratory Judgment Expense” as used herein shall be defined as the Reinsured’s own costs and legal expense incurred in direct
connection with declaratory judgment actions brought to determine the Reinsured’s defense and/or indemnification obligations that are assignable to specific claims arising out of Policies reinsured by this Contract, regardless of whether the
declaratory judgment action is successful or unsuccessful. Any Declaratory Judgment Expense shall be deemed to have been fully incurred by the Reinsured on the same date as the original loss (if any) giving rise to the action. 

TERM OF THIS CONTRACT 
 “Term of this Contract” as used
herein shall be defined as the period from 12:01 a.m., Local Standard Time, June 1, 2014 through 12:01 a.m., Local Standard Time, June 1, 2015. However, if this Contract is terminated, “Term of this Contract” as used herein shall
be defined as the period from 12:01 a.m., Local Standard Time, June 1, 2014 until the effective time and date of termination. 

ARTICLE 8 
 LOSS OCCURRENCE
DEFINITION 
 LOSS OCCURRENCE 
  

	1.	The term “Loss Occurrence” as used herein shall be defined as the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out
of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another. However, the duration and extent of any one Loss Occurrence shall be limited to all
individual losses sustained by the Reinsured occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event except that the term Loss Occurrence shall be further defined as follows: 

 

	 	a.	As regards windstorm, hail, tornado, hurricane, cyclone, including ensuing collapse and water damage, all individual losses sustained by the Reinsured occurring during any period of 96 consecutive hours arising out of
and directly occasioned by the same event. However, the event need not be limited to one state or province or states or provinces contiguous thereto. 

  
 

 
  

			
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	 	b.	As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Reinsured occurring during any period of 96 consecutive hours within the area of one
municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event. The maximum duration of 96 consecutive hours may be extended in respect of individual losses which occur beyond
such 96 consecutive hours during the continued occupation of an assured’s premises by strikers, provided such occupation commenced during the aforesaid period. 

 

	 	c.	As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the opening paragraph of this Article) and fire following directly occasioned by the earthquake, only
those individual fire losses which commence during the period of 168 consecutive hours may be included in the Reinsured’s Loss Occurrence. 

  

	 	d.	As regards freeze, only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting of frozen pipes and tanks) may be included in the Reinsured’s Loss Occurrence.

  

	 	e.	As regards firestorms, brush fires and any other fires or series of fires, irrespective of origin (except as provided in subparagraphs (b) and (c) above), which spread through trees, grassland or other
vegetation, all individual losses sustained by the Reinsured which occur during any period of 168 consecutive hours within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another
may be included in the Reinsured’s Loss Occurrence. 

  

	2.	For all Loss Occurrences the Reinsured may choose the date and time when any such period of consecutive hours commences provided that it is not earlier than the date and time of the occurrence of the first recorded
individual loss sustained by the Reinsured arising out of that disaster, accident or loss and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any Loss Occurrence referred to in
subparagraph (a) or (b) of paragraph (1) above where only one such period of 96 consecutive hours shall apply with respect to one event, regardless of the duration of the event. 

 

	3.	No individual losses occasioned by an event that would be covered by the 96 hours clauses may be included in any Loss Occurrence claimed under the 168 hours provision. 

  
 

 
  

			
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 ARTICLE 9 

ACCESS TO RECORDS 
 The Reinsurer or its designated
representatives shall have access to the books and records of the Reinsured on matters relating to this reinsurance at all reasonable times, at the location where such books and records are maintained in the ordinary course of business, for the
purpose of obtaining information concerning this Contract or the subject matter thereof. Notification of a request for inspection of records shall be sent to the Reinsured by the Reinsurer in written form, and shall normally be given four weeks in
advance. Notwithstanding the above, the Reinsurer shall not have any right of access to the records of the Reinsured if it is not current in all undisputed payments due the Reinsured. 

ARTICLE 10 
 AGENCY 

If more than one reinsured company is named as a party to this Contract, the first named company shall be deemed the agent of the other reinsured companies for
purposes of sending or receiving notices required by the terms and conditions of this Contract, and for purposes of remitting or receiving any monies due any party. 

ARTICLE 11 
 ARBITRATION

  

	1.	 As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this
Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration. One Arbiter shall be chosen by the Reinsured, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before
they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Underwriters at Lloyd’s. In the event that either party should fail to choose an Arbiter within 30
days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration. If the two Arbiters fail to agree upon the selection of an Umpire within
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following their appointment, the two Arbiters shall request the American Arbitration Association to appoint the Umpire. If the American Arbitration Association fails to appoint the Umpire within
30 days after it has been requested to do so, either party may request a justice of a Court of general jurisdiction of the state in which the arbitration is to be held to appoint the Umpire. 

 

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

 

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

  

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

  

	5.	Any arbitration proceedings shall take place in Tampa, Florida; however, the location may be changed if mutually agreed upon by the parties of this Contract. Notwithstanding the location of arbitration, all proceedings
pursuant hereto shall be governed by the law of the State of Florida. 

 ARTICLE 12 

CASH CALL 
 In the event that at any time the
Reinsured becomes obligated to make a payment or series of payments for losses which exceed the Reinsured’s retention, the Reinsured shall present to the Reinsurer an itemized statement of the amounts payable hereunder. The Reinsurer shall be

  
 

 
  

			
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obligated (subject to the terms and conditions of this Contract) to make a payment to the Reinsured of the amount requested within 10 working days of receipt of the statement from the Reinsured.

 ARTICLE 13 
 COLLATERAL

  

	1.	As promptly as possible following execution of this Contract, the Reinsurer (as Grantor) shall enter into a Trust Agreement (the “Trust Agreement”) with the Reinsured (as Beneficiary) and the trustee, pursuant
to which the Reinsurer shall provide collateral in the form of eligible Assets deposited and held in a Trust Account, with such Assets having a market value greater than or equal to $21,000,000 (the “Collateral”) less unpaid premium (net
of brokerage and applicable Federal Excise Tax). It is understood that deposit premium paid in accordance with the Reinsurance Premium Article shall be deposited into the Trust Account. 

 

	2.	The Reinsured agrees that if the Reinsurer makes indemnity payment(s) to the Reinsured under this Contract, the Reinsurer may withdraw Assets from the Trust Account, reducing the market value of Assets in the Trust
Account to an amount at least equal to the unused Reinsurance Limit, in accordance with the provisions of the Trust Agreement. 

  

	3.	The Trust Fund may be drawn upon by the Reinsured at any time and the Assets may be used at the Reinsured’s option in accordance with the provisions of Section 5 of the Trust Agreement. 

 

	4.	At any time prior to expiration or termination of this Contract, if the value of the Assets in the Trust Account is less than the Reinsurer’s Obligations hereunder, the Reinsurer shall promptly deposit the
difference into the Trust Account. 

  

	5.	Except as provided in the Collateral Release Article, the Reinsured agrees to release the Assets in the Trust Account required under this Article as promptly as provided in the Trust Agreement. 

  
 

 
  

			
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 ARTICLE 14 

COLLATERAL RELEASE 
  

	1.	At the expiration or termination of this Contract, if the Trust has not yet been terminated, the Reinsured shall calculate on a monthly basis, how much, if any, of the collateral shall be released from the Trust, as
follows: 

  

	 	a.	For each potentially covered Loss Occurrence, the Reinsured shall multiply the Loss Amount (being equal to the sum of losses and Loss Adjustment Expenses paid plus reserves for losses and Loss Adjustment Expense
outstanding plus reserves for losses incurred but not yet reported) by the appropriate Buffer Loss Factor from the table below, based upon the type of Loss Occurrence and the number of months which have elapsed since the event. The product of this
calculation shall be defined as the Buffered Loss Amount (“BLA”). 

  

													
	 Buffer Loss Factor Table
	 
	 Number of Calendar Months Since Date of Loss Occurrence
	  	Windstorm*/Brushfire	 	 	Earthquake and
Fire Following	 	 	Other	 
	 0 to 3
	  	 	200	% 	 	 	300	% 	 	 	250	% 
	 > 3 to 6
	  	 	150	% 	 	 	200	% 	 	 	175	% 
	 > 6 to 9
	  	 	125	% 	 	 	175	% 	 	 	150	% 
	 > 9 to 12
	  	 	110	% 	 	 	150	% 	 	 	130	% 
	 > 12 to 15
	  	 	105	% 	 	 	125	% 	 	 	115	% 
	 > 15 to 18
	  	 	100	% 	 	 	120	% 	 	 	110	% 
	 Thereafter
	  	 	100	% 	 	 	100	% 	 	 	100	% 

  

	*	For the purpose of this Article, the term “Windstorm” shall include Hurricane, Rainstorm, Storm, Tempest, Tornado, Cyclone, Typhoon and Hail. 

 

	 	b.	The BLA will be reduced by the $10,000,000 retention and any inuring reinsurance recoveries to compute the Presumed Ultimate Net Loss. The Presumed Ceded Loss will be defined as the lesser of ***% of the Presumed
Ultimate Net Loss and the limit of ***% of $30,000,000. 

  
 

 
  

			
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	 	c.	The Presumed Total Ceded Loss will equal the lesser of the limit of ***% of $30,000,000 and the Presumed Ceded Loss. An amount equal to the Presumed Total Ceded Loss less losses paid by the Reinsurer under this Contract
shall be retained in the Trust and any excess in the Trust shall be released to the Reinsurer. 

  

	 	d.	Notwithstanding the aforementioned, at December 31, 2014, the parties agree to consider the release of collateral. The intention is to release collateral for all limits for which there is essentially no possibility
of loss from past or future events before the expiration of this Contract. All collateral securing what the parties agree are unreachable limits will be released within three business days. 

 

	 	e.	Thirty-six months following the expiration of this Contract, the Reinsurer shall have the option to commute this Contract by sending the Reinsured written notice thereof. In such event, the Reinsurer shall pay to the
Reinsured an amount equal to the loss and loss adjustment expense reserves hereunder, including reserves for incurred but not reported losses, as estimated by the Reinsured, which would be recoverable hereunder. Upon the Reinsurer’s payment of
such amount, both parties shall be completely released from all liability under this Contract, whether known or unknown. 

  

	2.	So long as there is any security on deposit in the Trust, the Reinsured shall perform the calculation set forth above within 10 business days after the end of each month and deliver a report substantially in the form of
the Collateral Calculation Table attached to this Contract to the Reinsurer and the Trustee named in the Trust Agreement. Collateral will be adjusted monthly based on this calculation. To the extent the calculation indicates that collateral may be
reduced, the delivery of the report to the Trustee will constitute a directive to return excess collateral to the Reinsurer. In the event the calculation indicates additional collateral is required, the Reinsurer will have 10 business days from
receipt of the report to deposit the required collateral into the Trust. 

 ARTICLE 15 

CONFIDENTIALITY 
  

	1.	The Reinsurer hereby acknowledges that the terms and conditions of this Contract, any materials provided in the course of audit or inspection and any documents, information and data provided to it by the Reinsured,
whether directly or through an authorized agent, in connection with the placement and execution of this Contract (hereinafter referred to as “Confidential Information”) are proprietary and confidential to the Reinsured. Confidential
Information shall not include documents, information or data that the Reinsurer can show: 

  

	 	a.	Are publicly available or have become publicly available through no unauthorized act of the Reinsurer; 

  
 

 
  

			
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	 	b.	Have been rightfully received from a third person without obligation of confidentiality; or 

  

	 	c.	Were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality. 

  

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

 

	 	a.	When required by retrocessionaires subject to the business ceded to this Contract; 

  

	 	b.	When required by regulators performing an audit of the Reinsurer’s records and/or financial condition; 

  

	 	c.	When required by external auditors performing an audit of the Reinsurer’s records in the normal course of business; or 

  

	 	d.	When required by attorneys or arbitrators in connection with an actual or potential dispute hereunder. 

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

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

 

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

  
 

 
  

			
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 ARTICLE 16 

CURRENCY 
  

	1.	Whenever the word “Dollars” or the “$” sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

  

	2.	Amounts paid or received by the Reinsured in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Reinsured.

 ARTICLE 17 

ENTIRE AGREEMENT 
  

	1.	This Contract and any related trust agreement, Letter of Credit and/or special acceptance, shall constitute the entire agreement between the parties hereto with respect to the business being reinsured hereunder, and
there are no understandings between the parties hereto other than as expressed in this Contract. 

  

	2.	Any change or modification to this Contract shall be null and void unless made by an addendum and signed by the parties hereto. 

ARTICLE 18 
 ERRORS AND OMISSIONS

 Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any
liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery. 

  
 

 
  

			
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 ARTICLE 19 

FEDERAL EXCISE TAX 
  

	1.	The Reinsurer has agreed to allow, for the purpose of paying the Federal Excise Tax, the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the
extent such premium is subject to the Federal Excise Tax. 

  

	2.	In the event of any return of premium becoming due hereunder, the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Reinsured or its agent should take steps to recover the
tax from the United States Government. 

 ARTICLE 20 

GOVERNING LAW 
 This Contract shall be governed as
to performance, administration and interpretation in accordance with the laws of the State of Florida, exclusive of the rules with respect to conflicts of law; however, with respect to credit for reinsurance, the applicable rules of all states shall
apply. 
 ARTICLE 21 
 INSOLVENCY

  

	1.	If more than one reinsured company is included within the definition of “Reinsured” hereunder, this Article shall apply individually to each such company. 

 

	2.	 In the event of the insolvency of one or more of the reinsured companies, this reinsurance shall be payable directly to the Reinsured or to its
liquidator, receiver, conservator or statutory successor, with reasonable provision for verification, on the basis of the liability of the Reinsured or 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 Reinsured or because the liquidator, receiver, conservator or statutory successor of the Reinsured 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 Reinsured shall give written notice to the Reinsurer of the pendency of a claim against the Reinsured indicating the Policy or bond reinsured which claim would involve a
possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Reinsured or its liquidator, receiver, conservator or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to the 

  
 

 
  

			
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approval of the court, against the Reinsured as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Reinsured solely as a
result of the defense undertaken by the Reinsurer. 

  

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

  

	4.	It is further understood and agreed that, in the event of the insolvency of one or more of the reinsured companies, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Reinsured or to
its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee or other party as more specifically limited by any
statute or regulation applicable hereto, of such reinsurance in the event of the insolvency of the Reinsured or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such Policy obligations of the Reinsured as
direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Reinsured to such payees. However, the exceptions provided in (1) and (2) above shall apply only to the extent that
applicable statutes or regulations specifically permit such exceptions. 

 ARTICLE 22 

LATE PAYMENTS 
  

	1.	The interest penalties provided for in this Article shall apply to the Reinsurer or to the Reinsured in the following circumstances: 

 

	 	a.	With the exception of payments due from the Reinsurer in accordance with the Cash Call Article, payments due from the Reinsurer to the Reinsured shall have as a due date the date on which the agreed proof of loss is
received by the Reinsurer, and shall be overdue 30 days thereafter. Payment to the Intermediary is deemed to be payment to the Reinsured for purposes of this Article. 

 

	 	b.	Payments due from the Reinsured to the Reinsurer shall have as a due date the date specified in this Contract. Payments shall be overdue 30 days thereafter. Premium adjustments shall be overdue 30 days following the due
date set forth under the terms of this Contract. 

  
 

 
  

			
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	 	c.	The Reinsured shall provide a copy of the original insured’s proof of loss, and a copy of the claim adjuster’s report(s) or other evidence of indemnification for losses exceeding the excess limit on an
incurred basis. If, subsequent to receipt of this evidence, the information contained therein is insufficient or not in accordance with the contractual conditions, then the payment due date as defined in subparagraph (a) shall be deemed to be
the date upon which the Reinsurer received additional information necessary to approve payment of the claim or the claim is presented in an acceptable manner. Interest as stipulated in subparagraph (d) shall be payable should a disputed claim
be ultimately settled and if the period set out in subparagraph (a) is exceeded, but only to the extent that the final loss payment exactly tracks with the original proof of loss. 

 

	 	d.	Overdue amounts shall bear simple interest from the overdue date at the 90-day United States Treasury Bill rate set forth by the Federal Reserve Board for the first Monday of the calendar month in which the amount
becomes overdue, as published in the Federal Reserve Statistical Release. If the interest generated for 100% in respect of any overdue payment as outlined in subparagraph (a) or (b) is $500 or less, then the interest penalty shall be
waived. 

  

	 	e.	For the purposes of this Article, reinsuring Underwriters at Lloyd’s shall be viewed as one entity. The provisions set forth herein shall not be applicable until the creditor party shall have manifested to the
debtor party its intent to invoke the terms of this Article. 

 ARTICLE 23 

LIABILITY OF THE REINSURER 
  

	1.	The liability of the Reinsurer shall follow that of the Reinsured in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers, interpretations and modifications of the
Reinsured’s Policies and any endorsements thereon. However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract. 

 

	2.	Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract. 

  
 

 
  

			
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 ARTICLE 24 

LIMITED RECOURSE AND BERMUDA REGULATIONS 
  

	1.	The Reinsured understands and accepts that Aeolus Re Ltd. is registered as a segregated account company under the Bermuda Segregated Accounts Companies Act 2000 and that Aeolus Re Ltd. in respect of its Spire
Segregated Account (the “Reinsurer”) is a segregated account of Aeolus Re Ltd. 

  

	2.	All corporate matters relating to the creation of the Reinsurer, including, but not limited to, the capacity of the Reinsurer, the segregated nature of the Reinsurer and Aeolus Re Ltd., and the operation and liquidation
of the Reinsurer, will be governed by, and construed in accordance with, the laws of Bermuda. The Reinsured acknowledges that the Reinsurer has written and/or will write other reinsurance or retrocession policies and that the assets and liabilities
attributable to each such contract shall be linked to the segregated account of the Reinsurer. Accordingly, the Reinsurer will have assets and liabilities relating to a multiple of reinsurance contracts. The Reinsured has had the opportunity to take
advice and to obtain all such additional information that it considers necessary to evaluate the terms, conditions and risks of entering into this Contract with the Reinsurer. 

 

	3.	Notwithstanding any other provision of this Contract to the contrary, the liability of the Reinsurer for the performance and discharge of all of its obligations, however they may arise, in relation to this Contract (the
“SAC Obligations”) will be limited to and payable solely from the assets linked to the Reinsurer. Accordingly there will be no recourse to any other assets of Aeolus Re Ltd. (including, for the avoidance of doubt, any assets linked to any
other segregated account of Aeolus Re Ltd. or to its general account). In the event that the assets linked to the Reinsurer are insufficient to meet all of its SAC Obligations, any SAC Obligations remaining after the application of such assets
linked to the Reinsurer will be extinguished, and the Reinsured undertakes in such circumstances to take no further action against the Reinsurer, Aeolus Re Ltd. or any other segregated accounts of Aeolus Re Ltd. in respect of any such SAC
Obligations. In particular, neither the Reinsured nor any party acting on its behalf will petition or take any steps for the winding up or receivership of the Reinsurer, Aeolus Re Ltd., or any other segregated account of Aeolus Re Ltd.

  

	4.	This Limited Recourse and Bermuda Regulations Article shall survive termination of this Contract. 

  
 

 
  

			
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 ARTICLE 25 

LOSS NOTICES AND SETTLEMENTS 
  

	1.	Whenever losses sustained by the Reinsured appear likely to result in a claim hereunder, the Reinsured shall notify the Reinsurer, and the Reinsurer shall have the right to participate in the adjustment of such losses
at its own expense. 

  

	2.	All loss settlements made by the Reinsured, provided they are within the terms of this Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt
of reasonable evidence of the amount paid (or scheduled to be paid within 14 days) by the Reinsured. Notwithstanding the foregoing and subject to the provisions set forth under paragraph (2) of the Exclusions Article, should any judicial,
regulatory, or legislative entity having legal jurisdiction require that the Reinsured be liable for any amounts that are otherwise outside the terms of the Reinsured’s original Policies, the Reinsurer agrees that such amounts shall be subject
always to the terms and conditions of this Contract. 

 ARTICLE 26 

NET RETAINED LINES 
  

	1.	This Contract applies only to that portion of any Policy which the Reinsured retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating
the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any Policy which the Reinsured retains net for its own account shall be
included. 

  

	2.	The amount of the Reinsurer’s liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Reinsured to collect from any other reinsurer(s), whether specific or
general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise. 

  
 

 
  

			
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 ARTICLE 27 

NON-WAIVER 
 The failure of the Reinsured or the
Reinsurer to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not constitute a waiver of any rights or remedies contained herein nor stop either party from thereafter demanding full and complete compliance
nor prevent either party from exercising such rights or remedies in the future. 
 ARTICLE 28 

NOTICES AND AGREEMENT EXECUTION 
  

	1.	Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by
certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile. With the exception of notices of termination, first class mail is also acceptable. 

 

	2.	The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto: 

  

	 	a.	Paper documents with an original ink signature; 

  

	 	b.	Facsimile or electronic copies of paper documents showing an original ink signature; and/or 

  

	 	c.	Electronic records with an electronic signature made via an electronic agent. For the purposes of this Contract, the terms “electronic record,” “electronic signature” and “electronic agent”
shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto. 

  

	3.	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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 ARTICLE 29 

OFFSET 
 The Reinsured and the Reinsurer, each at
its option, may offset any balance or balances, whether on account of premiums, claims and losses, Loss Adjustment Expenses or salvages due from one party to the other under this Contract or under any other reinsurance agreement heretofore or
hereafter entered into between the Reinsured and the Reinsurer, whether acting as assuming reinsurer or as ceding company; provided, however, that in the event of the insolvency of a party hereto, offsets shall only be allowed in accordance with
applicable statutes and regulations. 
 ARTICLE 30 

OTHER REINSURANCE 
 The Reinsured shall be
permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Reinsured and be entirely disregarded in applying all of the provisions of this Contract. 

ARTICLE 31 
 SALVAGE AND SUBROGATION

 The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Reinsured, less the actual cost, excluding
salaries of officials and employees of the Reinsured and sums paid to attorneys as a retainer, of obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder. Salvage thereon shall
always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Reinsured for its primary loss. The Reinsured hereby agrees to enforce its rights
to salvage and subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights if, in the Reinsured’s opinion, it is economically reasonable to do so. Should the
Reinsured neglect or refuse to enforce such rights, the Reinsurer is hereby empowered and authorized to institute the appropriate action in the name of the Reinsured, at the Reinsurer’s expense. 

  
 

 
  

			
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 ARTICLE 32 

SANCTIONS 
 Neither the Reinsured nor any Reinsurer
shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European
Union, United Kingdom or United States of America that are applicable to either party. 
 ARTICLE 33 

SERVICE OF SUIT 
 (Applicable if the Reinsurer is
not domiciled in the United States of America, and/or is not authorized in any State, Territory, or District of the United States where authorization is required by insurance regulatory authorities.) 

 

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

 

	2.	In the event the Reinsurer fails to pay any amount claimed to be due hereunder or fails to otherwise perform its obligations hereunder, the Reinsurer, at the request of the Reinsured, will submit to the jurisdiction of
a court of competent jurisdiction within the United States. Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer’s rights to commence an action in any court of competent jurisdiction in the United
States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States. The Reinsurer, once the appropriate court is accepted
by the Reinsurer or is determined by removal, transfer or otherwise, as provided for above, will comply with all requirements necessary to give said court jurisdiction and, in any suit instituted against any of the Reinsurers upon this Contract,
will abide by the final decision of such court or of any Appellate Court in the event of an appeal. 

  

	3.	 Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby
designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, 

  
 

 
  

			
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Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his or her 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 Reinsured or any beneficiary hereunder arising out of this Contract. 

ARTICLE 34 
 SEVERABILITY

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

ARTICLE 35 
 TAXES 

In consideration of the terms under which this Contract is issued, the Reinsured will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia. 

ARTICLE 36 
 TERRITORY 

The liability of the Reinsurer shall be limited to losses under Policies covering property located within the territorial limits of the State of Florida; but
this limitation shall not apply to moveable property if the Reinsured’s Policies provide coverage when said moveable property is outside the aforementioned territorial limits. 

ARTICLE 37 
 INTERMEDIARY

 Advocate Reinsurance Partners, LLC is hereby recognized as the Intermediary negotiating this Contract for all business hereunder. All
communications (including, but not limited to, notices, statements, premium, return premium, commissions, taxes, losses, Loss Adjustment Expense, salvages and loss settlements) relating thereto shall be transmitted to the Reinsured or the

  
 

 
  

			
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Reinsurer through Advocate Reinsurance Partners, LLC, 2501 North Harwood Street, Suite 1250, Dallas, TX 75201. Payments by the Reinsured to the Intermediary shall be deemed to constitute payment
to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to constitute payment to the Reinsured only to the extent that such payments are actually received by the Reinsured. 

  
 

 
  

			
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 COLLATERAL COLLECTION TABLE 

CATASTROPHE AGGREGATE EXCESS OF LOSS REINSURANCE CONTRACT 

EFFECTIVE: JUNE 1, 2014 

issued to 
 HOMEOWNERS CHOICE
PROPERTY & CASUALTY INSURANCE COMPANY, INC. 
 TAMPA, FLORIDA 

 

																			
	 Collateral Release Calculation as of
[    ]

	 Line No.
	  	Col. 1	  	Col. 2	  	Col. 3	  	Col. 4	  	Col. 5	  	Col. 6	  	Col. 7	  	Col. 8	  	Col. 9
	 	  	Date of Loss Event	  	Description	  	Loss Amount	  	Buffer Loss Factor	  	Buffer Loss
Amount
(Col. 3 x Col. 4)	  	Inuring
Reinsurance
Coverage	  	Buffered Loss
Amount net of
Inuring
Reinsurance
(Col. 5 - Col. 6)	  	Less
$[    ]
Retention	  	Balance
(Col. 7 - Col.8)
	 1A
	  		  		  		  		  		  		  		  		  	
	 1B
	  		  		  		  		  		  		  		  		  	
	 1C
	  		  		  		  		  		  		  		  		  	
	 1D
	  		  		  		  		  		  		  		  		  	
	 1E
	  		  		  		  		  		  		  		  		  	
	 1F
	  		  		  		  		  		  		  		  		  	

  
 

 
  

			
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 NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE – REINSURANCE U.S.A.

  

	1.	This Reinsurance does not cover any loss or liability accruing to the Reinsured, directly or indirectly, and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering
Atomic or Nuclear Energy risks. 

  

	2.	Without in any way restricting the operation of paragraph (1) of this clause, this Reinsurance does not cover any loss or liability accruing to the Reinsured, directly or indirectly and whether as Insurer or
Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to: 

  

	 	I.	Nuclear reactor power plants including all auxiliary property on the site, or 

  

	 	II.	Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and “critical facilities” as such, or 

 

	 	III.	Installations for fabricating complete fuel elements or for processing substantial quantities of “special nuclear material”, and for reprocessing, salvaging, chemically separating, storing or disposing of
“spent” nuclear fuel or waste materials, or 

  

	 	IV.	Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission. 

 

	3.	Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reinsured, directly or
indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph
(3) shall not operate: 

  

	 	(a)	where Reinsured does not have knowledge of such nuclear reactor power plant or nuclear installation, or 

  

	 	(b)	where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused. However on and after 1st January 1960 this sub-paragraph
(b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof. 

  
 

 
  

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

  

	5.	It is understood and agreed that this clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reinsured to be the primary hazard. 

 

	6.	The term “special nuclear material” shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof. 

 

	7.	Reinsured to be sole judge of what constitutes: 

  

	 	(a)	substantial quantities, and 

  

	 	(b)	the extent of installation, plant or site. 

 Note: Without in any way restricting the operation of paragraph
(1) hereof, it is understood and agreed that: 
  

	 	(a)	all Policies issued by the Reinsured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs
whereupon all the provisions of this Clause shall apply. 

  

	 	(b)	with respect to any risk located in Canada, Policies issued by the Reinsured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or
31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply. 

  
 

 
  

			
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 TRUST AGREEMENT 

(copy to be included) 

  
 

 
  

			
	 ARP-HCI-02-AGG-002-14
  

DOC: June 3, 2014
	  	Trust Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}]]