Semi-Annual Aggregate Catastrophe Excess of Loss Reinsurance Contract between Employers Mutual Casualty Company and Dakota Fire Insurance Company, EMCASCO Insurance Company and Illinois EMCASCO Insurance Company

For the first six months (January 1 through June 30) of each Contract Year, the Reinsureds collectively will retain the first Twenty Million Dollars ($20,000,000.00) of all Ultimate Net Loss arising out of Cat Loss Occurrences during those six months (the “First Half Catastrophe Aggregate Retention”).

For the first six months (January 1 through June 30) of each Contract Year, the Reinsurer will be liable for 100% of all Ultimate Net Loss arising out of Cat Loss Occurrences above the First Half Catastrophe Aggregate Retention, up to a limit of Twenty-Four Million Dollars ($24,000,000.00) during those six months (the “First Half Catastrophe Aggregate Limit”).

For the last six months (July 1 through December 31) of each Contract Year, the Reinsureds collectively will retain the first Fifteen Million Dollars ($15,000,000.00) of all Ultimate Net Loss arising out of Cat Loss Occurrences during those six months (the “Second Half Catastrophe Aggregate Retention”).

For the last six months (July 1 through December 31) of each Contract Year, the Reinsurer will be liable for 100% of all Ultimate Net Loss arising out of Cat Loss Occurrences above the Second Half Catastrophe Aggregate Retention, up to a limit of Twelve Million Dollars ($12,000,000.00) during those six months (the “Second Half Catastrophe Aggregate Limit”).

Loss or damage occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, martial law or confiscation by order of any government or public authority, but not excluding loss or damage which would be covered under a standard policy form containing a standard war exclusion.

Mold, other than as a result of a covered peril.

The Reinsureds shall collectively pay the Reinsurer a premium of Six Million Three Hundred Ten Thousand Dollars ($6,310,000.00) for the January 1 through June 30 catastrophe aggregate coverage set out in Article 2 Section A.1 of the Contract for each Contract Year the Contract remains in place (the “First Half Catastrophe Aggregate Premium”). The First Half Catastrophe Aggregate Premium may be renegotiated on an annual basis and will be split evenly between Quarter 1 (January 1 through March 31) and Quarter 2 (April 1 through June 30) of the Contract Year. The First Half Catastrophe Aggregate Premium is to be paid in two equal installments, the first installment due in April and the second installment due in July. Balances will be settled during the duration of the Contract via intercompany balance transfers.

The Reinsureds shall collectively pay the Reinsurer a premium of One Hundred Million Five Hundred Thirty Thousand Dollars ($1,530,000.00) for the July 1 through December 31 catastrophe aggregate coverage set out in Article 2 Section A.2 of the Contract for each Contract Year the Contract remains in place (the “Second Half Catastrophe Aggregate Premium”). The Second Half Catastrophe Aggregate Premium may be renegotiated on an annual basis and will be split evenly between Quarter 3 (July 1 through September 30) and Quarter 4 (October 1 through December 31) of the Contract Year. The Second Half Catastrophe Aggregate Premium is to be paid in two equal installments, the first installment due in October and the second installment due in January. Balances will be settled during the duration of the Contract via intercompany balance transfers.

The Reinsureds shall furnish the Reinsurer with such information as may be required by the Reinsurer for completion of its financial statements.

1.    “Ultimate Net Loss” means the catastrophe losses assumed by the Reinsureds from the EMC Pooling Agreement, or which the Reinsureds otherwise become liable to pay. Such loss includes Loss Adjustment Expense, any Extra Contractual Obligations, and any Loss in Excess of Policy Limits as defined in the Extra Contractual Obligations/Excess of Policy Limits Article for any Cat Loss Occurrence, less any unaffiliated reinsurance recoveries received from parties providing reinsurance coverage to the pool participants.

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

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

The Reinsureds shall be deemed to be “liable to pay” their portion of a loss when a judgment has been rendered that the pool participants do not plan to appeal, and/or the pool participants have obtained a release, and/or the pool participants have accepted a proof of loss.

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

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

court costs;

costs of supersedeas and appeal bonds;

monitoring counsel expenses;

legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including but not limited to declaratory judgment actions;

post-judgment interest;

pre-judgment interest, unless included as part of an award or judgment;

a pro rata share of salaries and expenses of EMCC’s field employees, calculated in accordance with the time occupied in adjusting such loss, and expenses of other EMCC employees who have been temporarily diverted from their normal and customary duties and assigned to the field adjustment of losses covered by this Contract, to the extent such salaries and expenses have been specifically allocated to a claim file; and

subrogation, salvage and recovery expenses.

1.    “Cat Loss Occurrence(s)” shall mean any one accident, casualty, disaster, or occurrence or series of accidents, casualties, disasters or occurrences arising out of or following from one event and coded as such in EMCC’s claims and/or accounting system records.

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

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

An Extra Contractual Obligation and/or Loss in Excess of Policy Limits shall be deemed to have occurred on the same date as a loss covered under the pool participants’ Policies, and shall constitute part of the original loss.

For the purposes of the Loss in Excess of Policy Limits coverage hereunder, the word “Loss” shall mean any amounts for which a pool participant would have been contractually liable to pay had it not been for the limit of the original Policy.

Loss Adjustment Expense in respect of Extra Contractual Obligations and/or Loss in Excess of Policy Limits shall be covered hereunder in the same manner as other Loss Adjustment Expense.

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

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

This Contract applies only to that portion of any loss that the Reinsureds retain net for their own accounts.

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 Reinsureds to collect from any other reinsurer(s), whether specific or general, any amounts that may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.

The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations assumed by the Reinsureds from EMCC through the terms of the pooling agreement.

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

In the event of insolvency and the appointment of a conservator, liquidator or statutory successor of any Reinsured, the Reinsured’s pro rata portion of any risk or obligation assumed by the Reinsurer shall be payable to the conservator, liquidator or statutory successor on the basis of claims allowed against the insolvent Reinsured by any court of competent jurisdiction or by any conservator, liquidator or statutory successor of the Reinsured having authority to allow such claims, without diminution because of that insolvency, or because the conservator, liquidator or statutory successor has failed to pay all or a portion of any claims.

Payments by the Reinsurer as above set forth shall be made directly to the Reinsured or to its conservator, liquidator or statutory successor, except as provided by applicable law and regulation in the event of the insolvency of any Reinsured.

In the event of the insolvency of the Reinsurer, the liquidator, receiver, conservator or statutory successor of the Reinsurer shall notify the Reinsureds of the pendency of a claim against the insolvent Reinsurer on the Contract or contracts reinsured within a reasonable time after such claim is filed in the insolvency proceeding and, during the pendency of such claim, any of the Reinsureds may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses which it may deem available to the Reinsurer or its liquidator, receiver, conservator or statutory successor.

The original reinsured or policyholder shall not have any rights against the Reinsurer which are not specifically set forth in this Contract, or in a specific agreement between the Reinsurer and the original reinsured or policyholder.

This Contract may be executed by:

an original written ink signature of paper documents;

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

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

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

This Reinsurance does not cover any loss or liability accruing to the Reassureds, 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.

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 Reassureds, 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:

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

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

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

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

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 Reassureds, 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:

where Reassureds do not have knowledge of such nuclear reactor power plant or nuclear installation, or

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.

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 Reassureds, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

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 Reassured to be the primary hazard.

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

Reassureds to be sole judge of what constitutes:

substantial quantities, and

the extent of installation, plant or site.

all policies issued by the Reassureds 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.

with respect to any risk located in Canada policies issued by the Reassureds 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.

Wherever used herein the terms:

shall be understood to mean “Companies”, “Reinsureds”, “Reassureds” or whatever other term is used in the attached reinsurance document to designate the reinsured companies.

shall be understood to mean “Agreement”, Contract, “Policy” or whatever other term is used to designate the attached reinsurance document.

shall be understood to mean “Reinsurer”, “Underwriter” or whatever other term is used in the attached reinsurance document to designate the reinsurer.