Casualty Excess of Loss Reinsurance Agreement between Bridgefield Casualty Insurance Company, Bridgefield Employers Insurance Company, and Peerless Insurance Company (Effective January 1, 2003)

EXHIBIT 10.147

CASUALTY EXCESS OF LOSS
REINSURANCE AGREEMENT
NO. RAMSumCX — 2003

EFFECTIVE JANUARY 1, 2003

between

BRIDGEFIELD CASUALTY INSURANCE COMPANY
BRIDGEFIELD EMPLOYERS INSURANCE COMPANY
(Liberty RAM)
Lakeland, Florida
(hereinafter referred to as the “Company”)

and

PEERLESS INSURANCE COMPANY
Keene, New Hampshire
(hereinafter referred to as the “Reinsurer”)

CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT NO. RAMSumCX — 2003

ARTICLE		CONTENTS		PAGE
		PREAMBLE			1
I		BUSINESS COVERED			1
II		EFFECTIVE DATE AND TERMINATION			1
III		TERRITORY			3
IV		LIMIT AND RETENTION			3
V		WARRANTIES			4
VI		ULTIMATE NET LOSS			4
VII		LOSS IN EXCESS OF POLICY LIMITS			5
VIII		EXTRA CONTRACTUAL OBLIGATIONS			5
IX		EXCLUSIONS			6
X		SPECIAL ACCEPTANCES			9
XI		LOSS OCCURRENCE			10
XII		REINSURANCE PREMIUM			12
XIII		REPORTS AND REMITTANCES			12
XIV		NOTICE OF LOSS AND LOSS SETTLEMENTS			13
XV		SALVAGE AND SUBROGATION			14
XVI		ACCESS TO RECORDS			14
XVII		TAXES			14
XVIII		CURRENCY			14
XIX		OFFSET			15
XX		ERRORS OR OMISSIONS			15
XXI		INSOLVENCY			15
XXII		DISPUTE RESOLUTION			16
XXIII		SPECIAL TERMINATION			18
XXIV		RESERVES			19
XXV		SERVICE OF SUIT			21
XXVI		CONFIDENTIALITY CLAUSE			22
XXVII		AMENDMENTS			22
XXVIII		FEDERAL TERRORISM EXCESS RECOVERY CLAUSE			22
XXIX		ENTIRE AMENDMENTS			23

ATTACHMENTS:		EXHIBIT A — FIRST EXCESS OF LOSS
		EXHIBIT B — SECOND EXCESS OF LOSS
		EXHIBIT C — THIRD EXCESS OF LOSS
		APPENDIX A
		APPENDIX B
		APPENDIX C
		INSOLVENCY FUNDS EXCLUSION CLAUSE.
		NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE — U.S.A.
		NUCLEAR INCIDENT EXCLUSION CLAUSE — LIABILITY — REINSURANCE — CANADA.
		NUCLEAR INCIDENT EXCLUSION CLAUSE — REINSURANCE — NO. 4.

CASUALTY EXCESS OF LOSS
REINSURANCE AGREEMENT
No. RAMSumCX—2003
(hereinafter referred to as the “Agreement”)

between
BRIDGEFIELD CASUALTY INSURANCE COMPANY
BRIDGEFIELD EMPLOYERS INSURANCE COMPANY
(Liberty RAM)
Lakeland, Florida
(hereinafter referred to as the “Company”)

and

PEERLESS INSURANCE COMPANY
Keene, New Hampshire
(hereinafter referred to as the “Reinsurer”)

ARTICLE I — BUSINESS COVERED

A.

The Reinsurer shall indemnify the Company on an excess of loss basis in respect of the Company’s Ultimate Net Loss paid or to be paid by the Company as a result of losses occurring or claims made during the term of the Agreement for Policies in force as of January 1, 2003, and new and renewal Policies becoming effective on or after said date, subject to the terms and conditions contained herein.

B.

This Agreement is solely between the Company and the Reinsurer, and nothing contained in this Agreement shall create any obligations or establish any rights against the Reinsurer in favor of any person or entity not a party hereto.

C.

The term “Policies” shall mean each of the Company’s binders, policies and contracts of insurance or reinsurance on the business covered hereunder.

D.

Under this Agreement, the indemnity for reinsured loss applies only to Workers Compensation and Employers Liability business written by the Company or ceded to the Company by: Bridgefield Casualty Insurance Company, Bridgefield Employers Insurance Company, both of Lakeland, Florida, except as excluded under Article IX — Exclusions of this Agreement.

ARTICLE II — EFFECTIVE DATE AND TERMINATION

A.

This Agreement shall become effective at 12:01 a.m., Local Standard Time, with respect to Policies in force at 12:01 a.m., Local Standard Time, January 1, 2003, and new and renewal Policies becoming effective on or after said date. This Agreement may be

terminated at the close of any calendar year by either party giving to the other 90 days prior written notice by certified mail of its intention to do so.

B.

This Agreement shall apply to loss occurrence and claims made Policies in accordance with the following provisions:

	1.		As respects Policies written on an occurrence basis:
			This Agreement shall apply with respect to losses occurring on or after the inception date of this Agreement.
	2.		As respects Policies written on a claims made basis:
			This Agreement shall apply to claims made Policies as respects claims received and recorded by the Company or the insured, whichever comes first, at and after the effective date of this Agreement, provided that each such Policy includes a specific retroactive date and the occurrence which results in each such claim takes place on or after such retroactive date, and provided further that such retroactive date is on or after the inception date of the first of one or more consecutive claims made policies issued by the Company or another insurer(s) to the named insured.

C.

In the event of termination of this Agreement, the Company shall have the option of continuing or terminating the liability in force at the date of termination as set forth below. The Company may exercise such option provided written notice of the Company’s election is given by certified mail to the Reinsurer prior to the date of termination. If the Company does not choose to exercise its option prior to the date of termination, such option shall revert to the Reinsurer.

	1.a.		As respects Policies written on an occurrence basis:
			Upon termination of this Agreement, all Policies covered hereunder and in force at the date of termination of this Agreement shall continue until their natural expiry, cancellation or next anniversary of such business, whichever first occurs; but in no case shall this reinsurance be extended for longer than one year, plus odd time, after the termination date.
	b.		As respects Policies written on a claims made basis:
			Upon termination of this Agreement, the Reinsurer shall continue to be liable for claims received or recorded by the Company or by the insured with respect to Policies in force at the date of termination for the full original policy period until the natural expiry, cancellation or next anniversary of such policies, not to exceed one year, whichever comes first.

However, if the Company has provided an Extended Reporting Period within one year after the date of termination on policies in force at the date of termination or if the Extended Reporting Period is in force at the date of termination, the Reinsurer shall continue to be liable for such extended reporting period.

	2.a.		As respects Policies written on an occurrence basis:
			Upon termination of this Agreement, the Reinsurer shall be liable for losses occurring prior to the date of termination; however, the Reinsurer shall have no liability for losses occurring subsequent to the termination of this Agreement.
	b.		As respects Policies written on a claims made basis:
			Upon termination of this Agreement, the Reinsurer shall not be liable for claims received or recorded by the Company or insured after the effective date of termination unless such claim is received and recorded by the Company or the insured during an Extended Reporting Endorsement Period in force at the date of termination.

ARTICLE III — TERRITORY

This Agreement applies to Policies issued by the Company within the United States of America, its territories and possessions, and Canada and shall apply to losses covered hereunder wherever occurring.

ARTICLE IV — LIMIT AND RETENTION

A.		The limits and retentions provided under this Agreement are as set forth in Exhibits A, B and C attached hereto and made a part of this Agreement.
B.		The Company’s retention and the Reinsurer’s limit of liability for each Loss Occurrence, set forth in Section I of Exhibits A, B and C attached hereto and made part of this Agreement, shall apply irrespective of the number of Policies affected or number of hazards in one policy.
C.		Reinsurance of the Company’s retention, set forth in each Exhibit, shall not be deducted in arriving at the Company’s Ultimate Net Loss herein.

ARTICLE V — WARRANTIES

Notwithstanding any other provision of this Agreement, Reinsurers’ liability under this Agreement shall be limited to a maximum of:

1.

$5,000,000 Maximum Any One Life for Worker’s Compensation;

2.

Maximum Employers Liability limit $2,000,000.

ARTICLE VI — ULTIMATE NET LOSS

A.

The term “Ultimate Net Loss” shall mean the actual sum paid by the Company in settlement of losses or liability including interest accrued prior to judgment after making deductions for all recoveries, including subrogation, salvages, and claims upon other reinsurances, whether collectible or not, which inure to the benefit of the Reinsurer under this Agreement, and shall include Loss Adjustment Expenses incurred by the Company; provided, however, that in the event of the insolvency of the Company, Ultimate Net Loss shall mean the amount of loss and Loss Adjustment Expenses for which the Company is liable, and payment by the Reinsurer shall be made to the liquidator, receiver, conservator or statutory successor of the Company in accordance with the provisions of Article XXI — Insolvency of this Agreement.

B.

The term “Ultimate Net Loss” shall include 90% of Loss In Excess of Policy Limits and 90% of Extra Contractual Obligations, as defined herein, but only as respects business covered under this Agreement.

C.

The term “Loss Adjustment Expenses” shall mean all expenses incurred by the Company in connection with the investigation, settlement, defense or litigation, including court costs and post-judgment interest of any claim or loss covered by the Policies reinsured under this Agreement and shall include Declaratory Judgement Expenses. However, the term “Loss Adjustment Expense” shall not include the salaries and expenses of Company employees, office expenses and other overhead expenses.

D.

The term “Declaratory Judgment Expenses” shall mean all legal expenses, incurred in the representation of the Company in litigation brought to determine the Company’s defense and/or indemnification obligations, that are allocable to any specific claim or loss covered by Policies reinsured under this Agreement. In addition, the Company shall promptly notify the Reinsurer of any Declaratory Judgment Expenses subject to this Agreement.

E.

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

F.

Nothing in this Article shall be construed to mean that losses are not recoverable hereunder until the Ultimate Net Loss of the Company has been ascertained.

ARTICLE VII — LOSS IN EXCESS OF POLICY LIMITS

A.

“Loss in Excess of Policy Limits” is defined as loss in excess of the limit of the original Policy, such loss in excess of the limit having been incurred because of failure by the Company 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.

B.

However, this Article shall not apply where the loss has been incurred due to fraud by a member of the Board of Directors or a corporate officer of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder.

C.

For the purposes of this Article, the word “loss” shall mean any amounts which the Company would have been contractually liable to pay had it not been for the limit of the original Policy.

D.

With respect to coverage provided under this Article, recoveries from any insurance or reinsurance other than this Agreement shall be deducted to arrive at the amount of the Company’s Ultimate Net Loss.

ARTICLE VIII — EXTRA CONTRACTUAL OBLIGATIONS

A.

“Extra Contractual Obligations” are defined as those liabilities not covered under any other provision of this Agreement and which arise from the handling of any claim on business covered hereunder, such liabilities arising because of, but not limited to, the following: failure by the Company 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.

B.

The date on which an Extra Contractual Obligation is incurred by the Company shall be deemed, in all circumstances, to be the date of the original accident, casualty, disaster or loss occurrence.

C.

However, coverage hereunder as respects Extra Contractual Obligations shall not apply where the loss has been incurred due to the fraud of a member of the Board of Directors or a corporate officer of the Company 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.

D.

Recoveries, collectibles or retention from any other form of insurance or reinsurance including deductibles or self-insured retention which protect the Company against Extra Contractual Obligations shall inure to the benefit of the Reinsurer and shall be deducted from the total amount of Extra Contractual Obligations for purposes of determining the loss hereunder.

E.

If any provision of this Article 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 any such provision in any other jurisdiction.

ARTICLE IX — EXCLUSIONS

THIS AGREEMENT DOES NOT COVER:

A.

THE FOLLOWING GENERAL CATEGORIES

	1.		Ex-gratia payments.
	2.		Loss or damage caused directly or indirectly by: (a) enemy attack by armed forces including action taken by military, naval or air forces in resisting an actual or an immediately impending enemy attack; (b) invasion; (c) insurrection; (d) rebellion; (e) revolution; (f) intervention; (g) civil war; and (h) usurped power.
	3.		Reinsurance assumed by the Company, except intercompany reinsurance.
	4.		Business derived from any Pool, Association, including Joint Underwriting Association, Syndicate, Exchange, Plan, Fund or other facility directly as a member, subscriber or participant, or indirectly by way of reinsurance or assessments; provided this exclusion shall not apply to Automobile or Workers Compensation assigned risks which may be currently or subsequently covered hereunder.
	5.		Pollution Liability as per the Company’s original Policies and endorsements except when a judicial entity invalidates the Company’s exclusion or in any jurisdiction whose regulatory authorities have prohibited the exclusion.

	6.		Insolvency Funds as per the attached Insolvency Funds Exclusion Clause.
	7.		Global Fortune 500 Risks as per the attached Appendix B.
	8.		Pharmaceutical Risk per the attached Appendix C.
	9.		Nuclear Incident Exclusion Clauses which are attached and made part of this Agreement:

	a.		Nuclear Incident Exclusion Clause — Liability — Reinsurance — U.S.A.
	b.		Nuclear Incident Exclusion Clause — Liability — Reinsurance — Canada.
	c.		Nuclear Incident Exclusion Clause — Reinsurance — No. 4.

B.

THE FOLLOWING INSURANCE COVERAGES

	1.		Fiduciary Liability.
	2.		Surety and Credit insurance.
	3.		Fidelity Bonds.
	4.		Credit and Financial Guarantee.
	5.		Securities and Exchange Liability.
	6.		Malpractice insurance, Directors and Officers Liability insurance or any form of Errors and Omissions or Professional Liability insurance, except as provided for under the Company’s Underwriting Guidelines.
	7.		Advertisers’, Broadcasters’ and Telecasters’ Liability as respects Personal Injury Liability except as provided for under the Company’s Underwriting Guidelines.
	8.		Kidnap, Extortion and Ransom Liability.
	9.		Protection and Indemnity (Ocean Marine) except for hulls under 50 feet.
	10.		Entertainment Business, defined as Feature Film and Major Motion Picture Studios, Commercial Negative Film Coverages, Cast Coverage, Completion Bond and Television Productions.

B.

THE FOLLOWING RISKS AS RESPECTS WORKERS COMPENSATION AND EMPLOYERS LIABILITY

1.

Operations under the jurisdiction of the U.S. Longshoremen’s and Harbor Workers’ Act, the Jones Act and the Maritime Employers

Liability Act except when written as incidental coverages as defined in the Company’s Underwriting Guidelines.

	2.		Operation of docks or wharves, other than small marinas or pleasure docks.
	3.		The manufacturing, mining, refining, processing, distribution, installation, removal or encapsulment of asbestos.
	4.		Risks involving known exposure to asbestos.
	5.		All railway operations except sidetrack agreements.
	6.		Amusement parks, carnivals or circuses, except county or country fairs.
	7.		Subaqueous operations.
	8.		Mining.
	9.		Demolition of buildings or structures in excess of three stories or 50 feet in height.
	10.		Shoring, underpinning or moving of buildings or structures.
	11.		Manufacture, sale, rental, lease, erection or repair of scaffolds.
	12.		Construction of bridges over 50 feet, and tunnels or dams.
	13.		a.       Manufacturers or importers of fireworks, fuses, or any substance, as defined and noted below, intended for use as an explosive.

	b.		Loading of fireworks, fuses, or any explosive substance defined below into containers for use as explosive objects, propellant charges or detonation devices and the storage thereof.
	c.		Manufacturers or importers of any product in which fireworks, fuses, or any explosive substance defined below is an ingredient.
	d.		Handling, storage, transportation or use of fireworks, fuses, or any explosive substance defined below.

NOTE: An explosive substance is defined as any substance manufactured for the express purpose of exploding as differentiated from commodities used industrially and which are only incidentally explosive.

14.

Manufacture, production, refining, storage, wholesale distribution or transportation of natural or artificial fuel gas, butane, propane or liquefied petroleum gases or gasoline,

except when written as incidental coverages as defined in the Company’s Underwriting Guidelines.

	15.		Onshore and offshore gas and oil drilling operations.
	16.		Ownership, maintenance or use of any airport or aircraft, including fueling, or any device or machine intended for and/or aiding in the achievement of atmospheric flight, projection or orbit except as respects corporate owned aircraft up to four passengers.
	17.		Municipalities, except for those with a population less than 25,000.
	18.		Any actual or alleged liability whatsoever for any claim or claims in respect of loss or losses directly or indirectly arising out of, resulting from or in consequence of, or in any way involving asbestos, or any materials containing asbestos in whatever form or quantity.

D.		THE FOLLOWING RISKS AS RESPECTS TERRORISM
		Terrorism losses arising from Airports, Bridges, Government Buildings, Nuclear Facilities, Office Buildings over 25 stories, Security Services, Stadiums and Tunnels, Nuclear, Biological and Chemical exposures, Explosive Manufacturing risks, Fertilizer mixing Plants, Railroads, Amusement/Theme parks with greater than 5,000 person capacity, Distribution and Manufacturing of weapons/munitions.
E.		The Company and the Reinsurer have agreed on the Company’s Underwriting Guidelines, as respects policies covered under this Agreement. The Company shall advise the Reinsurer of any change in such Underwriting Guidelines.
F.		In the event the Company is inadvertently bound on any risk which is excluded under this Agreement, the reinsurance provided under this Agreement shall apply to such risk until discovery by the Company within its Home Office of the existence of such risk and for 45 days thereafter or for the period required by statutes, and shall then cease unless within such period, the Company has received from the Reinsurer written notice of its approval of such risk.

ARTICLE X — SPECIAL ACCEPTANCES

A.

Policies which are beyond the terms, conditions or limitations of this Agreement may be submitted to each Subscribing Reinsurer identified on the attached Interests and Liabilities Agreement. Upon receipt of approval from all Subscribing Reinsurers, such acceptance shall bind each Subscribing Reinsurer for its respective share in the interests and liabilities of said risk. A Subscribing

Reinsurers’ failure to respond within 2 full business days shall be deemed approval of a risk submitted for special acceptance.

B.

When a policy is specially accepted, such policy shall be covered under the terms and conditions of this Agreement, except as such terms shall be modified by such acceptance. Premiums and losses derived from any special acceptance shall be included with other data for rating purposes of this Agreement. Once a risk has been accepted under the provisions of this Article, it will automatically be included at renewal unless there have been material changes to the risk, in which case the risk will be resubmitted.

ARTICLE XI — LOSS OCCURRENCE

The provisions under this Article are set forth in the following Parts I, II and III:

Part I — As respects Policies written on an occurrence basis:

The term “Loss Occurrence” shall mean any accident or occurrence or series of accidents or occurrences arising out of any one event and happening within the term and scope of this Agreement. Without limiting the generality of the foregoing, the term “Loss Occurrence” shall be held to include:

A.

As respects Products Bodily Injury and Products Property Damage Liability, injuries to all persons and all damage to property of others occurring during a Policy Period and proceeding from or traceable to the same causative agency shall be deemed to arise out of one Loss Occurrence, and the date of such Loss Occurrence shall be deemed to be the commencing date of the Policy Period. For the purpose of this provision, each annual period of a Policy which continues in force for more than one year shall be deemed to be a separate Policy Period.

B.

As respects Bodily Injury Liability (other than Automobile and Products), said term shall also be understood to mean, as regards each original assured, injuries to one or more than one person resulting from infection, contagion, poisoning, or contamination proceeding from or traceable to the same causative agency.

C.

As respects Property Damage Liability (other than Automobile and Products), said term shall also, subject to Provisions 1. and 2. below, be understood to mean loss or losses caused by a series of operations, events, or occurrences arising out of operations at one specific site and which cannot be attributed to any single one of such operations, events or occurrences, but rather to the cumulative effect of the same. In assessing each and every Loss Occurrence within the foregoing definition, it is understood and agreed that:

1.

the series of operations, events or occurrences shall not extend over a period longer than 12 consecutive months; and

2.

the Company may elect the date on which the period of not exceeding 12 consecutive months shall be deemed to have commenced.

In the event that the series of operations, events or occurrences extend over a period longer than 12 consecutive months, then each consecutive period of 12 months, the first of which commences on the date elected under 2. above, shall form the basis of claim under this Agreement.

D.		As respects those Policies of the Company which provide aggregate limits of liability, the total of all individual losses occurring during any one policy year which proceed from or are traceable to the same causative agency.
E.		As respects an occupational or other disease or cumulative injury under Workers Compensation and Employers Liability, each case of an employee contracting any disease for which the Company may be liable shall be considered a separate and distinct occurrence and the date of each occurrence shall be deemed to be as follows:

	1.		If the case is compensable under the Workers Compensation Law or any Occupational Disease Compensation Act, the date of the beginning of the disability for which compensation is payable;
	2.		If the case is not compensable under the Workers Compensation Law or any Occupational Disease Compensation Act, the date of the disability due to said disease actually began;
	3.		Where claim is made after employment has ceased, then the date of the cessation of employment shall be deemed to be the date of disability;
	4.		Notwithstanding the foregoing, in the incidence of a sudden catastrophic event not exceeding 24 hours in duration including traumatic injury or death, all losses to all employers shall be deemed an occurrence.

Part II — As respects Policies written on a claims made basis:

A.		The term “Loss Occurrence” shall mean each claim or series of claims made to the Company, or the insured, during the term of this Agreement arising out of one casualty or event.
B.		As respects a Loss Occurrence involving one or more Policies written on a claims made basis, the date of Loss Occurrence for purposes of reinsurance, shall be considered the earliest date when notice of claims is first received and recorded by the Company or the insured, whichever comes first, and any related claims reported subsequent to such date shall be included in such loss. However, if notice of claims is first received and recorded by the Company or the insured

during an Extended Reporting Period, the date of occurrence shall be deemed to be the last day of the policy period.

Part III — As respects loss occurrence and claims-made Policies involved in the same Loss Occurrence:

In the event a Loss Occurrence involving one or more Policies written on an occurrence basis and one or more Policies written on a claims-made basis, it is understood that the earliest date on which bodily injury or property damage occurs, and any related claims reported subsequent to such date shall be included in such loss whether they are covered under occurrence or claims-made Policies.

ARTICLE XII — REINSURANCE PREMIUM

The rates set forth in Section 3 of the attached Exhibits A, B and C, shall be applied to the Company’s Subject Earned Premium for the business covered as stated in Paragraph E. of Article I — Business Covered.

B.		The term “Subject Earned Premium” as used herein is equal to the sum of the Net Premiums Written on the business covered hereunder during the period under consideration, plus the unearned premium reserve as respects premiums in force at the beginning of such period, less the unearned premium reserve as respects premiums in force at the end of the period, said unearned premium is to be calculated on a monthly pro rata basis.
C.		The term “Net Premiums Written” shall mean gross premiums written less returns, allowances and reinsurances which inure to the benefit of the Reinsurer.

ARTICLE XIII — REPORTS AMD REMITTANCES

A.

The Company shall furnish the Reinsurer with all necessary data respecting premiums and losses for as long as one of the parties hereto has a claim against the other arising from this Agreement.

B.

Deposit premiums equal to 1/4 of the 100% of anticipated premium will be remitted on January 15, May 15, August 15 and November 15, 2003. The Company shall submit finalized accounts to the Reinsurer on February 15, 2004, summarizing the actual Subject Earned premium for the January 1, 2003 through December 31, 2003 coverage period. The difference between the deposit premium and actual subject earned premium will be settled to/from the Company within 15 days of February 15, 2004 However, in no event shall the annual adjusted premium be less than the minimum premium for each layer.

C.

Payment by the Reinsurer of its portion of loss and Loss Adjustment Expenses paid by the Company shall be made by the Reinsurer to the

Company within 15 days after proof of payment is received by the Reinsurer.

ARTICLE XIV — NOTICE OF LOSS AMD LOSS SETTLEMENT

A.		The Company shall advise the Reinsurer promptly, but in no event later than 30 days, of all losses which, in the opinion of the Company, may result in a claim hereunder and of all subsequent developments thereto which, in the opinion of the Company, may materially affect the position of the Reinsurer. Notwithstanding the foregoing, the Company shall give notice to the Reinsurer once a claim exceeds the retention of the primary company or has the potential to exceed the retention.
B.		The Company shall advise the Reinsurer of all claims which:

	1.		Are reserved by the Company for an amount in excess of 50% of its retention;
	2.		Originate from fatal injuries;
	3.		Originate from the following kinds of bodily injury:

	a.		Brain injuries resulting in impairment of physical function;
	b.		Spinal injuries resulting in a partial or total paralysis of upper or lower extremities;
	c.		Amputation or permanent loss of use of upper or lower extremities;
	d.		Severe burn injuries;
	e.		Loss of sight in one or both eyes;
	f.		All other injuries likely to result in a permanent disability rate of 50% or more.

C.

All loss settlements made by the Company, provided they are within the terms of this Contract, shall be unconditionally binding upon the Reinsurer, who agrees to pay all amounts for which they may be liable immediately, but in no event later than 30 days, upon being furnished by the Company with reasonable evidence of the amount due.

D.

The Company shall have the responsibility to investigate, defend or negotiate settlements of all claims and lawsuits related to Policies written by the Company and reinsured under this Agreement. The Reinsurer, at its own expense, may associate with the Company in the defense or control of any claim, suit or other proceeding which involves or is likely to involve the reinsurance provided under this Agreement, and the Company shall cooperate in every respect in the defense of any such claim, suit or proceeding.

ARTICLE XV — SALVAGE AND SUBROGATION

A.		In the event of the payment of any indemnity by the Reinsurer under this Agreement, the Reinsurer shall be subrogated, to the extent of such payment, to all of the rights of the Company against any person or entity legally responsible for damages of the loss. The Company agrees to enforce such rights; but, in case the Company refuses or neglects to do so, the Reinsurer is hereby authorized and empowered to bring any appropriate action in the name of the Company or their policyholders or otherwise to enforce such rights.
B.		From any amount recovered by subrogation, salvage or other means, there shall first be deducted the expenses incurred in effecting the recovery. The balance shall then be used to reimburse the excess carriers in the inverse order to that in which their respective liabilities attached, before being used to reimburse the Company for its primary loss.

ARTICLE XVI — ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to examine, at the offices of the Company at a reasonable time, during the currency of this Agreement or anytime thereafter, all books and records of the Company relating to business which is the subject of this Agreement.

ARTICLE XVII — TAXES

The Company shall be liable for all taxes on premiums paid to the Reinsurer under this Agreement, except income or profit taxes of the Reinsurer, and shall indemnify and hold the Reinsurer harmless for any such taxes which the Reinsurer may become obligated to pay to any local, state or federal taxing authority.

ARTICLE XVIII — CURRENCY

Wherever the word “dollars” or the “$” symbol is used in this Agreement, it shall mean dollars of the United States of America, excepting in those cases where the Policy is issued by the Company in Canadian dollars, in which case it shall mean dollars of Canada. In the event the Company is involved in a loss requiring payment in United States and Canadian currency, the Company’s retention and the limit of liability of the Reinsurer shall be apportioned between the two currencies in the same proportion as the amount of net loss in each currency bears to the total amount of net loss paid by the Company. For the purposes of this Agreement, where the Company receives premiums or pays losses in currencies other than United States or Canadian currency, such premiums and losses shall be converted into United States dollars at the actual

rates of exchange at which the premiums and losses are entered in the Company’s books.

ARTICLE XIX — OFFSET

Each party to this Agreement together with their successors or assigns shall have and may exercise, at any time, the right to offset any balance or balances due the other (or, if more than one, any other). Such offset may include balances due under this Agreement and any other agreements heretofore or hereafter entered into between the parties regardless of whether such balances arise from premiums, losses or otherwise, and regardless of capacity of any party, whether as assuming insurer and/or ceding insurer, under the various agreements involved, provided however, that in the event of insolvency of a party hereto, offsets shall only be allowed in accordance with the provisions of the applicable law, statute or regulation governing such offset.

ARTICLE XX — ERRORS OR OMISSIONS

Errors or omissions of an administrative nature on the part of the Company shall not invalidate the reinsurance under this Agreement provided such errors or omissions are corrected promptly, but not later than 30 days after discovery thereof; but the liability of the Reinsurer under this Agreement or any exhibits, addenda, or endorsements attached hereto shall in no event exceed the limits specified herein nor be extended to cover any risks, perils, lines of business or classes of insurance generally or specifically excluded herein.

ARTICLE XXI — INSOLVENCY

In the event of insolvency and the appointment of a conservator, liquidator, or statutory successor of the Company the 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 Company by any court of competent jurisdiction or by any conservator, liquidator, or statutory successor of the Company 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 shall be made directly to the Company or to its conservator, liquidator, or statutory successor, except where the contract of insurance or reinsurance specially provides another payee of such reinsurance in the event of the insolvency of the Company. The conservator, liquidator, or statutory successor of the Company shall give written notice of the pendency of a claim against the Company indicating the policy or bond reinsured, within a reasonable time after such claim is filed and the Reinsurer may interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses which it may deem available to the Company or its conservator, liquidator, or statutory successor. The expense thus incurred by the Reinsurer shall be payable subject to court approval out of the estate

of the insolvent Company as part of the expense of conservation or liquidation to the extent of a proportionate share of the benefit which may accrue to the Company in conservation or liquidation, solely as a result of the defense undertaken by the Reinsurer.

ARTICLE XXII — DISPUTE RESOLUTION

Part I — Choice Of Law And Forum

Any dispute arising under this Agreement shall be resolved in the State of New Hampshire, and the laws of the State of New Hampshire, shall govern the interpretation and application of this Agreement.

Part II — Mediation

If a dispute between the Company and the Reinsurer, arising out of the provisions of this Agreement or concerning its interpretation or validity and whether arising before or after termination of this Agreement has not been settled through negotiation, both parties agree to try in good faith to settle such dispute by nonbinding mediation, before resorting to arbitration. The parties shall choose a mediator within thirty (30) days of a written demand by either party for mediation under Part II of this Article XXII. The mediator shall be a disinterested current or retired insurance or reinsurance officer knowledgeable in reinsurance matters. The parties shall have sixty (60) days from the selection of the mediator in which to mediate the dispute to resolution. In the event that mediation fails to resolve the dispute, the parties shall proceed to arbitration in accordance with Part III of this Article XXII.

Part III — Arbitration

A.

Resolution of Disputes — As a condition precedent to any right arising hereunder, any dispute not resolved by mediation between the Company and the Reinsurer arising out of the provisions of this Agreement or concerning its interpretation or validity, whether arising before or after termination of this Agreement, shall be submitted to arbitration in the manner hereinafter set forth.

B.

Composition of Panel — Unless the parties agree upon a single arbitrator within 15 days after the receipt of a notice of intention to arbitrate, all disputes shall be submitted to an arbitration panel composed of two arbitrators and an umpire chosen in accordance with Paragraph C. hereof. The mediator from Part II many not be an arbitrator or an umpire.

C.

Appointment of Arbitrators — The members of the arbitration panel shall be chosen from disinterested current or retired insurance or reinsurance officers knowledgeable in reinsurance matters. Unless a single arbitrator is agreed upon, the party requesting arbitration (hereinafter referred to as the “claimant”) shall appoint an

arbitrator and give written notice thereof by certified mail, to the other party (hereinafter referred to as the “respondent”) together with his notice of intention to arbitrate.

Within 30 days after receiving such notice, the respondent shall also appoint an arbitrator and notify the claimant thereof by certified mail. Before instituting a hearing, the two arbitrators so appointed shall choose an umpire. If, within 20 days after the appointment of the arbitrator chosen by the respondent, the two arbitrators fail to agree upon the appointment of an umpire, each of them shall nominate three individuals to serve as umpire, of whom the other shall decline two and the umpire shall be chosen from the remaining two by drawing lots. The name of the individual first drawn shall be the umpire.

D.

Failure of Party to Appoint an Arbitrator — If the respondent fails to appoint an arbitrator within 30 days after receiving a notice of intention to arbitrate, the claimant’s arbitrator shall appoint an arbitrator on behalf of the respondent, such arbitrator shall then, together with the claimant’s arbitrator, choose an umpire as provided in Paragraph C. of Part III of this Article.

E.

Involvement of Other Reinsurers — 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 Company to each of the reinsurers constituting the one party; provided, however, nothing herein shall impair the right of such reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the reinsurers under the terms of this Agreement from several to joint.

F.

If the Company is involved in a dispute under the terms of this Agreement and in one or more separate disputes with one or more other reinsurers in which common questions of law or fact are in issue, the Company or the Reinsurer, at its option, may join with such other reinsurers in a common arbitration proceeding under the terms of this Article. If the Company and such other reinsurers have commenced arbitration, the Reinsurer may at its option join such proceeding for the determination of the dispute between the Company and the Reinsurer.

G.

Submission of Dispute to Panel — Unless otherwise extended by the arbitration panel or agreed to by the parties, each party shall submit its case to the panel within 30 days after the selection of the umpire.

H.

Procedure Governing Arbitration — All proceedings before the panel shall be informal and the panel shall not be bound by the formal rules of evidence. The panel shall have the power to fix all procedural rules relating to the arbitration proceeding. In

reaching any decision, the panel shall give due consideration to the customs and usages of the insurance and reinsurance business.

I.

Arbitration Award — The arbitration panel shall render its decision within 60 days after termination of the proceeding, which decision shall be in writing, stating the reasons therefor. The decision of the majority of the panel shall be final and binding on the parties to the proceeding.

J.

Cost of Arbitration — Unless otherwise allocated by the panel, each party shall bear the expense of its own arbitrator and shall jointly and equally bear with the other parties the expense of the umpire and the arbitration.

ARTICLE XXIII — SPECIAL TERMINATION

A.

Notwithstanding the termination provisions set forth in Article II — Effective Date and Termination, this Agreement shall be:

1.

Terminated automatically and simultaneously upon the happening of any of the following events:

	a.		Entry of an order of liquidation, rehabilitation, receivership or conservatorship with respect to the Company or the Reinsurer by any court or regulatory authority;
	b.		Assignment of this Agreement by either party;
	c.		Any transfer of control of either party by change in ownership or otherwise;
	d.		General reinsurance of any portion of the Company’s business it retains net for its own account, as determined under the provisions of this Agreement without prior consent of the Reinsurer.

2.

Terminated in accordance with the provisions set forth in this Paragraph, upon the discovery of the following event:

a.

A reduction of 50% or more of the Company’s policyholders surplus during any calendar year. Such reduction shall be determined by calculating the difference between the Company’s prior year annual statement and each subsequent quarterly statutory statement within such current calendar year.

As respects the event set forth in this Paragraph A.2., the Company shall be obligated to notify the Reinsurer in writing within 30 days after the filing of its quarterly statement. Upon receipt of such notification the Reinsurer shall have the right to terminate this Agreement, by giving not less than 30 days notice of its intention to do so.

b.

A reduction of 50% or more of the Reinsurer’s policyholders surplus during any calendar year. Such reduction shall be determined by calculating the difference between the Reinsurer’s prior year annual statement and each subsequent quarterly statutory statement within such current calendar year.

As respects the event set forth in this Paragraph A.2., the Reinsurer shall be obligated to notify the Company in writing within 30 days after the filing of its quarterly statement. Upon receipt of such notification the Company shall have the right to terminate this Agreement, by giving not less than 30 days notice of its intention to do so.

3.

Terminated by either party by giving not less than 30 days notice of its intention to do so upon any transfer of control of either party by charge of ownership or otherwise.

B.

Any notice of termination pursuant to provisions set forth in Paragraph A.2. and A.3. above shall be sent by certified mail, return receipt requested. Such notice period shall commence upon the other party’s receipt of the notice of termination.

C.

In the event of termination, the Reinsurer shall not be liable for losses occurring subsequent to the date of termination.

ARTICLE XXIV — RESERVES

A.

If a jurisdiction of the United States will not permit the Reassured, in the statements required to be filed with its regulatory authority(ies), to receive full credit as admitted reinsurance for any Reinsurer’s share of obligations, the Reassured shall forward to such Reinsurer a statement of the Reinsurer’s share of such obligations. Upon receipt of such statement the Reinsurer shall promptly apply for, and provide the Reassured with, a “clean,” unconditional and irrevocable Letter of Credit, in the amount specified in the statement submitted, with terms and bank acceptable to the regulatory authority(ies) having jurisdiction over the Reassured.

B.

“Obligations,” as used in this Article, shall mean the sum of losses paid and allocated loss adjustment expenses paid by the Reassured but not yet recovered from the Reinsurer, plus reserves for reported losses, allocated loss adjustment expenses and losses incurred but not reported.

C.

The Reinsurer hereby agrees that the Letter of Credit will provide for automatic extension of the Letter of Credit without amendment for one year from the date of expiration of said Letter or any future expiration date unless thirty (30) days prior to any expiration the issuing bank shall notify the Reassured by registered mail that the issuing bank elects not to consider the Letter of Credit renewed for any additional period. An issuing bank, not a “qualified bank” as defined by Regulation No. 133 promulgated by the Insurance Department of the State of New York, shall provide sixty (60) days notice to the Reassured prior to any expiration.

D.

Notwithstanding any other provision of this Contract, the Reassured or any successor by operation of law of the Reassured including, without limitation, any Liguidator, rehabilitator, receiver or conservator of the Reassured may draw upon such credit, without diminution because of the insolvency of any party hereto, at any time and undertakes to use and apply such credit for one or more of the following purposes only:

	1.		To pay the Reinsurer’s share or to reimburse the Reassured for the Reinsurer’s share of any obligations, as stipulated in the statement submitted by the Reassured to the Reinsurer, which is due to the Reassured and not otherwise paid by the Reinsurer.
	2.		In the event the Reassured has received effective notice of nonrenewal of the Letter of Credit and the Reinsurer’s liability remains unliquidated and undischarged thirty (30) days prior to the expiry date of the Letter of Credit and place such sums in an interest bearing trust account to secure the continuing liabilities of the Reinsurer under this Contract until a renewal Letter of Credit acceptable to the requlatory authority(ies) having jurisdiction over the Reassured, or a substitute in lieu thereof acceptable to the requlatory authority(ies) having jurisdiction over the Reassured, has been received by the Reassured. The Reassured shall provide to the Reinsurer payment of any interest thereon accruing from such account.
	3.		To make refund of any sum which is in excess of the actual amount required for Sections 1. and 2. of this paragraph.

E.

At annual intervals or more frequently as determined by the Reassured, but never more frequently than quarterly, the Reassured shall prepare a specific statement, for the sole purpose of amending the Letter of Credit, of the Reinsurer’s share of any obligations. If the statement shows that the Reinsurer’s share of obligations exceeds the balance of credit as of the statement date, the Reinsurer shall, within thirty (30) days after receipt of notice of such excess, secure delivery to the Reassured of an amendment of the Letter of Credit increasing the amount of credit by the amount of such difference. If the statement shows, however, that the Reinsurer’s share of obligations is less than the balance of credit as of the statement date, the Reassured shall, within thirty (30)

days after receipt of a written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit reducing the amount of credit available by the amount of such excess credit.

F.

The bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Reassured or the disposition of funds withdrawn, except to assure that withdrawals are made only upon the order of properly authorized representatives of the Reassured. The Reassured shall incur no obligation to the bank in acting upon the credit, other than as appears in the express terms thereof.

ARTICLE XXV — SERVICE OF SUIT

(Paragraphs A. and B. of this Clause only apply to Reinsurers domiciled outside of the United States and/or unauthorized in the State of New York)

A.		It is agreed that in the event of the failure of the Reinsurers hereon to pay any amount claimed to be due hereunder, the Reinsurers hereon, at the request of the Reassured, 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 Reinsurers’ 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. It is further agreed that service of process in such suit may be made upon Mendes and Mount, 750 Seventh Avenue, New York, New York 10019-6829, and that in any suit instituted against any one of them upon this Contract, such Reinsurer(s) will abide by the final decision of such Court or of any Appellate Court in the event of an appeal.
B.		The above-named are authorized and directed to accept service of process on behalf of Reinsurers in any such suit and/or upon the request of the Reassured to give a written undertaking to the Reassured that they will enter a general appearance upon Reinsurers’ behalf in the event such a suit shall be instituted.
C.		Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefore, Reinsurers hereon hereby designate the Superintendent, Commissioner or Director of Insurance or their officer Specified for that purpose in the statute, or his successor or successors in office, as their 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 Reassured or any beneficiary hereunder arising out of this Contract of reinsurance, and hereby designate the above-named as the person

to whom the said officer is authorized to mail such process or a true copy thereof.

ARTICLE XXVI — CONFIDENTIALITY CLAUSE

All terms and conditions of this Agreement and any materials provided in the course of inspection shall be kept confidential by the Reinsurer as against third parities, unless the disclosure is required pursuant to process of law or unless the disclosure is to Reinsurer’s retrocessionaires, financial auditors or governing regulatory bodies. Disclosing or using this information for any purpose beyond the scope of this Agreement (Contract), or beyond the exceptions set forth above, is expressly forbidden without the prior consent of the Company.

ARTICLE XXVII — AMENDMENTS

This Agreement may be amended by mutual consent of the parties expressed in an addendum; and such addendum, when executed by both parties, shall be deemed to be an integral part of this Agreement and binding on the parties hereto.

ARTICLE XXVIII — FEDERAL TERRORISM EXCESS RECOVERY CLAUSE

Any loss reimbursement the Company receives from the United States Government under the Terrorism Risk Act of 2002 (“TRIA”) as a result of loss occurrences commencing during the term of this Agreement shall apply as follows:

Except as provided below, any loss reimbursement under TRIA shall inure solely to the benefit of the Company and shall be entirely disregarded in applying all of the provisions of this Agreement.

If one or more loss occurrences commencing during the term of this Agreement result(s) in reinsurance recoveries to the Company under this Agreement and reimbursement under TRIA, and such amounts, together with any other reinsurance recoveries to the Company for said loss occurrence(s), exceed the total amount of “Insured Losses” to the Company, any amount in excess thereof shall be held by the Company. The Company shall then reimburse the Reinsurer a portion of such excess recovery in an amount equal to the proportion that the Reinsurer’s payment under this Agreement bears to the total treaty reinsurance recoveries to the Company for Insured Losses for said loss occurrence(s). Provided, however, that in no event shall such reimbursement exceed the amount paid by the Reinsurer to the Company under this Agreement.

For purposes hereof, if a loss reimbursement received by the Company under TRIA is based on the Company’s Insured Losses in more than one loss occurrence and neither the Secretary of the Treasury nor his delagatee specifies the amount of loss allocable to each respective loss occurrence, the reimbursement shall be pro-rated in the proportion that the Company’s Insured Losses in each loss occurrence bears to the Company’s total Insured Losses resulting from all loss occurrences to which the reimbursement applies.

For purposes of this endorsement: (i) :“TRIA” shall mean the Terrorism Risk Insurance Act of 2002 and any subsequent amendments thereto; and (ii) “Insured Loss(es)” shall have the same meaning as set forth in Section 102 (5) of TRIA.

ARTICLE XXIX — ENTIRE AGREEMENT

This Agreement represents the entire agreement and understanding among the parties, and may not be changed except in writing, signed by the parties. No other oral or written agreements or contracts relating to the risks reinsured hereunder currently exist and/or are contemplated between the parties.

IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed by their duly authorized representative.

In Lakeland, Florida, this 30^th day of September, 2003.

ATTEST:				BRIDGEFIELD CASUALTY INSURANCE COMPANY
				BRIDGEFIELD EMPLOYERS INSURANCE COMPANY
/s/				/s/

And in Keene, New Hampshire, this 29^th day of September, 2003.

ATTEST:				PEERLESS INSURANCE COMPANY
/s/				/s/

EXHIBIT A

FIRST EXCESS OF LOSS

IS ATTACHED TO AND

FORMS PART OF

REINSURANCE AGREEMENT NO. RAMSumCX — 2003

EXHIBIT A — FIRST EXCESS OF LOSS

SECTION		SUBJECT		PAGE
1		LIMIT AND RETENTION			A-l
2		REINSTATEMENT			A-l
3		REINSURANCE PREMIUM			A-2

EXHIBIT A — FIRST EXCESS OF LOSS (ACCOUNTING CODE RAMSumCX — 2003)

SECTION 1 — LIMIT AND RETENTION (amounts shown are in terms of Ultimate Net Loss)

						Reinsurer Liability with
						Respect to any one
Profit Center		Retention				Loss Occurrence
Summit		$	1,000,000			$	4,000,000

SECTION 2 — REINSTATEMENT

A.

It is understood and agreed that each claim hereunder reduces the amount of indemnity from the time of occurrence of the loss by the sum paid, but any amount so exhausted is hereby reinstated from the time the Loss Occurrence commences without payment of an additional premium.

B.

Notwithstanding the foregoing, Reinsurers’ liability for losses arising out of an act of Terrorism shall be limited to one occurrence limit in all, any one Agreement Year.

C. An “Act of Terrorism” for purposes of this Agreement shall mean:

	1.		Any actual or threatened violent act or act harmful to human life, tangible or intangible property or infrastructure directed towards or having the effect of (a) influencing or protesting against any de jure or de facto government or policy thereof, (b) intimidating, coercing or putting in fear a civilian population or section thereof for the purpose of establishing or advancing a specific ideological, religious or political system of thought, perpetrated by a specific individual or group directly or indirectly through agents acting on behalf of said individual or group or (c) retaliating against any country for direct or vicarious support by that country of any other government or political system.
	2.		Any act deemed or declared by the Federal Office of Homeland Security to be terrorism or a terrorist act shall also be considered an “Act of Terrorism” for purposes of this Agreement.

D.

The term “Agreement Year” shall mean each consecutive twelve month period commencing January 1 and ending December 31.

SECTION 3 — REINSURANCE PREMIUM

Profit Center		Rate
Summit			3.45	%

Total Subject Premium to the Layer: $420,490,000

Composite Rate: 3.45% Subject Net Earned premium Income ($14,506,905)

EXHIBIT B

SECOND EXCESS OF LOSS

IS ATTACHED TO AND

FORMS PART OF

REINSURANCE AGREEMENT NO. RAMSumCX — 2003

EXHIBIT B — SECOND EXCESS OF LOSS

SECTION				SUBJECT		PAGE
	1			LIMIT AND RETENTION			B-l
	2			REINSTATEMENT			B-l
	3			REINSURANCE PREMIUM			B-2

EXHIBIT B — SECOND EXCESS OF LOSS (ACCOUNTING CODE RAMSumCX — 2003)

SECTION 1 — LIMIT AND RETENTION (amounts shown are in terms of Ultimate Net Loss)

						Reinsurer Liability with
						Respect to any one
Profit Center				Retention		Loss Occurrence
Summit				$5,000,000		$	5,000,000

SECTION 2 — REINSTATEMENT

A.

It is understood and agreed that each claim hereunder reduces the amount of indemnity from the time of occurrence of the loss by the sum paid, but any amount so exhausted is hereby reinstated from the time the Loss Occurrence commences without payment of an additional premium.

B.

Notwithstanding the foregoing, Reinsurers’ liability for losses arising out of an act of Terrorism shall be limited to one occurrence limit in all, any one Agreement Year.

C. An “Act of Terrorism” for purposes of this Agreement shall mean:

	1.		Any actual or threatened violent act or act harmful to human life, tangible or intangible property or infrastructure directed towards or having the effect of (a) influencing or protesting against any de jure or de facto government or policy thereof, (b) intimidating, coercing or putting in fear a civilian population or section thereof for the purpose of establishing or advancing a specific ideological, religious or political system of thought, perpetrated by a specific individual or group directly or indirectly through agents acting on behalf of said individual or group or (c) retaliating against any country for direct or vicarious support by that country of any other government or political system.
	2.		Any act deemed or declared by the Federal Office of Homeland Security to be terrorism or a terrorist act shall also be considered an “Act of Terrorism” for purposes of this Agreement.

D.

The term “Agreement Year” shall mean each consecutive twelve month period commencing January 1 and ending December 31.

SECTION 3 — REINSURANCE PREMIUM

Profit Center		Rate
Summit			0.25	%

Total Subject Premium to the Layer: $420,490,000

Composite Rate: .25% Subject Net Earned Premium Income ($1,051,225)

EXHIBIT C

THIRD EXCESS OF LOSS

IS ATTACHED TO AND

FORMS PART OF

REINSURANCE AGREEMENT NO. RAMSumCX — 2003

EXHIBIT C — THIRD EXCESS OF LOSS

SECTION				SUBJECT		PAGE
	1			LIMIT AND RETENTION			C-l
	2			REINSTATEMENT			C-l
	3			REINSURANCE PREMIUM			C-2

EXHIBIT C — THIRD EXCESS OF LOSS (ACCOUNTING CODE RAMSumCX — 2003)

SECTION 1 — LIMIT AND RETENTION (amounts shown are in terms of Ultimate Net Loss)

						Reinsurer Liability with
						Respect to any one
Profit Center		Retention				Loss Occurrence
Summit		$	10,000,000			$	15,000,000

SECTION 2 — REINSTATEMENT

A.		It is understood and agreed that each claim hereunder reduces the amount of indemnity from the time of occurrence of the loss by the sum paid, but any amount so exhausted is hereby reinstated from the time the Loss Occurrence commences hereon.
B.		For each amount so reinstated the Company agrees to pay an additional premium calculated at pro rata of the annual premium hereon, being pro rata only as to the fraction of the limit of liability of this Agreement (i.e., the fraction of 100% of $15,000,000) so reinstated and 100% as to the term.
C.		Nevertheless, the Reinsurer’s liability hereunder shall never exceed $15,000,000 in respect of any one Loss Occurrence and shall be further limited in all during the term of this Agreement to $30,000,000. Notwithstanding the foregoing, Reinsurers’ liability for losses arising out of an act of Terrorism shall be limited to only $5,000,000 in the aggregate, any one Agreement Year.
D.		An “Act of Terrorism” for purposes of this Agreement shall mean:

1.

Any actual or threatened violent act or act harmful to human life, tangible or intangible property or infrastructure directed towards or having the effect of (a) influencing or protesting against any de jure or de facto government or policy thereof, (b) intimidating, coercing or putting in fear a civilian population or section thereof for the purpose of establishing or advancing a specific ideological, religious or political system of thought, perpetrated by a specific individual or group directly or indirectly through agents acting on behalf of said individual or group or (c) retaliating against any country for direct or vicarious support by that country of any other government or political system.

2.

Any act deemed or declared by the Federal Office of Homeland Security to be terrorism or a terrorist act shall also be considered an “Act of Terrorism” for purposes of this Agreement.

E.

The term “Agreement Year” shall mean each consecutive twelve month period commencing January 1 and ending December 31.

SECTION 3 — REINSURANCE PREMIUM

Profit Center		Rate
Summit			0.2520	%

Total Subject Premium to the Layer: $420,490,000

Composite Rate: .2520% Subject Net Earned Premium Income ($1,059,635)

APPENDIX A

Definition of Company:

For purposes of Article I or any Articles, wherever the word “Company” is used, the Company is defined to include the following Profit Center.

Profit Center		Legal Entities
Summit:		Bridgefield Casualty Insurance Company, and Bridgefield Employers Insurance Company, WC only, all States

APPENDIX B — Fortune’s Global 500” list

Company		Rank				Revenues [USD mio]
3M			316				16 079
ABB			194				23 726
Abbey National			280				17 798
Abbott Laboratories			309				16 285
ABN AMRO Holding			90				39 703
Accenture			380				13 348
Adecco			313				16 147
AdvancePCS			387				13 107
Aegon			146				28 562
AEON			196				23 621
Aetna			178				25 191
Agricultural Bank of China			471				10 657
Air France Group			454				11 076
Akzo Nobel			407				12 636
Albertson’s			100				37 931
Alcan			408				12 626
Alcatel			207				22 704
Alcoa			205				22 859
Allegheny Energy			488				10 379
Alliance Unichem			478				10 533
Allianz			18				85 929
Allstate			144				28 865
Almanij			272				18 055
Alstom			228				20 734
Amerada Hess			376				13 413
American Electric Power			36				61 257
American Express			209				22 582
American Intl. Group			34				62 402
AmerisourceBergen			319				15 823
AMR			258				18 963
Anglo American			341				14 786
Anheuser-Busch			397				12 912
Anthem			486				10 445
AOL Time Warner			98				38 234
Aquila			87				40 377
Arbed			448				11 195
Arcelor			391				13 005
Archer Daniels Midland			240				20 051
Arrow Electronics			498				10 128
Asahi Glass			499				10 103
Asahi Mutual Life Insurance			119				33 143
Assicurazioni Generali			50				51 394
AstraZeneca			301				16 480
AT&T			40				59 142
AutoNation			241				19 989

Company		Rank				Revenues [USD mio]
Aventis			230				20 544
Aviva			48				52 318
Avnet			402				12 814
AXA			30				65 580
BAE Systems			390				13 020
Banco Bilbao Vizcaya Argentaria			192				23 848
Banco Bradesco			337				14 953
Banco Do Brasil			437				11 685
Bank of America Corp.			47				52 641
Bank Of China			277				17 869
Bank of Montreal			449				11 185
Bank of Nova Scotia			366				13 673
Bank One Corp.			186				24 527
Bankgesellschaft Berlin			473				10 618
Barclays			154				27 569
BASF			142				29 103
Bayer			158				27 111
Bayerische Landesbank			320				15 795
BCE			339				14 873
BellSouth			189				24 130
Berkshire Hathaway			101				37 668
Bertelsmann			276				17 887
Best Buy			247				19 597
BHP Billiton			281				17 789
BMW			112				34 444
BNP Paribas			44				55 044
Boeing			42				58 198
Bombardier			360				13 896
Bouygues			266				18 334
BP			4				174 218
Bridgestone			285				17 566
Bristol-Myers Squibb			218				21 717
British Airways			428				11 943
British American Tobacco			271				18 144
BT			139				29 958
Canadian Imperial Bank of Commerce			361				13 889
Canon			190				23 936
Cardinal Health			61				47 948
Carrefour			35				62 225
Carso Global Telecom			430				11 890
Caterpillar			232				20 450
Cathay Life			440				11 591
Central Japan Railway			460				10 933
Centrica			270				18 161
ChevronTexaco			14				99 699
China Construction Bank			389				13 083
China Mobile Communications			287				17 406
China National Petroleum			81				41 499

Company		Rank				Revenues [USD mio]
China Telecommunications			214				22 272
Chinese Petroleum			467				10 781
Chubu Electric Power			279				17 826
Cigna			254				19 115
Cinergy			396				12 923
Circuit City Stores			403				12 792
Cisco Systems			213				22 293
Citigroup			11				112 022
CMS Energy			393				12 977
CNP Assurances			238				20 099
Coca-Cola			239				20 092
Coca-Cola Enterprises			322				15 700
COFCO			392				13 004
Coles Myer			406				12 643
Commerzbank			193				23 778
Compaq Computer			117				33 554
Compass Group			409				12 552
Computer Sciences			443				11 426
ConAgra			156				27 194
Conoco			122				32 795
Consignia			425				12 040
Corus Group			452				11 087
Cosmo Oil			474				10 612
Costco Wholesale			111				34 797
Credit Agricole			107				35 669
Credit Lyonnais			259				18 848
Credit Suisse			31				64 205
CVS			215				22 241
Dai Nippon Printing			480				10 492
Daido Life Insurance			479				10 527
Daiei			237				20 113
Dai-ichi Mutual Life insurance			76				43 145
DaimlerChrysler			7				136 897
Daiwa Bank Holdings			463				10 888
Dana			484				10 469
Danske Bank Group			461				10 912
Deere			382				13 293
Delhaize ‘Le Lion’			245				19 629
Dell Computer			131				31 168
Delphi			166				26 088
Delta Air Lines			362				13 879
Denso			252				19 203
Dentsu			348				14 311
Deutsche Bahn			356				14 079
Deutsche Bank			27				66 840
Deutsche Post			130				31 302
Deutsche Telekom			75				43 261
Dexia Group			256				19 050

Company		Rank				Revenues [USD mio]
Diageo			262				18 605
Dior (Christian)			446				11 254
Dominion Resources			477				10 558
Dow Chemical			152				27 805
Duke Energy			39				59 503
DuPont de Nemours (E.I.)			172				25 370
Dynegy			78				42 242
DZ Bank			168				25 987
E. ON			28				66 453
EADS			153				27 580
East Japan Railway			233				20 341
Eastman Kodak			383				13 234
Edison			353				14 140
Edison International			420				12 184
El Paso			43				57 475
Électricité De France			102				36 461
Electrolux			386				13 131
Electronic Data Systems			221				21 543
Eli Lilly			441				11 543
Emerson Electric			326				15 480
Endesa			358				13 948
Enel			169				25 773
EHI			71				44 637
Enron			6				138 718
Exelon			333				15 140
Exxon Mobil			2				191 581
Fannie Mae			52				50 803
Farmland Industries			434				11 763
Federated Dept. Stores			292				16 895
FedEx			246				19 629
Fiat			49				51 944
FleetBoston			253				19 190
Fleming			325				15 628
Flextronics International			388				13 105
Foncière Euris			231				20 490
Ford Motor			5				162 412
Fortis			85				40 529
France Télécom			97				38 530
Franz Haniel			269				18 213
Freddie Mac			108				35 523
Fuji Heavy Industries			462				10 897
Fuji Photo Film			251				19 203
Fujitsu			83				40 044
Gap			363				13 848
Gaz de France			400				12 857
Gazprom			236				20 148
General Dynamics			421				12 163
General Electric			9				125 913

Company		Rank				Revenues [USD mio]
General Motors			3				177 260
George Weston			318				15 923
Georgia-Pacific			173				25 309
GlaxoSmithKline			140				29 506
Goldman Sachs Group			132				31 138
Goodyear Tire & Rubber			352				14 147
Great Atl. & Pacific Tea			458				10 973
Groupama			417				12 264
Groupe Auchan			199				23 450
Groupe Caisse d’ Épargne			297				16 693
Groupe Danone			394				12 958
Groupe Pinault-Printemps			181				24 894
Halliburton			377				13 405
Hartford Fin. Services			332				15 147
HBOS			150				27 839
HCA			275				17 953
Henkel			436				11 695
Hewlett-Packard			70				45 226
Hitachi			32				63 931
Home Depot			46				53 553
Honda Motor			41				58 882
Honeywell Intl.			195				23 652
Household International			359				13 916
HSBC Holding PLC			64				46 424
Humana			493				10 195
HypoVereinsbank			91				39 405
Hyundai			219				21 702
Hyundai Motor			133				30 864
Idemitsu Kosan			323				15 679
Indian Oil			226				20 916
Industrial & Commercial Bank of China			243				19 828
ING Group			20				82 999
Ingram Micro			179				25 187
Intel			162				26 539
International Paper			163				26 363
IntesaBci			242				19 946
Intl. Business Machines			19				85 866
Isuzu Motors			404				12 778
Itausa			492				10 239
Itochu			17				91 177
Ito-Yokado			161				26 823
J. Sainsbury			184				24 575
J.C. Penney			124				32 557
J.P. Morgan Chase			54				50 429
Japan Airlines			399				12 866
Japan Energy			385				13 203
Japan Postal Service			234				20 281
Japan Telecom			368				13 628

Company		Rank				Revenues [USD mio]
Japan Tobacco			307				16 331
Johnson & Johnson			121				33 004
Johnson Controls			264				18 427
Kajima			302				16 478
Kansai Electric Power			224				21 207
KarstadtQuelle			347				14 388
KDDI			208				22 664
Kimberly-Clark			345				14 524
Kingfisher			314				16 142
Kmart			104				36 151
Korea Electric Power			324				15 674
Kreditanstalt fur Wiederaufbau			481				10 484
Kroger			56				50 098
KT			413				12 349
Kyushu Electric Power			438				11 661
L.M. Ericsson			210				22 416
La Poste			329				15 249
Lafarge			416				12 267
Lagardère Groupe			429				11 906
Landesbank Baden-Wurttemberg			294				16 877
Lear			369				13 625
Legal & General			374				13 541
Lehman Brothers Hldgs.			212				22 392
LG Electronics			202				23 137
LG International			248				19 516
Liberty Mutual Group			349				14 256
Lloyds TSB Group			206				22 823
Lockheed Martin			182				24 793
Loews			260				18 799
L’ Oréal			415				12 305
Lowe’s			216				22 111
Lucent Technologies			180				25 132
Lufthansa Group			338				14 946
Lukoil			422				12 106
LVMH			459				10 951
Magna International			456				11 026
Man Group			343				14 552
Manpower			482				10 484
Manulife Financial			483				10 480
Marathon Oil			110				35 041
Marks & Spencer			439				11 650
Marriott International			496				10 152
Marubeni			25				71 757
Mass. Mutual Life Ins.			249				19 340
Matsushita Electric Industrial			45				54 997
May Dept. Stores			351				14 175
Mazda Motor			296				16 754
MBNA			497				10 145

Company		Rank				Revenues [USD mio]
McDonald’s			340				14 870
McKesson			57				50 006
Meiji Life Insurance			176				25 296
Merck			62				47 716
Merrill Lynch			95				38 793
MetLife			128				31 928
Metro			72				44 347
Michelin			342				14 566
Microsoft			175				25 296
Migros			427				11 955
Mirant			129				31 502
Mitsubishi			12				105 814
Mitsubishi Chemical			350				14 239
Mitsubishi Electric			141				29 183
Mitsubishi Heavy Industries			204				22 905
Mitsubishi Motors			171				25 598
Mitsubishi Tokyo Financial Group			165				26 091
Mitsui			13				101 206
Mitsui Mutual Life Insurance			220				21 656
Mitsui Sumitomo Insurance			330				15 206
Mizuho Holdings			82				41 445
Morgan Stanley			73				43 727
Motorola			138				30 004
Munich Re Group			79				41 894
National Australia Bank			303				16 450
Nationwide			334				15 118
NEC			84				40 796
Nestlé			55				50 192
New York Life Insurance			170				25 678
News Corp.			364				13 755
Nichimen			305				16 437
Nippon Express			367				13 661
Nippon Life insurance			33				63 827
Nippon Mitsubishi Oil			197				23 521
Nippon Steel			229				20 645
Nippon Telegraph & Telephone			16				93 425
Nissan Motor			58				49 555
Nissho Iwai			74				43 703
NKK			384				13 224
Nokia			147				27 931
Norddeutsche Landesb.			475				10 604
Nordea			419				12 209
Norinchukin Bank			395				12 939
Norsk Hydro			291				16 999
Nortel Networks			263				18 507
Northrop Grumman			373				13 558
Northwestern Mutual			310				16 212
Novartis			257				18 986

Company		Rank				Revenues [USD mio]
Obayashi			447				11 226
Occidental Petroleum			355				14 126
Office Depot			450				11 154
Old Mutual			453				11 076
Olivetti			145				28 670
Onex			327				15 369
Oracle			464				10 860
Otto Versand			372				13 564
PacifiCare Health Sys.			433				11 844
PDVSA			66				46 250
Pemex			92				39 400
PepsiCo			159				26 935
Petrobrás			185				24 549
Petronas			284				17 679
Peugeot			65				46 264
Pfizer			127				32 259
PG&E Corp.			203				22 959
Pharmacia			250				19 299
Philip Morris			24				72 944
Phillips Petroleum			188				24 189
POSCO			494				10 162
Power Corp. of Canada			432				11 855
Procter & Gamble			93				39 244
Prudential			106				35 821
Prudential Financial			157				27 177
Publix Super Markets			328				15 284
Qwest Communications			244				19 743
Rabobank			225				21 141
RAG			365				13 691
Raytheon			295				16 867
Reliant Energy			67				46 226
Renault			125				32 552
Repsol YPF			94				39 091
Ricoh			379				13 375
Rite Aid			331				15 171
Robert Bosch			135				30 473
Roche Group			288				17 282
Royal & Sun Alliance			222				21 525
Royal Ahold			38				59 634
Royal Bank of Canada			299				16 536
Royal Bank of Scotland			115				33 831
Royal Dutch/Shell Group			8				135 211
Royal KPN			451				11 119
Royal Philips Electronics			143				28 960
Rwe			53				50 664
Safeway			113				34 301
Safeway			418				12 258
Saint-Gobain			155				27 214

Company		Rank				Revenues [USD mio]
Samsung			118				33 212
Samsung Electronics			105				35 969
Samsung Life Insurance			286				17 503
Santander Central Hispano Group			136				30 422
Sanyo Electric			293				16 892
Sara Lee			282				17 747
SBC Communications			69				45 908
Schlumberger			357				13 988
Sears Roebuck			83				41 078
Sekisui House			472				10 631
Sharp			346				14 426
Shimizu			405				12 669
Showa Shell Sekiyu			490				10 362
Siemens			22				77 359
Sinochem			311				16 164
Sinopec			86				40 388
SK			120				33 008
SK Global			289				17 214
Skanska			317				15 948
SNCF			274				18 026
Société Générale			191				23 924
Sodexho Alliance			476				10 579
Solectron			261				18 692
Sony			37				60 608
Southern			495				10 155
Sprint			167				26 071
Standard Life Assurance			265				18 416
Staples			469				10 744
State Farm Insurance			63				46 705
State Power			60				48 375
Statoil			164				26 286
Stora Enso			423				12 097
Suez			99				37 933
Sumitomo			23				77 140
Sumitomo Electric Industries			431				11 877
Sumitomo Life Insurance			126				32 549
Sumitomo Metal Industries			466				10 793
Sumitomo Mitsui Banking			137				30 229
Sun Life Financial Services			465				10 857
Sun Microsystems			268				18 250
Sunoco			412				12 402
Suntory			485				10 445
Supervalu			227				20 909
Suzuki Motor			381				13 342
Swiss Life Ins. & Pension			375				13 511
Swiss Reinsurance			235				20 210
Sysco			217				21 785
Taisei			378				13 387

Company		Rank				Revenues [USD mio]
Taiyo Mutual Life Insurance			401				12 824
Takenaka			500				10 096
Target			89				39 888
Tech Data			290				17 198
Telefónica			151				27 808
Telstra			411				12 415
Tenet Healthcare			424				12 053
Tesco			114				33 916
Textron			414				12 321
Thyssen Krupp			116				33 796
TIAA-CREF			187				24 231
TJX			470				10 709
Tohoku Electric power			371				13 574
Tokio Marine & Fire Insurance			312				16 156
Tokyo Electric Power			80				41 752
Tomen			255				19 073
Toppan Printing			489				10 367
Toronto-Dominion Bank			370				13 585
Toshiba			77				43 139
Total Fina Elf			15				94 312
Toyota Motor			10				120 814
Toyota Tsusho			273				18 040
Toys `R` Us			457				11 019
TransCanada Pipelines			435				11 715
TRW			306				16 383
TUI			223				21 253
TXU			148				27 927
Tyco International			103				36 389
Tyson Foods			468				10 751
U.S. Bancorp			304				16 443
U.S. Postal Service			29				65 834
UAL			315				16 138
UBS			59				48 503
UFJ Holdings			174				25 300
UniCredito Italiano			321				15 791
Unilever			68				46 131
Union Pacific			426				11 973
United Parcel Service			134				30 646
United Technologies			149				27 897
United Health Group			198				23 454
Valero Energy			336				14 988
Verizon Communications			26				67 190
Viacom			200				23 223
Vinci			308				16 291
Visteon			278				17 843
Vivendi Universal			51				51 366
Vodafone			123				32 713
Volkswagen			21				79 287