Commercial: We are the fifth largest writer of commercial lines property and casualty insurance distributed through independent agencies in the United States, based on 2009 net written premiums, according to A.M. Best data. We offer insurance coverage for commercial multiple peril, commercial automobile, workers compensation, general liability and other commercial risks to small and mid-size

EXHIBIT 10.181

LIBERTY MUTUAL INSURANCE COMPANY
LIBERTY MUTUAL FIRE INSURANCE COMPANY

WORKER’S COMPENSATION AND GENERAL LIABILITY
SEVENTH EXCESS OF LOSS REINSURANCE CONTRACT

PREAMBLE

The Reinsurers hereby reinsure the Company to the extent and on the terms and conditions and subject to the exceptions, exclusions and limitations hereinafter set forth.

ARTICLE 1 — EXHIBITS COVERED

The Company shall reinsure with the Reinsurers and the Reinsurers shall accept reinsurance from the Company as set forth in Exhibits “A” and “B”, which are attached hereto and made part of this Contract, such Exhibits being entitled for purposes of identification as follows:

     Exhibit “A”     Excess of Loss Reinsurance of General Liability.

     Exhibit “B”     Excess of Loss Reinsurance of Worker’s Compensation.

ARTICLE 2 — RETENTION BY COMPANY

This Contract applies only to such portion of any obligation of the Company as the Company retains net for its own account, and in calculating the amount of any loss hereunder and in computing the amount in excess of which this Contract attaches only loss or losses in respect to that portion of any obligation which the Company retains net for its own account shall be included.

It is agreed that the amount of the Reinsurers’ liability hereunder in respect of any losses shall not be increased by reason of the inability of the Company to collect from any other Reinsurers whether specific or general, any amount or amounts which may have become due from them whether such inability arises from the insolvency of such other Reinsurers or otherwise.

ARTICLE 3 — REINSURANCE PREMIUM

(a)

The Reinsurers’ premium for the reinsurance provided under this Contract shall be computed by the application of a rate of .0015% to the Company’s net premium written on the business covered under Exhibits “A” and “B” subject to an annual minimum and deposit premium of $24,000 for the combined Seventh Excess of Loss layers provided under Exhibits “A” and “B”.

(b)

The minimum and deposit premium as provided for in (a) above shall be payable to Reinsurers in four equal quarterly installments at the beginning of each calendar quarter. The Company shall undertake to furnish to the Reinsurers at the conclusion of each year a report of the net premiums written during such year. If the Reinsurers’ annual premium for the Seventh Excess of Loss reinsurance under Exhibits “A” and “B”, computed in accordance with the provisions of (a) above is more than the annual minimum and deposit premium of $24,000, the Company shall promptly pay the difference to the Reinsurers.

		The term “net premiums written” shall mean gross premiums written by the Company on business covered hereunder less return premiums for cancellations and reductions and less premiums on reinsurance which inure to the benefit of the Reinsurers. No deduction shall be made for dividends declared, paid or credited to policyholders of the Company.
(c)		In addition to the premium stated above, additional premiums shall be paid under the following circumstances:
		In the event that the Company insures through pools or assigned risk plans risks of the character described in sub-divisions 3, 4 and 5 of Paragraph B. of Section 4 of Exhibit “B”, additional premium, if any, shall be determined upon submission of underwriting data to the Reinsurers. As soon as practicable after such time as the fact of insurance of an occupation, employment or risk listed in Paragraph B. of Section 4 of Exhibit “B” is disclosed to the Company, the Company shall notify the Reinsurers and will provide sufficient underwriting data so as to permit the application of the commensurate reinsurance rate or premium from inception of such hazardous risk.
		It is understood that failure on the part of the Company to comply with this requirement due to oversight or error shall not prejudice the reinsurance provided by this Contract. The Company, shall, however, as soon as such oversight or error comes to its attention, take prompt steps to contact the Reinsurers and proceed to the correction of the oversight or error as provided in this Contract.

ARTICLE 4 — SUBROGATION

The Company hereby agrees to enforce such subrogation rights as it may obtain by virtue of payments made under its policies, but in case the Company shall refuse or neglect to do so, the Reinsurers are hereby authorized and empowered to bring any appropriate action in the name of the Company or its policyholders or otherwise to enforce such rights.

The expense of any subrogation proceedings brought by the Company or the Reinsurers to enforce such rights shall be apportioned between the Company and the Reinsurers in the ratio of their respective interests in the total subrogation recovery but in the event there is a failure to make a subrogation recovery the expenses of the proceedings shall be apportioned between the Company and the Reinsurers in the ratio of their respective interests in the total loss.

All subrogation recoveries made by either party subsequent to payments made by the Reinsurers under this Contract shall be applied as if made prior to said payments and all necessary adjustments shall be made between the Company and the Reinsurers as soon as practicable after said subrogation recovery is made.

The Company shall have the right, before the happening of the accident or occurrence to waive its right of subrogation.

ARTICLE 5 — TAX CLAUSE

In consideration of the terms under which this Contract is issued, the Company undertakes not to claim any deduction in respect of the premium hereon when making tax returns, other than Income or Profits tax returns, to any State or to the District of Columbia.

ARTICLE 6 — PAYMENTS UNDER THIS CONTRACT

All payments under this Contract by either party hereto shall be made in New York or Boston in United States currency.

ARTICLE 7 — ACCESS TO COMPANY’S RECORDS

The Reinsurers or their duly appointed representatives shall at reasonable times, have free access to all books and records of the Company and of its agents or attorneys for the purpose of obtaining any information concerning this reinsurance or the subject matter hereof.

ARTICLE 8 — INSOLVENCY CLAUSE

The reinsurance provided by this Contract shall be payable by the Reinsurers directly to the Company or to its liquidator, receiver or statutory successor on the basis of the liability of the Company under the contracts reinsured without diminution because of the insolvency of the Company. In the event of the insolvency of the Company, the liquidator or receiver or statutory successor of the Company shall give written notice of the pendency of each claim against the Company on a policy or bond reinsured within a reasonable time after such claim is filed in the insolvency proceeding; and during the pendency of such claim, the Reinsurers may investigate such claim and interpose, at their own expense, in the proceeding where such claim is to be adjudicated any defense or defenses which it may deem available to the Company, its liquidator or receiver or statutory successor. The expense thus incurred by the Reinsurers shall be chargeable, subject to court approval, against the Company as part of the expense of liquidation to the extent of such proportionate share of the benefit as shall accrue to the Company solely as a result of the defense undertaken by the Reinsurers. This reinsurance shall be payable as hereinbefore in this paragraph provided except as otherwise provided by Section 315 (relating to Fidelity and Surety Risks) of the Insurance Law of New York or except (a) where the Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company and (b) where the Reinsurers with the consent of the direct insured or insureds have assumed such policy obligations of the Reinsurers to the payees under such policies and in substitution for the obligations of the Company to such payees.

ARTICLE 9 — ARBITRATION

In the event of any dispute or difference of opinion, arising with respect to this Contract, it is hereby agreed that such dispute or difference of opinion shall be submitted to arbitration, under Massachusetts General Law (Ter. Ed.), Chapter 251, one arbiter to be chosen by the Company, one by the Reinsurers, and a third arbiter

to be chosen by the two arbiters before they enter upon arbitration. The arbiters are relieved of all judicial formalities and may abstain from following strict rules of evidence. The award of a majority of the arbiters shall be reported to the Superior Court, County of Suffolk, Commonwealth of Massachusetts, within one year after the submission or within such further time as the court may allow, and final judgement thereon shall be binding upon both parties. Each party shall bear the expense of its own arbiter and shall jointly and equally bear with the other the expense of the third arbiter and of the arbitration. Any such arbitration shall take place at Boston, Massachusetts, unless some other location is mutually agreed upon.

ARTICLE 10 — OFFSET CLAUSE

Each party hereto shall have, and may exercise at any time and from time to rime, the right to offset any balance or balances, whether on account of premiums or on account of losses or otherwise, due from such party to the other (or, if more than one, any other) party hereto under this Contract or under any other reinsurance agreement heretofore or hereafter entered into by and between them, and may offset the same against any balance or balances due or to become due to the former from the latter under the same or any other reinsurance agreement between them; and the party asserting the right of offset shall have and may exercise such right whether the balance or balances due or to become due to such party from the other are on account of premiums or on account of losses or otherwise and regardless of the capacity, whether as assuming insurer or as ceding insurer, in which each party acted under the agreement or, if more than one, the different agreements involved.

ARTICLE 11 — LOSS RESERVES

(Applies only to those Reinsurers who do not qualify for credit by any State or any other governmental authority having jurisdiction over the Company’s loss reserves.)

As regards policies or bonds issued by the Company coming within the scope of this Agreement, the Company agrees that when it shall file with the Insurance Department or set up on its books reserves for losses which it shall be required to set up by law it will forward to the Reinsurers a statement showing the proportion of such loss reserves which is applicable to them. The Reinsurers hereby agreed that they will apply for and secure delivery to the Company a clean irrevocable Letter of Credit issued by any bank in the United States acceptable to the governmental authority having jurisdiction over the Company’s loss reserves in an amount equal to Reinsurers’ proportion of said loss reserves.

The Company agrees to use and apply any amounts which it may draw upon such credit for the following purposes only:

	(a)		To pay Reinsurers’ share or to reimburse the Company for the Reinsurers’ share of any liability for loss reinsured by this Agreement.
	(b)		To make refund of any sum which is in excess of the actual amount required to pay Reinsurers’ share of any liability reinsured by this Agreement.

ARTICLE 12 — ERRORS AND OMISSIONS

Any inadvertent delay, omission or error shall not be held to relieve either party hereto from any liability which would attach to it hereunder if such delay, omission or error had not been made, provided such delay, omission or error is rectified upon discovery.

ARTICLE 13 — COMMENCEMENT AND TERMINATION

This Contract applies only to accidents or occurrences happening during its effective period. This Contract is effective at Midnight, December 31, 1977 Standard Time at Boston, Massachusetts and shall remain in force continuously unless terminated at Midnight on any subsequent December 31 by either party giving the other at least three months prior notice of cancellation. Otherwise, this Contract may be cancelled only by mutual consent, or if required by law or by administrative order.

ARTICLE 14 — REINSURANCE INTERMEDIARY DESIGNATION

Holborn Agency Corporation, 90 John Street, New York, New York 10038 is hereby recognized as the Intermediary negotiating this Agreement for all business hereunder. All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages, and loss settlements) relating thereto shall be transmitted to the Company or the Reinsurer through Holborn Agency Corporation. Payments by the Company to the Intermediary shall be deemed to constitute payment to the Reinsurer. Payments by the Reinsurer to the Intermediary shall be deemed to constitute payment to the Company only to the extent such payments are actually received by the Company.

ARTICLE 15 — INTERPRETATION

The validity and interpretation of this Contract and of each Article and part thereof shall be governed by the law of the Commonwealth of Massachusetts.

EXHIBIT A

EXCESS OF LOSS REINSURANCE OF GENERAL LIABILITY

SECTION 1 — COVERAGE

The Reinsurers hereby reinsure the Company, subject to the provisions and conditions herein contained, in respect of liability which may accrue to the Company under any contracts of insurance or reinsurance (hereinafter referred to as obligations of the Company), but excluding liability in connection with the following classes of business or contracts:

Worker’s Compensation and Employers’ Liability insurance, but this exclusion shall not apply to Worker’s Compensation or Employers’ Liability coverage given under public liability policies written by the Company.

Bankers’ and Brokers’ insurances or reinsurances issued by the Company meaning contracts issued to banks, trust companies, building and loan companies, safe deposit companies, investment companies, including investment trusts, finance companies, credit unions, stock or security brokers, or to similar financial institutions, insuring them against loss from the following hazards:

Infidelity of employees and/or partners

Unfaithful performance of duties by employees and/or partners

Loss of property in transit

Forgery or alteration of negotiable or other paper

Burglary, robbery, theft, false pretenses or fraud

Mysterious disappearance or misplacement of property

Loss of property from safe deposit boxes or other depositories

Damage to or destruction of money or securities

Counterfeiting of currencies or securities

Motor Vehicle Physical Damage Insurance, but this exclusion shall not apply to motor vehicle property damage liability insurance.

Credit Insurance and/or Financial Guarantee.

Fire Insurance, including the coverages ordinarily written under Extended Coverage Endorsements.

Group Health, Disability, Hospital or Surgical Insurance, but this exclusion shall not apply to any loss due to two or more persons insured under one or more Group policies suffering bodily injuries, including death resulting therefrom, as a result of one accident or series of accidents arising out of one event.

Livestock Mortality Insurance.

Surety business, but this exclusion shall not apply to faithful performance bonds or public official bonds; provided; however, that the Reinsurers shall not be liable for any loss resulting from the insolvency of any firm, company, corporation or bank with which a guaranteed official has deposited funds in the course of his duties.

Insurance covering the liability of owners or operators of aircraft carrying passengers for hire for injuries to such passengers.

Contracts of insurance written on any cost-plus plan which provides for payment of the full amount of all losses, however great, by the policyholder. This exclusion shall not apply to contracts of insurance, premiums for which are determined by a retrospective rating plan which provides for a specific maximum premium or a formula for determination of a maximum premium.

Contracts of liability insurance covering injuries to persons or property issued directly to Class I railroads; but this exclusion shall not apply to railroad Protective Liability policies issued at the request of the Company’s policyholders doing work for or on the premises of such railroads.

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

Excess of Loss Reinsurance Contracts.

This Contract is subject to the Nuclear Incident Exclusion Clause -Liability - Reinsurance and the Nuclear Incident Exclusion Clause -Physical Damage - Reinsurance attached hereto.

SECTION 2 — LIMIT OF LIABILITY

The Reinsurer shall be liable for ultimate loss in excess of the sum of:

	(a)		$15,500,000 of ultimate net loss each and every accident or occurrence in respect of business the subject matter of this Exhibit, and
	(b)		$1,000,000 in the aggregate each calendar year of ultimate net loss the excess of $1,000,000 each accident or occurrence in respect of business the subject matter of the Company’s Excess Worker’s Compensation and/or Excess General Liability Reinsurance Contracts (it being agreed that such $1,000,000 aggregate shall apply, in each calendar year, in order by date of accident or occurrence which, with respect to disease including death resulting therefrom, shall be deemed to be the date assigned to the first claim of a series of claims in a calendar year)

subject to a limit of $5,000,000 on account of each and every accident or occurrence.

It is also agreed that subrogation expense incurred shall be paid in addition to the applicable limits of liability set forth in this Section 2, on the basis provided in Article 4 of the Contract.

For purposes of this Exhibit it is agreed that the Company’s limit of liability under any and all policies of personal accident insurances (individual and group) covering any one individual shall be considered as not exceeding $125,000. Subject to this agreement and subject to the limits set forth in this Section 2 it is agreed that the Company is reinsured hereunder for the excess of the amounts set forth in this Section 2 of ultimate net loss any one accident, or series of accidents arising out of one event involving more than one person covered under such policies issued by the Company.

SECTION 3 — ULTIMATE NET LOSS

The term “Ultimate Net Loss” as used in this Exhibit shall mean the amount actually paid by the Company (including loss adjustment expenses, attorneys’ fees and other costs of investigation or litigation) in settlement of or payment of claims or judgements arising from each and every loss for which the Company is or may be found liable under its contracts of insurance or reinsurance, less salvage and subrogation recoveries and amounts recovered or recoverable under pooling agreements or other reinsurances, whether collectible or not; provided, however, that in the event of the insolvency of the Company, “Ultimate Net Loss” shall mean the amount of loss (including loss adjustment expenses, attorneys’ fees and other costs of investigation or litigation) which the Company has incurred or for which it is liable, and payment by the Reinsurers shall be made to the liquidator, receiver or statutory successor of the Company in accordance with the provisions of Article 8 of this Contract. Salaries and expenses of employees of the Company shall not be included in ascertaining ultimate net loss.

This Contract shall protect the Company within the limit hereof, in connection with any loss for which the Company may be legally liable to pay in excess of the limit of its original policy, where loss in excess of the limit has been incurred because of its failure 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 in the preparation of prosecution of an appeal consequent upon such action.

It is further agreed that amounts recoverable under the following reinsurance shall be disregarded in ascertaining ultimate net loss:

	1.		Any reinsurance providing a retention below $1,000,000 but only as regards the difference between the retention under such reinsurance and $1,000,000.
	2.		The reinsuance provided in the Company’s underlying layers of excess reinsurance as respects the subject matter of this Exhibit plus $1,000,000 in the aggregate each calendar year of ultimate net loss the excess of $1,000,000 each accident or occurrence in respect of business the subject matter of this Exhibit and/or Exhibit B.

SECTION 4 — DEFINITION OF “EACH AND EVERY ACCIDENT OR OCCURRENCE”

The term “each and every accident or occurrence” as used in this Exhibit is defined as follows according to the class or risk involved:

	A.		Products Public Liability (Excluding Completed Operations)
			All injury or damage caused to persons or property by any manufactured, prepared or acquired lot of goods or products.
	B.		Fidelity and Forgery
			All losses resulting from any fraudulent or dishonest act or omission or series thereof on the part of any one person or of several persons acting in collusion (whether employees or not) and irrespective of the number of the Company’s obligations involved; provided, that in the case of any loss involving two or more persons acting in collusion, losses resulting from separate acts or omissions on the part of each such person shall be included as part of such loss.

	1.		It is agreed that each and every loss occurring prior to midnight on the date of termination of this Contract and discovered not later than three years after such termination (excluding only any loss which occurred wholly prior to midnight on the effective date of this Contract) shall be recoverable under this Contract.
	2.		It is further agreed that each and every loss resulting from a series of acts or omissions, some prior to and some subsequent to midnight on the effective date of this Contract shall be disregarded.

As regards losses arising under policies and/or contracts covering on a “losses discovered” or “claims made during” basis (that is to say policies and/or contracts in which the date of discovery of the loss, or the date the claim is made against the insured or is first notified to the Company, determines under which policy and/or contract the loss is collectible), such losses are covered hereunder and the date of the discovery of such loss or the date such claim is made or first notified shall be deemed to be the date of the loss occurring for the purposes of this Contract, provided that the date of the discovery of the loss or the date the claim is made or first notified falls within the period covered by this Contract.

For the purposes of the foregoing the date of first discovery of a “loss” or the date the claim is first made against an insured or first notified to the Company shall be the date applicable to the to the entire loss and/or claim and the Reinsurers shall be liable for their proportion of the entire loss and/or claim irrespective of the expiry date of this Contract and provided that such first discovery date or first date such claim is made or notified falls within the period of this Contract.

	C.		Liability Insurance Written Subject to an Aggregate Limit
			As respects each and every liability insurance policy issued by the Company which contains one or more aggregate limits of liability on a policy year basis, and as respects each such aggregate limit under each policy year, the aggregate amount of all losses occurring during one policy year. Where the Company issues more than one such policy to the same policyholder such policies shall together be treated as though they were one policy. Losses under such policies shall for the purposes of this reinsurance contract be deemed to have occurred in the calendar year in which the inception date of the policy falls, except that as respects such policies issued for a period in excess of twelve months, losses for the first twelve month period shall be deemed to have occurred in the calendar year in which the inception date of the policy falls and losses for each succeeding twelve month period or part thereof shall be deemed to have occurred in the calendar year in which the anniversary date of the policy starting such period falls.
	D.		All other classes or risks covered hereunder (including completed operations), all injuries to persons and all losses of, injury to or destruction of property resulting from each accident or loss, or from each series of accidents or losses proximately arising out of or following on any one cause or event.

SECTION 5 — CLAIMS AGAINST REINSURERS

The Company shall be the sole judge as to what claims are covered under its policies, and all loss settlements made and all judgements paid by the Company, provided they are within the terms and conditions of this Exhibit, shall be unconditionally binding upon the Reinsurers and amounts falling to the share of the Reinsurers shall be immediately due and payable by them upon reasonable evidence of the amount paid being given by the Company. Nevertheless, it is understood and agreed that in the event of a loss hereunder, or of an event or happening likely to result in a loss hereunder, the Reinsurers shall have the right, if they so elect, to cooperate with the Company in the defense or settlement of original losses under its obligations.

All settlements of losses effected by the Company shall be binding upon the Reinsurers, and the Reinsurers shall be liable for their proportion thereof.

This Exhibit A is attached to and forms part of the Worker’s Compensation and General Liability Seventh Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY AND LIBERTY MUTUAL FIRE INSURANCE COMPANY.

EXHIBIT B

EXCESS OF LOSS REINSURANCE OF WORKER’S COMPENSATION

SECTION 1 — COVERAGE

The Reinsurers hereby reinsure the Company in respect of the liability of the Company, under policies (the premium for which is classified by the Company, for internal purposes, as “Worker’s Compensation” or “Employers’ Liability”) by which the company insures the liability of employers under law or contract which imposes liability upon such employer for injury, sickness or disease, including death resulting therefrom, sustained by his employees.

SECTION 2 — LIMITS OF LIABILITY

The Reinsurers shall be liable for ultimate net loss in excess of the sum of:

	(a)		$15,500,000 of ultimate net loss each and every accident or occurrence in respect of business the subject matter of this Exhibit, and
	(b)		$1,000,000 in the aggregate each calendar year of ultimate net loss the excess of $1,000,000 each accident or occurrence in respect of business the subject matter of the Company’s Excess Worker’s Compensation and/or Excess General Liability Reinsurance Contracts (it being agreed that such $1,000,000 aggregate shall apply, in each calendar year, in order by date of accident or occurrence which, with respect to disease including death resulting therefrom, shall be deemed to be the date assigned to the first claim of a series of claims in a calendar year)

subject to a limit of $5,000,000 on account of each and every accident or occurrence.

It is also agreed that subrogation expense incurred shall be paid in addition to the applicable limits of liability set forth in this Section 2, on the basis provided in Article 4 of the Contract.

SECTION 3 — ULTIMATE NET LOSS

The term “ultimate net loss” as used in this Exhibit means the amount actually paid by the Company (including but not limited to medical losses, interests, costs and allocated claim expense) in respect of claims arising from any one accident or occurrence, for which the Company is or may be found liable, after making proper deductions for amounts paid or due under other reinsurance (whether collectible or not), subrogation recoveries, overpayments collected, and refunds to the Company from the New York Aggregate Trust Fund, second injury funds and other such funds; provided, however, that in the event of the insolvency of the Company, “ultimate net loss” as used in this Exhibit means the amount of loss (including but not limited to medical losses, interests, costs and allocated claim expense) in respect of claims arising from any one accident or occurrence which the Company has incurred or for which it is liable, and payment by the Reinsurers shall be made to the liquidator, receiver or statutory successor of the Company in accordance with the provisions of

Article 8 of this Contract. Expenses for salaried employees of the Company incurred in litigation and the investigation or adjustment of claims or suits and subrogation expense referred to in Article 4 shall be disregarded in ascertaining ultimate net loss. This Contract shall protect the Company within the limit hereof in connection with any loss for which the Company may be legally liable to pay in excess of the limit of its original policy, where loss in excess of the limit has been incurred because of its failure 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 in the preparation of prosecution of an appeal consequent upon such action.

It is further agreed that amounts recoverable under the following reinsurances shall be disregarded in ascertaining ultimate net loss.

	1.		Any reinsurance providing a retention below $1,000,000 but only as regards the difference between the retention under such reinsurance and $1,000,000.
	2.		The reinsurance provided in the Company’s underlying layers of excess reinsurance as respects the subject matter of this Exhibit plus $1,000,000 in the aggregate each calendar year of ultimate net loss the excess of $1,000,000 each accident or occurrence in respect of business the subject matter of this Exhibit and/or Exhibit A, and, as regards “Special Group Risks” $2,250,000 (plus a further indeterminate amount not to exceed $1,000,000 in any (calendar year) the excess of $250,000 in respect of each and every accident or occurrence.

SECTION 4 — EXCLUSIONS

This Exhibit does not apply:

	A.		To excess of loss reinsurance contracts.
	B.		To the following occupations, employments or risks (except when not disclosed to the Company, when incidental to a non-excluded risk (the Company to be the sole judge of what is incidental) or when insured through voluntary or statutory pools or assigned risk plans):

	1.		The navigation and operation of vessels on the high seas in foreign commerce;
	2.		Underground coal mining;
	3.		Fireworks manufacturing;
	4.		Fuse manufacturing;
	5.		Explosive risks, viz

	(a)		Manufacture of any explosive substance intended for use as an explosive;
	(b)		Manufacture of any product, other than Fireworks and Fuses, in which any such explosive substance is an ingredient;

	(c)		The loading of any such explosive substance into containers for use as explosive objects, propellant charges or detonating devices, and the incidental storage thereof;
	(d)		Handling transportation or storage of any such explosive substance intended solely for war purposes.

	C.		To any accident or occurrence as to which the Company is entitled to recover the full amount of the loss under an insurance policy written on a cost-plus plan, that is to say, a plan which provides for the payment of the full amount of all losses, however great, by the policyholder. This exclusion does not apply to bar recovery from the Reinsurers with respect to accidents or occurrences under retrospectively-rated policies.
	D.		Liability under any Insolvency Fund arising by contract, operation of law or otherwise, whether voluntary or involuntary. “Insolvency Fund” includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, howsoever denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim debt, charge, fee, or other obligation of an insurer, or its successors, or assigns, which has been declared by any competent authority to be insolvent, or which has been otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

SECTION 5 — DEFINITIONS

As used in this Exhibit the following terms shall have the meanings stated herein:

	A.		“Policies”. Policies, contracts, endorsements or binders, including but not limited to those by which the Company undertakes to offer and pay “voluntary compensation” benefits, those by which the Company undertakes to make payments to augment compensation benefits those by which the Company affords reinsurance or excess insurance to Worker’s Compensation or Employers’ Liability risks and those by which the Company undertakes to participate in voluntary or statutory Pools or assigned-risk plans.
	B.		“Explosive Substance”. Any substance manufactured for the express purpose of exploding as differentiated from commodities used industrially and which are only incidentally explosive — such as gasoline, celluloid, fuel gases and dyestuffs.
	C.		“Accident or Occurrence”. Any one accident or occurrence or, if a series of accidents or occurrences arising out of one event, such series of accidents or occurrences provided, however, that with respect to disease, including death resulting therefrom, the terms “accident or occurrence” and “series of accidents or occurrences” shall mean the claim or series of claims for which the Company may be liable, on account of diseases or deaths resulting therefrom, assigned by the Company to each calendar year of coverage under any one policy or renewals thereof. In making such assignments the Company will be bound by the following principles:

	1.		If liability is placed solely upon the employer or insurer as of the date the claimant’s disability commences or becomes manifest and that date is within a period of coverage under an applicable policy issued by the Company, the claim is to be assigned to the calendar year of such date;
	2.		If assignment is not made on the basis stated in the preceding subparagraph the claim is to be assigned to the calendar year of the date of the claimant’s last injurious exposure during a period of coverage under an applicable policy issued by the Company.
			It is also agreed that disease cases which are not chargeable to this Contract under the above principles and which are not chargeable to a previous reinsurance contract shall be charged to this Contract and be treated as an accident occurring during 1978.
			Notwithstanding anything to the contrary above set forth it is agreed that as to any policyholder to whom the Company issues disease coverage which is in effect for only twelve consecutive months or less all of the Company’s losses on account of disease claims will be charged for the purpose of this reinsurance to the calendar year which includes the date the Company’s disease coverage became effective.
			Notwithstanding the foregoing, where a policyholder requests that it be issued two or more policies in circumstances where applicable manual rules permit the issuance of a single policy. such policies shall be regarded as a single policy for purposes of assigning disease claims to calendar year coverage.

SECTION 6 — NOTICE TO REINSURERS

As soon as practicable after it appears probable that the Company’s ultimate net loss on account of any one accident or occurrence will exceed the amount above which the Reinsurers are liable under this Exhibit, the Company shall notify the Reinsurers and provide them full information relative thereto, and copies of all papers that may be desired by them, and the Reinsurers shall be given every opportunity to participate in the defense of any such suit, proceeding or claim at their own expense.

SECTION 7 — PAYMENT BY THE COMPANY

The Company shall be the sole judge as to what claims are covered under its policies, as to the liability of the Company therefor and as to the amounts which the Company should pay thereon, and the Reinsurers shall be bound by the judgement of the Company as to such matters.

All settlements of losses effected by the Company shall be binding upon the Reinsurers, and the Reinsurers shall be liable for their proportion thereof.

SECTION 8 — CLAIMS AGAINST REINSURERS

The Company shall, within twelve months after it has paid any amount of ultimate net loss for which the Reinsurers may be liable under this Exhibit, submit to the Reinsurers a definite claim for such amount. If any subsequent losses shall be paid by the Company on account of the same accident or occurrence, additional claims hereunder shall be similarly made from time to time. Losses shall be due and payable by the Reinsurers within fifteen days after claim hereunder is proved.

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

SECTION 9 — COMMUTATION

A.		At any time subsequent to two years after the date of notice to the Reinsurers of an accident or occurrence which may involve this Exhibit, representatives of the parties shall, at the request of either of them, meet in Boston, Massachusetts, for the purpose of appraising the Reinsurers’ ultimate liability to the Company under this Exhibit on account of the claims resulting from such accident or occurrence. The value of the Company’s incurred losses from such claims shall be calculated as of a date certain not more than 45 days after the date the appraisal begins. In such calculation, the value of each case as of such date shall be determined based upon a rate of discount to be mutually agreed and by the use of the latest available remarriage, survivorship, and mortality tables to determine probabilities of remarriage and normal life expectancies.
B.		If the parties agree as to the amount of the Reinsurers’ ultimate liability to the Company on acccount of the claims resulting from such accident or occurrence, the Reinsurers shall, on or before the date as of which the claims were valued, redeem their liability hereunder by the payment of such amount to the Company.
C.		If the parties cannot, at such first appraisal, reach an agreement as to the amount of the Reinsurers ultimate liability to the Company on account of such accident or occurrence, settlement hereunder shall be deferred for one year, when a second appraisal of the amount due the Company from the Reinsurers shall be made in accordance with the provisions of Paragraph A of this Section. If the parties then agree as to the amount of the Reinsurers’ ultimate liability to the Company on account of such accident or occurrence, settlement shall be made as outlined in Paragraph B of this Section.

D.

If the parties do not reach an agreement as a result of the second appraisal, settlement hereunder shall be deferred for another year, at the end of which a third and last such appraisal of the Reinsurers’ ultimate liability to the Company shall be made. If, as a result of such appraisal, the parties agree on the amount of the Reinsurers’ ultimate liability to the Company, settlement will be made as provided in Paragraph B of this Section. If they do not reach an agreement as a result of such third appraisal, the amount of the Reinsurers’ liability to the Company on account of such accident or occurrence shall promptly be determined by arbitration, in accordance with Article 9 of the Contract. The arbitrators, in determining the value of the claims against the Company on account of such accident or occurrence, shall follow the provision of Paragraph A of this Section. The amount, if any determined by the arbitration to be due the Copmpany from the Reinsurers shall be paid in the manner provided in Paragraph B of this Section.

This Exhibit B is attached to and forms part of the Worker’s Compensation and General Liability Seventh Excess of Loss Reinsurance Contract issued to LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY MUTUAL FIRE INSURANCE COMPANY.

MEMBERS’ LIST

Attached to and forming part
of Agreement No. C-652

     The list of Members constituting the “Reinsurer” and the respective proportions of the liability assumed severally and not jointly by them under this Agreement shall be as follows:

MEMBERS of EXCESS AND CASUALTY REINSURANCE ASSOCIATION

		PROPORTIONS
THE AETNA CASUALTY AND SURETY COMPANY			102/971
AETNA INSURANCE COMPANY			39/971
ALABAMA FARM BUREAU MUTUAL INSURANCE SERVICE, INC.**			3/971
ALLENDALE MUTUAL INSURANCE COMPANY			13/971
AMERICAN HOME ASSURANCE COMPANY			42/971
AMERICAN MOTORISTS INSURANCE COMPANY			8/971
AMERICAN MUTUAL LIABILITY INSURANCE COMPANY			13/971
AMERICAN OVERSEAS REINSURANCE COMPANY			6/971
ATLAS ASSURANCE COMPANY OF AMERICA			9/971
BELLEFONTE INSURANCE COMPANY			7/971
BUFFALO REINSURANCE COMPANY			4/971
THE CINCINNATI INSURANCE COMPANY**			3/971
COMMERCIAL UNION INSURANCE COMPANY			40/971
CONTINENTAL CASUALTY COMPANY			12/971
THE CONTINENTAL INSURANCE COMPANY			80/971
ELKHORN INSURANCE COMPANY			11/971
EMPLOYERS MUTUAL CASUALTY COMPANY			3/971
EMPLOYERS MUTUAL LIABILITY INSURANCE COMPANY OF WISCONSIN			9/971
EQUITABLE GENERAL INSURANCE COMPANY			10/971
EXCESS AND TREATY REINSURANCE CORPORATION			49/971
FARMERS HOME MUTUAL INSURANCE COMPANY			3/971
FEDERATED REINSURANCE COMPANY			97/971
GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORP. LTD*			17/971
GENERAL INSURANCE COMPANY OF AMERICA			10/971
GREAT AMERICAN INSURANCE COMPANY			24/971
GREATER NEW YORK MUTUAL INSURANCE COMPANY			3/971
THE HANOVER INSURANCE COMPANY			20/971
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY			5/971
HIGHLANDS INSURANCE COMPANY			16/971
THE HOME INSURANCE COMPANY			33/971
INLAND INSURANCE COMPANY**			3/971
INSURANCE COMPANY OF NORTH AMERICA			51/971
INTEGON INDEMNITY CORPORATION**			4/971
LIBERTY MUTUAL INSURANCE COMPANY			35/971
MERRIMACK MUTUAL FIRE INSURANCE COMPANY			10/971
METROPOLITAN PROPERTY & LIABILITY INSURANCE COMPANY			15/971
MOTORISTS MUTUAL INSURANCE COMPANY			5/971
THE MUTUAL FIRE, MARINE AND INLAND INSURANCE COMPANY			11/971
NEW ENGLAND REINSURANCE CORPORATION			3/971
NORTHEASTERN INSURANCE COMPANY OF HARTFORD			19/971
PHILADELPHIA MANUFACTURERS MUTUAL INSURANCE COMPANY			4/971
PROVIDENCE WASHINGTON INSURANCE COMPANY			6/971
PURITAN INSURANCE COMPANY			5/971
REPUBLIC INSURANCE COMPANY			9/971
ROYAL GLOBE INSURANCE COMPANY			30/971
SECURITY INSURANCE COMPANY OF HARTFORD			24/971
SENTRY INSURANCE A MUTUAL COMPANY			4/971
STATE FARM FIRE AND CASUALTY COMPANY			5/971
TOKIO MARINE AND FIRE INSURANCE COMPANY, LTD.*			3/971
UNIGARD MUTUAL INSURANCE COMPANY			5/971
UNIVERSAL REINSURANCE CORPORATION			17/971
ZURICH INSURANCE COMPANY*			12/971

In the event of any change in this List, the Reinsurer will send to the Company an AMENDED MEMBERS’ LIST to be attached hereto.

1-78

Excess and Treaty Management Corporation — Underwriting Manager

ENDORSEMENT A

Non-Admitted Reinsurers Clause — Each of the Members of Excess and Casualty Reinsurance Association (“ECRA”) designated on the Members’ List attached to this Agreement as not being licensed or accredited by the Insurance Department of the State of New York, will fund outstanding losses under this Agreement, including an allowance for IBNR as recommended by Excess and Treaty Management Corporation, the Underwriting Manager of ECRA, and unearned premium reserves, in an amount equal to such Member’s proportion of liability under this Agreement. Such security shall be held for the benefit of the Reinsured and may be in the form of cash advances, escrow or trust accounts, clean irrevocable letters of credit, or a combination thereof, acceptable to said Insurance Department.

Excess and Treaty Management Corporation — Underwriting Manager

LIBERTY MUTUAL INSURANCE COMPANY
LIBERTY MUTUAL FIRE INSURANCE COMPANY

WORKER’S COMPENSATION AND GENERAL LIABILITY
SEVENTH EXCESS OF LOSS REINSURANCE CONTRACT

INTERESTS AND LIABILITIES AGREEMENT

IT IS HEREBY MUTUALLY AGREED, by and between LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY MUTUAL FIRE INSURANCE COMPANY, Boston, Massachusetts (hereinafter called the “Company”) of the one part, and the undersigned Reinsurer (hereinafter called the “Reinsurer”) of the other part, that the Reinsurer shall have a 7.50% share in the interests and liabilities of the “Reinsurers” as set forth in the document attached hereto. The share of the Reinsurer shall be separate and apart from the shares of the other Reinsurers, and shall not be joint with those of the other Reinsurers, and the Reinsurer shall in no event participate in the interests and liabilities of the other Reinsurers.

The premium for this reinsurance shall be the Reinsurer’s percentage share of the premium provided under Article 3 of the attached document, and shall be payable as herein provided.

This Agreement shall be effective December 31, 1977 and shall remain in full force unless terminated in accordance with the termination provisions of Article 13 of the attached document.

IN WITNESS WHEREOF the parties hereto, by their respective duly authorized officers, have executed this Agreement, in duplicate, as of the dates undermentioned.

At Boston, Massachusetts this 27th day of June, 1978

and at Indianapolis, Indiana this 18^th day of JULY, 1978

EE/jb — 4/25/78

LIBERTY MUTUAL INSURANCE COMPANY
LIBERTY MUTUAL FIRE INSURANCE COMPANY

WORKER’S COMPENSATION AND GENERAL LIABILITY
SEVENTH EXCESS OF LOSS REINSURANCE CONTRACT

INTERESTS AND LIABILITIES AGREEMENT

IT IS HEREBY MUTUALLY AGREED, by and between LIBERTY MUTUAL INSURANCE COMPANY and LIBERTY MUTUAL FIRE INSURANCE COMPANY, Boston, Massachusetts (hereinafter called the “Company”) of the one part, and the undersigned Reinsurer (hereinafter called the “Reinsurer”) of the other part, that the Reinsurer shall have a 5.00% share in the interests and liabilities of the “Reinsurers” as set forth in the document attached hereto. The share of the Reinsurer shall be separate and apart from the shares of the other Reinsurers, and shall not be joint with those of the other Reinsurers, and the Reinsurer shall in no event participate in the interests and liabilities of the other Reinsurers.

The premium for this reinsurance shall be the Reinsurer’s percentage share of the premium provided under Article 3 of the attached document, and shall be payable as herein provided.

This Agreement shall be effective December 31, 1977 and shall remain in full force unless terminated in accordance with the termination provisions of Article 13 of the attached document.

IN WITNESS WHEREOF the parties hereto, by their respective duly authorized officers, have executed this Agreement, in duplicate, as of the dates undermentioned.

At Boston, Massachusetts this 27th day of June, 1978

and at New York, New York this 17th day of August, 1978

For and on behalf of Members’ of EXCESS AND CASUALTY REINSURANCE ASSOCIATION as their interests may appear in this Agreement.

EE/jb — 4/25/78