Treaty Property Reinsurance Binder between Quanta Companies and Arch Reinsurance Ltd.

  Exhibit 10.31 BENFIELD (Logo omitted) TREATY PROPERTY REINSURANCE BINDER REINSURED COMPANY: Quanta Reinsurance Ltd, Quanta Indemnity Company, Quanta Reinsurance US Ltd. and Quanta Specialty Lines Insurance Company, hereinafter referred to as "Company". REINSURER: Arch Reinsurance Ltd. BUSINESS COVERED: The Reinsurer will accept a 100% QS of the Company's property reinsurance assumed portfolio except as detailed below. TERM: October 1, 2005 until the natural expiration of all business. TERRITORY: As per original treaties. EXCLUSIONS: 1) Any losses from Hurricane Wilma 2) The following contracts will not be subject to this agreement: GMAC Aggregate Cover Manitoba Crop Cover PREMIUM: The Company will pay the Reinsurer 100% of the UEP as of 10/1/05 and 100% of the written premium on or after 10/1/05 on all assumed contracts subject to this agreement. Further, Quanta shall cede 100% of the assumed written premium from the SV Stuttgart Aggregate XOL cover. The Net Cash received to date by the Company on Business Covered will be paid in full to the Reinsurer on 11/28/05. The Reinsurer and the Company will use their best efforts to execute formal reinsurance contract by 11/28/05. In respect of both the Technical Property & Treaty Property Treaties ("Treaties"), a $500,000 non refundable Commitment Fee will be paid in full within 24 hours of an executed binder and the remaining Premium will be paid on 11/28/05. The Reinsurer and the Company will use their best efforts to execute formal reinsurance contracts by the premium due date of 11/28/05. In the event that either Treaties are not executed, by reason of the Company not executing the contract, Arch Re will retain the above mentioned Commitment Fee. Arch Re to receive its proportional share of any premium adjustments to the business covered hereunder. INURING REINSURANCE: All inuring reinsurance treaties purchased by the Company as described below will be endorsed to add the Reinsurer as an additional beneficiary. The endorsements shall take effect as of the inception date of coverage granted by the Reinsured hereunder and the UEP for the Inuring Reinsurances will be split as per the following schedule:  Expiration 100% USD 100% USD Total Ceded Description Date Limit Attachment Premium - ----------- ---------- --------- ---------- ----------- PX Re Retro Purchase EQ 04/04/06 2,500,000 10,000 -151,247 PX Re Retro Cover EQ 04/04/06 2,500,000 10,000 -81,925 Odyssey Re Retro Purchase EQ 04/04/06 2,500,000 10,000 -138,643 MS Frontier Re Retro Cover EQ 04/04/06 2,500,000 10,000 -78,774 Sompo Retro -- 40B CA only EQ ILW 07/01/06 5,000,000 25,000 -82,648 ---------- -533,237 ---------- Catlin Retro Cover -- TX wind 2.5B ILW 07/01/06 5,000,000 10,000 -523,562 Odyssey Re Retro -- 15B US Wind ILW 07/01/06 2,500,000 10,000 -299,178 Glacier Re Retro -- 20B Wind US ILW 07/01/06 6,000,000 10,000 -504,863 PX Re Retro Cover 04/05/06 7,500,000 15,000,000 -982,498 ---------- -2,310,100 ---------- ---------- 50% -1,155,050 ---------- ---------- UEP to UEP to Company Reinsurer -1,155,050 -1,688,287 Note: With respect to PX Re Retro Cover, should the Company exhaust any of the limit remaining for any event occurring prior to 10/31/05, the Company will reimburse the Reinsurer its proportionate share of the UEP for that inuring reinsurance contract (i.e. 50% of 982,498 X the amount of limit exhausted). Note: With respect to Odyssey Re Retro, 15B US Wind ILW, should the Company exhaust the limit with respect to Hurricane Wilma, the Company will reimburse the Reinsurer its proportionate share of the UEP for that inuring reinsurance contract (i.e. 100% X 299,178). ADJUSTMENT FEATURES: - Proportional contracts covered hereunder will be settled based upon the following formula: (UEP + WP after 10/2/005) X (1 less final ceding commission at year end, less attritional loss ratio at year end, less 100% of all PCS losses occurring on these contracts after 10/1/05 excluding Hurricane Wilma, less FET, less brokerage). Interim adjustments will be based on the selected non-cat loss ratio used when the Company bound the deal, and the provisional ceding commission. The definition of "attritional losses" and "attritional loss ratio" for these purposes must be agreed by the Reinsurer and is subject to due diligence that may be conducted by the Reinsurer. The projected attritional loss ratio will be estimated for these purposes as at 10/1/05 and is subject to adjustment on final settlement of any balances due to the Company always subject to agreement by the Reinsurer. WARRANTY: - Losses on Risk XOL contracts will be settled as follows: Losses occurring on or after 10/1/2005 will be assumed by the Reinsurer. Page 2 of 3 BENFIELD GREIG ELLINGER, INC.  - The Company will cede the Net Cash received as respects all premiums subject to this Binder & collected to date. Net Cash to be defined as Gross Unearned Premium less paid losses, less Arch's share of inuring reinsurance, less brokerage, less ceding commission, less FET. - Quarterly reporting periods starting 12/31/05, with reports due 30 days after the end of the quarter and with cash settlements 45 days from the end of the quarter. - The Company will post an LOC for the differential between expected cash receipts and actual payment made at binding. All premiums ceded are deemed collectible. Failure to pay deposit premium by 11/28/05 will result in cancellation of the Binder and Arch Re Ltd shall retain the Commitment Fee. Subject to further due diligence by Arch Re Ltd. BROKERAGE: 1.5% of UEP. QUANTA REINSURANCE LTD/QUANTA ARCH REINSURANCE LTD. INDEMNITY COMPANY/QUANTA SPECIALTY LINES INSURANCE COMPANY/QUANTA REINSURANCE US LTD Authorized Authorized Signature: /s/ Jonathan J.R. Dodd Signature: /s/ Matthew J. Dragonetti --------------------------- ---------------------------- Title: Interim Chief Financial Officer Title: US Underwriter Date 18/11/05 Date November 18, 2005 Page 3 of 3 BENFIELD GREIG ELLINGER, INC.