Common use of Ceding Commission Clause in Contracts

Ceding Commission. A. The Reinsurer shall allow the Company a provisional ceding commission of 32.0% of all Net Earned Premium ceded to the Reinsurer hereunder. The Company shall allow the Reinsurer return commission on return premiums at the same rate. B. The provisional commission allowed to the Company shall be adjusted periodically in accordance with the provisions set forth herein. C. The first adjustment period shall be from the inception date of this Agreement through December 31, 2010 and each subsequent 12 month period shall be a separate adjustment period, with the final separate adjustment period being a 14 month period (each an “Adjustment Period” and, collectively, “Adjustment Periods”). However, if this Agreement is terminated, the final adjustment period shall be from the beginning of the then current Adjustment Period through the date of termination if this Agreement is terminated on a “cutoff” basis or the end of the runoff period if this Agreement is terminated on a “runoff” basis. The first calculation of adjusted commission for an Adjustment Period shall be made as of the date that is 12 months after the end of such Adjustment Period (the “Initial Calculation Date”). D. The adjusted commission rate shall be calculated as follows and be applied to Net Earned Premium for the Adjustment Period under consideration: 1. If the Actual Loss Ratio for the Adjustment Period is 64.5% or greater, the adjusted commission rate for the Adjustment Period under consideration shall be a minimum commission of 30.0%; 2. If the Actual Loss Ratio for the Adjustment Period is less than 64.5%, but equal to or greater than 62.0%, the adjusted commission rate for such Adjustment Period under consideration shall be 32.5%, minus the difference in percentage points between 62.0% and the Actual Loss Ratio for such Adjustment Period; 3. If the Actual Loss Ratio for the Adjustment Period is less than 62.0%, but greater than 60.0% the adjusted commission rate for such Adjustment Period under consideration shall be 32.5% plus the difference in percentage points between 62.0% and the Actual Loss Ratio for such Adjustment Period; 4. If the Actual Loss Ratio for the Adjustment Period is 60.0% or less, the adjusted commission rate for such Adjustment Period shall be 34.5%. For an abundance of clarity, an illustration of the sliding scale is attached as Exhibit A. E. The Reinsurer shall calculate and report the adjusted commission on Net Earned Premium within 30 days after the Initial Calculation Date, and within 30 days after the end of each subsequent calendar year thereafter with respect to each Adjustment Period until all losses subject hereto have been finally settled. Each such calculation shall be based on cumulative transactions hereunder from the beginning of each Adjustment Period under consideration through the date of adjustment. With respect to the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall commence 24 months after the end of the first Adjustment Period. With respect to all Adjustment Periods other than the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall be made 12 months after the end of the final Adjustment Period. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration, as of the date remittance is due, is less than commissions previously allowed by the Reinsurer on Net Earned Premium for the same Adjustment Period, the Company shall remit the difference to the Reinsurer on or before March 1, after receipt and verification of the Reinsurer’s report. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration as of the date remittance is due, is greater than commissions previously allowed by the Reinsurer on Net Earned Premium for the same Adjustment Period, the Reinsurer shall remit the difference to the Company on or before March 1, after receipt of the Company’s written verification of the Reinsurer’s report. For an abundance of clarity, an illustration of the timing of annual calculations and payments is attached as Exhibit B. F. It is expressly agreed that the ceding commission allowed the Company includes provision for all unallocated loss expenses, dividends, commissions, taxes (exclusive of Federal Excise Taxes), assessments and all other expenses of whatever nature, except allocated Loss Adjustment Expense. III. Item G. of Article XII, Definitions is revised to read as follows:

Ceding Commission. A. The Reinsurer shall allow the Company a provisional ceding commission of 32.032.5% of all Net Earned Premium ceded to the Reinsurer hereunder. The Company shall allow the Reinsurer return commission on return premiums at the same rate. B. The provisional commission allowed to the Company shall be adjusted periodically in accordance with the provisions set forth herein. C. The first adjustment period shall be from the inception date of this Agreement through December 31, 2010 and each subsequent 12 month period shall be a separate adjustment period, with the final separate adjustment period being a 14 month period (each an “Adjustment Period” Period and, collectively, “Adjustment Periods”). However, if this Agreement is terminated, the final adjustment period shall be from the beginning of the then current Adjustment Period through the date of termination if this Agreement is terminated on a “"cutoff” basis " basis, or the end of the runoff period if this Agreement is terminated on a “"runoff” " basis. The first calculation of adjusted commission for an Adjustment Period shall be made as of the date that is 12 months after the end of such Adjustment Period (the “Initial Calculation Date”). D. The adjusted commission rate shall be calculated as follows and be applied to Net Earned Premium for the Adjustment Period under consideration: 1. If the Actual Loss Ratio for the Adjustment Period is 64.5% or greater, the adjusted commission rate for the Adjustment Period under consideration shall be a minimum commission of 30.030.5%; 2. If the Actual Loss Ratio for the Adjustment Period is less than 64.5%, but equal to or greater than 62.062.5%, the adjusted commission rate for such Adjustment Period under consideration shall be 32.530.5%, minus plus the difference in percentage points between 62.062.5% and the Actual Loss Ratio for such Adjustment Period; 3. If the Actual Loss Ratio for the Adjustment Period is less than 62.062.5%, but greater than 60.0% 60.5%, the adjusted commission rate for such Adjustment Period under consideration shall be 32.5% %, plus the difference in percentage points between 62.060.5% and the Actual Loss Ratio for such Adjustment Period; 4. If the Actual Loss Ratio for the Adjustment Period is 60.060.5% or less, the adjusted commission rate for such Adjustment Period shall be 34.5%. For an abundance of clarity, an illustration of the sliding scale is attached as Exhibit A.. E. The Reinsurer shall calculate and report the adjusted commission on Net Earned Premium within 30 days after the Initial Calculation Date, and within 30 days after the end of each subsequent calendar year thereafter with respect to each Adjustment Period until all losses subject hereto have been finally settled. Each such calculation shall be based on cumulative transactions hereunder from the beginning of each the Adjustment Period under consideration through the date of adjustment. With respect to the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall commence 24 months after the end of the first Adjustment Period. With respect to all Adjustment Periods other than the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall be made 12 months after the end of the final Adjustment Period. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration, as of the date remittance is dueof adjustment, is less than commissions previously allowed by the Reinsurer on Net Earned Premium for the same Adjustment Period, the Company shall remit the difference to the Reinsurer on or before March 1, as promptly as possible after receipt and verification of the Reinsurer’s 's report. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration as of the date remittance is dueof adjustment, is greater than commissions previously allowed by the Reinsurer on Net Earned Premium for the same Adjustment Period, the Reinsurer shall remit the difference to the Company on or before March 1, as promptly as possible after receipt of the Company’s 's written verification of the Reinsurer’s report. For an abundance of clarity, an illustration of the timing of annual calculations and payments is attached as Exhibit B.. F. It is expressly agreed that the ceding commission allowed the Company includes provision for all unallocated loss expenses, dividends, commissions, taxes (exclusive of Federal Excise Taxes), assessments and all other expenses of whatever nature, except allocated Loss Adjustment Expense. III. Item G. of Article XII, Definitions is revised to read as follows:

Ceding Commission. A. The Reinsurer shall allow the Company a provisional ceding commission of 32.032.5% of all Net Earned Premium ceded to the Reinsurer hereunder. The Company shall allow the Reinsurer return commission on return premiums at the same rate. B. The provisional commission allowed to the Company shall be adjusted periodically in accordance with the provisions set forth herein. C. The first adjustment period shall be from the inception date of this Agreement through December 31, 2010 and each subsequent 12 month period shall be a separate adjustment period, with the final separate adjustment period being a 14 month period (each an “Adjustment Period” Period and, collectively, “Adjustment Periods”). However, if this Agreement is terminated, the final adjustment period shall be from the beginning of the then current Adjustment Period through the date of termination if this Agreement is terminated on a “cutoff” basis basis, or the end of the runoff period if this Agreement is terminated on a “runoff” basis. The first calculation of adjusted commission for an Adjustment Period shall be made as of the date that is 12 months after the end of such Adjustment Period (the “Initial Calculation Date”). D. The adjusted commission rate shall be calculated as follows and be applied to Net Earned Premium for the Adjustment Period under consideration: 1. If the Actual Loss Ratio for the Adjustment Period is 64.5% or greater, the adjusted commission rate for the Adjustment Period under consideration shall be a minimum commission of 30.030.5%; 2. If the Actual Loss Ratio for the Adjustment Period is less than 64.5%, but equal to or greater than 62.062.5%, the adjusted commission rate for such Adjustment Period under consideration shall be 32.530.5%, minus plus the difference in percentage points between 62.062.5% and the Actual Loss Ratio for such Adjustment Period; 3. If the Actual Loss Ratio for the Adjustment Period is less than 62.062.5%, but greater than 60.0% 60.5%, the adjusted commission rate for such Adjustment Period under consideration shall be 32.5% %, plus the difference in percentage points between 62.060.5% and the Actual Loss Ratio for such Adjustment Period; 4. If the Actual Loss Ratio for the Adjustment Period is 60.060.5% or less, the adjusted commission rate for such Adjustment Period shall be 34.5%. For an abundance of clarity, an illustration of the sliding scale is attached as Exhibit A.. E. The Reinsurer shall calculate and report the adjusted commission on Net Earned Premium within 30 days after the Initial Calculation Date, and within 30 days after the end of each subsequent calendar year thereafter with respect to each Adjustment Period until all losses subject hereto have been finally settled. Each such calculation shall be based on cumulative transactions hereunder from the beginning of each the Adjustment Period under consideration through the date of adjustment. With respect to the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall commence 24 months after the end of the first Adjustment Period. With respect to all Adjustment Periods other than the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall be made 12 months after the end of the final Adjustment Period. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration, as of the date remittance is dueof adjustment, is less than commissions previously allowed by the Reinsurer on Net Earned Premium for the same Adjustment Period, the Company shall remit the difference to the Reinsurer on or before March 1, as promptly as possible after receipt and verification of the Reinsurer’s report. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration as of the date remittance is dueof adjustment, is greater than commissions previously allowed by the Reinsurer on Net Earned Premium for the same Adjustment Period, the Reinsurer shall remit the difference to the Company on or before March 1, as promptly as possible after receipt of the Company’s written verification of the Reinsurer’s report. For an abundance of clarity, an illustration of the timing of annual calculations and payments is attached as Exhibit B.. F. It is expressly agreed that the ceding commission allowed the Company includes provision for all unallocated loss expenses, dividends, commissions, taxes (exclusive of Federal Excise Taxes), assessments and all other expenses of whatever nature, except allocated Loss Adjustment Expense. III. Item G. of Article XII, Definitions is revised to read as follows:

Ceding Commission. A. FRONTING FEES, PREMIUM TAXES AND SLIDING ------------------------------------------------------------------------ SCALE COMMISSION ---------------- 9.1 The Reinsurer shall allow will pay to the Company a provisional ceding Ceding commission of 32.0% 31.00%, which shall be calculated on the basis of all Net Earned Premium ceded earned premium on policies reinsured hereunder. 9.2 The Company will be liable for remitting state premium taxes based on net written premium and net policy fees charged. Should service fees be charged on any policy covered by this Agreement, and such fees be deemed taxable for premium tax purposes, then such service fees are to be added to the net written premium and net policy fees charged to determine the amount subject to Fronting Fees. Should service fees be deemed taxable, they shall be reported and remitted in a consistent manner as premium written in Article 8 above. 9.3 The Reinsurer hereunderacknowledges that the Company is not responsible for any contingent commission adjustment, and such adjustment shall be settled directly between the Managing General Agent and the Reinsurer. The Company Reinsurer shall allow seek recovery for any contingent commission adjustment directly from the Reinsurer return commission on return premiums at the same rateManaging General Agent. B. 9.4 The provisional commission allowed to the Company shall be adjusted periodically in accordance with the provisions set forth herein. C. . The first adjustment period shall be from the inception effective date of this Agreement through December 31September 30, 2010 2005, and each subsequent 12 month period shall be a separate adjustment period, with the final separate adjustment period being a 14 month period (each an “Adjustment Period” and, collectively, “Adjustment Periods”). However, if this Agreement is terminated, the final adjustment period shall be from the beginning of the then current Adjustment Period adjustment period through the effective date of termination if this Agreement is terminated on a “cutoff” basis or the end of the runoff period if this Agreement is terminated on a “runoff” basis. The first calculation of adjusted commission for an Adjustment Period shall be made as of the date that is 12 months after the end of such Adjustment Period (the “Initial Calculation Date”)termination. D. 9.5 The adjusted commission rate shall be calculated as follows and be applied to Net Earned Premium premiums earned for the Adjustment Period period under consideration: 1. a. If the Actual Loss Ratio for the Adjustment Period ratio of losses incurred to premiums earned is 64.565.50% or greater, the adjusted commission rate for the Adjustment Period period under consideration shall be a minimum commission of 30.028.00%; 2. b. If the Actual Loss Ratio for the Adjustment Period ratio of losses incurred to premiums earned is less than 64.565.50%, but equal to or greater not less than 62.062.50%, the adjusted commission rate for such Adjustment Period the period under consideration shall be 32.528.00%, minus plus 100% of the difference in percentage points between 62.065.50% and the Actual Loss Ratio for such Adjustment Periodactual ratio of losses incurred to premiums earned; 3. c. If the Actual Loss Ratio for the Adjustment Period ratio of losses incurred to premiums earned is 62.50% or less, but not less than 62.0%, but greater than 60.053.50% the adjusted commission rate for such Adjustment Period the period under consideration shall be 32.5% 31.00%, plus the difference in percentage points between 62.062.50% and the Actual Loss Ratio for such Adjustment Periodactual ratio of losses incurred to premiums earned; 4. d. If the Actual Loss Ratio for the Adjustment Period ratio of losses incurred to premiums earned is 60.053.50% or less, the adjusted commission rate for such Adjustment Period the period under consideration shale be 40.00%. 9.6 If the ratio of losses incurred to premiums earned for any period is greater than 65.50%, the difference in percentage points between the actual ratio of losses incurred to premiums earned and 65.50% shall be 34.5multiplied by premiums earned for the period and the product shall be carried forward to the next adjustment period as a debit to losses incurred. If the ratio of losses incurred to premiums earned for any period is less than 53.50%. For an abundance , the difference in percentage points between 53.50% and the actual ratio of clarity, an illustration losses incurred to premiums earned shall be multiplied by premiums earned for the period and the product shall be carried forward to the next adjustment period as a credit to losses incurred. 9.7 Within 18 months from the inception of the sliding scale is attached as Exhibit A. E. The Reinsurer Underwriting Year, and after the end of each 12 month period thereafter the General Agent shall calculate and report the adjusted commission on Net Earned Premium within 30 days after premiums earned for the Initial Calculation Date, and within 30 days after the end of each subsequent calendar year thereafter with respect to each Adjustment Period until all losses subject hereto have been finally settled. Each such calculation shall be based on cumulative transactions hereunder from the beginning of each Adjustment Period under consideration through the date of adjustment. With respect to the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall commence 24 months after the end of the first Adjustment Period. With respect to all Adjustment Periods other than the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall be made 12 months after the end of the final Adjustment Periodadjustment period. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration, as of the date remittance is due, premiums earned is less than commissions previously allowed by the Reinsurer on Net Earned Premium premiums earned for the same Adjustment Periodadjustment period, the Company General Agent shall remit the difference to the Reinsurer on or before March 1, after receipt and verification of the Reinsurer’s with its report. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration as of the date remittance is due, premiums earned is greater than commissions previously allowed by the Reinsurer on Net Earned Premium premiums earned for the same Adjustment Periodadjustment period, the Reinsurer shall remit the difference to the Company on or before March 1, General Agent as promptly as possible after receipt and verification of the Company’s written verification of the Reinsurer’s 's report. For an abundance of clarity, an illustration of the timing of annual calculations and payments is attached as Exhibit B. F. It is expressly agreed that the ceding commission allowed the Company includes provision for all unallocated loss expenses, dividends, commissions, taxes (exclusive of Federal Excise Taxes), assessments and all other expenses of whatever nature, except allocated Loss Adjustment Expense. III. Item G. of Article XII, Definitions is revised to read as follows:

Ceding Commission. A. FRONTING FEES, PREMIUM TAXES AND SLIDING ------------------------------------------------------------------------ SCALE COMMISSION ---------------- 9.1 The Reinsurer shall allow will pay to the Company a provisional ceding Ceding commission of 32.0% 31.00%, which shall be calculated on the basis of all Net Earned Premium ceded earned premium on policies reinsured hereunder. 9.2 The Company will be liable for remitting state premium taxes based on net written premium and net policy fees charged. Should service fees be charged on any policy covered by this Agreement, and such fees be deemed taxable for premium tax purposes, then such service fees are to be added to the net written premium and net policy fees charged to determine the amount subject to Fronting Fees. Should service fees be deemed taxable, they shall be reported and remitted in a consistent manner as premium written in Article 8 above. 9.3 The Reinsurer hereunderacknowledges that the Company is not responsible for any contingent commission adjustment, and such adjustment shall be settled directly between the Managing General Agent and the Reinsurer. The Company Reinsurer shall allow seek recovery for any contingent commission adjustment directly from the Reinsurer return commission on return premiums at the same rateManaging General Agent. B. 9.4 The provisional commission allowed to the Company shall be adjusted periodically in accordance with the provisions set forth herein. C. . The first adjustment period shall be from the inception effective date of this Agreement through December 31October 1, 2010 2004, and each subsequent 12 month period shall be a separate adjustment period, with the final separate adjustment period being a 14 month period (each an “Adjustment Period” and, collectively, “Adjustment Periods”). However, if this Agreement is terminated, the final adjustment period shall be from the beginning of the then current Adjustment Period adjustment period through the effective date of termination if this Agreement is terminated on a “cutoff” basis or the end of the runoff period if this Agreement is terminated on a “runoff” basis. The first calculation of adjusted commission for an Adjustment Period shall be made as of the date that is 12 months after the end of such Adjustment Period (the “Initial Calculation Date”)termination. D. 9.5 The adjusted commission rate shall be calculated as follows and be applied to Net Earned Premium premiums earned for the Adjustment Period period under consideration: 1. a. If the Actual Loss Ratio for the Adjustment Period ratio of losses incurred to premiums earned is 64.565.50% or greater, the adjusted commission rate for the Adjustment Period period under consideration shall be a minimum commission of 30.028.00%; 2. b. If the Actual Loss Ratio for the Adjustment Period ratio of losses incurred to premiums earned is less than 64.565.50%, but equal to or greater not less than 62.062.50%, the adjusted commission rate for such Adjustment Period the period under consideration shall be 32.528.00%, minus plus 100% of the difference in percentage points between 62.065.50% and the Actual Loss Ratio for such Adjustment Periodactual ratio of losses incurred to premiums earned; 3. c. If the Actual Loss Ratio for the Adjustment Period ratio of losses incurred to premiums earned is 62.50% or less, but not less than 62.0%, but greater than 60.053.50% the adjusted commission rate for such Adjustment Period the period under consideration shall be 32.5% 31.00%, plus the difference in percentage points between 62.062.50% and the Actual Loss Ratio for such Adjustment Periodactual ratio of losses incurred to premiums earned; 4. d. If the Actual Loss Ratio for the Adjustment Period ratio of losses incurred to premiums earned is 60.053.50% or less, the adjusted commission rate for such Adjustment Period the period under consideration shale be 40.00%. 9.6 If the ratio of losses incurred to premiums earned for any period is greater than 65.50%, the difference in percentage points between the actual ratio of losses incurred to premiums earned and 65.50% shall be 34.5multiplied by premiums earned for the period and the product shall be carried forward to the next adjustment period as a debit to losses incurred. If the ratio of losses incurred to premiums earned for any period is less than 53.50%. For an abundance , the difference in percentage points between 53.50% and the actual ratio of clarity, an illustration losses incurred to premiums earned shall be multiplied by premiums earned for the period and the product shall be carried forward to the next adjustment period as a credit to losses incurred. 9.7 Within 18 months from the inception of the sliding scale is attached as Exhibit A. E. The Reinsurer Underwriting Year, and after the end of each 12 month period thereafter the General Agent shall calculate and report the adjusted commission on Net Earned Premium within 30 days after premiums earned for the Initial Calculation Date, and within 30 days after the end of each subsequent calendar year thereafter with respect to each Adjustment Period until all losses subject hereto have been finally settled. Each such calculation shall be based on cumulative transactions hereunder from the beginning of each Adjustment Period under consideration through the date of adjustment. With respect to the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall commence 24 months after the end of the first Adjustment Period. With respect to all Adjustment Periods other than the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall be made 12 months after the end of the final Adjustment Periodadjustment period. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration, as of the date remittance is due, premiums earned is less than commissions previously allowed by the Reinsurer on Net Earned Premium premiums earned for the same Adjustment Periodadjustment period, the Company General Agent shall remit the difference to the Reinsurer on or before March 1, after receipt and verification of the Reinsurer’s with its report. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration as of the date remittance is due, premiums earned is greater than commissions previously allowed by the Reinsurer on Net Earned Premium premiums earned for the same Adjustment Periodadjustment period, the Reinsurer shall remit the difference to the Company on or before March 1, General Agent as promptly as possible after receipt and verification of the Company’s written verification of the Reinsurer’s 's report. For an abundance of clarity, an illustration of the timing of annual calculations and payments is attached as Exhibit B. F. It is expressly agreed that the ceding commission allowed the Company includes provision for all unallocated loss expenses, dividends, commissions, taxes (exclusive of Federal Excise Taxes), assessments and all other expenses of whatever nature, except allocated Loss Adjustment Expense. III. Item G. of Article XII, Definitions is revised to read as follows:

Ceding Commission. A. The Reinsurer shall allow the Company a 37.0% provisional ceding commission of 32.0% of on all Net Earned Premium premiums ceded to the Reinsurer hereunderReinsurer. The Company shall allow the Reinsurer return commission on return premiums at the same rate. B. The provisional commission allowed to the Company shall be adjusted periodically in accordance with the provisions set forth herein. C. The first adjustment period shall be from the inception date of this Agreement through December 31, 2010 and each subsequent 12 month period shall be a separate adjustment period, with the final separate adjustment period being a 14 month period (each an “Adjustment Period” and, collectively, “Adjustment Periods”). However, if this Agreement is terminated, the final adjustment period shall be from the beginning of the then current Adjustment Period through the date of termination if this Agreement is terminated on a “cutoff” basis or the end of the runoff period if this Agreement is terminated on a “runoff” basis. The first calculation of adjusted commission for an Adjustment Period shall be made as of the date that is 12 months after the end of such Adjustment Period (the “Initial Calculation Date”). D. The adjusted commission rate shall be calculated as follows and be applied to Net Earned Premium for the Adjustment Period under considerationfollows: 1. If the Actual Ceded Loss and Loss Adjustment Expense Ratio for the Adjustment Period is 64.562.0% or greater, the adjusted commission rate for the Adjustment Period under consideration Contract Year shall be a minimum commission of 30.0%;. 2. If the Actual Ceded Loss and Loss Adjustment Expense Ratio for the Adjustment Period is less than 64.562.0%, but equal to or greater not less than 62.030.0%, the adjusted commission rate for such Adjustment Period under consideration the Contract Year shall be 32.530.0%, minus plus 100% of the absolute value of the difference in percentage points between 62.0% and the Actual ceded loss and Loss Ratio for such Adjustment Period;Expense Ratio. 3. If the Actual Ceded Loss and Loss Adjustment Expense Ratio for the Adjustment Period is less than 62.0%, but greater than 60.0% the adjusted commission rate for such Adjustment Period under consideration shall be 32.5% plus the difference in percentage points between 62.0% and the Actual Loss Ratio for such Adjustment Period; 4. If the Actual Loss Ratio for the Adjustment Period is 60.030.0% or less, the adjusted commission rate for such Adjustment Period the Contract Year shall be 34.562.0%. 4. For an abundance Notwithstanding the provisions of claritysubparagraphs (1), an illustration (2) and (3) above, if the effective date of calculation of the sliding scale adjusted commission rate is attached as Exhibit A.within 18 months of the end of the Contract Year then the adjusted commission rate for the Contract Year shall not exceed 37.0%. E. The Reinsurer D. Within 60 days after the end of the Contract Year, the Company shall calculate and report the adjusted commission on Net Earned Premium within 30 days after for the Initial Calculation Date, and within 30 days after the end of each subsequent calendar year thereafter with respect to each Adjustment Period until all losses subject hereto have been finally settled. Each such calculation shall be based on cumulative transactions hereunder from the beginning of each Adjustment Period under consideration through the date of adjustment. With respect to the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall commence 24 months after the end of the first Adjustment Period. With respect to all Adjustment Periods other than the first Adjustment Period, remittance of adjusted commission on Net Earned Premium, if any, shall be made 12 months after the end of the final Adjustment PeriodContract Year. If the adjusted commission on Net Earned Premium for the Adjustment Period under consideration, as of the date remittance is due, is less than commissions previously allowed by the Reinsurer on Net Earned Premium for the same Adjustment Period(Provisional Commission), the Company shall remit the difference to the Reinsurer on or before March 1, with its report. E. The adjusted commission shall be recalculated within 60 days of the end of each subsequent Contract Quarter after the end of the Contract Year until all losses subject hereto have been settled. Any balance shown to be due either party as a result of any such recalculation shall be remitted by the other party within 30 days after receipt and verification of the ReinsurerCompany’s report. If . F. Notwithstanding the provisions of paragraph E above, if 18 months after the end of the Contract Year the adjusted commission on Net Earned Premium for the Adjustment Period under consideration as of the date remittance is due, is greater than the commissions previously allowed by the Reinsurer on Net Earned Premium for the same Adjustment PeriodReinsurer, the Reinsurer shall remit the difference to the Company on or before March 1, within 30 days after receipt and verification of the Company’s written verification report. Upon such adjustment, the Company shall advise the Reinsurer of any outstanding losses arising during the Contract, which has not been finally settled and which may cause a recovery under this Contract and, unless mutually agreed otherwise, release the Reinsurer from all liabilities that attach hereunder for any losses not reported to the Reinsurer within 18 months after the end of the Reinsurer’s report. For an abundance of clarity, an illustration of the timing of annual calculations and payments is attached as Exhibit B. F. It is expressly agreed that the ceding commission allowed the Company includes provision for all unallocated loss expenses, dividends, commissions, taxes (exclusive of Federal Excise Taxes), assessments and all other expenses of whatever nature, except allocated Loss Adjustment ExpenseContract Year. III. Item G. of Article XII, Definitions is revised to read as follows: