Common use of Commutation Clause in Contracts

Commutation. A. As respects all losses, known or unknown, that may cause a claim under this Contract, the losses shall be commuted two years after the expiration date of this Contract. As promptly as possible after such date, the Company shall submit a statement of valuation of the outstanding claim or claims showing the elements considered reasonable to establish the commutation amount, and, if the Reinsurer concurs with the Company’s calculation, it shall promptly pay the amount requested. B. If the parties fail to agree on the commutation amount determined under paragraph A above, they shall settle any difference by mutually selecting an actuary to determine the commutation amount. If the parties cannot agree on a single actuary within 15 days after the Reinsurer’s notice that it does not concur with the Company’s statement of valuation, the parties shall settle the difference by using a panel of three actuaries. In that event, each party shall appoint an actuary within 30 days after receipt of the written request for commutation. Upon such appointment, the two actuaries shall appoint a third actuary. If the two actuaries fail to agree on the selection of a third actuary within 30 days of their appointment, each of them shall name three individuals, of whom the other shall decline two, and the decision shall be made by drawing lots. The actuary or actuaries shall then investigate and capitalize such loss(es). All actuaries shall be fellows of the Casualty Actuarial Society or the American Academy of Actuaries, and shall be disinterested in the outcome of the commutation. C. The Reinsurer’s proportion of the amount so determined shall be considered the Reinsurer’s total liability for the losses, and the Reinsurer shall pay the commutation amount promptly Effective: January 1, 2011 DOC: December 28, 2010 U4VT0004 15 of 36 after execution by both parties of a commutation and release agreement. Payment of the commutation amount by the Reinsurer, and acceptance of that payment by the Company, shall constitute a complete release of both parties from all further liability hereunder.

Commutation. A. As respects all losses, known or unknown, that At any time the Company may cause submit a claim under proposal to commute this Contract, Agreement. The effective date of the losses commutation shall be commuted two years after the expiration month-end that immediately preceded the date of this Contract. the proposal. B. As promptly as possible after such datepart of the proposal, the Company shall submit a statement of valuation of first calculate the outstanding claim or claims showing the elements considered reasonable to establish the commutation amount, and, if the Reinsurer concurs with the Company’s calculation, it shall promptly pay the amount requested. B. If the parties fail to agree on the commutation amount determined under paragraph A above, they shall settle any difference by mutually selecting an actuary to determine the commutation amount. If the parties cannot agree on a single actuary within 15 days after the Reinsurer’s notice that it does not concur with the Company’s statement of valuation, the parties shall settle the difference by using a panel of three actuaries. In that event, each party shall appoint an actuary within 30 days after receipt of the written request for commutation. Upon such appointment, the two actuaries shall appoint a third actuary. If the two actuaries fail to agree on the selection of a third actuary within 30 days of their appointment, each of them shall name three individuals, of whom the other shall decline two, and the decision shall be made by drawing lots. The actuary or actuaries shall then investigate and capitalize such loss(es). All actuaries shall be fellows of the Casualty Actuarial Society or the American Academy of Actuaries, and shall be disinterested in the outcome of the commutationExperience Account Balance as set forth herein. C. The Reinsurer’s proportion If the Experience Account Balance calculation results in a positive balance, the Reinsurer will automatically accept the proposal and will pay the Cash Balance of the Experience Account to the Company within twenty (20) days following the receipt by the Reinsurer from the Company of an executed full and final release of any and all future liability on the part of the Reinsurer under this Agreement. D. If the Experience Account Balance calculation results in a negative balance, the Company will submit to the Reinsurer this amount so determined within the proposal. The Reinsurer shall then have a chance to review said amount. E. If the Experience Account Balance cannot be mutually agreed upon, then such amount shall be considered determined by an independent third party actuary who is mutually agreeable to both the Company and the Reinsurer. The third party actuary’s total liability for the losses, fees shall be divided in half. The Company is to pay one-half and the Reinsurer shall pay the commutation amount promptly Effective: January second half proportionately. F. Once the Experience Account Balance has been mutually agreed upon, or determined via the independent third party, the following shall occur: 1. If the Experience Account Balance calculation results in a positive balance, 2011 DOC: December 28, 2010 U4VT0004 15 of 36 after execution by both parties of a commutation the Reinsurer will automatically accept the proposal and release agreement. Payment will pay the Cash Balance of the commutation amount Experience Account to the Company within twenty (20) days following the receipt by the ReinsurerReinsurer from the Company of an executed full and final release of any and all future liability on the part of the Reinsurer under this Agreement. 2. If the Experience Account Balance calculation results in a negative balance, and acceptance the Reinsurer may either: a. Reject the proposal, in which case the Agreement terms shall continue to apply as before the proposal. b. Accept the proposal, in which case the Reinsurer will pay the Cash Balance of that payment the Experience Account plus the negative amount calculated via the Experience Account Balance calculation to the Company within twenty (20) days following the receipt by the Company, shall constitute a complete Reinsurer from the Company of an executed full and final release of both parties from any and all further future liability hereunderon the part of the Reinsurer under this Agreement. G. In the event that commutation takes effect on or before September 30, 2005, the Reinsurer agrees to reimburse the Company an additional 1.0% of Ceded Net Earned Premium in addition to amounts as set forth herein.

Commutation. A. As respects The Company or the Reinsurer may request a commutation of this Contract at any time, upon providing written notice of a request to commute. If the Company and the Reinsurer agree to commute they shall, by mutual agreement, determine the Commutation Value or, in the absence of mutual agreement as to the Commutation Value, submit the determination of the Commutation Value to arbitration as set forth below. Payment by the Reinsurer of the Commutation Value shall constitute a complete and final release of the Reinsurer of all lossesclaims, known or unknownboth reported and unreported. For the avoidance of doubt, that may cause neither party shall have the unilateral right to require a claim commutation of this Contract. B. The Commutation Value shall be the amount necessary to compensate the Company for the reassumption of the remaining Reinsurer’s obligations under this Contract, including the losses associated risks. To the extent possible, the Commutation Value shall be commuted two years after determined in a manner consistent with the expiration determination of the original pricing of this Contract, as adjusted to be consistent with the remaining Reinsurer’s obligations and associated risks, relevant economic factors at the time of determination of the Commutation Value, and incorporating additional information that has emerged between the execution date of this Contract. As promptly as possible after such dateContract and the determination of the Commutation Value. C. If agreement cannot be reached, the Company shall submit a statement of valuation of the outstanding claim or claims showing the elements considered reasonable to establish the commutation amount, and, if and the Reinsurer concurs with shall mutually appoint an actuary or appraiser to investigate and determine the Company’s calculationappropriate Commutation Value. If both parties then agree, it the Reinsurer shall promptly pay the amount requestedCommutation Value so determined. B. D. If the parties fail to agree on agree, the commutation amount determined under paragraph A above, they Company and the Reinsurer shall settle any difference by mutually selecting an actuary to determine the commutation amount. If the parties cannot agree on a single actuary within 15 days after the Reinsurer’s notice that it does not concur with the Company’s statement of valuation, the parties shall settle the difference Commutation Value by using a panel of three actuaries. In that event, one to be chosen by each party shall and the third by the two so chosen. If either party refuses or neglects to appoint an actuary within 30 days after receipt of a request by the written request for commutation. Upon such appointmentother party, the other party may appoint two actuaries shall appoint a third actuaryactuaries. If the two actuaries fail to agree on the selection of a third actuary within 30 days of their appointment, each of them shall name three individualstwo, of whom the other shall decline two, one and the decision shall be made by drawing lots. The actuary or actuaries shall then investigate and capitalize such loss(es). All the actuaries shall be fellows regularly engaged in the valuation of claims which are the Casualty Actuarial Society or the American Academy subject of Actuaries, this Contract and shall be disinterested in the outcome Fellows of the commutationSociety of Actuaries. None of the actuaries shall be under the control of either party to this Contract. C. The Reinsurer’s proportion E. Each party shall submit its case to its actuary within 30 days of the amount so determined appointment of the third actuary. The decision in writing of any two actuaries, when filed with the parties hereto, shall be considered the Reinsurer’s total liability for determination of the losses, panel. The determination of the panel shall be binding on the parties. The expense of the actuaries and the Reinsurer shall pay the commutation amount promptly Effective: January 1, 2011 DOC: December 28, 2010 U4VT0004 15 of 36 after execution by both parties of a commutation and release agreement. Payment of the commutation amount shall be equally divided between the two parties. Said commutation shall take place in Schaumburg, Illinois, unless some other place is mutually agreed upon by the Company and the Reinsurer, and acceptance of that payment by the Company, shall constitute a complete release of both parties from all further liability hereunder.

Commutation. A. As respects all losses, known or unknown, that may cause a claim under this Contract, the Company may request, in writing, that the losses shall as respects a Contract Year are to be commuted two years at the end of any calendar quarter on or after 24 months following the expiration date end of this Contractthe Contract Year to be commuted. As promptly as possible Within 30 days after such date, the Company shall submit a statement of valuation of the outstanding claim or claims showing the elements considered reasonable to establish the commutation amount, and, if the Reinsurer concurs with the Company’s calculation, it the Reinsurer shall promptly pay the amount requested. B. If In the parties fail to event the Company and the Reinsurer cannot agree on the commutation amount determined under paragraph A abovevalue, they the Reinsurer and the Company shall settle any difference by mutually selecting appoint an independent actuary to who shall investigate and determine the commutation amountvalue. If In the parties event the Reinsurer and the Company cannot agree reach an agreement on a single actuary within 15 days after the Reinsurer’s notice that it does not concur with the Company’s statement of valuation, the parties shall settle the difference by using a panel of three actuaries. In that eventan independent actuary, each party shall appoint an actuary within 30 days after receipt of the written request for commutation. Upon such appointment, the two actuaries shall appoint a third actuary. If the two actuaries fail to agree on the selection of a third actuary within 30 days of their appointment, each of them shall name three individuals, of whom the other shall decline two, and the decision shall be made by drawing lots. The actuary or actuaries shall then investigate and capitalize determine the commutation value of such loss(es)losses. All actuaries shall be fellows of the Casualty Actuarial Society or the American Academy of Actuaries, and shall be disinterested in the outcome of the commutation. C. If the Company or the Reinsurer does not agree with the commutation value determined by the actuaries per paragraph B above, the Company or the Reinsurer shall have no obligation to commute. D. The Reinsurer’s proportion of the amount so determined in paragraph A or B above shall be considered the Reinsurer’s total liability for the losses, and the Reinsurer shall pay the commutation amount promptly Effective: January 1, 2011 DOC: December 28, 2010 U4VT0004 15 of 36 after execution by both parties of a commutation and release agreement. Payment The Reinsurer’s payment of the commutation amount by and any amount due under the Reinsurerprovisions of the Profit Sharing Article, and acceptance of that payment by the Company, shall constitute a complete release of both parties from all further liability hereunderas respects that Contract Year.

Commutation. A. As respects all losses, known or unknown, that may cause a claim under this Contract, the losses This Agreement shall be commuted two years after at one hundred twenty (120) months from the expiration date or termination of this ContractAgreement, or earlier as mutually agreed by the Company and the Reinsurers (the “Commutation Date”). B. Upon the Commutation Date, 1. As promptly the Reinsurers shall pay to the Company the present value of ceded Ultimate Net Loss outstanding and Incurred But Not Reported Ultimate Net Loss and any Ceding Commission adjustment along with special interest, calculated in accordance with the Article entitled CEDING COMMISSION as possible after such dateof the Commutation Date, utilizing an annual effective interest rate of three percent (3%); 2. the Company shall submit a statement of valuation pay to the Reinsurers one hundred percent (100%) of the outstanding claim balance of the Funds Held Account, which may be held in either a Segregated Account or claims showing Trust Account, as applicable, at the elements considered reasonable Commutation Date. If funds are held in a Segregated Account, any amount remaining in the Segregated Account, after payment of the Funds Held Account balance to establish the commutation amountReinsurers at the Commutation Date, and, if the Reinsurer concurs with shall be retained by the Company’s calculation; if funds are held in a Trust Account, it any amount remaining in the Trust Account, after payment of the Funds Held Account balance to the Reinsurers at the Commutation Date, shall promptly pay be returned to the amount requestedCompany. B. C. If the parties fail Reinsurers and the Company are not able to agree on such present value determination, such calculation shall be performed by an independent actuarial firm as mutually agreed by the commutation amount determined under paragraph A above, they shall settle any difference by mutually selecting an actuary to determine Company and the commutation amountReinsurers. If the parties cannot mutually agree on a single actuary within 15 days after the Reinsurer’s notice that it does not concur with the Company’s statement of valuation, the parties shall settle the difference by using a panel of three actuaries. In that eventan independent actuarial firm, each party shall appoint an actuary within 30 days after receipt of the written request for commutation. Upon such appointment, the two actuaries shall appoint a third actuary. If the two actuaries fail to agree on the selection of a third actuary within 30 days of their appointment, each of them shall name three individuals, of whom the other shall decline two, nominate one firm and the decision shall be made by drawing lots. The actuary or actuaries shall then investigate cost of such actuarial firm will be split evenly between the Company and capitalize such loss(es). All actuaries shall be fellows of the Casualty Actuarial Society or the American Academy of Actuaries, and shall be disinterested in the outcome of the commutationReinsurers. C. The Reinsurer’s proportion of D. Upon Commutation, the amount so determined shall be considered the Reinsurer’s total liability for the losses, Company and the Reinsurer Reinsurers shall pay the commutation amount promptly Effective: January 1, 2011 DOC: December 28, 2010 U4VT0004 15 of 36 after execution by both parties of receive a commutation full and release agreement. Payment of the commutation amount by the Reinsurer, and acceptance of that payment by the Company, shall constitute a complete final release of both parties from all further current and future liability hereunderunder this Agreement.

Commutation. A. As respects all losses, known or unknown, that may cause a claim under this Contract, the losses shall be commuted two years after the expiration date of this Contract. As promptly as possible after such date, the Company shall submit a statement of valuation of the outstanding claim or claims showing the elements considered reasonable to establish the commutation amount, and, if the Reinsurer concurs with the Company’s calculation, it shall promptly pay the amount requested. B. If the parties fail to agree on the commutation amount determined under paragraph A above, they shall settle any difference by mutually selecting an actuary to determine the commutation amount. If the parties cannot agree on a single actuary within 15 days after the Reinsurer’s notice that it does not concur with the Company’s statement of valuation, the parties shall settle the difference by using a panel of three actuaries. In that event, each party shall appoint an actuary within 30 days after receipt of the written request for commutation. Upon such appointment, the two actuaries shall appoint a third actuary. If the two actuaries fail to agree on the selection of a third actuary within 30 days of their appointment, each of them shall name three individuals, of whom the other shall decline two, and the decision shall be made by drawing lots. The actuary or actuaries shall then investigate and capitalize such loss(es). All actuaries shall be fellows of the Casualty Actuarial Society or the American Academy of Actuaries, and shall be disinterested in the outcome of the commutation.. Effective: January 1, 2011 DOC: December 28, 2010 U4VT0004 15 of 36 C. The Reinsurer’s proportion of the amount so determined shall be considered the Reinsurer’s total liability for the losses, and the Reinsurer shall pay the commutation amount promptly Effective: January 1, 2011 DOC: December 28, 2010 U4VT0004 15 of 36 after execution by both parties of a commutation and release agreement. Payment of the commutation amount by the Reinsurer, and acceptance of that payment by the Company, shall constitute a complete release of both parties from all further liability hereunder.

Commutation. A. (As respects all losses, known or unknown, that may cause a claim under Workers’ Compensation Claims) A. No later than eighty four (84) months following the termination of this Contract, the Company will submit a statement to the Reinsurers listing amounts paid, and reserves, in respect of the excess portion of all known Workers’ Compensation claims which occurred during the term of this Contract and which are not finally settled and are likely to result in claims under this Contract. This statement will form the basis of a final agreed present value for the excess portion of all such losses shall be commuted two years after reinsured under this Contract should both parties mutually agree to commute the expiration date Workers’ Compensation coverage part of this Contract. As promptly as possible after such date. B. In determining the present value of said losses in excess of the retention, the Company shall submit a statement of valuation will first calculate the undiscounted value excess of the outstanding claim or claims showing retention, subject to the elements considered reasonable to establish maximum amount of liability as provided in the commutation amountContract. The Company will then calculate the present value of that portion of the undiscounted Loss that exceeds the retention for those losses in accordance with generally accepted actuarial practices. C. If, and, if the Reinsurer concurs with upon receipt of such statement from the Company’s calculation, it shall promptly there is mutual agreement between the Company and the Reinsurers as to the present value of said losses, the Reinsurers will pay the agreed amount requestedin excess of the retention and subject to the maximum amount of liability as provided in each layer of coverage provided within this Contract. In the absence of mutual agreement as to the present value of said losses, the sole remedy to resolve disputes involving the determination of the present value of said losses will be as follows. B. If D. The Reinsurers, or the parties fail to agree on the commutation amount determined under paragraph A aboveCompany, they shall settle will request in writing that any difference be settled by mutually selecting an actuary to determine the commutation amount. If the parties cannot agree on a single actuary within 15 days after the Reinsurer’s notice that it does not concur with the Company’s statement of valuation, the parties shall settle the difference by using a panel of three (3) actuaries. In that event, one to be chosen by each party shall and the third by the two (2) so chosen. E. If either party refuses or neglects to appoint an actuary within 30 thirty (30) days after receipt the Reinsurers’ or Company’s request in writing that the differences be settled by a panel of the written request for commutation. Upon such appointmentthree (3) actuaries, the other party will appoint two actuaries shall appoint a third actuary. If the two actuaries fail to agree on the selection of a third actuary within 30 days of their appointment, each of them shall name three individuals, of whom the other shall decline two, and the decision shall be made by drawing lots. The actuary or actuaries shall then investigate and capitalize such loss(es)(2) actuaries. All the actuaries shall will be fellows regularly engaged in the evaluation of Workers’ Compensation claims and will be Fellows of the Casualty Actuarial Society or of the American Academy of Actuaries, and shall be disinterested in the outcome . None of the commutationactuaries will be under the control of either party to this Contract. C. F. Each party will submit its case to the actuary within thirty (30) days of the appointment of the third actuary. The Reinsurer’s decision in writing of any two (2) actuaries, when filed with the parties hereto, will be final and binding on both parties. The expense of the actuaries and of the commutation will be equally divided between the two (2) parties. Said commutation will take place in ▇▇▇▇▇▇ Barre, Pennsylvania, unless some other place is mutually agreed upon by the Company and the Reinsurers. G. The Reinsurers’ proportion of the amount amounts so determined shall will be considered the Reinsurer’s total liability for the lossesamount of Loss hereunder, and the Reinsurer shall pay the commutation amount promptly Effective: January 1, 2011 DOC: December 28, 2010 U4VT0004 15 of 36 after execution by both parties of a commutation and release agreement. Payment of the commutation amount payment thereof by the Reinsurer, and acceptance of that payment by the Company, shall Reinsurers will constitute a complete release of both parties from all further the Reinsurers of their liability hereunderfor such Loss or losses.