Common use of Contingent Collateral Clause in Contracts

Contingent Collateral. (This Article shall apply only to a Reinsurer with an A.M. Best insurance financial strength rating of "A" or below or a Standard & Poor's insurer financial strength rating of "A" or below at the effective date of this Agreement.) (This Article shall not apply to Lloyd's Syndicates who have satisfied their funding obligations to the Credit for Reinsurance Trust Fund (CRTF); however, in the instance where such funding requirements are reduced below 100%, then the provisions of this Article shall apply to any Lloyd's Syndicate and funding shall be required for the difference between 100% of the Reinsurer's Collateral funded to the CRTF.) (This Article shall not apply to the Reinsurer who has already fully funded reserves, under this Agreement, as per the provisions of the Funding of Reserves Article.) At any time subsequent to the inception of this Agreement, in the event that the Reinsurer: 1. has been assigned an A.M. Best's insurer financial strength rating below "A-" or a Standard & Poor's insurer financial strength rating below "A-" (a Standard & Poor's Insurance Solvency International rating of less than "BBB" shall apply as respects alien Reinsurers other than Underwriting Members of Lloyd's, London, and a Lloyd's Syndicate Assessment (LSA) rating of less than three shall apply as respects Underwriting Members of Lloyd's London); or 2. has suffered a surplus as regards policyholders loss of more than 25% (twenty-five percent) from either the inception of this Agreement or the date of the filing of the Reinsurer's most recent financial statement with the authorities having jurisdiction over the Reinsurer, 3. ceases writing new or renewal assumed reinsurance business, the Company may require that the Reinsurer provide Letters of Credit and/or establish a Trust Agreement, at the Reinsurer's own expense, to collateralize the sum of the following under this Agreement, as reported by the Company (hereinafter the "Reinsurer's Collateral"): a. the amount of loss and loss expense paid by the Company but not recovered from the Reinsurer; b. reserves for loss and loss expense reported and outstanding; c. reserves for loss and loss expense incurred but not reported; and d. if applicable, unearned premium. Such Reinsurer's Collateral shall be established by the Reinsurer within ten business days of receipt by the Reinsurer of the Company's written notice requesting the establishment of such Reinsurer's Collateral, and the notice shall be sent by the Company, to the Reinsurer, via certified mail or internationally recognized overnight courier service. The Reinsurer's Collateral shall be established and maintained in accordance with the provisions of the Funding of Reserves Article stated in this Agreement. If a Trust Agreement is established, the Reinsurer shall select the trustee bank with the consent of the Company, with such consent not to be unreasonably withheld. If the Reinsurer does not agree with the statement of the Reinsurer's Collateral as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's Collateral and such evaluation shall be binding upon the parties hereof. Such cost shall be shared equally between the Company and the Reinsurer. If the parties fail to agree on the selection of an independent national actuarial firm, each of the parties shall name two, of whom the other shall decline one, and the final decision shall be made by drawing lots. As respects the terms of this paragraph, any actuarial firm selected by drawing lots shall be disinterested in the outcome of the calculation and the employee of same engaged to evaluate the Reinsurer's Collateral hereunder shall not be under the influence of either party hereto and shall be a Fellow of the Casualty Actuarial Society. It is agreed by the parties hereto that the Arbitration Article of this Agreement shall not apply to the resolution of disputes arising under the terms of this paragraph. The evaluation by the independent national actuarial firm shall be binding on the Company and the Reinsurer. The Reinsurer shall bear all costs associated with establishing and maintaining the Letters of Credit and/or Trust Agreements as described in this Article The failure of the Company to enforce any provision of this Article shall not constitute a waiver by the Company of any such provision, irrespective of how long such failure continues. The past waiver of any provision of this Article, by the Company, shall not constitute a course of conduct or a waiver of the Company's rights in the future with respect to that same provision.

Contingent Collateral. (This Article shall apply only to a Reinsurer with an A.M. Best insurance financial strength rating of "“A" ” or below or a Standard & Poor's ’s insurer financial strength rating of "“A" ” or below at the effective date of this Reinsurance Agreement.) (This Article shall not apply to Lloyd's ’s Syndicates who have satisfied their funding obligations to the Credit for Reinsurance Trust Fund (CRTF); however, in the instance where such funding requirements are reduced below 100%, then the provisions of this Article shall apply to any Lloyd's ’s Syndicate and funding shall be required for the difference between 100% of the Reinsurer's ’s Collateral funded to the CRTF.) (This Article shall not apply to the Reinsurer who has already fully funded reserves, under this Reinsurance Agreement, as per the provisions of the Funding of Reserves Article or Reports and Remittances Article.) At any time subsequent to the inception of this Reinsurance Agreement, in the event that the Reinsurerthat: 1. the Reinsurer has been assigned an A.M. Best's ’s insurer financial strength rating below "“A-" ” or a Standard & Poor's ’s insurer financial strength rating below "“A-" ” (a Standard & Poor's ’s Insurance Solvency International rating of less than "“BBB" ” shall apply as respects alien Reinsurers other than Underwriting Members of Lloyd's’s, London, and a Lloyd's ’s Syndicate Assessment (LSA) rating of less than three shall apply as respects Underwriting Members of Lloyd's ’s London); or 2. the Reinsurer’s policyholders’ surplus (or the equivalent under the Reinsuer’s accounting system) as reported in such financial statements of the Reinsurer as designated by the Company has suffered a surplus as regards policyholders loss of more than been reduced by 25% (twenty-five percent) of the amount therof from either the inception date of this Reinsurance Agreement or from any date during the date 12-month period preceding the inception of the filing of the Reinsurer's most recent financial statement with the authorities having jurisdiction over the Reinsurerthis Reinsurance Agreement; or , 3. the Reinsurer ceases writing new or renewal assumed reinsurance business, the Company may require that the Reinsurer provide Letters of Credit and/or establish a Trust Agreement, at the Reinsurer's ’s own expense, to collateralize the sum of the following under this Reinsurance Agreement, as reported by the Company (hereinafter the "“Reinsurer's ’s Collateral"”): a. the amount of loss and loss expense paid by the Company but not recovered from the Reinsurer; ; b. reserves for loss and loss expense reported and outstanding; ; c. reserves for loss and loss expense incurred but not reported; and and d. if applicable, unearned premium. Surety Quota Share Treaty Effective: January 1, 2011 Page 12 of 16 Such Reinsurer's ’s Collateral shall be established by the Reinsurer within ten business days of receipt by the Reinsurer of the Company's ’s written notice requesting the establishment of such Reinsurer's ’s Collateral, and the notice shall be sent by the Company, to the Reinsurer, via certified mail or internationally recognized overnight courier service. The Reinsurer's ’s Collateral shall be established and maintained in accordance with the provisions of the Funding of Reserves Article stated in this Reinsurance Agreement. If a Trust Agreement is established, the Reinsurer shall select the trustee bank with the consent of the Company, with such consent not to be unreasonably withheld. If the Reinsurer does not agree with the statement of the Reinsurer's ’s Collateral as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's ’s Collateral. During such period of evaluation, the Reinsurer’s obligation to provide Reinsurer’s Collateral and such evaluation shall be binding upon the parties hereofremains unchanged. Such cost shall be shared equally between the Company and the Reinsurer. If the parties fail to agree on the selection of an independent national actuarial firm, each of the parties shall name two, of whom the other shall decline one, and the final decision shall be made by drawing lots. As respects the terms of this paragraph, any actuarial firm selected by drawing lots shall be disinterested in the outcome of the calculation and the employee of same engaged to evaluate the Reinsurer's ’s Collateral hereunder shall not be under the influence of either party hereto and shall be a Fellow of the Casualty Actuarial Society. It is agreed by the parties hereto that the Arbitration Article of this Reinsurance Agreement shall not apply to the resolution of disputes arising under the terms of this paragraph. The evaluation by the independent national actuarial firm shall be binding on the Company and the Reinsurer with respect to the amount of the Reinsurer’s Collateral. The Reinsurer shall bear all costs associated with establishing and maintaining the Letters of Credit and/or Trust Agreements as described in this Article The failure of the Company to enforce any provision of this Article shall not constitute a waiver by the Company of any such provision, irrespective of how long such failure continues. The past waiver of any provision of this Article, by the Company, shall not constitute a course of conduct or a waiver of the Company's ’s rights in the future with respect to that same provision.

Contingent Collateral. (This Article shall apply only to a Reinsurer with an A.M. Best insurance financial strength rating of "“A" ” or below or a Standard & Poor's ’s insurer financial strength rating of "“A" ” or below at the effective date of this Reinsurance Agreement.) (This Article shall not apply to Lloyd's ’s Syndicates who have satisfied their funding obligations to the Credit for Reinsurance Trust Fund (CRTF); however, in the instance where such funding requirements are reduced below 100%, then the provisions of this Article shall apply to any Lloyd's ’s Syndicate and funding shall be required for the difference between 100% of the Reinsurer's ’s Collateral funded to the CRTF.) (This Article shall not apply to the Reinsurer who has already fully funded reserves, under this Reinsurance Agreement, as per the provisions of the Funding of Reserves Article or Reports and Remittances Article.) At any time subsequent to the inception of this Reinsurance Agreement, in the event that the Reinsurerthat: 1. the Reinsurer has been assigned an A.M. Best's ’s insurer financial strength rating below "“A-" ” or a Standard & Poor's ’s insurer financial strength rating below "“A-" ” (a Standard & Poor's ’s Insurance Solvency International rating of less than "“BBB" ” shall apply as respects alien Reinsurers other than Underwriting Members of Lloyd's’s, London, and a Lloyd's ’s Syndicate Assessment (LSA) rating of less than three shall apply as respects Underwriting Members of Lloyd's ’s London); or 2. the Reinsurer’s policyholders’ surplus (or the equivalent under the Reinsuer’s accounting system) as reported in such financial statements of the Reinsurer as designated by the Company has suffered a surplus as regards policyholders loss of more than been reduced by 25% (twenty-five percent) of the amount therof from either the inception date of this Reinsurance Agreement or from any date during the date 12-month period preceding the inception of the filing of the Reinsurer's most recent financial statement with the authorities having jurisdiction over the Reinsurerthis Reinsurance Agreement; or , 3. the Reinsurer ceases writing new or renewal assumed reinsurance business, the Company may require that the Reinsurer provide Letters of Credit and/or establish a Trust Agreement, at the Reinsurer's ’s own expense, to collateralize the sum of the following under this Reinsurance Agreement, as reported by the Company (hereinafter the "“Reinsurer's ’s Collateral"”): a. the amount of loss and loss expense paid by the Company but not recovered from the Reinsurer; ; b. reserves for loss and loss expense reported and outstanding; ; c. reserves for loss and loss expense incurred but not reported; and and d. if applicable, unearned premium. Such Reinsurer's ’s Collateral shall be established by the Reinsurer within ten business days of receipt by the Reinsurer of the Company's ’s written notice requesting the establishment of such Reinsurer's ’s Collateral, and the notice shall be sent by the Company, to the Reinsurer, via certified mail or internationally recognized overnight courier service. The Reinsurer's ’s Collateral shall be established and maintained in accordance with the provisions of the Funding of Reserves Article stated in this Reinsurance Agreement. If a Trust Agreement is established, the Reinsurer shall select the trustee bank with the consent of the Company, with such consent not to be unreasonably withheld. If the Reinsurer does not agree with the statement of the Reinsurer's ’s Collateral as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's ’s Collateral. During such period of evaluation, the Reinsurer’s obligation to provide Reinsurer’s Collateral and such evaluation shall be binding upon the parties hereofremains unchanged. Such cost shall be shared equally between the Company and the Reinsurer. If the parties fail to agree on the selection of an independent national actuarial firm, each of the parties shall name two, of whom the other shall decline one, and the final decision shall be made by drawing lots. As respects the terms of this paragraph, any actuarial firm selected by drawing lots shall be disinterested in the outcome of the calculation and the employee of same engaged to evaluate the Reinsurer's ’s Collateral hereunder shall not be under the influence of either party hereto and shall be a Fellow of the Casualty Actuarial Society. It is agreed by the parties hereto that the Arbitration Article of this Reinsurance Agreement shall not apply to the resolution of disputes arising under the terms of this paragraph. The evaluation by the independent national actuarial firm shall be binding on the Company and the Reinsurer with respect to the amount of the Reinsurer’s Collateral. The Reinsurer shall bear all costs associated with establishing and maintaining the Letters of Credit and/or Trust Agreements as described in this Article The failure of the Company to enforce any provision of this Article shall not constitute a waiver by the Company of any such provision, irrespective of how long such failure continues. The past waiver of any provision of this Article, by the Company, shall not constitute a course of conduct or a waiver of the Company's ’s rights in the future with respect to that same provision.

Contingent Collateral. (This Article shall apply only to a Reinsurer with an A.M. Best insurance financial strength rating of "“A" ” or below or a Standard & Poor's ’s insurer financial strength rating of "“A" ” or below at the effective date of this Agreement.) (This Article shall not apply to Lloyd's ’s Syndicates who have satisfied their funding obligations to the Credit for Reinsurance Trust Fund (CRTF); however, in the instance where such funding requirements are reduced below 100%, then the provisions of this Article shall apply to any Surety Quota Share Treaty Effective: January 1, 2007 Page 11 of 15 Lloyd's ’s Syndicate and funding shall be required for the difference between 100% of the Reinsurer's ’s Collateral funded to the CRTF.) (This Article shall not apply to the Reinsurer who has already fully funded reserves, under this Agreement, as per the provisions of the Funding of Reserves Article or Reports and Remittances Article.) At any time subsequent to the inception of this Agreement, in the event that the Reinsurer: 1. has been assigned an A.M. Best's ’s insurer financial strength rating below "“A-" ” or a Standard & Poor's ’s insurer financial strength rating below "“A-" ” (a Standard & Poor's ’s Insurance Solvency International rating of less than "“BBB" ” shall apply as respects alien Reinsurers other than Underwriting Members of Lloyd's’s, London, and a Lloyd's ’s Syndicate Assessment (LSA) rating of less than three shall apply as respects Underwriting Members of Lloyd's ’s London); or 2. has suffered a surplus as regards policyholders loss of more than 25% (twenty-five percent) from either the inception of this Agreement or the date of the filing of the Reinsurer's ’s most recent financial statement with the authorities having jurisdiction over the Reinsurer, 3. ceases writing new or renewal assumed reinsurance business, the Company may require that the Reinsurer provide Letters of Credit and/or establish a Trust Agreement, at the Reinsurer's ’s own expense, to collateralize the sum of the following under this Agreement, as reported by the Company (hereinafter the "“Reinsurer's ’s Collateral"”): a. the amount of loss and loss expense paid by the Company but not recovered from the Reinsurer; ; b. reserves for loss and loss expense reported and outstanding; ; c. reserves for loss and loss expense incurred but not reported; and and d. if applicable, unearned premium. Such Reinsurer's ’s Collateral shall be established by the Reinsurer within ten business days of receipt by the Reinsurer of the Company's ’s written notice requesting the establishment of such Reinsurer's ’s Collateral, and the notice shall be sent by the Company, to the Reinsurer, via certified mail or internationally recognized overnight courier service. The Reinsurer's ’s Collateral shall be established and maintained in accordance with the provisions of the Funding of Reserves Article stated in this Agreement. If a Trust Agreement is established, the Reinsurer shall select the trustee bank with the consent of the Company, with such consent not to be unreasonably withheld. If the Reinsurer does not agree with the statement of the Reinsurer's ’s Collateral as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's ’s Collateral. During such period of evaluation, the Reinsurer’s obligation to provide Reinsurer’s Collateral and such evaluation shall be binding upon the parties hereofremains unchanged. Such cost shall be shared equally between the Company and the Reinsurer. If the parties fail to agree on the selection of an independent national actuarial firm, each of the parties shall name two, of whom the other shall decline one, and the final decision shall be made by drawing lots. As respects the terms of this paragraph, any actuarial firm selected by drawing lots shall be disinterested in the outcome of Surety Quota Share Treaty Effective: January 1, 2007 Page 12 of 15 the calculation and the employee of same engaged to evaluate the Reinsurer's ’s Collateral hereunder shall not be under the influence of either party hereto and shall be a Fellow of the Casualty Actuarial Society. It is agreed by the parties hereto that the Arbitration Article of this Agreement shall not apply to the resolution of disputes arising under the terms of this paragraph. The evaluation by the independent national actuarial firm shall be binding on the Company and the Reinsurer with respect to the amount of the Reinsurer’s Collateral. The Reinsurer shall bear all costs associated with establishing and maintaining the Letters of Credit and/or Trust Agreements as described in this Article Article. The failure of the Company to enforce any provision of this Article shall not constitute a waiver by the Company of any such provision, irrespective of how long such failure continues. The past waiver of any provision of this Article, by the Company, shall not constitute a course of conduct or a waiver of the Company's ’s rights in the future with respect to that same provision.

Contingent Collateral. (This Article shall apply only to a Reinsurer with an A.M. Best insurance insurer financial strength rating of "“A" ” or below or a Standard & Poor's ’s insurer financial strength rating of "“A" ” or below at the effective date of this AgreementContract.) (This Article shall not apply to Lloyd's ’s Syndicates who have satisfied their funding obligations to the Credit for Reinsurance Trust Fund (CRTF); however, in the instance where such funding requirements are reduced below 100%, then the provisions of this Article shall apply to any Lloyd's ’s Syndicate and funding shall be required for the difference between 100% of the Reinsurer's ’s Collateral, as defined in this Article, and the percentage of the Reinsurer’s Collateral funded to the CRTF.) (This Article shall not apply to the Reinsurer who has already fully funded reserves, under this AgreementContract, as per the provisions of the Funding of Reserves Article.) At any time subsequent to the inception of this AgreementContract, in the event that the Reinsurerthat: 1. the Reinsurer has been assigned an A.M. Best's ’s insurer financial strength rating below "“A-" “ or a Standard & Poor's ’s insurer financial strength rating below "“A-" “ (a Standard & Poor's ’s Insurance Solvency International rating of less than "“BBB" ” shall apply as respects an alien Reinsurers Reinsurer other than Underwriting Members of Lloyd's’s, London, and a Lloyd's ’s Syndicate Assessment (LSA) rating of less than three shall apply as respects Underwriting Members of Lloyd's ’s London); or 2. the Reinsurer’s policyholders’ surplus (or the equivalent under the Reinsurer’s accounting system) as reported in such financial statements of the Reinsurer as designated by the Company, has suffered a surplus as regards policyholders loss of more than been reduced by 25% (twenty-five percent) of the amount thereof from either the inception date of this Agreement Contract or from any date during the date 12-month period preceding the inception of the filing of the Reinsurer's most recent financial statement with the authorities having jurisdiction over the Reinsurer,this Contract; or 3. the Reinsurer ceases writing new or renewal assumed reinsurance business, the Company may require that the Reinsurer provide Letters of Credit and/or establish a Trust Agreement, at the Reinsurer's ’s own expense, to collateralize the sum of the following under this AgreementContract, as reported by the Company (hereinafter the "“Reinsurer's ’s Collateral"”): a. the amount of loss and loss expense paid by the Company but not recovered from the Reinsurer; ; b. reserves for loss and loss expense reported and outstanding; ; c. reserves for loss and loss expense incurred but not reported; and and d. if applicable, unearned premium. Such Reinsurer's ’s Collateral shall be established by the Reinsurer within ten 10 business days of receipt by the Reinsurer of the Company's ’s written notice requesting the establishment of such Reinsurer's ’s Collateral, and the notice shall be sent by the Company, to the Reinsurer, via certified mail or internationally recognized overnight courier service. The Reinsurer's ’s Collateral shall be established and maintained in accordance with the provisions of the Funding of Reserves Article stated in this AgreementContract. If a Trust Agreement is established, the Reinsurer shall select the trustee bank with the consent of the Company, with such consent not to be unreasonably withheld. If the Reinsurer does not agree with the statement of the Reinsurer's ’s Collateral as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's ’s Collateral. During such period of evaluation, the Reinsurer’s obligation to provide Reinsurer’s Collateral and such remains unchanged. The cost of the evaluation shall be binding upon the parties hereof. Such cost shall be shared equally between the Company and the Reinsurer. If the parties fail to agree on the selection of an independent national actuarial firm, each of the parties shall name two, of whom the other shall decline one, and the final decision shall be made by drawing lots. As respects the terms of this paragraph, any actuarial firm selected by drawing lots shall be disinterested in the outcome of the calculation and the employee of same engaged to evaluate the Reinsurer's ’s Collateral hereunder shall not be under the influence of either party hereto and shall be a Fellow of the Casualty Actuarial Society. It is agreed by the parties hereto that the Arbitration Article of this Agreement Contract shall not apply to the resolution of disputes arising under the terms of this paragraph. The evaluation by the independent national actuarial firm shall be binding on the Company and the Reinsurer with respect to the amount of the Reinsurer’s Collateral. The Reinsurer shall bear all costs associated with establishing and maintaining the Letters of Credit and/or Trust Agreements as described in this Article Article. The failure of the Company to enforce any provision of this Article shall not constitute a waiver by the Company of any such provision, irrespective of how long such failure continues. The past waiver of any provision of this Article, by the Company, shall not constitute a course of conduct or a waiver of the Company's ’s rights in the future with respect to that same provision.

Contingent Collateral. (This Article shall apply only to a Reinsurer with an A.M. Best insurance financial strength rating of "A" or below or a Standard & Poor's insurer financial strength rating of "A" or below at the effective date of this Agreement.) (This Article shall not apply to Lloyd's Syndicates who have satisfied their funding obligations to the Credit for Reinsurance Trust Fund (CRTF); however, in the instance where such funding requirements are reduced below 100%, then the provisions of this Article shall apply to any Lloyd's Syndicate and funding shall be required for the difference between 100% of the Reinsurer's Collateral funded to the CRTF.) (This Article shall not apply to the Reinsurer who has already fully funded reserves, under this Agreement, as per the provisions of the Funding of Reserves Article.) At any time subsequent to the inception of this Reinsurance Agreement, in the event that the Reinsurerthat: 1. the Reinsurer has been assigned an A.M. Best's ’s insurer financial strength rating below "“A-" ” or a Standard & Poor's ’s insurer financial strength rating below "“A-" ” (a Standard & Poor's ’s Insurance Solvency International rating of less than "“BBB" ” shall apply as respects alien Reinsurers other than Underwriting Members of Lloyd's’s, London, and a Lloyd's ’s Syndicate Assessment (LSA) rating of less than three shall apply as respects Underwriting Members of Lloyd's ’s London); or 2. the Reinsurer’s policyholders’ surplus (or the equivalent under the Reinsuer’s accounting system) as reported in such financial statements of the Reinsurer as designated by the Company has suffered a surplus as regards policyholders loss of more than been reduced by 25% (twenty-five percent) of the amount therof from either the inception date of this Reinsurance Agreement or from any date during the date 12-month period preceding the inception of the filing of the Reinsurer's most recent financial statement with the authorities having jurisdiction over the Reinsurerthis Reinsurance Agreement; or , 3. the Reinsurer ceases writing new or renewal assumed reinsurance business, the Company may require that the Reinsurer provide Letters of Credit and/or establish a Trust Agreement, at the Reinsurer's ’s own expense, to collateralize the sum of the following under this Reinsurance Agreement, as reported by the Company (hereinafter the "“Reinsurer's ’s Collateral"”): a. the amount of loss and loss expense paid by the Company but not recovered from the Reinsurer; ; b. reserves for loss and loss expense reported and outstanding; ; c. reserves for loss and loss expense incurred but not reported; and and d. if applicable, unearned premium. Such Reinsurer's ’s Collateral shall be established by the Reinsurer within ten business days of receipt by the Reinsurer of the Company's ’s written notice requesting the establishment of such Reinsurer's ’s Collateral, and the notice shall be sent by the Company, to the Reinsurer, via certified mail or internationally recognized overnight courier service. The Reinsurer's ’s Collateral shall be established and maintained in accordance with the provisions of the Funding of Reserves Article stated in this Reinsurance Agreement. If a Trust Agreement is established, the Reinsurer shall select the trustee bank with the consent of the Company, with such consent not to be unreasonably withheld. If the Reinsurer does not agree with the statement of the Reinsurer's ’s Collateral as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's ’s Collateral. During such period of evaluation, the Reinsurer’s obligation to provide Reinsurer’s Collateral and such evaluation shall be binding upon the parties hereofremains unchanged. Such cost shall be shared equally between the Company and the Reinsurer. If the parties fail to agree on the selection of an independent national actuarial firm, each of the parties shall name two, of whom the other shall decline one, and the final decision shall be made by drawing lots. As respects the terms of this paragraph, any actuarial firm selected by drawing lots shall be disinterested in the outcome of the calculation and the employee of same engaged to evaluate the Reinsurer's ’s Collateral hereunder shall not be under the influence of either party hereto and shall be a Fellow of the Surety Canada Quota Share Treaty Effective: January 1, 2011 Page 12 of 15 Casualty Actuarial Society. It is agreed by the parties hereto that the Arbitration Article of this Reinsurance Agreement shall not apply to the resolution of disputes arising under the terms of this paragraph. The evaluation by the independent national actuarial firm shall be binding on the Company and the Reinsurer with respect to the amount of the Reinsurer’s Collateral. The Reinsurer shall bear all costs associated with establishing and maintaining the Letters of Credit and/or Trust Agreements as described in this Article The failure of the Company to enforce any provision of this Article shall not constitute a waiver by the Company of any such provision, irrespective of how long such failure continues. The past waiver of any provision of this Article, by the Company, shall not constitute a course of conduct or a waiver of the Company's ’s rights in the future with respect to that same provision.

Contingent Collateral. (This Article shall apply only to a Reinsurer with an A.M. Best insurance financial strength rating of "A" or below or a Standard & Poor's insurer financial strength rating of "A" or below at the effective date of this Agreement.) (This Article shall not apply to Lloyd's Syndicates who have satisfied their funding obligations to the Credit for Reinsurance Trust Fund (CRTF); however, in the instance where such funding requirements are reduced below 100%, then the provisions of this Article shall apply to any Lloyd's Syndicate and funding shall be required for the difference between 100% of the Reinsurer's Collateral funded to the CRTF.) (This Article shall not apply to the Reinsurer who has already fully funded reserves, under this Agreement, as per the provisions of the Funding of Reserves Article.) At any time subsequent to the inception of this Reinsurance Agreement, in the event that the Reinsurerthat: 1. the Reinsurer has been assigned an A.M. Best's ’s insurer financial strength rating below "“A-" ” or a Standard & Poor's ’s insurer financial strength rating below "“A-" ” (a Standard & Poor's ’s Insurance Solvency International rating of less than "“BBB" ” shall apply as respects alien Reinsurers other than Underwriting Members of Lloyd's’s, London, and a Lloyd's ’s Syndicate Assessment (LSA) rating of less than three shall apply as respects Underwriting Members of Lloyd's ’s London); or 2. the Reinsurer’s policyholders’ surplus (or the equivalent under the Reinsuer’s accounting system) as reported in such financial statements of the Reinsurer as designated by the Company has suffered a surplus as regards policyholders loss of more than been reduced by 25% (twenty-five percent) of the amount therof from either the inception date of this Reinsurance Agreement or from any date during the date 12-month period preceding the inception of the filing of the Reinsurer's most recent financial statement with the authorities having jurisdiction over the Reinsurerthis Reinsurance Agreement; or , 3. the Reinsurer ceases writing new or renewal assumed reinsurance business, the Company may require that the Reinsurer provide Letters of Credit and/or establish a Trust Agreement, at the Reinsurer's ’s own expense, to collateralize the sum of the following under this Reinsurance Agreement, as reported by the Company (hereinafter the "“Reinsurer's ’s Collateral"”): a. the amount of loss and loss expense paid by the Company but not recovered from the Reinsurer; ; b. reserves for loss and loss expense reported and outstanding; ; c. reserves for loss and loss expense incurred but not reported; and and d. if applicable, unearned premium. Such Reinsurer's ’s Collateral shall be established by the Reinsurer within ten business days of receipt by the Reinsurer of the Company's ’s written notice requesting the establishment of such Reinsurer's ’s Collateral, and the notice shall be sent by the Company, to the Reinsurer, via certified mail or internationally recognized overnight courier service. The Reinsurer's ’s Collateral shall be established and maintained in accordance with the provisions of the Funding of Reserves Article stated in this Reinsurance Agreement. If a Trust Agreement is established, the Reinsurer shall select the trustee bank with the consent of the Company, with such consent not to be unreasonably withheld. If the Reinsurer does not agree with the statement of the Reinsurer's ’s Collateral as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's ’s Collateral. During such period of evaluation, the Reinsurer’s obligation to provide Reinsurer’s Collateral and such evaluation shall be binding upon the parties hereofremains unchanged. Such cost shall be shared equally between the Company and the Reinsurer. If the parties fail to agree on the selection of an independent national actuarial firm, each of the parties shall name two, of whom the other shall decline one, and the final decision shall be made by drawing lots. As respects the terms of this paragraph, any actuarial firm selected by drawing lots shall be disinterested in the outcome of the calculation and the employee of same engaged to evaluate the Reinsurer's ’s Collateral hereunder shall not be under the influence of either party hereto and shall be a Fellow of the Casualty Actuarial Society. It is agreed by the parties hereto that the Arbitration Article of this Reinsurance Agreement shall not apply to the resolution of disputes arising under the terms of this paragraph. The evaluation by the independent national actuarial firm shall be binding on the Company and the Reinsurer with respect to the amount of the Reinsurer’s Collateral. Surety Canada Quota Share Treaty Effective: January 1, 2010 Page 12 of 15 The Reinsurer shall bear all costs associated with establishing and maintaining the Letters of Credit and/or Trust Agreements as described in this Article The failure of the Company to enforce any provision of this Article shall not constitute a waiver by the Company of any such provision, irrespective of how long such failure continues. The past waiver of any provision of this Article, by the Company, shall not constitute a course of conduct or a waiver of the Company's ’s rights in the future with respect to that same provision.