Common use of FUNDING OF RESERVES Clause in Contracts

FUNDING OF RESERVES. (This Article is only applicable if the Reinsurer cannot qualify for credit by each governmental authority having jurisdiction over the Company's reserves.) As regards Policies issued by the Company coming within the scope of this Contract, the Company agrees that, when it files with the Insurance Department or sets up on its books reserves for losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves applicable to it. The Reinsurer hereby agrees that it shall apply for and secure delivery to the Company of a clean, irrevocable, unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Office, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company. The Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days prior to any expiration date the issuing bank notifies the Company by registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this Contract, the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because of the insolvency of the Company or of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies. B. To pay the Reinsurer's share or to reimburse the Company for the Reinsurer's share of any Loss reinsured by this Contract, which has not been otherwise paid. C. To make refund of any sum in excess of the actual amount required to pay the Reinsurer's share of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. At annual intervals, or more frequently as agreed but never more frequently than semi-annually, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then the Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Article.

FUNDING OF RESERVES. (This Article is only applicable if the Reinsurer cannot qualify for credit by each governmental authority having jurisdiction over the Company's reserves.) As regards Policies issued by the Company coming within the scope of this ContractAgreement, the Company agrees that, when it files with the Insurance Department or sets up on its books reserves for losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves applicable to it. The Reinsurer hereby agrees that it shall apply for and secure delivery to the Company of a clean, irrevocable, unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Office, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company. The Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days prior to any expiration date the issuing bank notifies the Company by registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractAgreement, the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because of the insolvency of the Company or of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies. B. To pay the Reinsurer's share or to reimburse the Company for the Reinsurer's share of any Loss reinsured by this ContractAgreement, which has not been otherwise paid. C. To make refund of any sum in excess of the actual amount required to pay the Reinsurer's share of any liability reinsured by this ContractAgreement. D. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this ContractAgreement. E. To pay any other amounts the Company claims are due under this ContractAgreement. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. At annual intervals, or more frequently as agreed but never more frequently than semi-annually, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then the Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Article.

FUNDING OF RESERVES. (This Article is only applicable if the Reinsurer cannot qualify for credit by each governmental authority having jurisdiction over the Company's reserves.) As regards Policies policies or bonds issued by the Company coming within the scope of this ContractAgreement, the Company agrees that, that when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for losses (including Loss losses, unearned premium reserves and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an loss development allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is shall be required by law to set up, it shall will forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees that it shall will fund such reserves by trust agreements for the benefit of the Company, letters of credit, or a combination thereof, in an amount equal to the Reinsurer's proportion of reserves in respect of losses, unearned premium reserves, incurred but not reported reserves for losses and loss expense, allocated loss adjustment expense relating thereto, and losses and allocated loss adjustment expense paid by the Company but not recovered from the Reinsurer as shown in the statement prepared by the Company (hereinafter referred to as "Reinsurer's Obligations"). If the Reinsurer's choice of funding is or includes a letter of credit, it will apply for and secure delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Officebank, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Companyreserves. The Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 thirty (30) days prior to any expiration date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank, not a member The Reinsurer and the Company agree that the trust agreements and/or Letters of Credit provided by the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractAgreement may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes, unless otherwise provided for in a separate Trust Agreement: B. To pay the Reinsurer's share or A. to reimburse the Company for the Reinsurer's share Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Agreement and which has not been otherwise paid.; C. To B. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's share Obligations under this Agreement; C. to fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of any liability reinsured by this Contract. D. the prime rate shall accrue to the benefit of the Reinsurer. In the event of nonextension of Letters the amount drawn by the Company on any trust agreement and/or Letter of Credit as provided for above, to establish deposits is in excess of the Reinsurer's share of reserves actual amount required for losses and/or unearned premium under this Contract. E. To pay any other amounts A) or C), the Company claims are due under this Contractshall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. At annual intervals, or more frequently as agreed agreed, but never more frequently than semi-annuallyquarterly, the Company shall prepareprepare a specific statement of the Reinsurer's Obligations, for the sole purpose of amending the trust agreement and/or Letter of Credit, a specific statement of in the Reinsurer's share of loss and/or unearned premium reserves. If following manner: A. if the statement shows that the Reinsurer's share of such reserves exceeds Obligations exceed the balance of credit as of the statement date, then the Reinsurer shall, within 30 thirty (30) days after receipt of notice of such excess, secure delivery to the Company of an amendment to the trust agreement and/or Letter of Credit increasing the amount of credit by the amount of such difference. If, ; B. if however, the statement shows that the Reinsurer's share of such reserves is Obligations are less than the balance of credit as of the statement date, the Company shall, shall within 30 thirty (30) days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the trust agreement and/or Letter of Credit, Credit reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Article.

FUNDING OF RESERVES. A. The Reinsurer agrees to fund its share of the Company’s ceded unearned premium (This Article including, but not limited to, the unearned portion of any deposit premium installment) and outstanding loss and Loss Adjustment Expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known Loss Occurrences) by: 1. Clean, irrevocable and unconditional letter of credit issued and confirmed, if confirmation is only applicable required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or 2. Escrow accounts for the benefit of the Company; and/or 3. Cash advances; if the Reinsurer cannot qualify for credit by each governmental authority Reinsurer: 1. Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company's reserves.) As regards Policies issued by Company and if, without such funding, a penalty would accrue to the Company coming within the scope of this Contract, the Company agrees that, when it files with the Insurance Department or sets up on its books reserves for losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which any financial statement it is required by law to set upfile with the insurance regulatory authorities involved; or 2. Has experienced any of the circumstances described in paragraph C of the Term Article. However, it if such circumstance is rectified, then no special funding requirements shall forward apply and any such current funding in accordance with the provisions above shall be released to the Reinsurer a statement showing Reinsurer. For purposes of this Agreement, the proportion of such reserves applicable to itLloyd’s United States Credit for Reinsurance Trust Fund shall be considered an acceptable funding instrument. The Reinsurer hereby agrees that it shall apply for Reinsurer, at its sole option, may fund in other than cash if its method and secure delivery to the Company form of a clean, irrevocable, unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Office, and containing provisions funding are acceptable to the insurance regulatory authorities involved. B. If a Subscribing Reinsurer fails to fulfill its funding obligation (if any) under this Article, the Company may, at its option, require the Subscribing Reinsurer to pay, and the Subscribing Reinsurer agrees to pay, any interest charge on the funding obligation calculated on the last business day of each month as follows: 1. The number of full days that have expired since the earliest of the applicable following dates: a. As respects a Subscribing Reinsurer that is unauthorized in any state of the United States of America or District of Columbia having jurisdiction over the Company's reserves , December 31 of the calendar year in an amount equal which the funding was required; b. As respects a Subscribing Reinsurer that has experienced any of the circumstances described in paragraph C of the Term Article, the first date such circumstance occurs; times: 2. 1 365ths of the sum of 2.0% and the U.S. prime rate as quoted in The Wall Street Journal on the first day of the month for which the calculation is made; times 3. The funding obligation, less the amount, if any, funded by the Subscribing Reinsurer prior to the Reinsurer's proportion applicable date determined in subparagraph 1 above. It is agreed that interest shall accumulate until the full interest charge amount as provided for in this paragraph and the funding obligation are paid. If the interest rate provided under this Article exceeds the maximum interest rate allowed by any applicable law or is held unenforceable by an arbitrator or a court of reserves as shown in competent jurisdiction, such interest rate shall be modified to the statement prepared highest rate permitted by the Company. The Letter applicable law, and all remaining provisions of Credit this Article and Agreement shall remain in full force and effect without being impaired or invalidated in any way. C. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a period term of at least one year and will involve an “evergreen clause,” which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days prior to any said expiration date date. The Company and the issuing bank notifies the Company by registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bankReinsurer further agree, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice notwithstanding anything to the Company prior to any expiration contrary in the event this Agreement, that said letter of nonextension. Notwithstanding any other provisions of this Contract, credit may be drawn upon by the Company or its court-appointed successor successors in interest may draw upon such credit at any time time, without diminution because of the insolvency of the Company or of any Reinsurer the Reinsurer, but only for one or more of the following purposes onlypurposes: A. 1. To reimburse itself for the Company Reinsurers’ share of losses and/or Loss Adjustment Expense paid under the terms of Policies reinsured hereunder, unless paid in cash by the Reinsurer; 2. To reimburse itself for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies. B. To pay the Reinsurer's share or to reimburse the Company for the Reinsurer's ’s share of any other amounts claims to be due hereunder, unless paid in cash by the Reinsurer; 3. To fund a cash account in an amount equal to the Reinsurer’s share of any ceded unearned premium and/or outstanding loss and Loss reinsured Adjustment Expense reserves (including all case reserves plus any reasonable amount estimated to be unreported for known Loss Occurrences) funded by this Contractmeans of a letter of credit which is under non-renewal notice, which if said letter of credit has not been otherwise paid.renewed or replaced by the Reinsurer 10 days prior to its expiration date; C. 4. To make refund of to the Reinsurer any sum sums in excess of the actual amount required to pay fund the Reinsurer's ’s share of the Company’s ceded unearned premium and/or outstanding loss and Loss Adjustment Expense reserves (including all case reserves plus any liability reinsured reasonable amount estimated to be unreported from known Loss Occurrences), if so requested by this Contract.the Reinsurer; and D. 5. To reimburse itself for the Reinsurer’s portion of the unearned reinsurance premium paid to the Reinsurer hereunder. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made amount drawn by the Company or the disposition on any letter of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives credit is in excess of the Company. At annual intervalsactual amount required for C(1), C(3), or more frequently as agreed but never more frequently than semi-annuallyC(5), or in the case of C(2), the actual amount determined to be due, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then promptly return to the Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Articleso drawn.

FUNDING OF RESERVES. (This Article is only applicable if applies to the Reinsurer canwho does not qualify for credit by each any state or any other governmental authority having jurisdiction over the Company's reserves’s loss reserves and/or to the Reinsurer to which the provisions of the Contingent Collateral Article apply should the Company exercise its option under such Article.) ) A. As regards Policies policies issued by the Company coming within the scope of this ContractReinsurance Agreement, the Company agrees that, that when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for unearned premium and losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is shall be required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of unearned premium, known outstanding losses that have been reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as “Reinsurer’s Obligations”) by cash advances, Trust Agreement or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it shall is acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves and provided that the issuing bank (i) is approved by the NAIC Securities Valuation Office for Letters of Credit and (ii) if applicable, has been assigned a Credit Rating by the LACE Financial Corporation of “C” or above for both Letters of Credit and Trust Agreements. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, Credit issued by a member of the Federal Reserve System or any bank approved for use consented to by the NAIC Securities Valuation OfficeCompany with such consent not being unreasonably withheld, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's ’s reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company’s Obligations. The Such Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 60 calendar days (90 calendar days where required by insurance regulatory authorities) prior to any expiration date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An At any time subsequent to the issuance of the Letter of Credit or establishment of the Trust Agreement, the Company may withdraw its consent to the use of an issuing bank, not a member of the Federal Reserve System or not chartered with such withdrawal right to be exercised in the state Company’s reasonable discretion, and the Reinsurer shall move the collateral to another Company-approved issuing bank in accordance with the provisions of domicile paragraph A. C. The Reinsurer and Company agree that the Letters of Credit, or other method of funding, provided by the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractArticle may be drawn upon at any time, notwithstanding any other provision of this Reinsurance Agreement, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes: B. To pay the Reinsurer's share or 1. to reimburse the Company for the Reinsurer's share ’s Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Reinsurance Agreement and which has not been otherwise paid.; C. To 2. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's ’s Obligations under this Reinsurance Agreement; 3. to fund an account with the Company for the Reinsurer’s Obligations; 4. to pay the Reinsurer’s share of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this ContractReinsurance Agreement. D. In the event the amount drawn by the Company on any Letter of Credit, or other method of funding, is in excess of the actual amount required for in Paragraphs C.1. or C.3. above, or in the case of Paragraph C.4. above, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. . F. At annual intervals, or more frequently as agreed at the discretion of the Company, but never more frequently than semi-annuallyquarterly, the Company shall prepareprepare a specific statement of the Reinsurer’s Obligations, for the sole purpose of amending the Letter of CreditCredit or other method of funding, a specific statement of in the Reinsurer's share of loss and/or unearned premium reservesfollowing manner: 1. If the statement shows that the Reinsurer's share of such reserves exceeds ’s Obligations exceed the balance of credit the Letter of Credit as of the statement date, then the Reinsurer shall, within 30 15 days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's share of such reserves is ’s Obligations are less than the balance of credit the Letter of Credit as of the statement date, the Company shall, within 30 15 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, Credit reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess. 3. If the Reinsurer does not agree with the statement of the Reinsurer’s Obligations as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer’s Obligations covered under this Reinsurance Agreement 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 Obligations 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. G. The Reinsurer shall be responsible for all costs and fees associated with the establishment and maintenance of any and all costscash advance, fees and charges as respects establishing and maintaining a Letter of Credit under and/or Trust Agreement mandated by the provisions of this Article. H. The Reinsurer’s duty to fund hereunder is continuous and extends until all of the Reinsurer’s Obligations under this Reinsurance Agreement have been met in accordance with applicable law. The Reinsurer’s liabilities under this Reinsurance Agreement may extend beyond the time during which the Company shall be receiving premiums under the policies and beyond the termination of the policies or this Reinsurance Agreement.

FUNDING OF RESERVES. (This Article is only applicable if applies to the Reinsurer canwho does not qualify for credit by each any state or any other governmental authority having jurisdiction over the Company's reserves’s loss reserves and/or to the Reinsurer to which the provisions of the Contingent Collateral Article apply.) ) A. As regards Policies policies issued by the Company coming within the scope of this ContractAgreement, the Company agrees that, that when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for unearned premium and losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is shall be required by law to set up, it shall will forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of unearned premium, known outstanding losses that have been reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as “Reinsurer’s Obligations”) by cash advances, Trust Agreement or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it shall is acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves and provided that the issuing bank is approved by the NAIC Securities Valuation Office. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, Credit issued by a member of the Federal Reserve System or any bank approved for use consented to by the NAIC Securities Valuation OfficeCompany with such consent not being unreasonably withheld, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's ’s reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company’s Obligations. The Such Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 60 calendar days (90 calendar days where required by insurance regulatory authorities) prior to any expiration date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank. C. The Reinsurer and Company agree that the Letters of Credit, not a member or other method of funding, provided by the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractArticle may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes: B. To pay the Reinsurer's share or 1. to reimburse the Company for the Reinsurer's share ’s Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Agreement and which has not been otherwise paid.; Accountants Professional Liability AmerInst - Bermuda at January 1, 2004 Page 10 of 17 - CCC reference: T036 C. To 2. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's share ’s Obligations under this Agreement; 3. to fund an account with the Company for the Reinsurer’s Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company’s other assets, and interest thereon not in excess of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, prime rate shall accrue to establish deposits the benefit of the Reinsurer's ; 4. to pay the Reinsurer’s share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this ContractAgreement. D. In the event the amount drawn by the Company on any Letter of Credit, or other method of funding, is in excess of the actual amount required for in Paragraphs C.1. or C.3. above, or in the case of Paragraph C.4. above, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. . F. At annual quarterly intervals, or more less frequently as agreed but never more less frequently than semi-annually, the Company shall prepareprepare a specific statement of the Reinsurer’s Obligations, for the sole purpose of amending the Letter of CreditCredit or other method of funding, a specific statement of in the Reinsurer's share of loss and/or unearned premium reservesfollowing manner: 1. If the statement shows that the Reinsurer's share of such reserves exceeds ’s Obligations exceed the balance of credit the Letter of Credit as of the statement date, then the Reinsurer shall, within 30 15 calendar days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's share of such reserves is ’s Obligations are less than the balance of credit the Letter of Credit as of the statement date, the Company shall, within 30 15 calendar days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, Credit reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess. 3. If the Reinsurer does not agree with the statement of the Reinsurer’s Obligations as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer’s Obligations covered Accountants Professional Liability AmerInst - Bermuda at January 1, 2004 Page 11 of 17 - CCC reference: T036 under this Agreement 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 Obligations 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. G. The Reinsurer shall be responsible for all costs and fees associated with the establishment and maintenance of any and all costscash advance, fees and charges as respects establishing and maintaining a Letter of Credit under and/or Trust Agreement mandated by the provisions of this Article.

FUNDING OF RESERVES. A. The Reinsurer agrees to fund its share of the Company’s ceded unearned premium (This Article including but not limited to the unearned portion of any deposit premium installment as calculated by the Company) and outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences) by: 1. Clean, irrevocable and unconditional letter of credit issued and confirmed, if confirmation is only applicable required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or 2. Escrow accounts for the benefit of the Company; and/or 3. Cash advances; if the Reinsurer cannot qualify for credit by each governmental authority Reinsurer: 1. Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company's reserves.) As regards Policies issued by Company and if, without such funding, a penalty would accrue to the Company coming within on any financial statement it is required to file with the scope insurance regulatory authorities involved; or 2. Has experienced any of the circumstances described in paragraph C of the Term Article. However, if such circumstance is rectified, then no special funding requirements shall apply and any such current funding in accordance with the provisions above shall be released to the Reinsurer. For purposes of this Contract, the Company agrees that, when it files with the Insurance Department or sets up on its books reserves Lloyd’s United States Credit for losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurance Trust Fund shall be considered an acceptable funding instrument. The Reinsurer, Loss at its sole option, may fund in other than cash if its method and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is required by law to set up, it shall forward to the Reinsurer a statement showing the proportion form of such reserves applicable to it. The Reinsurer hereby agrees that it shall apply for and secure delivery to the Company of a clean, irrevocable, unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Office, and containing provisions funding are acceptable to the insurance regulatory authorities involved. B. If a Subscribing Reinsurer fails to fulfill its funding obligation (if any) under this Article, the Company may, at its option, require the Subscribing Reinsurer to pay, and the Subscribing Reinsurer agrees to pay, any interest charge on the funding obligation calculated on the last business day of each month as follows: 1. The number of full days that have expired since the earliest of the applicable following dates: a. As respects a Subscribing Reinsurer that is unauthorized in any state of the United States of America or District of Columbia having jurisdiction over the Company's reserves , December 31 of the calendar year in an amount equal which the funding was required; Effective: June 1, 2011 b. As respects a Subscribing Reinsurer that has experienced any of the circumstances described in paragraph C of the Term Article, the first date such circumstance occurs; times: 2. 1 365ths of the sum of 2.0% and the U.S. prime rate as quoted in The Wall Street Journal on the first day of the month for which the calculation is made; times 3. The funding obligation, less the amount, if any, funded by the Subscribing Reinsurer prior to the Reinsurer's proportion applicable date determined in subparagraph 1 above. It is agreed that interest shall accumulate until the full interest charge amount as provided for in this paragraph and the funding obligation are paid. If the interest rate provided under this Article exceeds the maximum interest rate allowed by any applicable law or is held unenforceable by an arbitrator or a court of reserves as shown in competent jurisdiction, such interest rate shall be modified to the statement prepared highest rate permitted by the Company. The Letter applicable law, and all remaining provisions of Credit this Article and Contract shall remain in full force and effect without being impaired or invalidated in any way. C. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a period term of at least one year and will involve an “evergreen clause,” which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days prior to any said expiration date date. The Company and the issuing bank notifies the Company by registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bankReinsurer further agree, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice notwithstanding anything to the Company prior to any expiration contrary in the event of nonextension. Notwithstanding any other provisions of this Contract, that said letter of credit may be drawn upon by the Company or its court-appointed successor successors in interest may draw upon such credit at any time time, without diminution because of the insolvency of the Company or of any Reinsurer the Reinsurer, but only for one or more of the following purposes onlypurposes: A. 1. To reimburse itself for the Company Reinsurers’ share of losses and/or loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer; 2. To reimburse itself for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies. B. To pay the Reinsurer's share or to reimburse the Company for the Reinsurer's ’s share of any Loss reinsured other amounts claims to be due hereunder, unless paid in cash by this Contractthe Reinsurer; 3. To fund a cash account in an amount equal to the Reinsurer’s share of any ceded unearned premium and/or outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported for known loss occurrences) funded by means of a letter of credit which is under non-renewal notice, which if said letter of credit has not been otherwise paid.renewed or replaced by the Reinsurer 10 days prior to its expiration date; Effective: June 1, 2011 C. 4. To make refund of to the Reinsurer any sum sums in excess of the actual amount required to pay fund the Reinsurer's ’s share of the Company’s ceded unearned premium and/or outstanding loss and loss adjustment expense reserves (including all case reserves plus any liability reinsured reasonable amount estimated to be unreported from known loss occurrences), if so requested by this Contract.the Reinsurer; and D. 5. To reimburse itself for the Reinsurer’s portion of the unearned reinsurance premium paid to the Reinsurer hereunder. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made amount drawn by the Company or the disposition on any letter of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives credit is in excess of the Company. At annual intervalsactual amount required for C(1), C(3), or more frequently as agreed but never more frequently than semi-annuallyC(5), or in the case of C(2), the actual amount determined to be due, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then promptly return to the Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Articleso drawn.

FUNDING OF RESERVES. (This Article is only applicable if applies to the Reinsurer canwho does not qualify for credit by each any state or any other governmental authority having jurisdiction over the Company's reservesloss reserves and/or to the Reinsurer to which the provisions of the Contingent Collateral Article apply.) ) A. As regards Policies policies issued by the Company coming within the scope of this ContractAgreement, the Company agrees that, that when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for unearned premium and losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is shall be required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of unearned premium, known outstanding losses that have been reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as "Reinsurer's Obligations") by cash advances, Trust Agreement or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it shall is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves and provided that the issuing bank is approved by the NAIC Securities Valuation Office. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, Credit issued by a member of the Federal Reserve System or any bank approved for use consented to by the NAIC Securities Valuation OfficeCompany with such consent not being unreasonably withheld, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the CompanyObligations. The Such Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 60 calendar days (90 calendar days where required by insurance regulatory authorities) prior to any expiration date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank. C. The Reinsurer and Company agree that the Letters of Credit, not a member or other method of funding, provided by the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractArticle may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes: B. To pay the Reinsurer's share or 1. to reimburse the Company for the Reinsurer's share Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Agreement and which has not been otherwise paid.; C. To 2. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's share Obligations under this Agreement; 3. to fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of any liability reinsured by this Contract.the prime rate shall accrue to the benefit of the Reinsurer; D. In the event of nonextension of Letters of Credit as provided for above, 4. to establish deposits of pay the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this ContractAgreement. D. In the event the amount drawn by the Company on any Letter of Credit, or other method of funding, is in excess of the actual amount required for in Paragraphs C.1. or C.3. above, or in the case of Paragraph C.4. above, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. . F. At annual quarterly intervals, or more less frequently as agreed but never more less frequently than semi-annually, the Company shall prepareprepare a specific statement of the Reinsurer's Obligations, for the sole purpose of amending the Letter of CreditCredit or other method of funding, a specific statement of in the Reinsurer's share of loss and/or unearned premium reservesfollowing manner: 1. If the statement shows that the Reinsurer's share of such reserves exceeds Obligations exceed the balance of credit the Letter of Credit as of the statement date, then the Reinsurer shall, within 30 15 calendar days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's share of such reserves is Obligations are less than the balance of credit the Letter of Credit as of the statement date, the Company shall, within 30 15 calendar days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, Credit reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess. 3. If the Reinsurer does not agree with the statement of the Reinsurer's Obligations as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's Obligations covered under this Agreement 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 Obligations 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. G. The Reinsurer shall be responsible for all costs and fees associated with the establishment and maintenance of any and all costscash advance, fees and charges as respects establishing and maintaining a Letter of Credit under and/or Trust Agreement mandated by the provisions of this Article.

FUNDING OF RESERVES. (This Article is only applicable if the Reinsurer cannot qualify for credit by each governmental authority having jurisdiction over the Company's reserves.) As regards Policies Bonds issued by the Company coming within the scope of this Contract, the Company agrees that, when it files with the Insurance Department or sets up on its books reserves for losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves applicable to it. The Reinsurer hereby agrees that it shall apply for and secure delivery to the Company of a clean, irrevocable, unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Office, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company. The Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days prior to any expiration date the issuing bank notifies the Company by registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this Contract, the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because of the insolvency of the Company or of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies Bonds reinsured hereunder on account of cancellations of such policiesBonds. B. To pay the Reinsurer's share or to reimburse the Company for the Reinsurer's share of any Loss reinsured by this Contract, which has not been otherwise paid. C. To make refund of any sum in excess of the actual amount required to pay the Reinsurer's share of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. At annual intervals, or more frequently as agreed but never more frequently than semi-annually, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then the Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Article.

FUNDING OF RESERVES. (This Article is only applicable if the Reinsurer cannot qualify for credit by each governmental authority having jurisdiction over the Company's reserves.) As regards Policies issued by the Company coming within the scope of this Contract, the Company agrees that, when it files with the Insurance Department or sets up on its books reserves for losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves applicable to it. The Reinsurer hereby agrees that it shall apply for and secure delivery to the Company of a clean, irrevocable, unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Office, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company. The Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days prior to any expiration date the issuing bank notifies the Company by registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this Contract, the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because of the insolvency of the Company or of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies. B. To pay the Reinsurer's share or to reimburse the Company for the Reinsurer's share of any Loss reinsured by this Contract, which has not been otherwise paid. C. To make refund of any sum in excess of the actual amount required to pay the Reinsurer's share of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. At annual intervals, or more frequently as agreed but never more frequently than semi-annually, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then the Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Article.

FUNDING OF RESERVES. (This Article is only applicable if applies to the Reinsurer canwho does not qualify for credit by each any state or any other governmental authority having jurisdiction over the Company's reserves’s loss reserves and/or to the Reinsurer to which the provisions of the Contingent Collateral Article apply should the Company exercise its option under such Article.) ) A. As regards Policies policies issued by the Company coming within the scope of this ContractReinsurance Agreement, the Company agrees that, that when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for unearned premium and losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is shall be required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of unearned premium, known outstanding losses that have been reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as “Reinsurer’s Obligations”) by cash advances, Trust Agreement or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it shall is acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves and provided that the issuing bank (i) is approved by the NAIC Securities Valuation Office for Letters of Credit and (ii) if applicable, has been assigned a Credit Rating by the LACE Financial Corporation of “C” or above for both Letters of Credit and Trust Agreements. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, Credit issued by a member of the Federal Reserve System or any bank approved for use consented to by the NAIC Securities Valuation OfficeCompany with such consent not being unreasonably withheld, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's ’s reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company’s Obligations. The Such Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 60 calendar days (90 calendar days where required by insurance regulatory authorities) prior to any expiration date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An At any time subsequent to the issuance of the Letter of Credit or establishment of the Trust Agreement, the Company may withdraw its consent to the use of an issuing bank, not a member of the Federal Reserve System or not chartered with such withdrawal right to be exercised in the state Company’s reasonable discretion, and the Reinsurer shall move the collateral to another Company-approved issuing bank in accordance with the provisions of domicile paragraph A. C. The Reinsurer and Company agree that the Letters of Credit, or other method of funding, provided by the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractArticle may be drawn upon at any time, notwithstanding any other provision of this Reinsurance Agreement, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes: B. To pay the Reinsurer's share or 1. to reimburse the Company for the Reinsurer's share ’s Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Reinsurance Agreement and which has not been otherwise paid.; C. To 2. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's ’s Obligations under this Reinsurance Agreement; 3. to fund an account with the Company for the Reinsurer’s Obligations; 4. to pay the Reinsurer’s share of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this ContractReinsurance Agreement. D. In the event the amount drawn by the Company on any Letter of Credit, or other method of funding, is in excess of the actual amount required for in Paragraphs C.1. or C.3. above, or in the case of Paragraph C.4. above, the actual amount determined to be due, the Company Surety Quota Share Treaty Effective: January 1, 2011 Page 10 of 16 shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. . F. At annual intervals, or more frequently as agreed at the discretion of the Company, but never more frequently than semi-annuallyquarterly, the Company shall prepareprepare a specific statement of the Reinsurer’s Obligations, for the sole purpose of amending the Letter of CreditCredit or other method of funding, a specific statement of in the Reinsurer's share of loss and/or unearned premium reservesfollowing manner: 1. If the statement shows that the Reinsurer's share of such reserves exceeds ’s Obligations exceed the balance of credit the Letter of Credit as of the statement date, then the Reinsurer shall, within 30 15 days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's share of such reserves is ’s Obligations are less than the balance of credit the Letter of Credit as of the statement date, the Company shall, within 30 15 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, Credit reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess. 3. If the Reinsurer does not agree with the statement of the Reinsurer’s Obligations as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer’s Obligations covered under this Reinsurance Agreement 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 Obligations 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. G. The Reinsurer shall be responsible for all costs and fees associated with the establishment and maintenance of any and all costscash advance, fees and charges as respects establishing and maintaining a Letter of Credit under and/or Trust Agreement mandated by the provisions of this Article. H. The Reinsurer’s duty to fund hereunder is continuous and extends until all of the Reinsurer’s Obligations under this Reinsurance Agreement have been met in Surety Quota Share Treaty Effective: January 1, 2011 Page 11 of 16 accordance with applicable law. The Reinsurer’s liabilities under this Reinsurance Agreement may extend beyond the time during which the Company shall be receiving premiums under the policies and beyond the termination of the policies or this Reinsurance Agreement.

FUNDING OF RESERVES. (This Article is only applicable if applies to the Reinsurer canwho does not qualify for credit by each any state or any other governmental authority having jurisdiction over the Company's reserves’s loss reserves and/or to the Reinsurer to which the provisions of the Contingent Collateral Article apply.) ) A. As regards Policies policies issued by the Company coming within the scope of this ContractAgreement, the Company agrees that, that when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for unearned premium and losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is shall be required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of unearned premium, known outstanding losses that have been reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as “Reinsurer’s Obligations”) by cash advances, Trust Agreement or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it shall is acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves and provided that the issuing bank (i) is approved by the NAIC Securities Valuation Office for Letters of Credit and (ii) if applicable, has been Surety Quota Share Treaty Effective: January 1, 2007 Page 9 of 15 assigned a Credit Rating by the LACE Financial Corporation of “C” or above for both Letters of Credit and Trust Agreements. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, Credit issued by a member of the Federal Reserve System or any bank approved for use consented to by the NAIC Securities Valuation OfficeCompany with such consent not being unreasonably withheld, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's ’s reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company’s Obligations. The Such Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 60 calendar days (90 calendar days where required by insurance regulatory authorities) prior to any expiration date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An At any time subsequent to the issuance of the Letter of Credit or establishment of the Trust Agreement, the Company may withdraw its consent to the use of an issuing bank, not a member of the Federal Reserve System or not chartered with such withdrawal right to be exercised in the state Company’s reasonable discretion, and the Reinsurer shall move the collateral to another Company-approved issuing bank in accordance with the provisions of domicile paragraph A. C. The Reinsurer and Company agree that the Letters of Credit, or other method of funding, provided by the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractArticle may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes: B. To pay the Reinsurer's share or 1. to reimburse the Company for the Reinsurer's share ’s Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Agreement and which has not been otherwise paid.; C. To 2. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's share ’s Obligations under this Agreement; 3. to fund an account with the Company for the Reinsurer’s Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company’s other assets, and interest thereon not in excess of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, prime rate shall accrue to establish deposits the benefit of the Reinsurer's ; 4. to pay the Reinsurer’s share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this ContractAgreement. D. In the event the amount drawn by the Company on any Letter of Credit, or other method of funding, is in excess of the actual amount required for in Paragraphs C.1. or C.3. above, or in the case of Paragraph C.4. above, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. Surety Quota Share Treaty Effective: January 1, 2007 Page 10 of 15 F. At annual quarterly intervals, or more less frequently as agreed but never more less frequently than semi-annually, the Company shall prepareprepare a specific statement of the Reinsurer’s Obligations, for the sole purpose of amending the Letter of CreditCredit or other method of funding, a specific statement of in the Reinsurer's share of loss and/or unearned premium reservesfollowing manner: 1. If the statement shows that the Reinsurer's share of such reserves exceeds ’s Obligations exceed the balance of credit the Letter of Credit as of the statement date, then the Reinsurer shall, within 30 15 calendar days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's share of such reserves is ’s Obligations are less than the balance of credit the Letter of Credit as of the statement date, the Company shall, within 30 15 calendar days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, Credit reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess. 3. If the Reinsurer does not agree with the statement of the Reinsurer’s Obligations as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer’s Obligations covered under this Agreement 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 Obligations 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. G. The Reinsurer shall be responsible for all costs and fees associated with the establishment and maintenance of any and all costscash advance, fees and charges as respects establishing and maintaining a Letter of Credit under and/or Trust Agreement mandated by the provisions of this Article.

FUNDING OF RESERVES. (This Article is only applicable if applies to the Reinsurer canwho does not qualify for credit by each any state or any other governmental authority having jurisdiction over the Company's reservesloss reserves and/or to the Reinsurer to which the provisions of the Contingent Collateral Article apply.) ) A. As regards Policies policies issued by the Company coming within the scope of this ContractAgreement, the Company agrees that, that when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for unearned premium and losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is shall be required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of unearned premium, known outstanding losses that have been reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as "Reinsurer's Obligations") by cash advances, Trust Agreement or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it shall is acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves and provided that the issuing bank is approved by the NAIC Securities Valuation Office. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, Credit issued by a member of the Federal Reserve System or any bank approved for use consented to by the NAIC Securities Valuation OfficeCompany with such consent not being unreasonably withheld, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the CompanyObligations. The Such Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 60 calendar days (90 calendar days where required by insurance regulatory authorities) prior to any expiration date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank. C. The Reinsurer and Company agree that the Letters of Credit, not a member or other method of funding, provided by the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractArticle may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes: B. To pay the Reinsurer's share or 1. to reimburse the Company for the Reinsurer's share Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Agreement and which has not been otherwise paid.; Surety Quota Share Treaty Effective: January 1, 2005 Page 9 of 15 (Revised - 5/10/05) C. To 2. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's share Obligations under this Agreement; 3. to fund an account with the Company for the Reinsurer's Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company's other assets, and interest thereon not in excess of any liability reinsured by this Contract.the prime rate shall accrue to the benefit of the Reinsurer; D. In the event of nonextension of Letters of Credit as provided for above, 4. to establish deposits of pay the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this ContractAgreement. D. In the event the amount drawn by the Company on any Letter of Credit, or other method of funding, is in excess of the actual amount required for in Paragraphs C.1. or C.3. above, or in the case of Paragraph C.4. above, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. . F. At annual quarterly intervals, or more less frequently as agreed but never more less frequently than semi-annually, the Company shall prepareprepare a specific statement of the Reinsurer's Obligations, for the sole purpose of amending the Letter of CreditCredit or other method of funding, a specific statement of in the Reinsurer's share of loss and/or unearned premium reservesfollowing manner: 1. If the statement shows that the Reinsurer's share of such reserves exceeds Obligations exceed the balance of credit the Letter of Credit as of the statement date, then the Reinsurer shall, within 30 15 calendar days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's share of such reserves is Obligations are less than the balance of credit the Letter of Credit as of the statement date, the Company shall, within 30 15 calendar days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, Credit reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess. 3. If the Reinsurer does not agree with the statement of the Reinsurer's Obligations as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer's Obligations covered under this Agreement 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. Surety Quota Share Treaty Effective: January 1, 2005 Page 10 of 15 (Revised - 5/10/05) 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 Obligations 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. G. The Reinsurer shall be responsible for all costs and fees associated with the establishment and maintenance of any and all costscash advance, fees and charges as respects establishing and maintaining a Letter of Credit under and/or Trust Agreement mandated by the provisions of this Article.

FUNDING OF RESERVES. (This Article is only applicable if applies to the Reinsurer canwho does not qualify for credit by each any state or any other governmental authority having jurisdiction over the Company's reserves’s loss reserves and/or to the Reinsurer to which the provisions of the Contingent Collateral Article apply.) ) A. As regards Policies policies issued by the Company coming within the scope of this ContractAgreement, the Company company agrees that, that when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for unearned premium and losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurercovered Value Plan Accountants Professional Liability AmerInst – Bermuda at January 1, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered 2004 Page 10 of 18 - CCC reference: T037 hereunder and/or unearned premium, which it is shall be required by law to set up, it shall will forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of unearned premium, known outstanding losses that have been reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses incurred but not reported, as shown in the statement prepared by the Company (hereinafter referred to as “Reinsurer’s Obligations”) by cash advances, Trust Agreement or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it shall is acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves and provided that the issuing bank is approved by the NAIC Securities Valuation Office. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, Credit issued by a member of the Federal Reserve System or any bank approved for use consented to by the NAIC Securities Valuation OfficeCompany with such consent not being unreasonably withheld, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's ’s reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company’s Obligations. The Such Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 60 calendar days (90 calendar days where required by insurance regulatory authorities) prior to any expiration expiration, date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank. C. The Reinsurer and Company agree that the Letters of Credit, not a member or other method of funding, provided by the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this ContractArticle may be drawn upon at any time, notwithstanding any other provision of this Agreement, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes: B. To pay the Reinsurer's share or 1. to reimburse the Company for the Reinsurer's share ’s Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Agreement and which has not been otherwise paid.; C. To 2. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's share ’s Obligations under this Agreement; 3. to fund an account with the Company for the Reinsurer’s Obligations. Such cash deposit shall be held in an interest bearing account separate from the Company’s other assets, and interest thereon not in excess of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, prime rate shall accrue to establish deposits the benefit of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. At annual intervals, or more frequently as agreed but never more frequently than semi-annually, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then the Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Article.;

FUNDING OF RESERVES. (This Article is only applicable if the Reinsurer cannot qualify for credit by each governmental authority having jurisdiction over the Company's reserves.) As regards Policies Bonds issued by the Company coming within the scope of this Contract, the Company agrees that, when it files with the Insurance Department or sets up on its books reserves for losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves applicable to it. The Reinsurer hereby agrees that it shall apply for and secure delivery to the Company of a clean, irrevocable, unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Office, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company. The Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days prior to any expiration date the issuing bank notifies the Company by registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bank, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice to the Company prior to any expiration in the event of nonextension. Notwithstanding any other provisions of this Contract, the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because of the insolvency of the Company or of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies Bonds reinsured hereunder on account of cancellations of such policiesbonds. B. To pay the Reinsurer's share or to reimburse the Company for the Reinsurer's share of any Loss reinsured by this Contract, which has not been otherwise paid.. Surety Excess of Loss (Dick Corporation) Effective: January 1, 2005 Page 10 of 15 (Revised - 5/10/05) C. To make refund of any sum in excess of the actual amount required to pay the Reinsurer's share of any liability reinsured by this Contract. D. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. At annual intervals, or more frequently as agreed but never more frequently than semi-annually, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then the Reinsurer shall, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Article.

FUNDING OF RESERVES. (This Article is applies only applicable if to the Reinsurer canwho does not qualify for credit by each any state or other governmental authority having jurisdiction over the Company's reserves’s loss reserves and/or to the Reinsurer to which the provisions of the Contingent Collateral Article apply should the Company exercise its option under such Article.) ) A. As regards Policies Contract Bond Business issued by the Company coming within the scope of this Contract, the Company agrees that, when it files shall file with the Insurance Department insurance regulatory authority or sets set up on its books reserves for unearned premium and losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurer, Loss and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is shall be required by law to set up, it shall forward to the Reinsurer a statement showing the proportion of such reserves which is applicable to itthe Reinsurer. The Reinsurer hereby agrees to fund such reserves in respect of unearned premium, known outstanding losses that have been reported to the Reinsurer and loss expense relating thereto, losses and loss expenses paid by the Company but not recovered from the Reinsurer, plus reserves for losses and loss expenses incurred but not reported as shown in the statement prepared by the Company (hereinafter referred to as “Reinsurer’s Obligations”) by cash advances, Trust Agreement or a Letter of Credit. The Reinsurer shall have the option of determining the method of funding provided it shall is acceptable to the insurance regulatory authorities having jurisdiction over the Company’s reserves and provided that the issuing bank (i) is approved by the NAIC Securities Valuation Office for Letters of Credit and (ii) if applicable, has been assigned a Credit Rating by the LACE Financial Corporation of “C” or above for both Letters of Credit and Trust Agreements. B. When funding by a Letter of Credit, the Reinsurer agrees to apply for and secure timely delivery to the Company of a clean, irrevocable, irrevocable and unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, Credit issued by a member of the Federal Reserve System or any bank approved for use consented to by the NAIC Securities Valuation OfficeCompany with such consent not being unreasonably withheld, and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company's ’s reserves in an amount equal to the Reinsurer's proportion of reserves as shown in the statement prepared by the Company’s Obligations. The Such Letter of Credit shall be issued for a period of not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 60 calendar days (90 calendar days where required by insurance regulatory authorities) prior to any expiration date the issuing bank notifies shall notify the Company by certified or registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An At any time subsequent to the issuance of the Letter of Credit or establishment of the Trust Agreement, the Company may withdraw its consent to the use of an issuing bank, not a member of the Federal Reserve System or not chartered with such withdrawal right to be exercised in the state Company’s reasonable discretion, and the Reinsurer shall move the collateral to another Company-approved issuing bank in accordance with the provisions of domicile paragraph A. C. The Reinsurer and Company agree that the Letter of Credit, or other method of funding, provided by the Company, shall provide 60 days notice Reinsurer pursuant to the Company prior to provisions of this Article may be drawn upon at any expiration in the event of nonextension. Notwithstanding time, notwithstanding any other provisions of this Contract, and be utilized by the Company or its court-appointed successor in interest may draw upon such credit at any time without diminution because successor, by operation of the insolvency law, of the Company including, without limitation, any liquidator, rehabilitator, receiver or conservator of any Reinsurer for one or more of the following purposes only: A. To reimburse the Company for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies.following purposes: B. To pay the Reinsurer's share or 1. to reimburse the Company for the Reinsurer's share ’s Obligations, the payment of any Loss reinsured by which is due under the terms of this Contract, Contract and which has not been otherwise paid.; C. To 2. to make refund of any sum which is in excess of the actual amount required to pay the Reinsurer's share of any liability reinsured by ’s Obligations under this Contract. D. In the event , or in excess of nonextension of Letters of Credit as provided for above, to establish deposits 102% of the Reinsurer's ’s Obligations if funding is provided by a Trust Agreement; 3. to fund an account with the Company for the Reinsurer’s Obligations, or in excess of 102% of the Reinsurer’s Obligations if funding is provided by a Trust Agreement. If the assets are inadequate to pay taxes, any taxes due shall be paid by the Reinsurer; 4. to pay the Reinsurer’s share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. D. In the event the amount drawn by the Company on any Letter of Credit, or other method of funding, is in excess of the actual amount required for in paragraphs C.1. or C.3. above, or in the case of paragraph C.4. above, the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn. All of the foregoing shall be applied without diminution because of insolvency on the part of the Company or the Reinsurer. E. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Company or the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Company. . F. At annual intervals, or more frequently as agreed at the discretion of the Company but never more frequently than semi-annuallyquarterly, the Company shall prepare, prepare a specific statement of the Reinsurer’s Obligations for the sole purpose of amending the Letter of CreditCredit or other method of funding, a specific statement of in the Reinsurer's share of loss and/or unearned premium reservesfollowing manner: 1. If the statement shows that the Reinsurer's share of such reserves exceeds ’s Obligations exceed the balance of credit the Letter of Credit as of the statement date, then the Reinsurer shall, within 30 15 days after receipt of notice of such excess, secure delivery to the Company of an amendment to the Letter of Credit increasing the amount of credit by the amount of such difference. Should another method of funding be used, the Reinsurer shall, within the time period outlined above, increase such funding by the amount of such difference. 2. If, however, the statement shows that the Reinsurer's share of such reserves is ’s Obligations are less than the balance of credit the Letter of Credit as of the statement date, the Company shall, within 30 15 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, Credit reducing the amount of credit available by the amount of such excess credit. Should another method of funding be used, the Company shall, within the time period outlined above, decrease such funding by the amount of such excess. 3. If the Reinsurer does not agree with the statement of the Reinsurer’s Obligations as furnished by the Company, a mutually agreed upon independent national actuarial firm shall be engaged to evaluate the Reinsurer’s Obligations covered under this Contract 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 Obligations 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 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. G. The Reinsurer shall be responsible for any and all costscosts and fees associated with the establishment and maintenance of any cash advance, fees and charges as respects establishing and maintaining a Letter of Credit under and/or Trust Agreement mandated by the provisions of this Article. H. The Reinsurer’s duty to fund hereunder is continuous and extends until the Company is satisfied that all of the Reinsurer’s Obligations under this Contract have been or shall be met. The Reinsurer’s liabilities under this Contract may extend beyond the time during which the Company shall be receiving premiums under the policies and beyond the termination of the policies or this Contract.

FUNDING OF RESERVES. A. The Reinsurer agrees to fund its share of the Company’s ceded unearned premium (This Article including but not limited to the unearned portion of any deposit premium installment as calculated by the Company) and outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences) by: 1. Clean, irrevocable and unconditional letter of credit issued and confirmed, if confirmation is only applicable required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or 2. Escrow accounts for the benefit of the Company; and/or 3. Cash advances; Effective: January 1, 2012 HCI_102_12 if the Reinsurer cannot qualify for credit by each governmental authority Reinsurer: 1. Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company's reserves.) As regards Policies issued by Company and if, without such funding, a penalty would accrue to the Company coming within on any financial statement it is required to file with the scope insurance regulatory authorities involved; or 2. Has experienced any of the circumstances described in paragraph C of the Term Article. However, if such circumstance is rectified, then no special funding requirements shall apply and any such current funding in accordance with the provisions above shall be released to the Reinsurer. For purposes of this Contract, the Company agrees that, when it files with the Insurance Department or sets up on its books reserves Lloyd’s United States Credit for losses (including Loss and Loss Expense paid by the Company but not recovered from the Reinsurance Trust Fund shall be considered an acceptable funding instrument. The Reinsurer, Loss at its sole option, may fund in other than cash if its method and Loss Expense reported and outstanding, and an allowance for Incurred But Not Reported Losses and Loss Expenses as determined by the Company) covered hereunder and/or unearned premium, which it is required by law to set up, it shall forward to the Reinsurer a statement showing the proportion form of such reserves applicable to it. The Reinsurer hereby agrees that it shall apply for and secure delivery to the Company of a clean, irrevocable, unconditional Letter of Credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any bank approved for use by the NAIC Securities Valuation Office, and containing provisions funding are acceptable to the insurance regulatory authorities involved. B. If a Subscribing Reinsurer fails to fulfill its funding obligation (if any) under this Article, the Company may, at its option, require the Subscribing Reinsurer to pay, and the Subscribing Reinsurer agrees to pay, any interest charge on the funding obligation calculated on the last business day of each month as follows: 1. The number of full days that have expired since the earliest of the applicable following dates: a. As respects a Subscribing Reinsurer that is unauthorized in any state of the United States of America or District of Columbia having jurisdiction over the Company's reserves , December 31 of the calendar year in an amount equal which the funding was required; b. As respects a Subscribing Reinsurer that has experienced any of the circumstances described in paragraph C of the Term Article, the first date such circumstance occurs; times: 2. 1 365ths of the sum of 2.0% and the U.S. prime rate as quoted in The Wall Street Journal on the first day of the month for which the calculation is made; times 3. The funding obligation, less the amount, if any, funded by the Subscribing Reinsurer prior to the Reinsurer's proportion applicable date determined in subparagraph 1 above. It is agreed that interest shall accumulate until the full interest charge amount as provided for in this paragraph and the funding obligation are paid. Effective: January 1, 2012 HCI_102_12 If the interest rate provided under this Article exceeds the maximum interest rate allowed by any applicable law or is held unenforceable by an arbitrator or a court of reserves as shown in competent jurisdiction, such interest rate shall be modified to the statement prepared highest rate permitted by the Company. The Letter applicable law, and all remaining provisions of Credit this Article and Contract shall remain in full force and effect without being impaired or invalidated in any way. C. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a period term of at least one year and will involve an “evergreen clause,” which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than one year, and shall be automatically extended for one year from its date of expiration or any future expiration date unless 30 days prior to any said expiration date date. The Company and the issuing bank notifies the Company by registered mail that the issuing bank elects not to consider the Letter of Credit extended for any additional period. An issuing bankReinsurer further agree, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company, shall provide 60 days notice notwithstanding anything to the Company prior to any expiration contrary in the event of nonextension. Notwithstanding any other provisions of this Contract, that said letter of credit may be drawn upon by the Company or its court-appointed successor successors in interest may draw upon such credit at any time time, without diminution because of the insolvency of the Company or of any Reinsurer the Reinsurer, but only for one or more of the following purposes onlypurposes: A. 1. To reimburse itself for the Company Reinsurers’ share of losses and/or loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer; 2. To reimburse itself for the Reinsurer's share of unearned premium on Policies reinsured hereunder on account of cancellations of such policies. B. To pay the Reinsurer's share or to reimburse the Company for the Reinsurer's ’s share of any Loss reinsured other amounts claims to be due hereunder, unless paid in cash by this Contractthe Reinsurer; 3. To fund a cash account in an amount equal to the Reinsurer’s share of any ceded unearned premium and/or outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported for known loss occurrences) funded by means of a letter of credit which is under non-renewal notice, which if said letter of credit has not been otherwise paid.renewed or replaced by the Reinsurer 10 days prior to its expiration date; C. 4. To make refund of to the Reinsurer any sum sums in excess of the actual amount required to pay fund the Reinsurer's ’s share of the Company’s ceded unearned premium and/or outstanding loss and loss adjustment expense reserves (including all case reserves plus any liability reinsured reasonable amount estimated to be unreported from known loss occurrences), if so requested by this Contract.the Reinsurer; and D. 5. To reimburse itself for the Reinsurer’s portion of the unearned reinsurance premium paid to the Reinsurer hereunder. In the event of nonextension of Letters of Credit as provided for above, to establish deposits of the Reinsurer's share of reserves for losses and/or unearned premium under this Contract. E. To pay any other amounts the Company claims are due under this Contract. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made amount drawn by the Company or the disposition on any letter of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives credit is in excess of the Company. At annual intervalsactual amount required for C(1), C(3), or more frequently as agreed but never more frequently than semi-annuallyC(5), or in the case of C(2), the actual amount determined to be due, the Company shall prepare, for the sole purpose of amending the Letter of Credit, a specific statement of the Reinsurer's share of loss and/or unearned premium reserves. If the statement shows that the Reinsurer's share of such reserves exceeds the balance of credit as of the statement date, then promptly return to the Reinsurer shallthe excess amount so drawn. Effective: January 1, within 30 days after receipt of notice of such excess, secure delivery to the Company of an amendment of such difference. If, however, the statement shows that the Reinsurer's share of such reserves is less than the balance of credit as of the statement date, the Company shall, within 30 days after receipt of written request from the Reinsurer, release such excess credit by agreeing to secure an amendment to the Letter of Credit, reducing the amount of credit available by the amount of such excess credit. The Reinsurer shall be responsible for any and all costs, fees and charges as respects establishing and maintaining a Letter of Credit under the provisions of this Article.2012 HCI_102_12