Common use of Reinsurance Credit Clause in Contracts

Reinsurance Credit. A. If any Participating Company is unauthorized or otherwise unqualified in any state or other United States jurisdiction, and if, without such security, a financial penalty to an other Participating Company, hereinafter in this Article XIV called the “Reinsured Participating Company”, would result on any statutory statement or report it is required to make or file with insurance regulatory authorities or a court of law in the event of insolvency, the Participating Company will timely secure its share of Obligations under this Agreement in a manner, form, and amount acceptable to the Reinsured Participating Company and to all applicable insurance regulatory authorities in accordance with this Article. B. The Participating Company shall secure such Obligations by either: 1. Clean, irrevocable, and unconditional evergreen letter(s) of credit (“Letter(s) of Credit”) meeting the requirements of New York Insurance Regulation 133; and/or 2. A trust account meeting the requirements of New York Regulation 114. C. The “Obligations” referred to herein means the then current (as of the end of each calendar quarter) sum of: 1. The amount of the ceded unearned premium reserve for which the Participating Company is responsible to the Reinsured Participating Company; 2. The amount of Losses and Loss Adjustment Expenses and other amounts paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid; 3. The amount of ceded reserves for Losses and Loss Adjustment Expenses (including, ceded reserves for losses incurred but not reported) for which the Participating Company is responsible to the Reinsured Participating Company; and 4. The amount of return and refund premiums paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid. D. To the extent that the Participating Company elects to provide Letter(s) of Credit, the following shall apply: 1. Each Letter of Credit will be issued for a term of at least one year and will include 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 Reinsured Participating Company not less than 30 days prior to said expiration date. 2. The Letter of Credit must be issued or confirmed by a bank which is authorized to issue letters of credit, which is either a member of the Federal Reserve System or is a New York State chartered bank, and which in all other respects satisfies the definition of a “Qualified Bank” under Section 79.1(e) of New York Insurance Regulation 133. If the Letter of Credit is issued by a bank authorized to issue letters of credit but which is not such a “Qualified Bank”, then the Letter of Credit must be confirmed by such a bank and the Letter of Credit must meet all of the conditions set forth in Section 79.4 of New York Insurance Regulation 133. 3. The Participating Company and the Reinsured Participating Company agree that the Reinsured Participating Company may draw upon the Letter(s) of Credit at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of premiums returned to the owners of policies reinsured under this Agreement on account of cancellations of such policies; (ii) to reimburse the Reinsured Participating Company for the Participating Company’s share of surrenders and benefits or losses paid by the Reinsured Participating Company under the terms and provisions of the policies reinsured under this Agreement; (iii) to fund an account with the Reinsured Participating Company in an amount at least equal to the deduction, for reinsurance ceded, from the Reinsured Participating Company’s liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to, amounts for policy reserves for claims and losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums; and (iv) to pay any other amounts the Reinsured Participating Company claims are due under this Agreement. 4. the Reinsured Participating Company shall immediately return to the Participating Company any amounts drawn down on the Letter of Credit that are subsequently determined not to be due. 5. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Reinsured Participating Company of the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Reinsured Participating Company. E. To the extent that the Participating Company elects to establish a trust account, the following shall apply. 1. It is agreed that the Participating Company shall enter into a trust agreement (the “Trust Agreement”) in a form acceptable to the Reinsured Participating Company and establish a trust account (the “Trust Account”) for the sole benefit of the Reinsured Participating Company with a trustee (the “Trustee”), which shall be at the time the Trust is established, and shall continue to be, either a member of the Federal Reserve System or a New York state chartered bank and which shall not be a parent, subsidiary or affiliate of the Participating Company or the Reinsured Participating Company. 2. The Participating Company agrees to deposit and maintain in said Trust Account assets to be held in trust by the Trustee for the benefit of the Reinsured Participating Company as security for the payment of the Participating Company’s Obligations to the Reinsured Participating Company under the Agreement. Such assets shall be maintained in the Trust Account by the Participating Company as long as the Participating Company continues to remain liable for such Obligations. 3. The Participating Company agrees that the assets deposited into the Trust Account shall be valued according to their current fair market value and shall consist only of currency of the United States of America, certificates of deposit issued by a United States bank and payable in United States legal tender, and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of the New York Insurance Law, provided such investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Grantor or the Beneficiary (“Authorized Investments”). 4. The Participating Company, prior to depositing assets with the Trustee, shall execute all assignments and endorsements in blank, and shall transfer legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that the Reinsured Participating Company, or the Trustee upon direction of the Reinsured Participating Company, may whenever necessary negotiate any such assets without consent or signature from the Participating Company or any other entity. 5. All settlements of account under the Trust Agreement between the Reinsured Participating Company and Participating Company shall be made in cash or its equivalent. 6. The Participating Company and the Reinsured Participating Company agree that the assets in the Trust Account may be withdrawn by the Reinsured Participating Company at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of any Losses and Loss Adjustment Expenses paid by the Reinsured Participating Company but not received from the Participating Company or for unearned premiums due to the Reinsured Participating Company but not otherwise paid by the Participating Company under the Agreement; or (ii) to make payment to the Participating Company of any amounts held in the Trust Account that exceed 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit) hereunder; or (iii) where the Reinsured Participating Company has received notification of termination of the Trust Account, and where the Participating Company’s entire Obligations under the Agreement remain unliquidated and undischarged ten (10) days prior to such termination, to withdraw amounts equal to such Obligations (less the balance of credit available under any Letter(s) of Credit) and deposit such amounts in a separate account, in the name of the Reinsured Participating Company, in any United States bank or trust company, apart from its general assets, in trust for such uses and purposes specified in sub-paragraphs (i) and (ii) above as may remain executory after such withdrawal and for any period after such termination. 7. The Participating Company shall have the right to seek the Reinsured Participating Company’s approval to withdraw all or any part of the assets from the Trust Account and transfer such assets to the Participating Company, provided that the withdrawal conforms to the following requirements: (i) the Participating Company shall, at the time of withdrawal, replace the withdrawn assets with other Authorized Investments having a market value equal to the market value of the assets withdrawn, (ii) after such withdrawal and transfer, the market value of the Trust Account is no less than 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit). In the event that the Participating Company seeks the Reinsured Participating Company’s approval hereunder, the Reinsured Participating Company shall not unreasonably or arbitrarily withhold its approval. 8. In the event that the Reinsured Participating Company withdraws assets from the Trust Account for the purposes set forth in Paragraph (6)(i) above in excess of actual amounts required to meet the Participating Company’s Obligations to the Reinsured Participating Company (less the balance of credit available under any Letter(s) of Credit), or in excess of amounts determined to be due and under Paragraph (6)(iii) above, the Reinsured Participating Company will return such excess to the Participating Company. 9. The Reinsured Participating Company will prepare and forward at annual intervals or more frequently as determined by the Reinsured Participating Company, but not more frequently than quarterly to the Participating Company a statement for the purposes of this Article, showing the Participating Company’s share of Obligations as set forth above. If the Participating Company’s share thereof exceeds the then existing balance of the security provided, the Participating Company will, within fifteen (15) days of receipt of the Reinsured Participating Company’s statement, but never later than December 31 of any year, increase the amount of the letter of credit, or Trust Account to the required amount of the Participating Company’s share of Obligations set forth in the Reinsured Participating Company’s statement, but never later than December 31 of any year. If the then existing balance of the security provided exceeds an amount equal to 102% of the Participating Company’s share thereof, the Reinsured Participating Company will release the excess amount over 102% to the Participating Company upon the Participating Company’s written request. F. The Participating Company will take any other reasonable steps that may be required for the Reinsured Participating Company to take full credit on its statutory financial statements for the reinsurance provided by this Agreement.

Reinsurance Credit. A. If any Participating Company is unauthorized or otherwise unqualified in any state or other United States jurisdiction, and if, without such security, a financial penalty to an other Participating Company, hereinafter in this Article XIV called the “Reinsured Participating Company”, would result on any statutory statement or report it is required to make or file with insurance regulatory authorities or a court of law in the event of insolvency, the Participating Company will timely secure its share of Obligations under this Agreement in a manner, form, and amount acceptable to the Reinsured reinsured Participating Company and to all applicable insurance regulatory authorities in accordance with this Article. B. The Participating Company shall secure such Obligations by either: 1. Clean, irrevocable, and unconditional evergreen letter(s) of credit (“Letter(s) of Credit”) meeting the requirements of New York Insurance Regulation 133; and/or 2. A trust account meeting the requirements of New York Regulation 114. C. The “Obligations” referred to herein means the then current (as of the end of each calendar quarter) sum of: 1. The amount of the ceded unearned premium reserve for which the Participating Company is responsible to the Reinsured Participating Company; 2. The amount of Losses and Loss Adjustment Expenses and other amounts paid by the Reinsured Reinsure Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid; 3. The amount of ceded reserves for Losses and Loss Adjustment Expenses (including, ceded reserves for losses incurred but not reported) for which the Participating Company is responsible to the Reinsured Participating Company; and 4. The amount of return and refund premiums paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid. D. To the extent that the Participating Company elects to provide Letter(s) of Credit, the following shall apply: 1. Each Letter of Credit will be issued for a term of at least one year and will include 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 Reinsured Participating Company not less than 30 days prior to said expiration date. 2. The Letter of Credit must be issued or confirmed by a bank which is authorized to issue letters of credit, which is either a member of the Federal Reserve System or is a New York State chartered bank, and which in all other respects satisfies the definition of a “"Qualified Bank” " under Section 79.1(e) of New York Insurance Regulation 133. If the Letter of Credit is issued by a bank authorized to issue letters of credit but which is not such a “"Qualified Bank”", then the Letter of Credit must be confirmed by such a bank and the Letter of Credit must meet all of the conditions set forth in Section 79.4 of New York Insurance Regulation 133. 3. The Participating Company and the Reinsured Participating Company agree that the Reinsured Participating Company may draw upon the Letter(s) of Credit at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of premiums returned to the owners of policies reinsured under this Agreement on account of cancellations of such policies; (ii) to reimburse the Reinsured Participating Company for the Participating Company’s share of surrenders and benefits or losses paid by the Reinsured Participating Company under the terms and provisions of the policies reinsured under this Agreement; (iii) to fund an account with the Reinsured Participating Company in an amount at least equal to the deduction, for reinsurance ceded, from the Reinsured Participating Company’s liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to, amounts for policy reserves for claims and losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums; and (iv) to pay any other amounts the Reinsured Participating Company claims are due under this Agreement. 4. the The Reinsured Participating Company shall immediately return to the Participating Company any amounts drawn down on the Letter of Credit that are subsequently determined not to be due. 5. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Reinsured Participating Company of the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Reinsured Participating Company. E. To the extent that the Participating Company elects to establish a trust account, the following shall apply. 1. It is agreed that the Participating Company shall enter into a trust agreement (the “Trust Agreement”) in a form acceptable to the Reinsured Participating Company and establish a trust account (the “Trust Account”) for the sole benefit of the Reinsured Participating Company with a trustee (the “Trustee”), which shall be at the time the Trust is established, and shall continue to be, either a member of the Federal Reserve System or a New York state chartered bank and which shall not be a parent, subsidiary or affiliate of the Participating Company or the Reinsured Participating Company. 2. The Participating Company agrees to deposit and maintain in said Trust Account assets to be held in trust by the Trustee for the benefit of the Reinsured Participating Company as security for the payment of the Participating Company’s Obligations to the Reinsured Participating Company under the Agreement. Such assets shall be maintained in the Trust Account by the Participating Company as long as the Participating Company continues to remain liable for such Obligations. 3. The Participating Company agrees that the assets deposited into the Trust Account shall be valued according to their current fair market value and shall consist only of currency of the United States of America, certificates of deposit issued by a United States bank and payable in United States legal tender, and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of the New York Insurance Law, provided such investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Grantor or the Beneficiary (“Authorized Investments”). 4. The Participating Company, prior to depositing assets with the Trustee, shall execute all assignments and endorsements in blank, and shall transfer legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that the Reinsured Participating Company, or the Trustee upon direction of the Reinsured Participating Company, may whenever necessary negotiate any such assets without consent or signature from the Participating Company or any other entity. 5. All settlements of account under the Trust Agreement between the Reinsured Participating Company and Participating Company shall be made in cash or its equivalent. 6. The Participating Company and the Reinsured Participating Company agree that the assets in the Trust Account may be withdrawn by the Reinsured Participating Company at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of any Losses and Loss Adjustment Expenses paid by the Reinsured Participating Company but not received from the Participating Company or for unearned premiums due to the Reinsured Participating Company but not otherwise paid by the Participating Company under the Agreement; or (ii) to make payment to the Participating Company of any amounts held in the Trust Account that exceed 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit) hereunder; or (iii) where the Reinsured Participating Company has received notification of termination of the Trust Account, and where the Participating Company’s entire Obligations under the Agreement remain unliquidated and undischarged ten (10) days prior to such termination, to withdraw amounts equal to such Obligations (less the balance of credit available under any Letter(s) of Credit) and deposit such amounts in a separate account, in the name of the Reinsured Participating Company, in any United States bank or trust company, apart from its general assets, in trust for such uses and purposes specified in sub-paragraphs (i) and (ii) above as may remain executory after such withdrawal and for any period after such termination. 7. The Participating Company shall have the right to seek the Reinsured Participating Company’s approval to withdraw all or any part of the assets from the Trust Account and transfer such assets to the Participating Company, provided that the withdrawal conforms to the following requirements: (i) the Participating Company shall, at the time of withdrawal, replace the withdrawn assets with other Authorized Investments having a market value equal to the market value of the assets withdrawn, (ii) after such withdrawal and transfer, the market value of the Trust Account is no less than 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit). In the event that the Participating Company seeks the Reinsured Participating Company’s approval hereunder, the Reinsured Participating Company shall not unreasonably or arbitrarily withhold its approval. 8. In the event that the Reinsured Participating Company withdraws assets from the Trust Account for the purposes set forth in Paragraph (6)(i) above in excess of actual amounts required to meet the Participating Company’s Obligations to the Reinsured Participating Company (less the balance of credit available under any Letter(s) of Credit), or in excess of amounts determined to be due and under Paragraph (6)(iii) above, the Reinsured Participating Company will return such excess to the Participating Company. 9. The Reinsured Participating Company will prepare and forward at annual intervals or more frequently as determined by the Reinsured Participating Company, but not more frequently than quarterly to the Participating Company a statement for the purposes of this Article, showing the Participating Company’s share of Obligations as set forth above. If the Participating Company’s share thereof exceeds the then existing balance of the security provided, the Participating Company will, within fifteen (15) days of receipt of the Reinsured Participating Company’s statement, but never later than December 31 of any year, increase the amount of the letter of credit, or Trust Account to the required amount of the Participating Company’s share of Obligations set forth in the Reinsured Participating Company’s statement, but never later than December 31 of any year. If the then existing balance of the security provided exceeds an amount equal to 102% of the Participating Company’s share thereof, the Reinsured Participating Company will release the amount in excess amount over of 102% to the Participating Company upon the Participating Company’s written request. F. The Participating Company will take any other reasonable steps that may be required for the Reinsured Participating Company to take full credit on its statutory financial statements for the reinsurance provided by this Agreement.

Reinsurance Credit. A. If any Participating Company is unauthorized or otherwise unqualified in any state or other United States jurisdiction, and if, without such security, a financial penalty to an other Participating Company, hereinafter in this Article XIV called the “Reinsured Participating Company”, would result on any statutory statement or report it is required to make or file with insurance regulatory authorities or a court of law in the event of insolvency, the Participating Company will timely secure its share of Obligations under this Agreement in a manner, form, and amount acceptable to the Reinsured Participating Company and to all applicable insurance regulatory authorities in accordance with this Article. B. The Participating Company shall secure such Obligations by either: 1. Clean, irrevocable, and unconditional evergreen letter(s) of credit (“Letter(s) of Credit”) meeting the requirements of New York Insurance Regulation 133; and/or 2. A trust account meeting the requirements of New York Regulation 114. C. The “Obligations” referred to herein means the then current (as of the end of each calendar quarter) sum of: 1. The amount of the ceded unearned premium reserve for which the Participating Company is responsible to the Reinsured Participating Company; 2. The amount of Losses and Loss Adjustment Expenses and other amounts paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid; 3. The amount of ceded reserves for Losses and Loss Adjustment Expenses (including, ceded reserves for losses incurred but not reported) for which the Participating Company is responsible to the Reinsured Participating Company; and 4. The amount of return and refund premiums paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid. D. To the extent that the Participating Company elects to provide Letter(s) of Credit, the following shall apply: 1. Each Letter of Credit will be issued for a term of at least one year and will include 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 Reinsured Participating Company not less than 30 days prior to said expiration date. 2. The Letter of Credit must be issued or confirmed by a bank which is authorized to issue letters of credit, which is either a member of the Federal Reserve System or is a New York State chartered bank, and which in all other respects satisfies the definition of a “Qualified Bank” under Section 79.1(e) of New York Insurance Regulation 133. If the Letter of Credit is issued by a bank authorized to issue letters of credit but which is not such a “Qualified Bank”, then the Letter of Credit must be confirmed by such a bank and the Letter of Credit must meet all of the conditions set forth in Section 79.4 of New York Insurance Regulation 133. 3. The Participating Company and the Reinsured Participating Company agree that the Reinsured Participating Company may draw upon the Letter(s) of Credit at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of premiums returned to the owners of policies reinsured under this Agreement on account of cancellations of such policies; (ii) to reimburse the Reinsured Participating Company for the Participating Company’s share of surrenders and benefits or losses paid by the Reinsured Participating Company under the terms and provisions of the policies reinsured under this Agreement; (iii) to fund an account with the Reinsured Participating Company in an amount at least equal to the deduction, for reinsurance ceded, from the Reinsured Participating Company’s liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to, amounts for policy reserves for claims and losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums; and (iv) to pay any other amounts the Reinsured Participating Company claims are due under this Agreement. 4. the The Reinsured Participating Company shall immediately return to the Participating Company any amounts drawn down on the Letter of Credit that are subsequently determined not to be due. 5. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Reinsured Participating Company of the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Reinsured Participating Company. E. To the extent that the Participating Company elects to establish a trust account, the following shall apply. 1. It is agreed that the Participating Company shall enter into a trust agreement (the “Trust Agreement”) in a form acceptable to the Reinsured Participating Company and establish a trust account (the “Trust Account”) for the sole benefit of the Reinsured Participating Company with a trustee (the “Trustee”), which shall be at the time the Trust is established, and shall continue to be, either a member of the Federal Reserve System or a New York state chartered bank and which shall not be a parent, subsidiary or affiliate of the Participating Company or the Reinsured Participating Company. 2. The Participating Company agrees to deposit and maintain in said Trust Account assets to be held in trust by the Trustee for the benefit of the Reinsured Participating Company as security for the payment of the Participating Company’s Obligations to the Reinsured Participating Company under the Agreement. Such assets shall be maintained in the Trust Account by the Participating Company as long as the Participating Company continues to remain liable for such Obligations. 3. The Participating Company agrees that the assets deposited into the Trust Account shall be valued according to their current fair market value and shall consist only of currency of the United States of America, certificates of deposit issued by a United States bank and payable in United States legal tender, and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of the New York Insurance Law, provided such investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Grantor or the Beneficiary (“Authorized Investments”). 4. The Participating Company, prior to depositing assets with the Trustee, shall execute all assignments and endorsements in blank, and shall transfer legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that the Reinsured Participating Company, or the Trustee upon direction of the Reinsured Participating Company, may whenever necessary negotiate any such assets without consent or signature from the Participating Company or any other entity. 5. All settlements of account under the Trust Agreement between the Reinsured Participating Company and Participating Company shall be made in cash or its equivalent. 6. The Participating Company and the Reinsured Participating Company agree that the assets in the Trust Account may be withdrawn by the Reinsured Participating Company at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of any Losses and Loss Adjustment Expenses paid by the Reinsured Participating Company but not received from the Participating Company or for unearned premiums due to the Reinsured Participating Company but not otherwise paid by the Participating Company under the Agreement; or (ii) to make payment to the Participating Company of any amounts held in the Trust Account that exceed 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit) hereunder; or (iii) where the Reinsured Participating Company has received notification of termination of the Trust Account, and where the Participating Company’s entire Obligations under the Agreement remain unliquidated and undischarged ten (10) days prior to such termination, to withdraw amounts equal to such Obligations (less the balance of credit available under any Letter(s) of Credit) and deposit such amounts in a separate account, in the name of the Reinsured Participating Company, in any United States bank or trust company, apart from its general assets, in trust for such uses and purposes specified in sub-paragraphs (i) and (ii) above as may remain executory after such withdrawal and for any period after such termination. 7. The Participating Company shall have the right to seek the Reinsured Participating Company’s approval to withdraw all or any part of the assets from the Trust Account and transfer such assets to the Participating Company, provided that the withdrawal conforms to the following requirements: (i) the Participating Company shall, at the time of withdrawal, replace the withdrawn assets with other Authorized Investments having a market value equal to the market value of the assets withdrawn, (ii) after such withdrawal and transfer, the market value of the Trust Account is no less than 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit). In the event that the Participating Company seeks the Reinsured Participating Company’s approval hereunder, the Reinsured Participating Company shall not unreasonably or arbitrarily withhold its approval. 8. In the event that the Reinsured Participating Company withdraws assets from the Trust Account for the purposes set forth in Paragraph (6)(i) above in excess of actual amounts required to meet the Participating Company’s Obligations to the Reinsured Participating Company (less the balance of credit available under any Letter(s) of Credit), or in excess of amounts determined to be due and under Paragraph (6)(iii) above, the Reinsured Participating Company will return such excess to the Participating Company. 9. The Reinsured Participating Company will prepare and forward at annual intervals or more frequently as determined by the Reinsured Participating Company, but not more frequently than quarterly to the Participating Company a statement for the purposes of this Article, showing the Participating Company’s share of Obligations as set forth above. If the Participating Company’s share thereof exceeds the then existing balance of the security provided, the Participating Company will, within fifteen (15) days of receipt of the Reinsured Participating Company’s statement, but never later than December 31 of any year, increase the amount of the letter of credit, or Trust Account to the required amount of the Participating Company’s share of Obligations set forth in the Reinsured Participating Company’s statement, but never later than December 31 of any year. If the then existing balance of the security provided exceeds an amount equal to 102% of the Participating Company’s share thereof, the Reinsured Participating Company will release the amount in excess amount over of 102% to the Participating Company upon the Participating Company’s written request. F. The Participating Company will take any other reasonable steps that may be required for the Reinsured Participating Company to take full credit on its statutory financial statements for the reinsurance provided by this Agreement.

Reinsurance Credit. A. If any Participating Company is unauthorized or otherwise unqualified in any state or other United States jurisdiction, and if, without such security, a financial penalty to an other Participating Company, hereinafter in this Article XIV called the “Reinsured Participating Company”, would result on any statutory statement or report it is required to make or file with insurance regulatory authorities or a court of law in the event of insolvency, the Participating Company will timely secure its share of Obligations under this Agreement in a manner, form, and amount acceptable to the Reinsured Participating Company and to all applicable insurance regulatory authorities in accordance with this Article. B. The Participating Company shall secure such Obligations by either: 1. Clean, irrevocable, and unconditional evergreen letter(s) of credit (“Letter(s) of Credit”) meeting the requirements of New York Insurance Regulation 133; and/or 2. A trust account meeting the requirements of New York Regulation 114. C. The “Obligations” referred to herein means the then current (as of the end of each calendar quarter) sum of: 1. The amount of the ceded unearned premium reserve for which the Participating Company is responsible to the Reinsured Participating Company; 2. The amount of Losses and Loss Adjustment Expenses and other amounts paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid; 3. The amount of ceded reserves for Losses and Loss Adjustment Expenses (including, ceded reserves for losses incurred but not reported) for which the Participating Company is responsible to the Reinsured Participating Company; and 4. The amount of return and refund premiums paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid. D. To the extent that the Participating Company elects to provide Letter(s) of Credit, the following shall apply: 1. Each Letter of Credit will be issued for a term of at least one year and will include 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 Reinsured Participating Company not less than 30 days prior to said expiration date. 2. The Letter of Credit must be issued or confirmed by a bank which is authorized to issue letters of credit, which is either a member of the Federal Reserve System or is a New York State chartered bank, and which in all other respects satisfies the definition of a “Qualified Bank” under Section 79.1(e) of New York Insurance Regulation 133. If the Letter of Credit is issued by a bank authorized to issue letters of credit but which is not such a “Qualified Bank”, then the Letter of Credit must be confirmed by such a bank and the Letter of Credit must meet all of the conditions set forth in Section 79.4 of New York Insurance Regulation 133. 3. The Participating Company and the Reinsured Participating Company agree that the Reinsured Participating Company may draw upon the Letter(s) of Credit at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of premiums returned to the owners of policies reinsured under this Agreement on account of cancellations of such policies; (ii) to reimburse the Reinsured Participating Company for the Participating Company’s share of surrenders and benefits or losses paid by the Reinsured Participating Company under the terms and provisions of the policies reinsured under this Agreement; (iii) to fund an account with the Reinsured Participating Company in an amount at least equal to the deduction, for reinsurance ceded, from the Reinsured Participating Company’s liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to, amounts for policy reserves for claims and losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums; and (iv) to pay any other amounts the Reinsured Participating Company claims are due under this Agreement. 4. the The Reinsured Participating Company shall immediately return to the Participating Company any amounts drawn down on the Letter of Credit that are subsequently determined not to be due. 5. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Reinsured Participating Company of the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Reinsured Participating Company. E. To the extent that the Participating Company elects to establish a trust account, the following shall apply. 1. It is agreed that the Participating Company shall enter into a trust agreement (the “Trust Agreement”) in a form acceptable to the Reinsured Participating Company and establish a trust account (the “Trust Account”) for the sole benefit of the Reinsured Participating Company with a trustee (the “Trustee”), which shall be at the time the Trust is established, and shall continue to be, either a member of the Federal Reserve System or a New York state chartered bank and which shall not be a parent, subsidiary or affiliate of the Participating Company or the Reinsured Participating Company. 2. The Participating Company agrees to deposit and maintain in said Trust Account assets to be held in trust by the Trustee for the benefit of the Reinsured Participating Company as security for the payment of the Participating Company’s Obligations to the Reinsured Participating Company under the Agreement. Such assets shall be maintained in the Trust Account by the Participating Company as long as the Participating Company continues to remain liable for such Obligations. 3. The Participating Company agrees that the assets deposited into the Trust Account shall be valued according to their current fair market value and shall consist only of currency of the United States of America, certificates of deposit issued by a United States bank and payable in United States legal tender, and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of the New York Insurance Law, provided such investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Grantor or the Beneficiary (“Authorized Investments”). 4. The Participating Company, prior to depositing assets with the Trustee, shall execute all assignments and endorsements in blank, and shall transfer legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that the Reinsured Participating Company, or the Trustee upon direction of the Reinsured Participating Company, may whenever necessary negotiate any such assets without consent or signature from the Participating Company or any other entity. 5. All settlements of account under the Trust Agreement between the Reinsured Participating Company and Participating Company shall be made in cash or its equivalent. 6. The Participating Company and the Reinsured Participating Company agree that the assets in the Trust Account may be withdrawn by the Reinsured Participating Company at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of any Losses and Loss Adjustment Expenses paid by the Reinsured Participating Company but not received from the Participating Company or for unearned premiums due to the Reinsured Participating Company but not otherwise paid by the Participating Company under the Agreement; or (ii) to make payment to the Participating Company of any amounts held in the Trust Account that exceed 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit) hereunder; or (iii) where the Reinsured Participating Company has received notification of termination of the Trust Account, and where the Participating Company’s entire Obligations under the Agreement remain unliquidated and undischarged ten (10) days prior to such termination, to withdraw amounts equal to such Obligations (less the balance of credit available under any Letter(s) of Credit) and deposit such amounts in a separate account, in the name of the Reinsured Participating Company, in any United States bank or trust company, apart from its general assets, in trust for such uses and purposes specified in sub-paragraphs (i) and (ii) above as may remain executory after such withdrawal and for any period after such termination. 7. The Participating Company shall have the right to seek the Reinsured Participating Company’s approval to withdraw all or any part of the assets from the Trust Account and transfer such assets to the Participating Company, provided that the withdrawal conforms to the following requirements: (i) the Participating Company shall, at the time of withdrawal, replace the withdrawn assets with other Authorized Investments having a market value equal to the market value of the assets withdrawn, (ii) after such withdrawal and transfer, the market value of the Trust Account is no less than 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit). In the event that the Participating Company seeks the Reinsured Participating Company’s approval hereunder, the Reinsured Participating Company shall not unreasonably or arbitrarily withhold its approval. 8. In the event that the Reinsured Participating Company withdraws assets from the Trust Account for the purposes set forth in Paragraph (6)(i) above in excess of actual amounts required to meet the Participating Company’s Obligations to the Reinsured Participating Company (less the balance of credit available under any Letter(s) of Credit), or in excess of amounts determined to be due and under Paragraph (6)(iii) above, the Reinsured Participating Company will return such excess to the Participating Company. 9. The Reinsured Participating Company will prepare and forward at annual intervals or more frequently as determined by the Reinsured Participating Company, but not more frequently than quarterly to the Participating Company a statement for the purposes of this Article, showing the Participating Company’s share of Obligations as set forth above. If the Participating Company’s share thereof exceeds the then existing balance of the security provided, the Participating Company will, within fifteen (15) days of receipt of the Reinsured Participating Company’s statement, but never later than December 31 of any year, increase the amount of the letter of credit, or Trust Account to the required amount of the Participating Company’s share of Obligations set forth in the Reinsured Participating Company’s statement, but never later than December 31 of any year. If the then existing balance of the security provided exceeds an amount equal to 102% of the Participating Company’s share thereof, the Reinsured Participating Company will release the excess amount over 102% to the Participating Company upon the Participating Company’s written request. F. The Participating Company will take any other reasonable steps that may be required for the Reinsured Participating Company to take full credit on its statutory financial statements for the reinsurance provided by this Agreement.

Reinsurance Credit. A. If any Participating Company is unauthorized or otherwise unqualified in any state or other United States jurisdiction, and if, without such security, a financial penalty to an other Participating Company, hereinafter in this Article XIV called the “Reinsured Participating Company”, would result on any statutory statement or report it is required to make or file with insurance regulatory authorities or a court of law in the event of insolvency, the Participating Company will timely secure its share of Obligations under this Agreement in a manner, form, and amount acceptable to the Reinsured Participating Company and to all applicable insurance regulatory authorities in accordance with this Article. B. The Participating Company shall secure such Obligations by either: 1. Clean, irrevocable, and unconditional evergreen letter(s) of credit (“Letter(s) of Credit”) meeting the requirements of New York Insurance Regulation 133; and/or 2. A trust account meeting the requirements of New York Regulation 114. C. The “Obligations” referred to herein means the then current (as of the end of each calendar quarter) sum of: 1. The amount of the ceded unearned premium reserve for which the Participating Company is responsible to the Reinsured Participating Company; 2. The amount of Losses and Loss Adjustment Expenses and other amounts paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid; 3. The amount of ceded reserves for Losses and Loss Adjustment Expenses (including, ceded reserves for losses incurred but not reported) for which the Participating Company is responsible to the Reinsured Participating Company; and 4. The amount of return and refund premiums paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid. D. To the extent that the Participating Company elects to provide Letter(s) of Credit, the following shall apply: 1. Each Letter of Credit will be issued for a term of at least one year and will include 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 Reinsured Participating Company not less than 30 days prior to said expiration date. 2. The Letter of Credit must be issued or confirmed by a bank which is authorized to issue letters of credit, which is either a member of the Federal Reserve System or is a New York State chartered bank, and which in all other respects satisfies the definition of a “Qualified Bank” under Section 79.1(e) of New York Insurance Regulation 133. If the Letter of Credit is issued by a bank authorized to issue letters of credit but which is not such a “Qualified Bank”, then the Letter of Credit must be confirmed by such a bank and the Letter of Credit must meet all of the conditions set forth in Section 79.4 of New York Insurance Regulation 133. 3. The Participating Company and the Reinsured Participating Company agree that the Reinsured Participating Company may draw upon the Letter(s) of Credit at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of premiums returned to the owners of policies reinsured under this Agreement on account of cancellations of such policies; (ii) to reimburse the Reinsured Participating Company for the Participating Company’s share of surrenders and benefits or losses paid by the Reinsured Participating Company under the terms and provisions of the policies reinsured under this Agreement; (iii) to fund an account with the Reinsured Participating Company in an amount at least equal to the deduction, for reinsurance ceded, from the Reinsured Participating Company’s liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to, amounts for policy reserves for claims and losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums; and (iv) to pay any other amounts the Reinsured Participating Company claims are due under this Agreement. 4. the Reinsured Participating Company shall immediately return to the Participating Company any amounts drawn down on the Letter of Credit that are subsequently determined not to be due. 5. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Reinsured Participating Company of the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Reinsured Participating Company. E. To the extent that the Participating Company elects to establish a trust account, the following shall apply. 1. It is agreed that the Participating Company shall enter into a trust agreement (the “Trust Agreement”) in a form acceptable to the Reinsured Participating Company and establish a trust account (the “Trust Account”) for the sole benefit of the Reinsured Participating Company with a trustee (the “Trustee”), which shall be at the time the Trust is established, and shall continue to be, either a member of the Federal Reserve System or a New York state chartered bank and which shall not be a parent, subsidiary or affiliate of the Participating Company or the Reinsured Participating Company. 2. The Participating Company agrees to deposit and maintain in said Trust Account assets to be held in trust by the Trustee for the benefit of the Reinsured Participating Company as security for the payment of the Participating Company’s Obligations to the Reinsured Participating Company under the Agreement. Such assets shall be maintained in the Trust Account by the Participating Company as long as the Participating Company continues to remain liable for such Obligations. 3. The Participating Company agrees that the assets deposited into the Trust Account shall be valued according to their current fair market value and shall consist only of currency of the United States of America, certificates of deposit issued by a United States bank and payable in United States legal tender, and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of the New York Insurance Law, provided such investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Grantor or the Beneficiary (“Authorized Investments”). 4. The Participating Company, prior to depositing assets with the Trustee, shall execute all assignments and endorsements in blank, and shall transfer legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that the Reinsured Participating Company, or the Trustee upon direction of the Reinsured Participating Company, may whenever necessary negotiate any such assets without consent or signature from the Participating Company or any other entity. 5. All settlements of account under the Trust Agreement between the Reinsured Participating Company and Participating Company shall be made in cash or its equivalent. 6. The Participating Company and the Reinsured Participating Company agree that the assets in the Trust Account may be withdrawn by the Reinsured Participating Company at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of any Losses and Loss Adjustment Expenses paid by the Reinsured Participating Company but not received from the Participating Company or for unearned premiums due to the Reinsured Participating Company but not otherwise paid by the Participating Company under the Agreement; or (ii) to make payment to the Participating Company of any amounts held in the Trust Account that exceed 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit) hereunder; or (iii) where the Reinsured Participating Company has received notification of termination of the Trust Account, and where the Participating Company’s entire Obligations under the Agreement remain unliquidated and undischarged ten (10) days prior to such termination, to withdraw amounts equal to such Obligations (less the balance of credit available under any Letter(s) of Credit) and deposit such amounts in a separate account, in the name of the Reinsured Participating Company, in any United States bank or trust company, apart from its general assets, in trust for such uses and purposes specified in sub-paragraphs (i) and (ii) above as may remain executory after such withdrawal and for any period after such termination. 7. The Participating Company shall have the right to seek the Reinsured Participating Company’s approval to withdraw all or any part of the assets from the Trust Account and transfer such assets to the Participating Company, provided that the withdrawal conforms to the following requirements: (i) the Participating Company shall, at the time of withdrawal, replace the withdrawn assets with other Authorized Investments having a market value equal to the market value of the assets withdrawn, (ii) after such withdrawal and transfer, the market value of the Trust Account is no less than 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit). In the event that the Participating Company seeks the Reinsured Participating Company’s approval hereunder, the Reinsured Participating Company shall not unreasonably or arbitrarily withhold its approval. 8. In the event that the Reinsured Participating Company withdraws assets from the Trust Account for the purposes set forth in Paragraph (6)(i) above in excess of actual amounts required to meet the Participating Company’s Obligations to the Reinsured Participating Company (less the balance of credit available under any Letter(s) of Credit), or in excess of amounts determined to be due and under Paragraph (6)(iii) above, the Reinsured Participating Company will return such excess to the Participating Company. 9. The Reinsured Participating Company will prepare and forward at annual intervals or more frequently as determined by the Reinsured Participating Company, but not more frequently than quarterly to the Participating Company a statement for the purposes of this Article, showing the Participating Company’s share of Obligations as set forth above. If the Participating Company’s share thereof exceeds the then existing balance of the security provided, the Participating Company will, within fifteen (15) days of receipt of the Reinsured Participating Company’s statement, but never later than December 31 of any year, increase the amount of the letter of credit, or Trust Account to the required amount of the Participating Company’s share of Obligations set forth in the Reinsured Participating Company’s statement, but never later than December 31 of any year. If the then existing balance of the security provided exceeds an amount equal to 102% of the Participating Company’s share thereof, the Reinsured Participating Company will release the amount in excess amount over of 102% to the Participating Company upon the Participating Company’s written request. F. The Participating Company will take any other reasonable steps that may be required for the Reinsured Participating Company to take full credit on its statutory financial statements for the reinsurance provided by this Agreement.

Reinsurance Credit. A. If any Participating Company is unauthorized or otherwise unqualified in any state or other United States jurisdiction, and if, without such security, a financial penalty to an other Participating Company, hereinafter in this Article XIV called the “Reinsured Participating Company”, would result on any statutory statement or report it is required to make or file with insurance regulatory authorities or a court of law in the event of insolvency, the Participating Company will timely secure its share of Obligations under this Agreement in a manner, form, and amount acceptable to the Reinsured reinsured Participating Company and to all applicable insurance regulatory authorities in accordance with this Article. B. The Participating Company shall secure such Obligations by either: 1. Clean, irrevocable, and unconditional evergreen letter(s) of credit (“Letter(s) of Credit”) meeting the requirements of New York Insurance Regulation 133; and/or 2. A trust account meeting the requirements of New York Regulation 114. C. The “Obligations” referred to herein means the then current (as of the end of each calendar quarter) sum of: 1. The amount of the ceded unearned premium reserve for which the Participating Company is responsible to the Reinsured Participating Company; 2. The amount of Losses and Loss Adjustment Expenses and other amounts paid by the Reinsured Reinsure Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid; 3. The amount of ceded reserves for Losses and Loss Adjustment Expenses (including, ceded reserves for losses incurred but not reported) for which the Participating Company is responsible to the Reinsured Participating Company; and 4. The amount of return and refund premiums paid by the Reinsured Participating Company for which the Participating Company is responsible to the Reinsured Participating Company but has not yet paid. D. To the extent that the Participating Company elects to provide Letter(s) of Credit, the following shall apply: 1. Each Letter of Credit will be issued for a term of at least one year and will include 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 Reinsured Participating Company not less than 30 days prior to said expiration date. 2. The Letter of Credit must be issued or confirmed by a bank which is authorized to issue letters of credit, which is either a member of the Federal Reserve System or is a New York State chartered bank, and which in all other respects satisfies the definition of a “Qualified Bank” under Section 79.1(e) of New York Insurance Regulation 133. If the Letter of Credit is issued by a bank authorized to issue letters of credit but which is not such a “Qualified Bank”, then the Letter of Credit must be confirmed by such a bank and the Letter of Credit must meet all of the conditions set forth in Section 79.4 of New York Insurance Regulation 133. 3. The Participating Company and the Reinsured Participating Company agree that the Reinsured Participating Company may draw upon the Letter(s) of Credit at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of premiums returned to the owners of policies reinsured under this Agreement on account of cancellations of such policies; (ii) to reimburse the Reinsured Participating Company for the Participating Company’s share of surrenders and benefits or losses paid by the Reinsured Participating Company under the terms and provisions of the policies reinsured under this Agreement; (iii) to fund an account with the Reinsured Participating Company in an amount at least equal to the deduction, for reinsurance ceded, from the Reinsured Participating Company’s liabilities for policies ceded under this Agreement. Such amount shall include, but not be limited to, amounts for policy reserves for claims and losses incurred (including losses incurred but not reported), loss adjustment expenses, and unearned premiums; and (iv) to pay any other amounts the Reinsured Participating Company claims are due under this Agreement. 4. the The Reinsured Participating Company shall immediately return to the Participating Company any amounts drawn down on the Letter of Credit that are subsequently determined not to be due. 5. The issuing bank shall have no responsibility whatsoever in connection with the propriety of withdrawals made by the Reinsured Participating Company of the disposition of funds withdrawn, except to ensure that withdrawals are made only upon the order of properly authorized representatives of the Reinsured Participating Company. E. To the extent that the Participating Company elects to establish a trust account, the following shall apply. 1. It is agreed that the Participating Company shall enter into a trust agreement (the “Trust Agreement”) in a form acceptable to the Reinsured Participating Company and establish a trust account (the “Trust Account”) for the sole benefit of the Reinsured Participating Company with a trustee (the “Trustee”), which shall be at the time the Trust is established, and shall continue to be, either a member of the Federal Reserve System or a New York state chartered bank and which shall not be a parent, subsidiary or affiliate of the Participating Company or the Reinsured Participating Company. 2. The Participating Company agrees to deposit and maintain in said Trust Account assets to be held in trust by the Trustee for the benefit of the Reinsured Participating Company as security for the payment of the Participating Company’s Obligations to the Reinsured Participating Company under the Agreement. Such assets shall be maintained in the Trust Account by the Participating Company as long as the Participating Company continues to remain liable for such Obligations. 3. The Participating Company agrees that the assets deposited into the Trust Account shall be valued according to their current fair market value and shall consist only of currency of the United States of America, certificates of deposit issued by a United States bank and payable in United States legal tender, and investments of the types specified in paragraphs (1), (2), (3), (8) and (10) of Section 1404(a) of the New York Insurance Law, provided such investments are issued by an institution that is not the parent, subsidiary or affiliate of either the Grantor or the Beneficiary (“Authorized Investments”). 4. The Participating Company, prior to depositing assets with the Trustee, shall execute all assignments and endorsements in blank, and shall transfer legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that the Reinsured Participating Company, or the Trustee upon direction of the Reinsured Participating Company, may whenever necessary negotiate any such assets without consent or signature from the Participating Company or any other entity. 5. All settlements of account under the Trust Agreement between the Reinsured Participating Company and Participating Company shall be made in cash or its equivalent. 6. The Participating Company and the Reinsured Participating Company agree that the assets in the Trust Account may be withdrawn by the Reinsured Participating Company at any time, notwithstanding any other provisions in the Agreement, provided such assets are applied and utilized by the Reinsured Participating Company or any successor of the Reinsured Participating Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver or conservator of the Reinsured Participating Company, without diminution because of the insolvency of the Reinsured Participating Company or the Participating Company, only for the following purposes: (i) to reimburse the Reinsured Participating Company for the Participating Company’s share of any Losses and Loss Adjustment Expenses paid by the Reinsured Participating Company but not received from the Participating Company or for unearned premiums due to the Reinsured Participating Company but not otherwise paid by the Participating Company under the Agreement; or (ii) to make payment to the Participating Company of any amounts held in the Trust Account that exceed 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit) hereunder; or (iii) where the Reinsured Participating Company has received notification of termination of the Trust Account, and where the Participating Company’s entire Obligations under the Agreement remain unliquidated and undischarged ten (10) days prior to such termination, to withdraw amounts equal to such Obligations (less the balance of credit available under any Letter(s) of Credit) and deposit such amounts in a separate account, in the name of the Reinsured Participating Company, in any United States bank or trust company, apart from its general assets, in trust for such uses and purposes specified in sub-paragraphs (i) and (ii) above as may remain executory after such withdrawal and for any period after such termination. 7. The Participating Company shall have the right to seek the Reinsured Participating Company’s approval to withdraw all or any part of the assets from the Trust Account and transfer such assets to the Participating Company, provided that the withdrawal conforms to the following requirements: (i) the Participating Company shall, at the time of withdrawal, replace the withdrawn assets with other Authorized Investments having a market value equal to the market value of the assets withdrawn, (ii) after such withdrawal and transfer, the market value of the Trust Account is no less than 102% of the Participating Company’s Obligations (less the balance of credit available under any Letter(s) of Credit). In the event that the Participating Company seeks the Reinsured Participating Company’s approval hereunder, the Reinsured Participating Company shall not unreasonably or arbitrarily withhold its approval. 8. In the event that the Reinsured Participating Company withdraws assets from the Trust Account for the purposes set forth in Paragraph (6)(i) above in excess of actual amounts required to meet the Participating Company’s Obligations to the Reinsured Participating Company (less the balance of credit available under any Letter(s) of Credit), or in excess of amounts determined to be due and under Paragraph (6)(iii) above, the Reinsured Participating Company will return such excess to the Participating Company. 9. The Reinsured Participating Company will prepare and forward at annual intervals or more frequently as determined by the Reinsured Participating Company, but not more frequently than quarterly to the Participating Company a statement for the purposes of this Article, showing the Participating Company’s share of Obligations as set forth above. If the Participating Company’s share thereof exceeds the then existing balance of the security provided, the Participating Company will, within fifteen (15) days of receipt of the Reinsured Participating Company’s statement, but never later than December 31 of any year, increase the amount of the letter of credit, or Trust Account to the required amount of the Participating Company’s share of Obligations set forth in the Reinsured Participating Company’s statement, but never later than December 31 of any year. If the then existing balance of the security provided exceeds an amount equal to 102% of the Participating Company’s share thereof, the Reinsured Participating Company will release the amount in excess amount over of 102% to the Participating Company upon the Participating Company’s written request. F. The Participating Company will take any other reasonable steps that may be required for the Reinsured Participating Company to take full credit on its statutory financial statements for the reinsurance provided by this Agreement.