**X.L. Insurance Company, Ltd.**

Cumberland House
One Victoria Street
P.O. Box HM 2245
Hamilton HM JX Bermuda
Fax: (441) 292-1568
Telephone: (441) 292-8515

**December 1, 1995**

**TO:** ALL X.L. EXCESS LIABILITY INSUREDS UNDER FORM XS-004.

**Re:** Notice Guidelines

**A. Integrated Occurrences**

As you likely are aware, X.L. has revised its basic form of Excess Liability Policy. As a result of good experience from both insureds' and X.L.'s perspectives with the "batch occurrence" mechanism under XS-003, under the new form, XS-004, the "batch occurrence" concept has been expanded and is now known as "Integrated Occurrence." The "batch occurrence" feature was limited to personal injury and/or property damage arising out of two or more units of a product attributable to the same event, condition, cause, defect or hazard or failure to warn of such. An Integrated Occurrence applies not only to Occurrences arising out of unit products but also to other products as well as to non-product occurrences. An Integrated Occurrence consists of Personal Injury, Property Damage and/or Advertising Liability to two or more persons or properties which commenced over a period longer than thirty consecutive days attributable directly, indirectly or allegedly to the same actual, or alleged event, condition, cause, defect, hazard or failure to warn of such.

An essential precondition to an Integrated Occurrence under XS-004, which is similar to the XS-003 batch occurrence mechanism, is that the notice thereof identify the Occurrence as an "Integrated Occurrence" (see Definition R and Section C of Article V of the Policy). Where notice of an Occurrence is not given as an "Integrated Occurrence" and it is later discovered that there is an Integrated Occurrence, a subsequent notice may declare an "Integrated Occurrence" under the Policy as then in effect (so long as the coverage is continued). Whether or not to give notice of an "Integrated Occurrence" is at the option of the Insured. (As respects MAXL and three-year policies, X.L. also can designate an "Integrated Occurrence" under certain circumstances.)

To illustrate, assume an explosion at the Insured's plant results in a release of a toxic gas which floats into inhabited areas and is inhaled by residents for five days before it dissipates. Further assume that this causes both immediate acute injuries and long-term chronic injuries. This would not be an Integrated Occurrence because all of the injuries would have commenced in the five day exposure period. Accordingly, no "Integrated Occurrence" notice would be required.

On the other hand, assume that the Insured sells a truckload of contaminated frozen hamburgers which are consumed over a three-month period giving rise to two wrongful death claims relating to people who consumed hamburgers more than 30 days apart. In this case, the Insured would have the option of notifying each death as a separate occurrence, with a separate retention and limit, or notifying both deaths as a single Integrated Occurrence. Further, even if the Insured determined to notify the deaths initially as separate occurrences (say, because it was not immediately apparent that both deaths