# Reinsurance Certificate

**CONTINENTAL CASUALTY COMPANY**
CNA PLAZA, CHICAGO, ILLINOIS 60685
(Herein Called "the Company")

**IN CONSIDERATION OF THE PAYMENT OF THE PREMIUM, AND SUBJECT TO THE TERMS, CONDITIONS AND LIMIT(S) OF LIABILITY SET FORTH HEREIN AND IN THE DECLARATIONS MADE A PART HEREOF, THE REINSURER DOES HEREBY REINSURE THE CEDING COMPANY NAMED IN THE DECLARATIONS (HEREIN CALLED "THE COMPANY") IN RESPECT OF THE COMPANY'S POLICY AS FOLLOWS:**

**A.** The Company warrants to retain for its own account, subject to treaty reinsurance, the amount of liability specified in Item 3 of the Declarations. The liability of the Reinsurer, as specified in Item 4 of the Declarations, shall follow that of the Company, subject in all respects to all terms, conditions, and limit(s) of the Company's policy except when otherwise specifically provided herein or designated as non-concurrent coverage reinsurance in the Declarations; provided, however, that with respect to the liability of the Reinsurer for losses in excess of the stated retained aggregate limit such excess shall be calculated based solely on losses occurring after the effective date of this reinsurance.

**B.** The Reinsurer's certificate period shall be as specified in the Declarations at the place specified in the Company's policy. The Company shall furnish the Reinsurer with a copy of its policy and all endorsements thereto and agrees to notify the Reinsurer promptly of all changes which in any manner affect this certificate of reinsurance. The Company shall make available for inspection, and place at the disposal of the Reinsurer at all reasonable times, all records of the Company relating to the certificate of reinsurance or claims in connection therewith.

**C.** The reinsurance afforded under this certificate does not apply to (1) injury, damage, destruction, or contamination arising out of the hazardous properties, including radioactive, toxic or explosive properties of nuclear material; nor (2) liability arising out of the Employees Retirement Income Security Act, 1974, as amended.

**D.** In no event shall anyone other than the Company or, in the event of the Company's insolvency, its receiver, liquidator, or statutory successor, have any right of action against the Reinsurer under this agreement.

**E.** Prompt notice shall be given to the Reinsurer by the Company of any occurrence or accident which appears likely to involve this reinsurance and while the Reinsurer does not undertake to investigate or defend claims or suits it shall nevertheless have the right and be given the opportunity to associate with the Company and its representatives at its own expense in the defense and control of any claim, suit or proceeding involving this reinsurance with full cooperation of the Company.

**F.** All loss settlements made by the Company, provided they are within the terms, conditions and limit(s) of this certificate of reinsurance, shall be binding on the Reinsurer. Upon receipt of a definitive statement of loss the Reinsurer shall promptly pay its proportion of expenses (other than office expenses and payments to any salaried employee incurred by the Company in the investigation and settlement of claims or suits and its proportion of court costs and interest on any judgment or award, in the ratio that the Reinsurer's loss payment bears to the Company's loss payment). If there is no loss payment, the Reinsurer shall pay its proportion of such expenses only in respect of business accepted on a Quota Share basis and then only in the percentage stated in Item 4 of the Declarations in the first layer of participation.

**G.** Definitions
As used in this certificate the following terms shall have the meaning set opposite each.

**Excess of Loss:** The limit(s) of liability of the Reinsurer, as stated in Item 4 of the Declarations, applies (y) only to that portion of loss within the policy limits, in excess of the applicable retention of the Company as stated in Item 3 of the Declarations.

**Quota Share:** Coverage provided by the Reinsurer under this certificate of reinsurance or a self-insured retention and the limit(s) of liability of the Reinsurer applies (y) proportionally to all loss within the Policy Limits in the percentage(s) set forth in Item 4 of the Declarations.

**Non-concurrent Coverage:** The reinsurance provided does not apply to any hazards or risks of loss or damage covered under the Company's policy other than those specifically set forth in the declarations. The retention of the Company and liability of the Reinsurer shall be determined as though the Company's policy applied only to the hazards or risks of loss or damage specifically described in the Declarations.

**H.** The Reinsurer will be paid or credited by the Company with its proportion of salvage, that is, reimbursement obtained or recovery made by the Company, less all expenses paid by the Company in making such recovery. If the reinsurance afforded by this certificate is on an excess of loss basis, salvage shall be applied, in the inverse order, in which liability attaches.

**I.** The Company will be liable for all taxes on premiums ceded to the Reinsurer under this certificate of reinsurance.

**J.** In the event of the insolvency of the Company, the reinsurance provided by this certificate shall be payable by the Reinsurer on the basis of the liability of the Company, the policy retained, without diminution because of such insolvency, directly to the Company or its receiver, liquidator, or statutory successor. The Reinsurer shall be given written notice of the filing of any claim against the Company or its receiver, liquidator, or statutory successor within a reasonable time after such claim is filed in the insolvency proceedings. The Reinsurer shall have the right to investigate each such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defenses which it may deem available to the Company or its receiver, liquidator, or statutory successor. The expense thus incurred by the Reinsurer shall be chargeable, subject to court approval, against the insolvent Company as part of the expenses of liquidation to the extent of a proportionate share of the benefit which may accrue to the Company solely as the result of the defense undertaken by the Reinsurer.

**K.** Should the Company's policy be cancelled, this certificate shall terminate automatically at the same time and date. This certificate may also be cancelled by the Company upon prior written notice stating when thereafter the reinsurance afforded hereby shall terminate. This certificate may also be cancelled by the Reinsurer upon written notice stating when thereafter the reinsurance afforded hereby shall terminate. The date of such termination shall be the earlier date of either: A) the date written notice is mailed plus the number of days required to cancel the Company's policy reinsured hereby plus fifteen days, if less, or twenty-five days in all; or B) in the event of cancellation for non-payment of premium, the date written notice is mailed plus fifteen days. Proof of mailing shall be deemed proof of notice and calculation of the earned premium shall follow the Company's calculation in the use of short rate or pro rata tables.

**L.** Any difference of opinion between the Reinsurer and the Company with respect to the interpretation of this certificate or the performance of the obligations under this certificate shall be submitted to arbitration upon request of one of the contracting parties. Each of the contracting parties shall nominate an arbitrator within thirty days of being requested to do so, and the two named shall select an umpire upon arbitration. In the event that either party fails to appoint its arbitrator within the time specified, the other party shall have the right to appoint the said arbitrator forthwith. The arbitrators and the umpire shall be officials or former officials of insurance or reinsurance companies not under the control or management of either party to this Agreement. If the arbitrators do not agree as to an umpire within thirty days of their appointment, each of them shall name three, of whom the other shall decline two, and the decision shall be made by drawing lots. Each party shall present its case to the arbitrators within fifteen days of the appointment of the umpire or within such period as may be agreed upon by the Board of Directors.

A decision in writing of either of the three (two arbitrators and one umpire), when filed with the contracting parties, shall be final and binding upon both. The arbitrators and the umpire are relieved from all judicial formalities and the rules of evidence and may abstain from the strict rules of law, interpreting the present Agreement as an honorable engagement rather than merely a legal obligation. Each party shall bear the expense of its own arbitrator, and shall jointly and equally bear with the other the expense of the umpire and of the arbitration. In the event that the umpire is chosen by one party, as above provided, the expense of the arbitrators, the umpire, and the arbitration shall be equally divided between the two parties.

Any arbitration shall take place in the city of the Home Office of the Company unless otherwise agreed.

**M.** The Reinsurance Broker, if any, named herein, is hereby recognized as the intermediary negotiating this reinsurance through whom all premiums, loss payments and communications relating to business hereunder shall be transmitted by the parties.

**N.** The terms of this certificate of reinsurance shall not be waived or changed except by endorsement issued to form a part hereof, executed by a duly authorized representative of the Reinsurer.

**IN WITNESS WHEREOF,** CONTINENTAL CASUALTY COMPANY has caused this certificate of reinsurance to be signed by the Chairman of the Board and Corporate Secretary at Chicago, Illinois, but the same shall not be binding upon the Reinsurer unless signed by an authorized representative of the Reinsurer.