Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the structural, economic, and regulatory aspects of a new catastrophe excess-of-loss ("Cat XOL") reinsurance layer being placed for the benefit of Quorum Specialty Insurance Company ("Quorum Specialty" or "QSIC," NAIC No. 42917), the operating subsidiary of Quorum Insurance Holdings Corp. ("Quorum Holdings" or "QIHC"). This memorandum is prepared at yo

II. Background: Quorum's Reinsurance Program and Catastrophe Exposure A. Quorum Specialty — Overview Quorum Specialty Insurance Company is a Connecticut-domiciled admitted property and casualty insurer, assigned NAIC No. 42917. QSIC is a wholly owned operating subsidiary of Quorum Insurance Holdings Corp., a Delaware corporation publicly traded on the Nasdaq Stock Market under the ticker symbol QIHC. Quorum Holdings

III. Layer Structure and Economics A. Coverage Parameters The proposed Cat XOL layer is structured as follows: • Per-Occurrence Limit: $35,000,000 • Attachment Point (Per Occurrence): $15,000,000, net of quota-share recoveries under the existing 40% property quota-share treaty with Pinnacle Re Ltd. • Exhaustion Point (Per Occurrence): $15,000,000 + $35,000,000 = $50,000,000 • Reinstatements: One (1) reinstatement at

IV. Reinsurer Panel Composition and Credit Quality A. Participation Table The proposed Cat XOL layer will be placed across a panel of three reinsurers, with Pinnacle Re Ltd. serving as the lead reinsurer. The panel composition is as follows: Each reinsurer's participation is several (not joint), meaning that each reinsurer is liable only for its proportionate share of each loss. No reinsurer is responsible for the de

V. Collateral and Trust Requirements A. Regulatory Framework The ability of a ceding insurer to take credit for reinsurance ceded on its statutory financial statements is governed by a comprehensive regulatory framework designed to ensure that reinsurance recoverables are backed by adequate security. The principal sources of law applicable to this placement are: • New York Insurance Law § 1308: Establishes the condit

VI. Key Exclusion Clauses A detailed analysis of the exclusion clauses applicable to the Cat XOL layer is being prepared separately by Carlos Espinoza of our insurance regulatory practice group. That memorandum is expected to be circulated prior to the November 1, 2025 target date for distribution of the first draft Cat XOL contract. The following is a summary of the principal exclusion clauses that have been identif

VII. Key Contractual Provisions A. Occurrence Definition and Hours Clause As noted in Section III.A above, the Cat XOL contract will include a 168-consecutive-hour aggregation clause (the "hours clause") that defines the temporal window within which individual losses may be aggregated into a single occurrence for purposes of the attachment point, per-occurrence limit, and exhaustion point. The hours clause is fundame

I. Insolvency Provisions The Cat XOL contract will include a standard insolvency clause, as required by New York Insurance Law § 1308(a)(2)(A)(iv), providing that the reinsurer's obligation to pay losses shall be payable directly to the cedent's liquidator, receiver, or statutory successor, without diminution because of the insolvency of the cedent and without requiring presentation of a claim by the policyholder. Th

VIII. Interaction with Quota-Share Treaty The interaction between the Cat XOL layer and the existing 40% property quota-share treaty with Pinnacle Re is a critical element of Quorum Specialty's overall reinsurance program architecture. As noted above, the Cat XOL attachment point of $15,000,000 is calculated net of quota-share recoveries. In a catastrophe event, the loss waterfall operates as follows:

1. Quorum Specialty first cedes 40% of its gross catastrophe loss to Pinnacle Re under the quota-share treaty;

2. Quorum Specialty retains the remaining 60% of the gross loss as its net share;

3. Of that net share, the first $15,000,000 is retained by Quorum Specialty within the Cat XOL attachment point;

4. The Cat XOL layer responds to the next $35,000,000 of net loss (from $15,000,000 to $50,000,000);

5. Any net loss above the $50,000,000 exhaustion point is retained by Quorum Specialty. Illustrative Example. To demonstrate the operation of the program in a major catastrophe scenario, consider a gross occurrence loss of $100,000,000: In this example, Quorum Specialty's total retained loss is $25,000,000 ($15,000,000 within the attachment plus $10,000,000 above the exhaustion point), representing approximately 5.2%