Contract analysis

I. Executive Summary The purpose of this memorandum is to analyze the expiring terms and proposed renewal terms of the property quota-share reinsurance treaty (the "QS Treaty") between Quorum Specialty Insurance Company ("Quorum Specialty" or "QSIC"), the Connecticut-domiciled admitted carrier subsidiary (NAIC No. 42917) of Quorum Insurance Holdings Corp. ("Quorum" or "QIH"), and Pinnacle Re Ltd. ("Pinnacle Re"), a B

1. Summarizes the key commercial terms of the expiring QS Treaty and compares them to the proposed renewal terms under discussion for the January 1, 2026 treaty year.

2. Identifies and analyzes each area of proposed change, including the economic impact of such changes on Quorum Specialty's financial position.

3. Evaluates the interplay between the QS Treaty and the new $35,000,000 xs $15,000,000 catastrophe excess-of-loss ("Cat XOL") layer being placed concurrently through Blackbridge.

4. Recommends specific negotiation positions for each open issue, together with fallback positions and strategic considerations.

5. Identifies regulatory, accounting, and rating agency implications of the proposed terms. In preparing this memorandum, we have reviewed the expiring treaty wording (dated December 15, 2024), Blackbridge's initial market submission circulated October 17, 2025, and supporting actuarial work product from Meridian Actuarial Partners LLC (lead actuary: Dr. Anita K. Rourke, FCAS). Catastrophe model output referenced her

II. Background and Treaty History A. Quorum Specialty — Cedent Profile Quorum Insurance Holdings Corp. is a Delaware corporation, publicly traded on the Nasdaq Stock Market under the ticker symbol QIHC. The company is headquartered at 400 Constitution Plaza, Suite 2200, Hartford, Connecticut 06103. Quorum's chief executive officer is Desmond R. Hargrove, and its chief financial officer is Priya Chandrasekaran. Quorum

III. Comparison of Expiring vs. Proposed Terms A. Summary Table The following table provides a side-by-side comparison of the key commercial terms under the expiring QS Treaty (January 1, 2025 – December 31, 2025) and the proposed terms for the renewal treaty year (January 1, 2026 – December 31, 2026): The sections that follow analyze each of these parameters in detail. B. Cession Percentage Expiring: 40% of net writ

I. Maximum Per-Occurrence Limit Maximum per-occurrence limit to the QS Treaty: $25,000,000. Pinnacle Re's 40% share of this limit: $10,000,000. The per-occurrence limit caps Pinnacle Re's maximum exposure under the QS Treaty for any single occurrence at $10,000,000 (being its 40% share of the $25,000,000 treaty-level cap). This limit protects Pinnacle Re from catastrophic aggregation of individual risk losses within

IV. Economic Analysis A. Commission Income Impact The proposed increase in the provisional ceding commission from 32.0% to 33.5% generates meaningful incremental income for Quorum Specialty. On the projected 2026 ceded premium base of $135,200,000: At the proposed 33.5% provisional commission: Commission income to Quorum Specialty: $135,200,000 × 33.5% = $45,292,000 At the expiring 32.0% commission rate: Commission i

V. Actuarial and Modeling Considerations A. Meridian Actuarial Partners LLC Analysis Meridian Actuarial Partners LLC has been engaged by Quorum Specialty to provide loss development analysis and catastrophe-model review in support of the QS Treaty renewal. The engagement is led by Dr. Anita K. Rourke, FCAS, who serves as lead actuary on the matter. Meridian's offices are located at 1 Ashbury Asset Advisors, Suite 800

VI. Open Issues and Recommended Negotiation Positions Based on our analysis of the expiring and proposed terms, the following issues remain open for negotiation. For each issue, we provide our recommended opening position, target settlement, and fallback. A. Ceding Commission Level Recommendation: Open negotiations at 34.0% and target a settlement at 33.5%. The 33.5% provisional commission level is well-supported by

VII. Intermediary / Broker Considerations Blackbridge Advisory Group LLC serves as the reinsurance intermediary and broker of record on both the QS Treaty and the Cat XOL placement. Blackbridge holds New York Department of Financial Services reinsurance intermediary license No. RI-00483. Owen F. Halstead, Managing Director, is the lead broker responsible for the Quorum account. Blackbridge's brokerage on the QS Treat

VIII. Regulatory and Accounting Considerations Several regulatory and accounting considerations are relevant to the QS Treaty renewal: Reinsurance Credit. Quorum Specialty, as a Connecticut-domiciled admitted carrier, takes statutory reinsurance credit for cessions under the QS Treaty. This credit is essential to Quorum's statutory financial statements, as it reduces net liabilities and supports the company's risk-ba

IX. Next Steps and Timeline The following timeline summarizes the key milestones and deliverables for the QS Treaty renewal process: We will circulate a revised timeline if any milestone is delayed. The December 1, 2025 target signing date provides a one-month buffer before the January 1, 2026 effective date, but given the number of open negotiation items and the parallel Cat XOL placement, we should be prepared for

X. Conclusion This memorandum has analyzed the expiring and proposed terms for the January 1, 2026 renewal of the 40% property quota-share reinsurance treaty between Quorum Specialty Insurance Company and Pinnacle Re Ltd. Our key recommendations are summarized as follows:

1. Ceding Commission: Seek a provisional commission of 33.5% (opening negotiations at 34.0%); do not accept below 33.0%.

2. Sliding-Scale Parameters: Push for an improved slide factor of 1 point of commission per 3.0 points of loss ratio movement, with the 30.0%–36.0% range accepted. Trade this against loss corridor concessions if necessary.

3. Loss Corridor: Propose narrowing from 75%–80% to 76%–79%, or alternatively excluding catastrophe losses from the corridor calculation.

4. Funds Withheld: Maintain at 25% of ceded premium with crediting at 3-month SOFR + 75 bps; resist reductions and propose a 6.0% all-in crediting rate cap.

5. Commutation Trigger: Propose increasing the ITD cash loss ratio trigger from 85% to 90%.

6. Drafting Coordination: Ensure consistent definitions, occurrence terms, and attachment-point coordination between the QS Treaty and the concurrent Cat XOL placement. We respectfully request Angela Fontaine's input on and approval of this negotiation strategy before we schedule a discussion with the cli