Contract analysis

From: Yuki Nakamura <ynakamura@calderwoodharkness.com> To: "Suzanne M. Driscoll" <sdriscoll@quoruminsurance.com> Cc: Angela Fontaine <afontaine@calderwoodharkness.com> Date: Fri, 07 Nov 2025 05:47:00 -0000 Subject: Quorum — Quota-Share Renewal & Cat XOL Placement: Status Update and Outstanding Items [Matter No. 1025-00004]

I hope your week is wrapping up well. I wanted to send along an end-of-week status update covering both the property quota-share renewal with Pinnacle Re Ltd. and the new catastrophe excess-of-loss placement so that we're all aligned heading into a busy few weeks. For reference, this falls under Matter No. 1025-00004.

**A. Quota-Share Treaty Renewal — Draft Status**

As planned, on November 1 we distributed the draft amended and restated property quota-share reinsurance treaty to Nathan Kessler and Miriam Soto-Flores at Harmon, Kessler & Fitch LLP, counsel to Pinnacle Re. The draft reflects the proposed terms we discussed with your team, including:

- 40% cession percentage (unchanged since the original inception on January 1, 2022); - Proposed increase in provisional ceding commission from 32.0% (expiring) to 33.5%; - Sliding-scale commission range of 30.0% to 36.0%, with a slide factor of 1 point of commission per 2.5 points of loss ratio movement; - Retention of the loss corridor under which Quorum retains 100% of losses in the 75%–80% loss ratio band; - Fund

HKF has acknowledged receipt and indicated they expect to circulate a marked draft with Pinnacle Re's comments within the next 7–10 days — so roughly mid-November. As expected, we anticipate the ceding commission increase and sliding-scale parameters will be the most contested provisions. Angela and I are prepared to schedule a negotiation call as soon as we have HKF's markup in hand.

On the premium side, we have included the projected 2026 ceded premium of approximately $135,200,000 (based on $338,000,000 projected gross written premium × 40%) in the draft's recitals and schedules. Please let us know if that GWP projection has been updated at all since we last spoke.

The intermediary clause naming Blackbridge Advisory Group LLC, with brokerage at 1.25% of ceded premium, is included in the current draft.

**B. Catastrophe Excess-of-Loss Treaty — Draft and Placement Status**

The draft cat XOL reinsurance contract was also distributed to HKF on November 1. Key terms in the draft are as follows:

- **Layer structure:** $35,000,000 per-occurrence layer in excess of a $15,000,000 retention (net of quota-share recoveries), with an exhaustion point of $50,000,000. - **Panel allocation:** - Pinnacle Re Ltd. — 50% ($17,500,000 limit / $1,487,500 premium share) - Graystone Reinsurance AG — 30% ($10,500,000 limit / $892,500 premium share) - Tidewater Re S.A. — 20% ($7,000,000 limit / $595,000 premium share) - **Reins

On the placement side, Owen Halstead at Blackbridge circulated the initial broker market submission on October 17 and has been coordinating with the following underwriting contacts:

- Derek Kimball (Head of Treaty, North America) at Pinnacle Re — 50% lead share - Jan-Erik Lindgren (Head of Property Treaty, Americas) at Graystone Re — 30% share - François-Xavier Delacroix (CUO) at Tidewater Re — 20% share

Owen expects to receive formal indicative pricing responses from all three panel members by the **November 15 deadline**. Informally, he has indicated that Pinnacle Re and Graystone Re appear comfortable with the 8.50% rate-on-line, but Tidewater Re may push for a slightly higher rate. Blackbridge is working to hold the line.

One item to flag: the panel allocations (50/30/20) are not yet formally confirmed via signed participation slips. Owen expects to finalize those concurrent with or shortly after the pricing responses.

**C. Trust Agreement Negotiations — Graystone Re and Tidewater Re**

With respect to collateral and trust arrangements required under NY Insurance Law § 1308 and 11 NYCRR 125:

- **Pinnacle Re** is exempt from collateral requirements as a certified reinsurer under the NY DFS framework (Certified Reinsurer ID CR-2019-0217), with a $0 collateral posting requirement given its A.M. Best "A (Excellent)" rating from Brindoval Rating Services. - **Graystone Re** (Swiss AG, regulated by FINMA) and **Tidewater Re** (Luxembourg S.A.) are each required to fund multi-beneficiary reinsurance trusts at F

We have circulated draft trust agreements to Fidelitas Trust and to counsel for both Graystone Re and Tidewater Re. Fidelitas has provided initial comments on the trustee provisions — fees, investment guidelines, and reporting obligations. We are reviewing those and expect to turn a revised draft early next week.

The target date for execution of the trust agreements is **December 15, 2025**, with funding to be completed prior to the January 1, 2026 treaty inception. Given the year-end holidays, holding to this timeline will be important, and we'll stay on top of it.

**D. Outstanding Actuarial Deliverables — Meridian Actuarial Partners**

We are awaiting the final loss development and catastrophe model review report from Dr. Anita K. Rourke (FCAS) at Meridian Actuarial Partners LLC. The report, based on the Tempest Analytics CatView v11.2 model output, is expected to include:

- Updated loss development triangles supporting the sliding-scale commission economics on the quota-share treaty; - Validation of Quorum's 250-year modeled PML (net of quota-share) of $52,000,000, which underpins the $15M xs $15M cat XOL layer structure (covering through approximately the 1-in-50-year return period); and - Commentary on the 2024 net combined ratio of 94.7% and projected loss experience.

Meridian has indicated the final report will be delivered by approximately November 12–14. Could you confirm whether Quorum's internal actuarial team has any additional data requests pending with Meridian? We want to make sure nothing is holding up their timeline.

As a related note, the Meridian deliverable will also be important for Quorum's discussions with Whitfield & Strand LLP (Gregory Tate) regarding reinsurance asset recognition for statutory and GAAP reporting purposes.

| Date | Milestone | |---|---| | **November 15, 2025** | Indicative pricing response deadline for cat XOL panel (Pinnacle Re, Graystone Re, Tidewater Re); formal participation confirmations expected from Blackbridge | | **Mid-to-late November** | Receipt of HKF marked drafts of both the quota-share and cat XOL treaties; negotiation sessions to follow | | **December 1, 2025** | Target date for final agreed terms and s

1. **GWP Projection** — Please confirm that the projected 2026 gross written premium figure of $338,000,000 for the property book remains current. 2. **Funds Withheld Mechanics** — Could you coordinate internally with Priya Chandrasekaran (CFO) regarding the funds withheld investment mechanics and whether Quorum has any preferences or concerns regarding the SOFR + 75 bps rate? 3. **Cyber Exclusion Carve-Back** — Plea

We are maintaining a closing checklist across both transactions and will circulate an updated version early next week.

Angela is available to discuss any of the above at your convenience. It might be worthwhile to schedule a call early next week to align on negotiating strategy ahead of receiving HKF's markups — please let us know what works on your end. If it would also be helpful for your internal reporting to Desmond Hargrove or the board, we're happy to prepare a more detailed written status memo.

Have a good weekend, Suzanne, and please don't hesitate to reach out with any questions in the meantime.

**Yuki Nakamura** Associate Calderwood & Harkness LLP 125 Broad Street, 38th Floor New York, NY 10004 Tel: (212) 555-0194 Email: ynakamura@calderwoodharkness.com

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