1025-00005 · Quorum Insurance Holdings · Correspondence/Opposing Counsel

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CALDERWOOD & HARKNESS LLP Attorneys at Law

One Liberty Plaza, 55th Floor New York, New York 10006

Telephone: (212) 504-6000 Facsimile: (212) 504-6100 www.calderwoodharkness.com

March 25, 2026

VIA EMAIL AND FIRST-CLASS MAIL

Nathaniel R. Calloway III, Esq. Hargrove, Fitch & Calloway LLP 51 West 52nd Street, 40th Floor New York, New York 10019

Re: *Pinnacle Atlantic Reinsurance Ltd. v. Quorum Casualty & Surety Company* — Treaty No. PA-QCS-2019-EXL-0044 — Proposal for Voluntary Mediation

Dear Mr. Calloway:

We write on behalf of our clients, Quorum Insurance Holdings Corp. and its wholly owned subsidiary, Quorum Casualty & Surety Company ("QC&S"), in connection with the dispute that has arisen under Aggregate Excess-of-Loss Reinsurance Treaty No. PA-QCS-2019-EXL-0044 (the "Treaty"), effective July 1, 2019, between QC&S, as cedent, and Pinnacle Atlantic Reinsurance Ltd. ("Pinnacle Atlantic"), as reinsurer. As you know, this firm has represented QC&S throughout all matters relating to the Treaty and the instant dispute.

We are, of course, in receipt of Pinnacle Atlantic's pre-suit demand letter dated February 14, 2026, which your firm transmitted on Pinnacle Atlantic's behalf. That letter demanded the return of $78,400,000 in reinsurance recoverables previously paid by Pinnacle Atlantic to QC&S, together with $12,600,000 in pre-demand interest, for a total demand of $91,000,000, relating to Treaty Years 2022 and 2023. You will also have received our response letter dated March 18, 2026, in which we rejected, in their entirety, all four grounds asserted by Pinnacle Atlantic in its demand and expressly reserved all of QC&S's rights, remedies, claims, counterclaims, and defenses. Simultaneously with that response, we transmitted a separate demand to arbitrate letter, also dated March 18, 2026, invoking QC&S's right to binding arbitration under Treaty Article 22 and the ARIAS-U.S. Rules.

The purpose of the present letter is not to revisit the substantive positions set forth in our March 18, 2026 correspondence, but rather to propose voluntary mediation as a preliminary, good-faith step toward resolution of the parties' dispute, without prejudice to QC&S's demand for arbitration or to any other rights of QC&S, whether contractual, statutory, or otherwise.

Reservation of Rights and Without-Prejudice Statement

At the outset, we wish to make clear that this proposal is made on an entirely without-prejudice basis. QC&S's demand to arbitrate under Treaty Article 22, transmitted to your firm on March 18, 2026, remains in full force and effect and is in no way modified, suspended, or withdrawn by the making of this proposal or by any proceedings that may follow from it. Nothing in this letter, nor in any mediation proceedings that may occur as a result of this proposal, shall constitute or be deemed to constitute a waiver, modification, or impairment of QC&S's right to compel arbitration under the Treaty, the ARIAS-U.S. Rules, Article 75 of the New York Civil Practice Law and Rules ("NY CPLR"), the Federal Arbitration Act, 9 U.S.C. §§ 1–16, or any other applicable law, rule, or regulation.

QC&S expressly reserves all rights, remedies, claims, counterclaims, and defenses available to it at law, in equity, or under the Treaty, including, but not limited to: (a) its affirmative defense that timely notice was provided to Pinnacle Atlantic under Article 7 of the Treaty with respect to the Meridian Docks mass tort cluster; (b) its affirmative defense that the allocation of $22,300,000 in incurred-but-not-reported ("IBNR") reserves was proper and in accordance with Article 5 of the Treaty and standard actuarial practice; (c) its affirmative defense that the follow-the-fortunes and follow-the-settlements doctrine, as codified in Article 11 of the Treaty and as interpreted under governing New York law, requires Pinnacle Atlantic to honor the cession of the Veridian Financial Services E&O cluster settlement of $34,500,000; (d) its defense based on Pinnacle Atlantic's waiver by conduct, having made full payment of the $78,400,000 in reinsurance recoverables across seven consecutive billing installments without objection or reservation; and (e) its compulsory arbitration defense under Treaty Article 22. QC&S further reserves the right to assert any additional claims, counterclaims, defenses, or affirmative defenses that may become available as this matter develops.

Any and all statements, offers, proposals, or concessions made by either party or any representative of either party during any mediation session or pre-mediation communications shall be inadmissible, non-discoverable, and not subject to introduction in evidence in any subsequent arbitration, litigation, regulatory, or other proceeding, in accordance with applicable mediation privilege and the confidentiality provisions set forth below.

Rationale for Mediation

We recognize that the dispute between QC&S and Pinnacle Atlantic is both substantial and complex. As reflected in your client's February 14, 2026 demand letter and our March 18, 2026 response, the dispute encompasses four distinct grounds, each of which involves nuanced factual and legal questions: (1) Pinnacle Atlantic's allegation of late notice under Article 7 of the Treaty with respect to the Meridian Docks mass tort cluster; (2) Pinnacle Atlantic's allegation of misallocation of $22,300,000 in IBNR reserves under Article 5; (3) Pinnacle Atlantic's allegation that QC&S breached its follow-the-fortunes and follow-the-settlements obligations under Article 11 in connection with the Veridian Financial Services E&O cluster settlement of $34,500,000; and (4) Pinnacle Atlantic's allegation that QC&S underreported ceded earned premium by $6,800,000 under Article 3. Taken together, these issues implicate questions of treaty interpretation, actuarial methodology, the scope of the follow-the-fortunes doctrine under New York decisional law, the effect of a reinsurer's course-of-dealing payments on its subsequent ability to assert coverage defenses, and the proper construction of premium-reporting obligations in the aggregate excess-of-loss context.

We note, as well, the longstanding commercial relationship between QC&S and Pinnacle Atlantic under the Treaty. The Treaty has been in continuous effect since its inception date of July 1, 2019, and, pursuant to its automatic renewal provisions, has been extended twice beyond its original expiration date of June 30, 2024. The Treaty therefore remains in force through the current extension period ending June 30, 2026. Both QC&S and Pinnacle Atlantic are sophisticated and experienced participants in the reinsurance market. QC&S is a New York-domiciled insurer (NAIC No. 24891) carrying an A.M. Ridgeway rating of "A (Excellent)" and maintaining statutory surplus of approximately $1.42 billion as of its most recent annual statement. Pinnacle Atlantic is a Bermuda-domiciled Class 4 insurer with gross reinsurance assumed of approximately $9.6 billion for fiscal year 2025.

Given the foregoing, we believe that a structured, confidential mediation process offers a meaningful opportunity for the parties to evaluate their respective positions, explore potential avenues for resolution, and, if a mutually acceptable resolution can be reached, avoid the significant time, expense, and disruption that would attend a protracted arbitration proceeding or, should your client pursue litigation, contested motion practice to compel arbitration. An efficient mediated resolution would also preserve the parties' ability to continue any ongoing commercial interactions through the Treaty's remaining extension period, which expires on June 30, 2026. Moreover, mediation would afford both parties and their counsel the occasion to assess the strengths and vulnerabilities of their positions in a structured, neutral environment — with the benefit of an experienced third-party neutral — before either side commits the substantial resources that formal arbitration would inevitably require.

We therefore respectfully propose the following framework for voluntary mediation.

Proposed Mediation Framework

I. Mediator Selection

We propose that the parties agree upon a single neutral mediator who possesses substantial experience in reinsurance disputes, including demonstrated familiarity with aggregate excess-of-loss treaty structures, the follow-the-fortunes and follow-the-settlements doctrine as developed under New York law, and actuarial allocation issues relating to IBNR reserves and ceded premium reporting. In our view, the mediator should ideally be a retired judge with experience presiding over complex insurance and reinsurance coverage disputes, or alternatively, a senior practitioner or academic with recognized expertise in reinsurance and insurance coverage matters. The mediator need not be an actuary, but should be sufficiently conversant with actuarial concepts and reinsurance market practice to engage meaningfully with the technical issues presented by the dispute.

We propose the following procedure for selection: within fourteen (14) days of Pinnacle Atlantic's acceptance of this mediation proposal, each party shall submit to the other a list of up to three (3) proposed mediators, together with a brief statement of each proposed mediator's qualifications. The parties shall thereafter confer in good faith to agree upon a mutually acceptable mediator within twenty-one (21) days of the exchange of lists. In the event the parties are unable to reach agreement on a mediator within that period, we suggest that the parties jointly request ARIAS-U.S. — or, if Pinnacle Atlantic prefers, another mutually acceptable alternative dispute resolution organization such as JAMS or the American Arbitration Association — to designate a qualified mediator from its panel of reinsurance neutrals.

II. Mediation Session Format

We propose that the mediation consist of a single one-day session, with the understanding that, by mutual agreement of the parties, the session may be extended to a second consecutive day if the mediator and the parties believe that continued discussions would be productive. The session should be conducted in person in New York, New York, at a neutral location to be agreed upon by the parties — for example, the mediator's own offices, a suitable ADR facility, or another mutually convenient venue in Manhattan.

We further propose that the mediation session be scheduled to occur within approximately sixty (60) days of the parties' agreement on a mediator, so as to allow adequate time for the preparation and submission of pre-mediation statements and for the mediator to familiarize himself or herself with the dispute.

III. Pre-Mediation Submissions

We propose that each party prepare and submit a confidential pre-mediation statement to the mediator no later than ten (10) business days before the scheduled mediation session. Unless both parties agree otherwise, pre-mediation statements shall be submitted to the mediator only and shall not be exchanged between the parties. This approach will allow each party to be candid in its assessment of the dispute and its settlement posture without concern that its submission may be used against it in a subsequent proceeding.

Pre-mediation submissions should be limited to no more than twenty-five (25) pages of narrative text, exclusive of exhibits, and should summarize the submitting party's position on each of the four disputed issues and its view of the appropriate resolution. Each party may attach a reasonable number of key documentary exhibits to its submission, including, for example, the Treaty, the February 14, 2026 demand letter, the March 18, 2026 response letter, relevant actuarial certificates and actuarial reports, pertinent claims correspondence and loss reports, and any other documents that the submitting party believes will assist the mediator in understanding the dispute.

We do not believe that formal discovery or any compulsory exchange of documents should be required as a condition of the mediation. Mediation is most productive when both parties participate in a spirit of cooperation rather than compulsion. We do, however, encourage each party to share voluntarily with the other such documents as may facilitate a productive discussion during the mediation session, including updated loss development data, relevant treaty accounting statements, and any actuarial analyses bearing on the disputed IBNR allocation.

IV. Costs. We propose that the fees and expenses of the mediator, as well as any costs associated with the mediation venue, be shared equally between QC&S and Pinnacle Atlantic. Each party shall bear its own attorneys' fees, expert fees (if any), travel expenses, and other costs of participation in the mediation.

V. Confidentiality. All mediation communications, whether oral or written, including all pre-mediation submissions, proposals, offers, counteroffers, memoranda, notes, and any other materials prepared for or exchanged during the mediation process, shall be confidential and shall be subject to mediation privilege under applicable New York law, including New York CPLR § 4547 and any other applicable privilege or protection. No mediation communication or submission may be introduced into evidence, disclosed to any third party, or referenced in any subsequent arbitration, litigation, regulatory proceeding, or other forum, except as may be required by law or by order of a court or tribunal of competent jurisdiction. The mediator shall not be called as a witness, consultant, or expert by either party, and shall not be subject to subpoena, deposition, or other compulsory process by either party in any subsequent proceeding arising out of or relating to the matters at issue in this dispute.

VI. Authority. Each party shall ensure that at least one representative with full authority to negotiate and to enter into a binding settlement agreement attends the mediation session in person. The attendance of such a representative is essential to the effectiveness of the mediation process and to the parties' ability to reach a resolution, should a mutually acceptable basis for settlement emerge during the session.

Relationship to Arbitration Demand and Treaty Article 22

We wish to reiterate, with the utmost clarity, that QC&S's demand to arbitrate, dated March 18, 2026, invoking Article 22 of the Treaty and calling for the constitution of a three-member arbitration panel seated in New York, New York, under the ARIAS-U.S. Rules, remains fully operative and is not suspended, withdrawn, or modified by this mediation proposal or by any mediation proceedings that may follow.

In recognition of the fact that the mediation process will require a reasonable period of time to complete, and in order to remove any concern that the passage of time during the mediation might prejudice either party's procedural or substantive rights, we propose that the parties agree, in writing, to toll any applicable contractual or procedural deadlines under the Treaty and the ARIAS-U.S. Rules during the pendency of the mediation process. The tolling period would commence upon Pinnacle Atlantic's written acceptance of this mediation proposal and would continue through the tenth (10th) business day following the conclusion of the final mediation session. Upon expiration of the tolling period, all rights, obligations, and deadlines shall resume automatically and without further action by either party.

In the event that mediation does not result in a resolution of the dispute, QC&S intends to proceed with arbitration in accordance with its March 18, 2026 demand. Should Pinnacle Atlantic file suit in the Supreme Court of the State of New York, New York County, Commercial Division, or in any other state or federal court, QC&S will move to compel arbitration and to stay such litigation pending completion of the arbitration, in accordance with the Treaty, the ARIAS-U.S. Rules, the Federal Arbitration Act, and NY CPLR Article 75.

We also wish to note that Pinnacle Atlantic's participation in any mediation proceeding shall not be deemed a waiver of any of its positions, claims, or defenses, including Pinnacle Atlantic's assertion — which QC&S firmly disputes and to which QC&S does not acquiesce in any respect — that the compulsory arbitration clause set forth in Treaty Article 22 is inapplicable to the matters at issue. We extend this reciprocal protection to Pinnacle Atlantic in a spirit of fairness and to ensure that neither party's willingness to engage in mediation is construed against it in any subsequent proceeding.

Requested Response

We respectfully request that Pinnacle Atlantic, through your firm, respond to this mediation proposal within fourteen (14) days of the date of this letter — that is, by no later than April 8, 2026. We are, of course, willing to discuss any modifications to the proposed framework that Pinnacle Atlantic may wish to suggest and that would make mediation acceptable to both parties. We approach this process with flexibility and a genuine desire to find a format that works for everyone involved.

Should Pinnacle Atlantic be receptive to this proposal, or should your firm wish to discuss any aspect of the proposed framework before providing a definitive response, we would be pleased to arrange a brief telephone conference between counsel at a mutually convenient time. Please do not hesitate to contact the undersigned or my colleague, Francesca Morano, to arrange such a call.

Conclusion

QC&S makes this mediation proposal in good faith and in the interest of efficient, cost-effective resolution of the parties' dispute. While we are prepared to defend QC&S's rights and interests through arbitration or any other appropriate forum, we believe that both parties — and the longstanding Treaty relationship — would benefit from a structured effort to explore whether a negotiated resolution is achievable.

We reaffirm that QC&S is confident in the validity of the $78,400,000 in reinsurance recoverables that were properly billed and collected under the Treaty for Treaty Years 2022 and 2023, and in the strength of QC&S's defenses to each of the four grounds asserted in Pinnacle Atlantic's February 14, 2026 demand. QC&S reserves all of its rights, defenses, counterclaims, and remedies in full, whether arising under the Treaty, under applicable law, or otherwise.

We look forward to receiving your response.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Douglas Carmichael, Partner

One Liberty Plaza, 55th Floor New York, New York 10006 Telephone: (212) 504-6217

Email: dcarmichael@calderwoodharkness.com

cc: Rachel Sondergaard, General Counsel, Quorum Insurance Holdings Corp.

cc: Tobias Engström, Senior Vice President, Reinsurance & Capital Markets, Quorum Insurance Holdings Corp.

cc: Francesca Morano, Partner, Calderwood & Harkness LLP

cc: Jeffrey Park, Associate, Calderwood & Harkness LLP

Enclosures: None (this letter references prior correspondence dated February 14, 2026, March 18, 2026 (response letter), and March 18, 2026 (demand to arbitrate letter), copies of which are in the possession of the addressee)

Calderwood & Harkness LLP Matter No. 1025-00005

CALDERWOOD & HARKNESS LLP Attorneys at Law
One Liberty Plaza, 55th Floor New York, New York 10006
Telephone: (212) 504-6000 Facsimile: (212) 504-6100 www.calderwoodharkness.com
March 25, 2026
VIA EMAIL AND FIRST-CLASS MAIL
Nathaniel R. Calloway III, Esq. Hargrove, Fitch & Calloway LLP 51 West 52nd Street, 40th Floor New York, New York 10019
Re: *Pinnacle Atlantic Reinsurance Ltd. v. Quorum Casualty & Surety Company* — Treaty No. PA-QCS-2019-EXL-0044 — Proposal for Voluntary Mediation
Dear Mr. Calloway:
We write on behalf of our clients, Quorum Insurance Holdings Corp. and its wholly owned subsidiary, Quorum Casualty & Surety Company ("QC&S"), in connection with the dispute that has arisen under Aggregate Excess-of-Loss Reinsurance Treaty No. PA-QCS-2019-EXL-0044 (the "Treaty"), effective July 1, 2019, between QC&S, as cedent, and Pinnacle Atlantic Reinsurance Ltd. ("Pinnacle Atlantic"), as reinsurer. As you know, this firm has represented QC&S throughout all matters relating to the Treaty and the instant dispute.
We are, of course, in receipt of Pinnacle Atlantic's pre-suit demand letter dated February 14, 2026, which your firm transmitted on Pinnacle Atlantic's behalf. That letter demanded the return of $78,400,000 in reinsurance recoverables previously paid by Pinnacle Atlantic to QC&S, together with $12,600,000 in pre-demand interest, for a total demand of $91,000,000, relating to Treaty Years 2022 and 2023. You will also have received our response letter dated March 18, 2026, in which we rejected, in their entirety, all four grounds asserted by Pinnacle Atlantic in its demand and expressly reserved all of QC&S's rights, remedies, claims, counterclaims, and defenses. Simultaneously with that response, we transmitted a separate demand to arbitrate letter, also dated March 18, 2026, invoking QC&S's right to binding arbitration under Treaty Article 22 and the ARIAS-U.S. Rules.
The purpose of the present letter is not to revisit the substantive positions set forth in our March 18, 2026 correspondence, but rather to propose voluntary mediation as a preliminary, good-faith step toward resolution of the parties' dispute, without prejudice to QC&S's demand for arbitration or to any other rights of QC&S, whether contractual, statutory, or otherwise.
Reservation of Rights and Without-Prejudice Statement
At the outset, we wish to make clear that this proposal is made on an entirely without-prejudice basis. QC&S's demand to arbitrate under Treaty Article 22, transmitted to your firm on March 18, 2026, remains in full force and effect and is in no way modified, suspended, or withdrawn by the making of this proposal or by any proceedings that may follow from it. Nothing in this letter, nor in any mediation proceedings that may occur as a result of this proposal, shall constitute or be deemed to constitute a waiver, modification, or impairment of QC&S's right to compel arbitration under the Treaty, the ARIAS-U.S. Rules, Article 75 of the New York Civil Practice Law and Rules ("NY CPLR"), the Federal Arbitration Act, 9 U.S.C. §§ 1–16, or any other applicable law, rule, or regulation.
QC&S expressly reserves all rights, remedies, claims, counterclaims, and defenses available to it at law, in equity, or under the Treaty, including, but not limited to: (a) its affirmative defense that timely notice was provided to Pinnacle Atlantic under Article 7 of the Treaty with respect to the Meridian Docks mass tort cluster; (b) its affirmative defense that the allocation of $22,300,000 in incurred-but-not-reported ("IBNR") reserves was proper and in accordance with Article 5 of the Treaty and standard actuarial practice; (c) its affirmative defense that the follow-the-fortunes and follow-the-settlements doctrine, as codified in Article 11 of the Treaty and as interpreted under governing New York law, requires Pinnacle Atlantic to honor the cession of the Veridian Financial Services E&O cluster settlement of $34,500,000; (d) its defense based on Pinnacle Atlantic's waiver by conduct, having made full payment of the $78,400,000 in reinsurance recoverables across seven consecutive billing installments without objection or reservation; and (e) its compulsory arbitration defense under Treaty Article 22. QC&S further reserves the right to assert any additional claims, counterclaims, defenses, or affirmative defenses that may become available as this matter develops.
Any and all statements, offers, proposals, or concessions made by either party or any representative of either party during any mediation session or pre-mediation communications shall be inadmissible, non-discoverable, and not subject to introduction in evidence in any subsequent arbitration, litigation, regulatory, or other proceeding, in accordance with applicable mediation privilege and the confidentiality provisions set forth below.
Rationale for Mediation
We recognize that the dispute between QC&S and Pinnacle Atlantic is both substantial and complex. As reflected in your client's February 14, 2026 demand letter and our March 18, 2026 response, the dispute encompasses four distinct grounds, each of which involves nuanced factual and legal questions: (1) Pinnacle Atlantic's allegation of late notice under Article 7 of the Treaty with respect to the Meridian Docks mass tort cluster; (2) Pinnacle Atlantic's allegation of misallocation of $22,300,000 in IBNR reserves under Article 5; (3) Pinnacle Atlantic's allegation that QC&S breached its follow-the-fortunes and follow-the-settlements obligations under Article 11 in connection with the Veridian Financial Services E&O cluster settlement of $34,500,000; and (4) Pinnacle Atlantic's allegation that QC&S underreported ceded earned premium by $6,800,000 under Article 3. Taken together, these issues implicate questions of treaty interpretation, actuarial methodology, the scope of the follow-the-fortunes doctrine under New York decisional law, the effect of a reinsurer's course-of-dealing payments on its subsequent ability to assert coverage defenses, and the proper construction of premium-reporting obligations in the aggregate excess-of-loss context.
We note, as well, the longstanding commercial relationship between QC&S and Pinnacle Atlantic under the Treaty. The Treaty has been in continuous effect since its inception date of July 1, 2019, and, pursuant to its automatic renewal provisions, has been extended twice beyond its original expiration date of June 30, 2024. The Treaty therefore remains in force through the current extension period ending June 30, 2026. Both QC&S and Pinnacle Atlantic are sophisticated and experienced participants in the reinsurance market. QC&S is a New York-domiciled insurer (NAIC No. 24891) carrying an A.M. Ridgeway rating of "A (Excellent)" and maintaining statutory surplus of approximately $1.42 billion as of its most recent annual statement. Pinnacle Atlantic is a Bermuda-domiciled Class 4 insurer with gross reinsurance assumed of approximately $9.6 billion for fiscal year 2025.
Given the foregoing, we believe that a structured, confidential mediation process offers a meaningful opportunity for the parties to evaluate their respective positions, explore potential avenues for resolution, and, if a mutually acceptable resolution can be reached, avoid the significant time, expense, and disruption that would attend a protracted arbitration proceeding or, should your client pursue litigation, contested motion practice to compel arbitration. An efficient mediated resolution would also preserve the parties' ability to continue any ongoing commercial interactions through the Treaty's remaining extension period, which expires on June 30, 2026. Moreover, mediation would afford both parties and their counsel the occasion to assess the strengths and vulnerabilities of their positions in a structured, neutral environment — with the benefit of an experienced third-party neutral — before either side commits the substantial resources that formal arbitration would inevitably require.
We therefore respectfully propose the following framework for voluntary mediation.
Proposed Mediation Framework
I. Mediator Selection
We propose that the parties agree upon a single neutral mediator who possesses substantial experience in reinsurance disputes, including demonstrated familiarity with aggregate excess-of-loss treaty structures, the follow-the-fortunes and follow-the-settlements doctrine as developed under New York law, and actuarial allocation issues relating to IBNR reserves and ceded premium reporting. In our view, the mediator should ideally be a retired judge with experience presiding over complex insurance and reinsurance coverage disputes, or alternatively, a senior practitioner or academic with recognized expertise in reinsurance and insurance coverage matters. The mediator need not be an actuary, but should be sufficiently conversant with actuarial concepts and reinsurance market practice to engage meaningfully with the technical issues presented by the dispute.
We propose the following procedure for selection: within fourteen (14) days of Pinnacle Atlantic's acceptance of this mediation proposal, each party shall submit to the other a list of up to three (3) proposed mediators, together with a brief statement of each proposed mediator's qualifications. The parties shall thereafter confer in good faith to agree upon a mutually acceptable mediator within twenty-one (21) days of the exchange of lists. In the event the parties are unable to reach agreement on a mediator within that period, we suggest that the parties jointly request ARIAS-U.S. — or, if Pinnacle Atlantic prefers, another mutually acceptable alternative dispute resolution organization such as JAMS or the American Arbitration Association — to designate a qualified mediator from its panel of reinsurance neutrals.
II. Mediation Session Format
We propose that the mediation consist of a single one-day session, with the understanding that, by mutual agreement of the parties, the session may be extended to a second consecutive day if the mediator and the parties believe that continued discussions would be productive. The session should be conducted in person in New York, New York, at a neutral location to be agreed upon by the parties — for example, the mediator's own offices, a suitable ADR facility, or another mutually convenient venue in Manhattan.
We further propose that the mediation session be scheduled to occur within approximately sixty (60) days of the parties' agreement on a mediator, so as to allow adequate time for the preparation and submission of pre-mediation statements and for the mediator to familiarize himself or herself with the dispute.
III. Pre-Mediation Submissions
We propose that each party prepare and submit a confidential pre-mediation statement to the mediator no later than ten (10) business days before the scheduled mediation session. Unless both parties agree otherwise, pre-mediation statements shall be submitted to the mediator only and shall not be exchanged between the parties. This approach will allow each party to be candid in its assessment of the dispute and its settlement posture without concern that its submission may be used against it in a subsequent proceeding.
Pre-mediation submissions should be limited to no more than twenty-five (25) pages of narrative text, exclusive of exhibits, and should summarize the submitting party's position on each of the four disputed issues and its view of the appropriate resolution. Each party may attach a reasonable number of key documentary exhibits to its submission, including, for example, the Treaty, the February 14, 2026 demand letter, the March 18, 2026 response letter, relevant actuarial certificates and actuarial reports, pertinent claims correspondence and loss reports, and any other documents that the submitting party believes will assist the mediator in understanding the dispute.
We do not believe that formal discovery or any compulsory exchange of documents should be required as a condition of the mediation. Mediation is most productive when both parties participate in a spirit of cooperation rather than compulsion. We do, however, encourage each party to share voluntarily with the other such documents as may facilitate a productive discussion during the mediation session, including updated loss development data, relevant treaty accounting statements, and any actuarial analyses bearing on the disputed IBNR allocation.
IV. Costs. We propose that the fees and expenses of the mediator, as well as any costs associated with the mediation venue, be shared equally between QC&S and Pinnacle Atlantic. Each party shall bear its own attorneys' fees, expert fees (if any), travel expenses, and other costs of participation in the mediation.
V. Confidentiality. All mediation communications, whether oral or written, including all pre-mediation submissions, proposals, offers, counteroffers, memoranda, notes, and any other materials prepared for or exchanged during the mediation process, shall be confidential and shall be subject to mediation privilege under applicable New York law, including New York CPLR § 4547 and any other applicable privilege or protection. No mediation communication or submission may be introduced into evidence, disclosed to any third party, or referenced in any subsequent arbitration, litigation, regulatory proceeding, or other forum, except as may be required by law or by order of a court or tribunal of competent jurisdiction. The mediator shall not be called as a witness, consultant, or expert by either party, and shall not be subject to subpoena, deposition, or other compulsory process by either party in any subsequent proceeding arising out of or relating to the matters at issue in this dispute.
VI. Authority. Each party shall ensure that at least one representative with full authority to negotiate and to enter into a binding settlement agreement attends the mediation session in person. The attendance of such a representative is essential to the effectiveness of the mediation process and to the parties' ability to reach a resolution, should a mutually acceptable basis for settlement emerge during the session.
Relationship to Arbitration Demand and Treaty Article 22
We wish to reiterate, with the utmost clarity, that QC&S's demand to arbitrate, dated March 18, 2026, invoking Article 22 of the Treaty and calling for the constitution of a three-member arbitration panel seated in New York, New York, under the ARIAS-U.S. Rules, remains fully operative and is not suspended, withdrawn, or modified by this mediation proposal or by any mediation proceedings that may follow.
In recognition of the fact that the mediation process will require a reasonable period of time to complete, and in order to remove any concern that the passage of time during the mediation might prejudice either party's procedural or substantive rights, we propose that the parties agree, in writing, to toll any applicable contractual or procedural deadlines under the Treaty and the ARIAS-U.S. Rules during the pendency of the mediation process. The tolling period would commence upon Pinnacle Atlantic's written acceptance of this mediation proposal and would continue through the tenth (10th) business day following the conclusion of the final mediation session. Upon expiration of the tolling period, all rights, obligations, and deadlines shall resume automatically and without further action by either party.
In the event that mediation does not result in a resolution of the dispute, QC&S intends to proceed with arbitration in accordance with its March 18, 2026 demand. Should Pinnacle Atlantic file suit in the Supreme Court of the State of New York, New York County, Commercial Division, or in any other state or federal court, QC&S will move to compel arbitration and to stay such litigation pending completion of the arbitration, in accordance with the Treaty, the ARIAS-U.S. Rules, the Federal Arbitration Act, and NY CPLR Article 75.
We also wish to note that Pinnacle Atlantic's participation in any mediation proceeding shall not be deemed a waiver of any of its positions, claims, or defenses, including Pinnacle Atlantic's assertion — which QC&S firmly disputes and to which QC&S does not acquiesce in any respect — that the compulsory arbitration clause set forth in Treaty Article 22 is inapplicable to the matters at issue. We extend this reciprocal protection to Pinnacle Atlantic in a spirit of fairness and to ensure that neither party's willingness to engage in mediation is construed against it in any subsequent proceeding.
Requested Response
We respectfully request that Pinnacle Atlantic, through your firm, respond to this mediation proposal within fourteen (14) days of the date of this letter — that is, by no later than April 8, 2026. We are, of course, willing to discuss any modifications to the proposed framework that Pinnacle Atlantic may wish to suggest and that would make mediation acceptable to both parties. We approach this process with flexibility and a genuine desire to find a format that works for everyone involved.
Should Pinnacle Atlantic be receptive to this proposal, or should your firm wish to discuss any aspect of the proposed framework before providing a definitive response, we would be pleased to arrange a brief telephone conference between counsel at a mutually convenient time. Please do not hesitate to contact the undersigned or my colleague, Francesca Morano, to arrange such a call.
Conclusion
QC&S makes this mediation proposal in good faith and in the interest of efficient, cost-effective resolution of the parties' dispute. While we are prepared to defend QC&S's rights and interests through arbitration or any other appropriate forum, we believe that both parties — and the longstanding Treaty relationship — would benefit from a structured effort to explore whether a negotiated resolution is achievable.
We reaffirm that QC&S is confident in the validity of the $78,400,000 in reinsurance recoverables that were properly billed and collected under the Treaty for Treaty Years 2022 and 2023, and in the strength of QC&S's defenses to each of the four grounds asserted in Pinnacle Atlantic's February 14, 2026 demand. QC&S reserves all of its rights, defenses, counterclaims, and remedies in full, whether arising under the Treaty, under applicable law, or otherwise.
We look forward to receiving your response.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Douglas Carmichael, Partner
One Liberty Plaza, 55th Floor New York, New York 10006 Telephone: (212) 504-6217
Email: dcarmichael@calderwoodharkness.com
cc: Rachel Sondergaard, General Counsel, Quorum Insurance Holdings Corp.
cc: Tobias Engström, Senior Vice President, Reinsurance & Capital Markets, Quorum Insurance Holdings Corp.
cc: Francesca Morano, Partner, Calderwood & Harkness LLP
cc: Jeffrey Park, Associate, Calderwood & Harkness LLP
Enclosures: None (this letter references prior correspondence dated February 14, 2026, March 18, 2026 (response letter), and March 18, 2026 (demand to arbitrate letter), copies of which are in the possession of the addressee)
Calderwood & Harkness LLP Matter No. 1025-00005

CALDERWOOD & HARKNESS LLP Attorneys at Law

VIA EMAIL AND FIRST-CLASS MAIL

CALDERWOOD & HARKNESS LLP

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