[sheet: Cover]

[sheet: Cover]
Field | Value
Document Title | Carrier Quote Comparison Matrix — Product-Liability Tower
Prepared For | Nexford Industrial Holdings Inc.
Prepared By | Calderwood & Harkness LLP — Matter No. 1005-00003
Date | June 10, 2022
Policy Period | July 1, 2022 – July 1, 2023 (Renewal)
Incumbent Policy Period | July 1, 2021 – July 1, 2022
Broker of Record | Ashford Breckinridge LLP (Phillip Garza / Tamara Fisk)
Named Insured | Nexford Industrial Holdings Inc. and subsidiaries
Tower Structure | Primary GL/PL + 3 Excess Layers; $75,000,000 Total Aggregate Limit
Confidentiality | PRIVILEGED AND CONFIDENTIAL — Attorney Work Product
C&H Contacts | Douglas Fairchild (Responsible Partner); Naomi Petersen (Lead Associate); Yuki Nakamura (Working Associate)
Client Contacts | Priya Sundaram (General Counsel); Trevor Haines (VP Risk Management); Donna Kowalski (Director of Insurance and Claims)
[sheet: Primary GL-PL Quotes]
Quote Element | Incumbent (2021-2022) — Midland Casualty & Surety Company | Midland Casualty Renewal Quote — Option A | Midland Casualty Renewal Quote — Option B | Competing Quote — Hawthorne General Insurance Co. | C&H Comments / Analysis
Carrier Name | Midland Casualty & Surety Company | Midland Casualty & Surety Company | Midland Casualty & Surety Company | Hawthorne General Insurance Co.
Domicile | Illinois | Illinois | Illinois | Texas
A.M. Best Rating | A (Excellent), XV | A (Excellent), XV | A (Excellent), XV | A- (Excellent), XII | Hawthorne one notch lower; smaller financial size category
Policy Number | MCS-GL-2021-55671 | TBD (renewal) | TBD (renewal) | N/A — new
Policy Period | 7/1/2021 – 7/1/2022 | 7/1/2022 – 7/1/2023 | 7/1/2022 – 7/1/2023 | 7/1/2022 – 7/1/2023
Quote Date Received | N/A (prior year) | May 18, 2022 | May 24, 2022 | June 3, 2022 | Hawthorne quote received latest; limited negotiation window
Coverage Form | Occurrence | Occurrence | Occurrence | Occurrence | All quotes on occurrence basis — consistent
Per Occurrence Limit | $5,000,000 | $5,000,000 | $5,000,000 | $5,000,000 | No change proposed
General Aggregate Limit | $10,000,000 | $10,000,000 | $10,000,000 | $10,000,000 | No change proposed
Products-Completed Operations Aggregate | $10,000,000 | $10,000,000 | $10,000,000 | $10,000,000
Personal & Advertising Injury Limit | $5,000,000 | $5,000,000 | $5,000,000 | $5,000,000
Self-Insured Retention (Per Occurrence) | $500,000 | $750,000 | $500,000 | $500,000 | Option A proposes SIR increase from $500K to $750K; Option B maintains $500K at higher premium; Hawthorne maintains $500K
SIR Applicability | Bodily Injury & Property Damage — PL only | Bodily Injury & Property Damage — PL only | Bodily Injury & Property Damage — PL only | Bodily Injury & Property Damage — PL only | Consistent across all quotes
Annual Premium | $1,125,000 | $1,215,000 | $1,275,000 | $1,310,000 | Option A: 8.0% increase (with higher SIR); Option B: 13.3% increase (SIR maintained); Hawthorne: 16.4% increase — not competitive
Premium Increase ($) | N/A | $90,000 | $150,000 | $185,000
Premium Increase (%) | N/A | 8.00% | 13.33% | 16.44%
Product Recall Sub-Limit (Per Occurrence) | $2,500,000 | $2,500,000 | $2,500,000 | $2,500,000 | Base quote maintains $2.5M/occ; see Recall Sub-Limit Options tab for enhancement quotes
Product Recall Sub-Limit (Aggregate) | $5,000,000 | $5,000,000 | $5,000,000 | $5,000,000 | Base quote maintains $5M agg; see Recall Sub-Limit Options tab
Product Recall — Waiting Period | 30 days from recall announcement | 30 days | 30 days | 30 days
Product Recall — Gov't Mandated & Voluntary | Both covered | Both covered | Both covered | Both covered
Completed Operations — Tail Period | 10 years post-delivery | 10 years post-delivery | 10 years post-delivery | 7 years post-delivery | Hawthorne shorter tail is a significant deficiency; 10 years required given Nexford conveyor system product life cycle
Named Insureds | NIH, NCS, Triton, Marlowe Asset Management | NIH, NCS, Triton, Marlowe Asset Management | NIH, NCS, Triton, Marlowe Asset Management | NIH, NCS, Triton, Marlowe Asset Management | All subsidiaries named across all quotes
Cross-Liability / Separation of Insureds | Included | Included | Included | Included — limited carve-outs | Hawthorne includes carve-outs for intercompany contractual indemnity; may be problematic given shared components between Triton and NCS
Pollution Exclusion | Standard absolute — with limited buy-back for hostile fire | Standard absolute — with limited buy-back for hostile fire | Standard absolute — with limited buy-back for hostile fire | Broad absolute — no buy-back | Hawthorne broader pollution exclusion; less favorable
Contractual Liability | Included — insured contract | Included — insured contract | Included — insured contract | Included — insured contract
Additional Insured — Automatic | Blanket by written contract | Blanket by written contract | Blanket by written contract | Scheduled only | Hawthorne requires scheduling — impractical given ~42,000 SKUs shipped annually
Additional Insured — Primary/Non-Contributory | Included where required by contract | Included where required by contract | Included where required by contract | Not offered | Hawthorne deficiency — many customer contracts require primary/non-contributory status
Waiver of Subrogation | Blanket where required by written contract | Blanket where required by written contract | Blanket where required by written contract | Blanket where required by written contract | Consistent across all quotes
Defense Costs | Within limits (eroding) | Within limits (eroding) | Within limits (eroding) | Within limits (eroding) | All quotes defense within limits
Duty to Defend vs. Duty to Indemnify | Duty to defend | Duty to defend | Duty to defend | Duty to defend
Prior Acts / Known Claims | Prior acts included; known claims excluded per endorsement | Prior acts included; pending claims (Higgins, Consolidated Builders) covered under occurrence trigger | Same as Option A | Prior acts included; pending claims covered under occurrence trigger | Higgins v. NCS (Case No. 2021-L-04382; $14.5M damages sought) and Consolidated Builders v. Triton (Case No. 1:21-cv-08914; $6.8M damages sought) — both under occurrence form, no known-claims issue at renewal
Extended Reporting Period | N/A — occurrence form | N/A — occurrence form | N/A — occurrence form | N/A — occurrence form
Terrorism Coverage (TRIA) | Included — certified acts | Included — certified acts | Included — certified acts | Included — certified acts
Cancellation Notice Period | 60 days (30 days for non-payment) | 60 days (30 days for non-payment) | 60 days (30 days for non-payment) | 60 days (30 days for non-payment)
Quota of Premium to Recall Enhancement | N/A | See Recall tab | See Recall tab | Not offered | Hawthorne does not offer recall enhancement option
Quote Expiration Date | N/A | June 30, 2022 | June 30, 2022 | June 24, 2022 | Hawthorne quote expires earlier; Midland quotes valid through end of month
[sheet: 1st Excess-Umbrella Quotes]
Quote Element | Incumbent (2021-2022) — Great Basin Insurance Company | Great Basin Renewal Quote | Competing Quote — Meridian Surplus Lines Co. | C&H Comments / Analysis
Carrier Name | Great Basin Insurance Company | Great Basin Insurance Company | Meridian Surplus Lines Co.
Domicile | Nevada | Nevada | New Jersey
A.M. Best Rating | A (Excellent), XIV | A (Excellent), XIV | A (Excellent), XIII
Policy Number | GBI-XS-2021-7712 | TBD (renewal) | N/A — new
Policy Period | 7/1/2021 – 7/1/2022 | 7/1/2022 – 7/1/2023 | 7/1/2022 – 7/1/2023
Quote Date Received | N/A (prior year) | May 25, 2022 | June 1, 2022
Layer | $25,000,000 xs $10,000,000 | $25,000,000 xs $10,000,000 | $25,000,000 xs $10,000,000 | Both quoting same attachment and limit
Per Occurrence Limit | $25,000,000 | $25,000,000 | $25,000,000
Aggregate Limit | $25,000,000 | $25,000,000 | $25,000,000
Attachment Point | $10,000,000 (above primary aggregate) | $10,000,000 | $10,000,000
Follow-Form Basis | Follow-form with stated exceptions | Follow-form with stated exceptions | Follow-form with stated exceptions | Review exceptions for consistency
Annual Premium | $862,500 | $975,000 | $1,012,500 | Great Basin: 13.0% increase; Meridian: 17.4% increase — Great Basin more competitive
Premium Increase ($) | N/A | $112,500 | $150,000
Premium Increase (%) | N/A | 13.04% | 17.39%
Self-Insured Retention | N/A — excess of primary | N/A | N/A | SIR applies at primary layer only
Pollution Exclusion | Broader than primary — absolute with no hostile fire buy-back | Same as incumbent | Standard absolute — with hostile fire buy-back | Great Basin pollution exclusion broader than Midland primary — identified as gap in preliminary coverage review (May 27, 2022); recommend negotiation to align
Other Insurance Clause | Excess of all other collectible insurance | Same as incumbent | Primary with respect to underlying scheduled policies only | Conflict potential between Great Basin and Midland primary other-insurance clauses flagged in C&H gap memo
Drop-Down Provision | Drop-down if underlying exhausted by payment of covered loss | Same as incumbent | Drop-down with 30-day waiting period | Meridian waiting period introduces coverage delay risk
Defense Cost Treatment | Within limits — follows primary form | Within limits — follows primary form | Within limits — follows primary form | Consistent across all quotes
Cross-Liability / Separation of Insureds | Follows primary | Follows primary | Follows primary
Contractual Liability | Follows primary | Follows primary | Follows primary
Named Insureds | Same as primary — NIH, NCS, Triton, Marlowe Asset Management | Same as primary | Same as primary
Cancellation Notice Period | 60 days (30 days for non-payment) | 60 days (30 days for non-payment) | 60 days (30 days for non-payment)
Subrogation Rights | Carrier retains subrogation rights | Same as incumbent | Same as incumbent
Quote Expiration Date | N/A | June 30, 2022 | June 22, 2022 | Meridian quote expires earlier
[sheet: 2nd Excess Quotes]
Quote Element | Incumbent (2021-2022) — Cornerstone Reinsurance Corp. | Cornerstone Renewal Quote | Competing Quote — Atlas Specialty Re Ltd. | C&H Comments / Analysis
Carrier Name | Cornerstone Reinsurance Corp. | Cornerstone Reinsurance Corp. | Atlas Specialty Re Ltd.
Domicile | New York | New York | Bermuda
A.M. Best Rating | A+ (Superior), XV | A+ (Superior), XV | A (Excellent), XIV | Cornerstone rated one notch higher
Policy Number | CRC-XS2-2021-3340 | TBD (renewal) | N/A — new
Policy Period | 7/1/2021 – 7/1/2022 | 7/1/2022 – 7/1/2023 | 7/1/2022 – 7/1/2023
Quote Date Received | N/A (prior year) | May 31, 2022 | June 6, 2022
Layer | $25,000,000 xs $35,000,000 | $25,000,000 xs $35,000,000 | $25,000,000 xs $35,000,000 | Same structure
Per Occurrence Limit | $25,000,000 | $25,000,000 | $25,000,000
Aggregate Limit | $25,000,000 | $25,000,000 | $25,000,000
Attachment Point | $35,000,000 (above primary + 1st excess) | $35,000,000 | $35,000,000
Follow-Form Basis | Follow-form to Great Basin excess | Follow-form to Great Basin excess | Follow-form to Midland primary (skips excess) | Atlas follows primary directly — could create gaps if Great Basin has broader exclusions
Annual Premium | $437,000 | $492,000 | $478,500 | Cornerstone: 12.6% increase; Atlas: 9.5% increase — Atlas lower but follow-form concern exists
Premium Increase ($) | N/A | $55,000 | $41,500
Premium Increase (%) | N/A | 12.59% | 9.50%
Aggregate Erosion Provision | Layer erodes by claims applicable to underlying layers | Same as incumbent | Same as incumbent
Commutation Clause | None | None | Included — 36-month commutation right | Atlas commutation clause could create discontinuity risk in long-tail PL claims
Defense Cost Treatment | Within limits — follows excess form | Within limits — follows excess form | Within limits — follows primary form
Drop-Down Provision | Drop-down if 1st excess exhausted by payment of covered loss | Same as incumbent | Drop-down if primary exhausted (skip-layer drop-down) | Atlas skip-layer drop-down creates ambiguity if 1st excess does not pay
Named Insureds | Same as primary — NIH, NCS, Triton, Marlowe Asset Management | Same as primary | Same as primary
Pollution Exclusion | Follows Great Basin form | Same as incumbent | Follows Midland primary form | Atlas approach may inadvertently provide broader coverage than intended by excess layers
Cancellation Notice Period | 60 days (30 days for non-payment) | 60 days (30 days for non-payment) | 60 days (30 days for non-payment)
Quote Expiration Date | N/A | June 30, 2022 | June 20, 2022 | Atlas quote expires earliest among all quotes received
[sheet: 3rd Excess Quotes]
Quote Element | Incumbent (2021-2022) — Allegheny Pacific Underwriters, Inc. | Allegheny Pacific Renewal Quote | C&H Comments / Analysis
Carrier Name | Allegheny Pacific Underwriters, Inc. | Allegheny Pacific Underwriters, Inc.
Domicile | California | California
A.M. Best Rating | A- (Excellent), XII | A- (Excellent), XII | Lowest-rated carrier in tower; monitor for downgrade
Policy Number | APU-XS3-2021-0915 | TBD (renewal)
Policy Period | 7/1/2021 – 7/1/2022 | 7/1/2022 – 7/1/2023
Quote Date Received | N/A (prior year) | June 2, 2022
Layer | $15,000,000 xs $60,000,000 | $15,000,000 xs $60,000,000
Per Occurrence Limit | $15,000,000 | $15,000,000
Aggregate Limit | $15,000,000 | $15,000,000
Attachment Point | $60,000,000 (above primary + 1st excess + 2nd excess) | $60,000,000
Follow-Form Basis | Follow-form to Cornerstone 2nd excess | Follow-form to Cornerstone 2nd excess | Consistent with incumbent structure
Annual Premium | $218,400 | $243,500 | 11.5% increase
Premium Increase ($) | N/A | $25,100
Premium Increase (%) | N/A | 11.49%
Defense Cost Treatment | Within limits — follows excess form | Within limits — follows excess form
Drop-Down Provision | Drop-down if 2nd excess exhausted by payment of covered loss | Same as incumbent
Aggregate Erosion Provision | Layer erodes by claims applicable to underlying layers | Same as incumbent
Sunset / Expiring Claims Provision | None | None
Named Insureds | Same as primary — NIH, NCS, Triton, Marlowe Asset Management | Same as primary
Pollution Exclusion | Follows Cornerstone 2nd excess form | Same as incumbent
Cancellation Notice Period | 60 days (30 days for non-payment) | 60 days (30 days for non-payment)
Competing Quotes Solicited | Ashford Breckinridge marketed to 4 carriers at this layer | Sole quote received | Other carriers declined due to attachment height and Nexford claims profile
Total Tower Attachment | Attaches above $60M of underlying limits | Same | High attachment; remote probability of attachment but important for catastrophic conveyor system or mass fastener failure scenarios
Quote Expiration Date | N/A | June 30, 2022
[sheet: Recall Sub-Limit Options]
Recall Sub-Limit Parameter | Incumbent (2021-2022) | Option 1 — Maintain Current | Option 2 — Increase to $5M/$10M | Option 3 — Increase to $7.5M/$15M | C&H Recommendation / Analysis
Per Occurrence Sub-Limit | $2,500,000 | $2,500,000 | $5,000,000 | $7,500,000
Aggregate Sub-Limit | $5,000,000 | $5,000,000 | $10,000,000 | $15,000,000
Incremental Annual Premium | N/A (included in base) | $0 (no change) | $67,000 | $112,000
Incremental Premium per $1M of Added Per-Occ Limit | N/A | N/A | $26,800 | $22,400 | Option 3 marginally more efficient on cost-per-limit basis but exceeds recommended need
Total Primary Premium with Enhancement (Option B base) | $1,125,000 (incumbent) | $1,275,000 | $1,342,000 | $1,387,000 | Option B (maintain $500K SIR) used as base for recall enhancement pricing
Historical Recall Costs — Triton Fastener Voluntary Recall (March 2020) | $1,100,000 | Within current sub-limit | Within enhanced sub-limit | Within enhanced sub-limit
Historical Recall Costs — NCS Advisory Notice (August 2020) | $340,000 | Within current sub-limit | Within enhanced sub-limit | Within enhanced sub-limit
Combined Historical Recall Costs | $1,440,000 | 57.6% of per-occ sub-limit | 28.8% of per-occ sub-limit | 19.2% of per-occ sub-limit
Coverage Scope — Recall Expenses | Reasonable and necessary costs of recall | Same | Same | Same
Waiting Period | 30 days from recall announcement | 30 days | 30 days | 30 days
Government-Mandated vs. Voluntary | Both covered | Both covered | Both covered | Both covered | Critical for CPSC-mandated recalls
Third-Party Recall Expenses | Included — notification, shipping, destruction | Included | Included | Included
Business Interruption — Recall Related | Excluded | Excluded | Excluded | Excluded | Consistent exclusion across all options
C&H Recommendation | RECOMMENDED — $5M/$10M | Option 2 provides meaningful uplift at modest incremental cost ($67,000); aligns with C&H Product Recall Sub-Limit Adequacy Memo (June 7, 2022) and industry benchmarking for companies with $1.42B revenue and ~42,000 annual SKUs shipped
Client Approval Status | Approved by T. Haines (VP Risk Mgmt) on June 9, 2022 | Subject to board authorization of total combined D&O + PL premium cap