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EXHIBIT 16
THIRD AMENDMENT
TO THE SECOND AMENDED AND RESTATED
REINSURANCE POOLING AGREEMENT
WHEREAS, the undersigned parties (Participants) entered into the above-
captioned agreement (Agreement) on December 14, 1992 and executed amendments
thereto on February 18, 1993 and February 10, 1995;
WHEREAS, the Participants desire to enter into a third amendment to the
Agreement pursuant to Section 8.1 thereof; and
WHEREAS, the amendments set out hereinbelow were approved by the
Coordinating Committee and the board of directors of ALLIED Mutual Insurance
Company on May 4, 1998 and by the boards of directors of AMCO Insurance Company,
ALLIED Property and Casualty Insurance Company, and Depositors Insurance Company
on May 5, 1998;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the Participants hereby agree as
follows;
1. Effective January 1, 1998, Section 3.8 of the Agreement is deleted
therefrom in its entirety;
2. Effective on the date of this amendment, Section 3.7 of the Agreement
is hereby amended by deleting therefrom in its entirety the final sentence
thereof, as added by the Second Amendment thereto;
3. Effective July 1, 1998, Exhibit C to the Agreement, which is
captioned "Administrative Fee" and which is incorporated by reference into
Section 3.7 thereof, is amended as follows:
A. Subsection 2 of Exhibit C is deleted in its entirety and
replaced with the following;
"7.5% of Adjusted Earned Premiums+ multiplied by its Applicable
Participation Percentage (6.75% for unallocated LAE and 0.75%
for investment expense)"
B. The following is added to the definitions of Adjusted Written
Premiums and Adjusted Earned Premiums by insertion at the end
thereof:
"and those premiums written by the Square Deal Division of
Mutual"
C. Subsections 3 and 4 of Exhibit C are deleted therefrom in their
entirety.
4. Effective January 1, 1999, Exhibit C to the Agreement is amended as
follows:
A. Subsection 1 is deleted in its entirety and replaced with the
following:
"Commencing on January 1, 1999, its Applicable Participation
Percentage multiplied by that percentage of Adjusted Written
Premiums* which is the product of Adjusted Written Premiums*
and a percentage equaling the average underwriting expense
(excluding commissions and premiums taxes) incurred by the
Participants and the Square Deal Division of Mutual during the
Annual Statement years 1994 through 1998."
B. Subsection 2 is deleted in its entirety and replaced with the
following:
"Commencing on January 1, 1999, its Applicable Participation
Percentage multiplied by the total of (i) total unallocated
loss adjustment expense incurred by the Participants and the
Square Deal Division of Mutual for that Annual Statement year
and (ii) 0.50% of Adjusted Earned Premiums+."
C. The following is added to the Exhibit as Subsection 3:
"The foregoing notwithstanding, for Annual Statement years 1998
through 2000, no Affiliated Company shall be required to pay
the Pool Administrator in any year an Administration Fee
calculated pursuant hereto which is greater than that it would
have paid if the Administrative Fee had been calculated
pursuant to the terms of the Agreement as they existed prior to
execution of this Third Amendment."
5 Effective January 1, 2000, Exhibit C to the Agreement is amended by
(i) striking the phrase "1994 through 1998" from the last line of
Subsection 1 and by replacing it with "1995 through 1999" and (ii) striking
the phrase "0.50% of Adjusted Earned Premiums+" from the last line of
Subsection 2 and by replacing it with "0.25% of Adjusted Earned Premiums+."
6. Effective January 1, 2001, the Agreement shall be amended by deleting
Section 3.7 and Exhibit C therefrom in their entirety and by replacing
Section 3.7 with the following:
"For each Annual Statement year commencing on or after January
1, 2001, the Pool Administrator shall be reimbursed by each
Affiliated Company for those Company Specific Expenses and Non-
Pooled Items paid by the Pool Administrator on its behalf. In
addition thereto, each Affiliated Company shall pay to the Pool
Administrator an amount equaling its Applicable Participation
Percentage of the Participants', including Square Deal Division
of Mutual, total Administrative Expenses."
IN WITNESS HEREOF, the undersigned parties hereto have executed this
amendment on the 5th day of May, 1998.
ALLIED Mutual Insurance Company AMCO Insurance Company
By: /s/ Douglas L. Andersen By: /s/ Douglas L. Andersen
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Its: President and Chief Executive Its: President and Chief Executive
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Officer Officer
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ALLIED Property and Casualty Depositors Insurance Company
Insurance Company
By: /s/ Douglas L. Andersen By: /s/ Douglas L. Andersen
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Its: President and Chief Executive Its: President and Chief Executive
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Officer Officer
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