Managing General Agency Agreement

EXHIBIT 10.21

Managing General Agency Agreement

Entered into by and between

Southern Insurance Company

Southern Vanguard Insurance Company

Republic Underwriters Insurance Company

Republic Fire and Casualty Insurance Company

(Hereinafter singularly and collectively referred to as " Company" )

and

FirstComp Underwriters Group, Inc. (Hereinafter " General Agent" )

Originally Effective: July 1, 2006

Contents


Description Page Managing General Agency Agreement:

Article 1 - Appointment and Independent Contractor Relationship 1

Article 2 - Definitions 2

Article 3 - Confidentiality 3

Article 4 - Non-competition 5

Article 5 - General Agent' s Authority 5

Article 6 - Directors and Employees 9

Article 7 - Compensation 9

Article 8 - Records 10

Article 9 - Audits and Examinations 11

Article 10 - General Agent' s Reports 12

Article 11- Establishment of Loss Reserves 14

Article 12 - Expenses 14

Article 13 - Handling of Funds 15

Article 14 - Ownership of Books and Records and Miscellaneous Property 17

Article 15 - Advertising 17

Article 16 - Changes in Ownership, Control or Management 18

Article 17 - Indemnity Agreement 18

Article 18 - Errors and Omissions Insurance, Surety Bond 20

Article 19 - Arbitration 20

Article 20 - Termination 20

Article 21 - Claims Handling 24

Article 22 - Reinsurance 26

Article 23 - Prohibited Acts 27

Article 24 - Miscellaneous 27

Addenda:

ullet Schedule of Business Addendum A-1

ullet Commission Schedule Addendum B-1


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MANAGING GENERAL AGENCY AGREEMENT

This Managing General Agency Agreement dated as of July 1, 2006 (" Effective Date" ) is made and entered into by and between Southern Insurance Company, an insurance company domiciled in the State Texas, Southern Vanguard Insurance Company, an insurance company domiciled in the State of Texas, Republic Underwriters Insurance Company, an insurance company domiciled in the State of Texas, and Republic Fire and Casualty Insurance Company, an insurance company domiciled in the State of Oklahoma (singularly and collectively referred to herein as " Company" ) and FirstComp Underwriters Group, Inc., a Nebraska Corporation with administrative offices in Omaha, Nebraska (referred to herein as " General Agent" ).

In consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and General Agent hereby agree as follows:

Article 1 Appointment and Independent Contractor Relationship

1.1 Appointment . Company appoints General Agent to act as its Managing General Agent, as defined in applicable Regulations. After execution or termination of this Agreement, Company shall make appropriate notifications of such appointment, or subsequent termination thereof, to applicable state insurance departments, as may be required of Company by Regulations. General Agent shall make appropriate notifications of such appointment, or subsequent termination thereof, to applicable state insurance departments, as may be required of General Agent by Regulations. 1.2 Exclusivity . General Agent acknowledges and agrees that Company' s appointment of General Agent is non-exclusive and does not restrict in any manner Company' s right to appoint agents for any lines of insurance Company writes directly or indirectly either through agents, sub-agents, managing general agents or otherwise. Company acknowledges and agrees that General Agent' s appointment by Company is non-exclusive and does not restrict in any manner General Agent' s right to be appointed by any other insurer or provide management or other services to any other person or entity, other than as provided in Article 4 of this Agreement.

1.3 Independent Contractor . General Agent shall act as an independent contractor. Company shall have no right of control over General Agent as to the time, means, or manner of General Agent' s performance or the conduct of its business within the authority granted by this Agreement. General Agent shall furnish and maintain, at [**], the office and office equipment, vehicles, telephone service, books of accounts, personnel and employees deemed by it as necessary or desirable to the carrying on and promoting of the business of General Agent and shall [**]. Nothing contained in this Agreement is intended to nor shall it be construed as creating the relationship of employer and employee, nor partner, nor joint venturer between Company and General Agent or between Company and any Agent with whom General Agent might contract.

[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


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Managing General Agency Agreement Effective July 1, 2006

Article 2 Definitions

2.1 " Affiliated Reinsurance Agreements" means those certain reinsurance agreements, as may be amended from time to time, by and between Company and Republic Underwriters Insurance Company reinsuring the business produced pursuant to this Agreement.

2.2 " Agent" means any person or entity licensed as an insurance agent who acts in compliance with Regulations as an appointed sub-producer for General Agent and Policies are issued as a result. 2.3 " Agreement" means this Managing General Agency Agreement, including all Addenda hereto, as amended from time to time. 2.4 " Authorized Business" means lines of insurance and coverages, with the authority, limitations and underwriting guidelines, as set forth in the Schedule of Business Addendum attached to and incorporated into this Agreement by reference.

2.5 " Broker" means any person or entity who acts in compliance with Regulations as an un-appointed sub-producer for General Agent and Policies are issued as a result.

2.6 " Company" shall have the meaning set forth in the preamble of this Agreement.

2.7 " Effective Date" means the effective date of this Agreement and shall be July 1, 2006.

2.8 " Excess of Loss Reinsurance Agreement" means that certain excess of loss reinsurance agreement(s), as may be amended from time to time, by and between Republic Underwriters Insurance Company and one or more Excess of Loss Reinsurers providing excess of loss reinsurance for the Authorized Business.

2.9 " Excess of Loss Reinsurer" means the reinsurer or reinsurers under the Excess of Loss Reinsurance Agreement. General Agent and Company understand and agree that an Excess of Loss Reinsurer may change from time to time and such changes in Excess of Loss Reinsurer shall not require written amendment to this Agreement.

2.10 " General Agent" shall have the meaning set forth in the preamble of this Agreement.

2.11 " Installment Billing Fees" means the sum of the amounts identified as billing fees charged by General Agent to policyholders on behalf of Company for processing installment payments on Policies.

2.12 " Loss Adjustment Expenses" (" LAE" ) means expenses assignable to the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of specific claims, regardless of how such expenses are classified for statutory reporting purposes. Loss Adjustment Expenses shall include, but not be limited to, interest on judgments, expenses of outside adjusters, ex gratia payments and declaratory judgment expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto but shall not include office expenses or salaries of Company' s or General Agent' s regular employees.

2.13 " Net Written Premium" means gross written premium on Policies (including endorsements and audits), less return premiums and cancellations.


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Managing General Agency Agreement Effective July 1, 2006

2.14 " Party" shall mean General Agent or Company, as applicable.

2.15 " Policy" means any policy, endorsement, binder, certificate, or proposal for insurance or other document that binds Company.

2.16 " Quota Share Reinsurance Agreement" means that quota share reinsurance agreement(s), as may be amended from time to time, by and between Republic Underwriters Insurance Company and Quota Share Reinsurer reinsuring the Authorized Business.

2.17 " Quota Share Reinsurer" means a reinsurer subscribing to a Quota Share Reinsurance Agreement, as may be amended from time to time, reinsuring the business produced pursuant to this Agreement.

2.18 " Regulations" mean federal and state statutes, laws, rules, regulations, or orders which govern or regulate the operations or actions of Company, General Agent, Agents or Reinsurers.

2.19 " Reinsurer" means those companies subscribing to Affiliated Reinsurance Agreements, Quota Share Reinsurance Agreements or Excess of Loss Reinsurance Agreements reinsuring the business produced pursuant to this Agreement (reinsuring the Authorized Business) to which General Agent is not a party. General Agent and Company understand and agree that Reinsurers may change from time to time and such changes in Reinsurers shall not require written amendment to this Agreement.

2.20 " Unearned Premiums" means that portion of Net Written Premiums not earned because the Policy term has not expired as of the date for which the calculation is made.

Article 3 Confidentiality

3.1 During the term of this Agreement, one Party to this Agreement (" Disclosing Party" ) may reveal to the other Party (" Receiving Party" ) certain confidential or proprietary information related to its business operations, proprietary software applications and other intellectual property, and other information. All such information and all information related to the Authorized Business and this Agreement, whether oral, written, electronic or otherwise, furnished by Disclosing Party to Receiving Party, its directors, officers, employees, agents, consultants, or representatives (" Representatives" ), together with analyses, working papers, notes, compilations, studies, or other documents or records prepared by Disclosing Party or its Representatives which contain or otherwise reflect or are generated from such information, are collectively referred to herein as " Confidential Information."

3.2 Receiving Party agrees to use Confidential Information solely for the purpose of this Agreement, the Affiliated Reinsurance Agreement, the Quota Share Reinsurance Agreement, or the Excess of Loss Reinsurance Agreement (and no other purposes) and shall keep Confidential Information confidential and not disclose Confidential Information to others, except that Disclosing Party may disclose Confidential Information to its Representatives who need to know Confidential Information, or to whom such disclosure is reasonably desirable, for the sole purpose of Receiving Party' s performance under this Agreement, the Affiliated Reinsurance Agreement, the Quota Share Reinsurance Agreement, or the Excess of Loss Reinsurance Agreement.


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Managing General Agency Agreement Effective July 1, 2006

3.3 Receiving Party may disclose Confidential Information to any of its affiliates and any of their respective directors, officers, employees, agents, consultants, or representatives (each an " Authorized Recipient" ) who need to know the Confidential Information solely for the purpose of Receiving Party' s performance under this Agreement, the Affiliated Reinsurance Agreement, the Quota Share Reinsurance Agreement, or the Excess of Loss Reinsurance Agreement, provided that each Authorized Recipient shall have agreed to treat such Confidential Information in accordance with the terms of this Agreement as if such Authorized Recipient were Receiving Party (in the case of an entity) or a Representative (in the case of an individual) under this Agreement. Receiving Party shall be responsible for any breach of this Agreement by its Representatives or any of its Authorized Recipients.

3.4 Confidential Information shall not include:

(a) information which at the time of disclosure by Disclosing Party is in the public domain or which later becomes part of the public domain through no act or omission of Receiving Party or its Representatives;

(b) information received by Receiving Party or its Representatives from any third party not known by Receiving Party or its Representatives to be bound by a confidentiality agreement; (c) information already known by Receiving Party, provided that such information is not known by Receiving Party to be subject to another confidentiality agreement with or other obligation of secrecy to Disclosing Party; (d) information independently developed by Receiving Party or its Representatives not receiving disclosure hereunder or from a source known by Receiving Party or its Representatives to be bound by a confidentiality agreement with or other obligation of secrecy to Disclosing Party; or (e) information that is required to be disclosed in compliance with any Regulation, in response to any properly and lawfully issued summons or subpoena or other judicial process or at the request or demand of any governmental authority, including any regulator, administrative arbiter or court with authority or jurisdiction over Receiving Party' s or any of its affiliates (it being agreed that Receiving Party shall promptly give Disclosing Party notice of any such request or grounds for disclosure, if permitted by applicable law).

3.5 Company and General Agent acknowledge and agree that Confidential Information is valuable information to Disclosing Party and unauthorized disclosure or use of Confidential Information by Receiving Party or its Representatives may cause irreparable harm and damage to Disclosing Party, and in the event of any breach of the provisions of this Article 3, Disclosing Party shall be entitled to seek equitable relief, including injunctions and orders for specific performance, in addition to all other remedies available to it at law or in equity.


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Managing General Agency Agreement Effective July 1, 2006

3.6 Each Party shall keep in strict confidence and shall not use or disclose any nonpublic personal information the other Party furnishes to it, other than to carry out the purposes set forth in this Agreement for which such Party disclosed such information. For purposes of this Agreement, nonpublic personal information means nonpublic personal financial information and nonpublic personal health information as those terms are defined in applicable federal and state law, including the Gramm-Leach-Bliley Act (Financial Services Modernization Act of 1999) and comparable state laws. Nonpublic personal financial information includes personally identifiable financial information; and any list, description or other grouping of consumers (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available. Nonpublic personal health information includes health information that identifies an individual who is the subject of the information or with respect to which there is a reasonable basis to believe that the information could be used to identify an individual.

Article 4 Non-competition

In recognition of the significant time and expense incurred by Company in connection with this Agreement, during the term of this Agreement in states for which the Company is licensed, General Agent shall not act as a managing general agent for any entity other than Company or General Agent' s affiliated insurer which is under common ownership with General Agent related to business which under this Agreement would qualify as Authorized Business nor directly or indirectly solicit business which under this Agreement would qualify as Authorized Business from agents, broker or other producers other than pursuant to this Agreement without the express, written approval of Company or upon 180 days written notice by General Agent to Company.

Article 5 General Agent' s Authority

5.1 General Authority . General Agent shall have the authority and the duty to act for and on behalf of Company insofar as necessary for General Agent to perform the functions of a managing general agent of Company, including, but not limited to, recruiting and supervising Agents and Brokers, underwriting, Policy issuance, accounting, billing and claims handling, all subject to the terms and conditions of this Agreement. General Agent, through its personnel, facilities, contractual arrangements and service providers, shall provide such services as set forth in this Agreement and Addenda as may be attached hereto and incorporated into this Agreement by reference.

5.2 Regulations . General Agent shall comply with all Regulations with respect to the placement of business with Company and in carrying out its duties and obligations under this Agreement. General Agent shall maintain current licenses and certificates of authority as required by Regulations for the conduct of business pursuant to this Agreement.

5.3 Company' s Authority . Company shall have ultimate authority over the business placed with Company, including the right to accept any application or to underwrite any risk submitted or to reject, cancel or nonrenew any Policy or Policies produced by or through General Agent, subject to Policy provisions and applicable Regulations. Company may from time to time place written restrictions upon General Agent for the business produced pursuant to this Agreement, including restrictions on premium volume, concentration of risks, forms, rates, fees, and underwriting guidelines. General Agent shall make recommendations to Company regarding such restrictions.


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Managing General Agency Agreement Effective July 1, 2006

5.4 Schedule of Business Addendum . The Schedule of Business Addendum attached to and incorporated into this Agreement by reference shall set forth the authority and limitations of General Agent with regard to Authorized Business, including, but not limited to, authority limitations, underwriting guidelines, maximum annual premium volume, basis of rates to be charged, types of risks which may be written , maximum limits of liability, applicable exclusions, territorial limitations, Policy cancellation provisions and maximum Policy periods. One or more Schedule of Business Addendum may be attached hereto and may be amended upon mutual agreement of the Parties without otherwise affecting the terms and conditions of this Agreement. Any amendment shall be in writing, executed by the Parties, and specify the effective date of the amendment. Underwriting guidelines developed in accordance with the authority and limitations set forth in the Schedule of Business Addendum shall be incorporated into this Agreement by reference.

5.5 Management of Business . Pursuant to the terms of this Agreement, General Agent shall have the responsibility to manage all business placed with Company under this Agreement, including business placed by Agents and Brokers. General Agent shall make every attempt to cure any unauthorized business placed with Company. 5.6 Agents and Brokers .

(a) General Agent shall assure that the original source of all business produced under this Agreement shall be properly licensed Agents or Brokers, who maintain appropriate licenses, certificates of authority and appointments as required by Regulations for the conduct of business under this Agreement. General Agent shall conduct and maintain proper background checks of Agents and Brokers. Upon discovery, General Agent shall immediately notify Company of any irregularities regarding any Agent or Broker. Company shall have the right to accept, reject or cancel any agent' s appointment recommended or made by General Agent. General Agent shall not delegate its authority to underwrite and issue Policies or any risk changing endorsements or amendments to Policies to any Agent, Broker or other entity without the express written consent of Company.

(b) General Agent shall have authority to recruit, contract with, manage, train, and supervise Agents as producing agents acting for and on behalf of General Agent. General Agent may appoint Agents for Company at General Agent' s expense, and upon execution of this Agreement, General Agent shall provide to Company all information necessary or requested by Company to substantiate the expertise and acceptability of each Agent appointed. General Agent shall maintain in force a written agreement, in a form acceptable to Company, with Agents and Brokers, who are not employees of General Agent. Each such agreement shall be made directly between General Agent and the Agent or Broker and shall provide that the Agent or Broker shall have no right, claim or cause of action against Company and shall look exclusively to General Agent for the payment of or satisfaction of any and all damages, losses, claims, costs, causes of action or expenses (including attorneys' fees), including, but not limited to, extra-contractual damages or losses in excess of policy limits, arising, directly or indirectly, out of or in connection with any action taken or not taken by Company or General Agent, unless such right, claim or cause of action arises solely and exclusively out of the negligence of Company.


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Managing General Agency Agreement Effective July 1, 2006

5.7 Indemnification and Hold Harmless .

(a) GENERAL AGENT [**]. (b) GENERAL AGENT SHALL COMPLY WITH ALL REGULATIONS WITH RESPECT TO ANY TERMINATION, SUSPENSION, OR REVOCATION OF AUTHORITY DELEGATED TO ANY AGENT AND SHALL INDEMNIFY AND HOLD COMPANY HARMLESS, SINGULARLY AND COLLECTIVELY, AGAINST ANY DAMAGES, LOSSES, CLAIMS, COSTS, CAUSES OF ACTION, OR EXPENSES, INCLUDING ATTORNEYS' FEES, ARISING, DIRECTLY OR INDIRECTLY, OUT OF OR IN CONNECTION WITH ANY ACTION TAKEN OR NOT TAKEN BY GENERAL AGENT, AGENT OR BROKER IN THIS REGARD, EXCEPT FOR ANY SUCH ACTION TAKEN OR NOT TAKEN SOLELY AT THE AUTHORIZED, WRITTEN DIRECTION OF COMPANY. GENERAL AGENT SHALL INDEMNIFY AND HOLD COMPANY, SINGULARLY AND COLLECTIVELY, HARMLESS AGAINST ANY PENALTIES AND FINES IMPOSED BY REGULATORY AUTHORITIES, INCLUDING ATTORNEYS' FEES AND EXPENSES, ARISING DIRECTLY OR INDIRECTLY, OUT OF OR IN CONNECTION WITH COMPANY' S ACCEPTANCE OF BUSINESS FROM ANY AGENT OR BROKER AND AGAINST ANY DAMAGES, LOSSES, CLAIMS, COSTS, CAUSES OF ACTION, OR EXPENSES, INCLUDING ATTORNEYS' FEES, ARISING, DIRECTILY OR INDIRECTLY, OUT OF OR IN CONNECTION WITH COMPANY' S ACCEPTANCE OF BUSINESS FROM ANY AGENT OR BROKER, UNLESS AND TO THE EXTENT SUCH PENALITIES, FINES, DAMAGES, LOSSES, CLAIMS, COSTS, CAUSES OF ACTION, OR EXPENSES ARE THE SOLE RESULT OF THE AUTHORIZED INSTRUCTIONS OR ACTS OF COMPANY.

5.8 Regulatory Filings . Forms, rates, and rules for Authorized Business as mutually agreed upon by General Agent and Company shall be filed by Company as required with the proper regulatory agency. Upon completion of filing and receipt of approval from the applicable regulatory agency or according to approval granted by Regulations, Company shall notify General Agent of the effective date of such filing. 5.9 Applications and Policies . General Agent shall have the authority to accept applications for Policies and to issue Policies for Authorized Business submitted by or through Agents or Brokers on forms, at rates, and under rules approved by Company. Company may refuse to accept any application or to underwrite any risk submitted and shall have the right to cancel or non-renew any Policy, subject to Regulations and Policy provisions. General Agent shall ensure that all applications, binders, policies or other forms are approved by Company and the required applicable state regulatory official prior to use. 5.10 Policy Renewals and Cancellations . According to Regulations and Policy provisions, as well as delegations of authorities herein, General Agent shall be responsible for the proper renewal, non-renewal or cancellation of Policies in accordance with Regulations, Policy provisions, and delegations of authority as provided in this Agreement. General Agent shall timely communicate to policyholders any renewal quotes or notices of non-renewal or cancellation to preclude the extension of coverages beyond the expiration dates or cancellation dates of in-force Policies.

[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.


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Managing General Agency Agreement Effective July 1, 2006

5.11 Policy Issuance . General Agent shall not delegate its authority to issue Policies to any Agent or Broker or other third party, unless otherwise approved in writing by Company in advance of the delegation of authority by General Agent. General Agent' s request to Company for approval to delegate such authority shall include a copy of the agreement between General Agent and Agent or Broker which includes Agent' s or Broker' s authorities to be delegated by General Agent.

5.12 Premiums and Fees . General Agent shall have the authority to receive and receipt for premiums and to retain commissions and other fees, as specified in this Agreement, out of such collected premiums and fees, subject to the terms and conditions of this Agreement. General Agent shall have the authority to bill premiums to policyholders on an installment basis and charge policyholders Installment Billing Fees as allowed by Regulations. General Agent shall have the authority to accept premiums financed by premium finance companies or other lending institutions. General Agent shall be solely responsible and liable for premiums financed and shall cause any unearned premium or commission refunds to be paid directly to said premium finance company or lender and shall not pay or credit any Agent' s or Broker' s account. 5.13 Reserves . General Agent or its designated claims adjustment contractor approved by Company shall have the authority to set loss, Loss Adjustment Expenses (LAE), and incurred but not reported (IBNR) reserves on Policies for Company according to accepted statutory accounting principles, actuarial loss reserving standards, and Regulations, subject to review and adjustment by Company. 5.14 Involuntary Risks . General Agent shall process and administer in accordance with the provisions of this Agreement all involuntary business (e.g., assigned risk plans), if any, arising as a result of business produced pursuant to this Agreement and shall continue to do so after the termination of this Agreement, at the election of Company.

5.15 Communications with Regulators . Each Party hereto shall, immediately upon its receipt, send to the other Party all communications or copies of communications received from insurance departments or other regulatory authorities, including complaints, related to the business written pursuant to this Agreement. General Agent shall cooperate with Company in responding to such communications and shall provide the detail information necessary for Company to respond to such communications in a complete and timely manner. Company, not General Agent, shall correspond directly with the regulatory authorities regarding such communications. 5.16 Suspension of Authority .

(a) Company shall have the unilateral right, exercisable in its sole and absolute discretion, to suspend the authority of General Agent pursuant to this Agreement during the pendency of any dispute between Company and General Agent arising out of or in connection with any alleged breach or failure of performance or any material uncertainty of future performance on the part of General Agent under this Agreement, including, but not limited to:


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Managing General Agency Agreement Effective July 1, 2006

(i) General Agent' s failure to follow or adhere to limitations on its underwriting authority;

(ii) General Agent' s unauthorized delegation of binding authority;

(iii) General Agent' s failure to follow or adhere to claims handling guidelines of Company; or

(iv) impairment of General Agent' s resources to perform.

(b) Upon receiving notice of any suspension of authority, General Agent shall have [**] days to cure any underlying cause of such dispute; otherwise, upon the expiration of such [**] days, Company may exercise its unilateral right to suspend the authority of General Agent. Company' s suspension of the authority of General Agent under this Agreement in good ...