10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2015

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___________________TO _______________________

Commission File number 000-25001

Federated National Holding Company

(Exact name of registrant as specified in its charter)

Florida	65-0248866
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)

14050 N.W. 14^th Street, Suite 180, Sunrise, Florida 33323

(Address of principal executive offices) (Zip Code)

800-293-2532

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has electronically submitted and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒   Non-accelerated filer ☐ Smaller reporting company ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $.01 par value –14,230,890 outstanding as of November 3, 2015

FEDERATED NATIONAL HOLDING COMPANY

INDEX

PART I: FINANCIAL INFORMATION		PAGE
ITEM 1	Financial Statements	3
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	58
ITEM 4	Controls and Procedures	60
PART II: OTHER INFORMATION
ITEM 1	Legal Proceedings	61
ITEM 1A	Risk Factors	61
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	61
ITEM 3	Defaults upon Senior Securities	61
ITEM 4	Mine Safety Disclosures	61
ITEM 5	Other Information	61
ITEM 6	Exhibits	62
SIGNATURES		63

2

PART I: FINANCIAL INFORMATION

Item 1 Financial Statements

FEDERATED NATIONAL HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	September 30, 2015		December 31, 2014
ASSETS	(Dollars in Thousands)
Investments
Debt maturities, available for sale, at fair value	$	341,915	$	284,099
Debt maturities, held to maturity, at amortized cost		6,387		7,417
Equity securities, available for sale, at fair value		38,086		39,247
Total investments		386,388		330,763
Cash and short term investments		76,161		40,157
Prepaid reinsurance premiums		95,470		54,502
Premiums receivable, net of allowance for credit losses of $312 and $148, respectively		34,928		27,275
Reinsurance recoverable, net		8,349		12,534
Deferred policy acquisition costs		13,522		13,610
Income taxes receivable		5,763		1,810
Property, plant and equipment, net		2,753		1,749
Other assets		10,973		7,231
Contingent quota-share profit sharing		-		14,000
Total assets	$	634,307	$	503,631
LIABILITIES AND SHAREHOLDERS' EQUITY
Unpaid losses and LAE	$	91,673	$	78,330
Unearned premiums		250,397		192,424
Debt		5,000		-
Premiums deposits and customer credit balances		11,265		7,381
Deferred income taxes, net		4,815		1,341
Claims payments outstanding		13,272		10,152
Accounts payable and accrued expenses		16,403		10,924
Deferred quota-share profit sharing		-		10,500
Total liabilities		392,825		311,052
Shareholders' equity:
Common stock, $0.01 par value. Authorized 25,000,000 shares; issued and outstanding 13,773,130 and 13,632,414, respectively		138		136
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; none issued or outstanding		-		-
Additional paid-in capital		131,203		127,302
Accumulated other comprehensive income
Unrealized net gains on investments, available for sale		4,838		7,718
Total accumulated other comprehensive income		4,838		7,718
Retained earnings		87,188		57,423
Total Federated National Holding Company equity		223,367		192,579
Non-controlling interest		18,115		-
Total shareholders' equity		241,482		192,579
Total liabilities and shareholders' equity	$	634,307	$	503,631

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3

FEDERATED NATIONAL HOLDING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in Thousands)						(Dollars in Thousands)
Revenue:
Gross premiums written	$	129,840		$	92,032		$	368,561		$	280,487
Gross premiums ceded		(119,985	)		(129,298	)		(231,046	)		(179,137	)
Net premiums written		9,855			(37,266	)		137,515			101,350
Increase in prepaid reinsurance premiums		70,018			80,013			76,756			86,900
Increase in unearned premiums		(17,587	)		(8,229	)		(57,973	)		(58,295	)
Net change in prepaid reinsurance premiums and unearned premiums		52,431			71,784			18,783			28,605
Net premiums earned		62,286			34,518			156,298			129,955
Commission income		1,863			1,173			4,296			3,350
Finance revenue		425			392			1,322			1,051
Direct written policy fees		2,782			2,238			7,887			6,417
Net investment income		1,907			1,450			5,154			3,758
Net realized investment gains		1,126			659			3,743			4,047
Other income		2,210			970			4,548			1,540
Quota-share profit sharing, net		-			1,750			3,077			1,750
Total revenue		72,599			43,150			186,325			151,868
Expenses:
Losses and LAE		28,412			15,126			75,510			60,476
Operating and underwriting expenses		11,769			6,732			24,887			14,600
Salaries and wages		7,940			4,022			18,091			10,520
Policy acquisition costs		6,788			5,815			16,938			23,095
Interest expense		65			-			152			-
Total expenses		54,974			31,695			135,578			108,691
Income before provision for income tax expense		17,625			11,455			50,747			43,177
Provision for income tax expense		7,054			4,228			19,519			15,973
Income before non-controlling interest		10,571			7,227			31,228			27,204
Non-controlling interest		(22	)		-			(383	)		-
Net income attributable to Federated National Holding Company common stockholders	$	10,593		$	7,227		$	31,611		$	27,204
Net income per share - basic	$	0.77		$	0.57		$	2.31		$	2.35
Net income per share - diluted	$	0.76		$	0.56		$	2.26		$	2.28
Weighted average number of common shares outstanding - basic		13,749,394			12,624,746			13,709,605			11,562,709
Weighted average number of common shares outstanding - diluted		13,976,709			12,956,407			13,978,381			11,934,057
Dividends paid per share	$	0.05		$	0.03		$	0.13		$	0.09

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4

FEDERATED NATIONAL HOLDING COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in Thousands)						(Dollars in Thousands)
Income before non-controlling interest	$	10,571		$	7,227		$	31,228		$	27,204
Change in net unrealized (losses) gains on investments available for sale		(2,671	)		(1,883	)		(4,681	)		359
Comprehensive income before tax		7,900			5,344			26,547			27,563
Income tax benefit (expense) related to items of other comprehensive income		1,083			615			1,734			(229	)
Comprehensive income		8,983			5,959			28,281			27,334
Less: Comprehensive income attributable to NCI		(17	)		-			(494	)		-
Comprehensive income attributable to FNHC	$	8,966		$	5,959		$	27,787		$	27,334

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5

FEDERATED NATIONAL HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
	2015			2014
	(Dollars in Thousands)
Cash flow from operating activities:
Income before non-controlling interest	$	31,228		$	27,204
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of investment premium or discount, net		3,795			2,909
Depreciation and amortization of property plant and equipment, net		495			334
Net realized investment gains		(3,743	)		(4,047	)
Non-cash compensation		2,903			72
Changes in operating assets and liabilities:
Premiums receivable, net		(7,653	)		(5,698	)
Prepaid reinsurance premiums		(40,967	)		(31,610	)
Reinsurance recoverable, net		4,186			(6,494	)
Income taxes recoverable		(3,953	)		(2,130	)
Deferred income tax expense, net of other comprehensive income		5,277			2,741
Policy acquisition costs, net of amortization		88			5,728
Other assets		(3,742	)		(1,941	)
Contingent quota-share profit sharing		3,500			(1,750	)
Unpaid losses and LAE		13,343			12,093
Unearned premiums		57,973			58,295
Cash received from other entitie’s debt instrument		5,000			-
Premium deposits and customer credit balances		3,884			3,261
Income taxes payable		-			(2,379	)
Claims payments outstanding		3,120			979
Accounts payable and accrued expenses		5,480			1,158
Net cash provided by operating activities		80,214			58,725
Cash flow used by investing activities:
Proceeds from sale of investment securities		134,918			65,869
Purchases of investment securities available for sale		(195,278	)		(162,864	)
Purchases of property and equipment		(1,500	)		(1,074	)
Net cash used by investing activities		(61,860	)		(98,069	)
Cash flow provided by financing activities:
Exercised stock options	$	130		$	1,433
Dividends paid		(1,847	)		(1,038	)
Non-controlling interest investment in affiliate		18,498			-
Issuance of common stock		-			43,116
Tax benefit related to non-cash compensation		869			313
Net cash provided by financing activities		17,650			43,824
Net increase in cash and short term investments		36,004			4,480
Cash and short term investments at beginning of period		40,157			41,446
Cash and short term investments at end of period	$	76,161		$	45,926

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6

FEDERATED NATIONAL HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
(continued)	2015		2014
	(Dollars in Thousands)
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes	$	15,662	$	18,185
Non-cash investing and finance activities:
Accrued dividends payable	$	712	$	350

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1) Organization and Business

In this Quarterly Report on Form 10-Q, “FNHC” and the terms “Company”, “we”, “us” and “our” refer to Federated National Holding Company and its subsidiaries, unless the context indicates otherwise.

FNHC is an insurance holding company that controls substantially all steps in the insurance underwriting, distribution and claims processes through our subsidiaries and our contractual relationships with our independent agents and general agents.

We are authorized to underwrite, and/or place through our wholly owned subsidiaries, homeowners’ multi-peril (“homeowners”), commercial general liability, federal flood, personal auto and various other lines of insurance in Florida and various other states. We market and distribute our own and third-party insurers’ products and our other services through a network of independent agents.

Our wholly owned insurance subsidiary is Federated National Insurance Company (“FNIC”) and is licensed as an admitted carrier in Florida. An admitted carrier is an insurance company that has received a license from the state department of insurance giving the company the authority to write specific lines of insurance in that state. These companies are also bound by rate and form regulations, and are strictly regulated to protect policyholders from a variety of illegal and unethical practices, including fraud. Admitted carriers are also required to financially contribute to the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due their policyholders. Through contractual relationships with a network of approximately 3,900 independent agents, of which approximately 2,500 actively sell and service our products. FNIC operates in several states authorized to write various lines of business.

The table below reflects the states and lines of business that FNIC operates in as of September 30, 2015.

	Fire		Allied Lines	Private Passenger Automobile	Homeowners' Multiperil	Commercial General Liability
Florida (Domestic)	a		a	a	a	a
Alabama	d		d	d	a	c
Georgia	-		-	a	-	c
Louisiana	-		-	-	a	c
South Carolina	-		-	-	b	-
Texas	-		-	a	b	c
	a	Ongoing operations for more than one year
	b	Ongoing operations for less than one year
	c	Working with state to discontinue line of authority
	d	Licensed, but no current operations

Non-Florida commercial general liability operations have not been material to the Company’s overall operations. Although FNIC has underwritten commercial general liability insurance in those states, the Company has decided to wind-down its commercial general liability operations in Alabama, Georgia, Louisiana and Texas, resulting in no new premium for this particular line of business. FNIC continues to underwrite commercial general liability operations in Florida.

FNIC is licensed as a non-admitted carrier in Missouri and Nevada and can underwrite commercial general liability insurance in these states. Currently, we do not have any operations in these states. A non-admitted carrier, sometimes referred to as an “excess and surplus lines” carrier, is permitted to do business in a state and, although it is strictly regulated to protect policyholders from a variety of illegal and unethical practices, including fraud, non-admitted carriers are subject to considerably less regulation with respect to policy rates and forms. Non-admitted carriers are not required to financially contribute to and benefit from the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due their policyholders.

- 8 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company has entered into a joint venture to organize Monarch National Insurance Company (“MNIC”), which received its certificate of authority to write homeowners’ property and casualty insurance in Florida from the Florida Office of Insurance Regulation (the “Florida OIR”) on March 19, 2015.  The Company’s joint venture partners are a majority-owned limited partnership of Crosswinds Holdings Inc., f/k/a C.A. Bancorp Inc., a publicly traded Canadian private equity firm and asset manager (“Crosswinds”); and Transatlantic Reinsurance Company (“TransRe”).

The Company and Crosswinds have each invested $14.0 million in Monarch Delaware Holdings LLC (“Monarch Delaware”), the indirect parent company of MNIC, for a 42.4% interest in Monarch Delaware (each holding 50% of the voting interests in Monarch Delaware).  TransRe has invested $5.0 million for a 15.2% non-voting interest in Monarch Delaware and has advanced an additional $5.0 million in debt evidenced by a six-year promissory note bearing 6% annual interest payable by Monarch National Holding Company (“MNHC”), a wholly owned subsidiary of Monarch Delaware and the direct parent company of MNIC.

In connection with the organization of MNIC, the parties entered into a Managing General Agent and Claims Administration Agreement (the “Monarch MGA Agreement”) dated March 17, 2015, with FedNat Underwriters, Inc. (“FNU”), a wholly owned subsidiary of the Company, pursuant to which FNU provides underwriting, accounting, reinsurance placement and claims administration services to Monarch.  For its services under the Monarch MGA Agreement, FNU will receive 4% of MNIC’s total written annual premium, excluding acquisition expenses payable to agents, for FNU’s managing general agent services; 3.6% of MNIC’s total earned annual premium for FNU’s claims administration services; and a per-policy administrative fee of $25 for each policy underwritten for MNIC.  The Company will also receive an annual expense reimbursement for accounting and related services.

On October 20, 2015, the Florida OIR approved the filing made by FNIC to comply with the cease and desist order dated May 19, 2015 to enable the Florida OIR to review and approve FNIC’s analytic models.  On October 21, 2015, the Florida OIR rescinded the cease and desist order based upon its approval of the Company’s filing.

Pending approval of its underwriting analytics, FNIC used its current filed and approved rule-based underwriting to manage all new and existing business since early June 2015.  Prior to this change, the average weekly new premium written was approximately $3.3 million.  Since discontinuing the use of the underwriting analytics, the average weekly new premium written during the next seven weeks increased to $4.9 million, a 48% increase. Since that peak, the average written premium returned to an anticipated $3.3 million level.  The Company does not believe that the additional written premium will have a material impact on the Company’s results of operations.

We previously entered into a Coexistence Agreement effective August 30, 2013 (the “Coexistence Agreement”) with Federated Mutual Insurance Company (“Federated Mutual”) pursuant to which, among other things, we may continue to use “Federated” until at least August 30, 2020, after which time we have agreed to either cease using “Federated” in commerce or otherwise adopt and use trade names that are not confusingly similar to Federated Mutual’s trademarks.  We continue to develop our brand under the “FedNat” name, which is the name by which agents generally know us.

As of September 30, 2014, we had satisfied all applicable conditions of the Consent Order we entered into in January 2011 (the “Consent Order”) with the Florida OIR in connection with the merger of FNIC into American Vehicle Insurance Company (“American Vehicle”). As of the date of this Report, the only operational restriction that remains in effect is a requirement to obtain Florida OIR approval prior to writing commercial multi-peril business or any new commercial property business, including condo associations, under any other line of business for which FNIC is authorized.

During the three months ended September 30, 2015, 91.6%, 2.6%, 3.8% and 2.0% of the premiums we underwrote were for homeowners’, commercial general liability, automobile insurance, and federal flood, respectively. During the three months ended September 30, 2015, $28.6 million or 24.1% of the $118.9 million of the homeowners’ premiums we underwrote were produced under Ivantage Select Agency, Inc. (“ISA”), an affiliate of Allstate Insurance Company, that grants Allstate agents the authority to offer certain FNIC products. The $9.6 million increased homeowners’ premiums we underwrote under ISA represents 27.0% of the $35.6 million increased total homeowners’ premiums we underwrote during the three months ended September 30, 2015. During the three months ended September 30, 2014, $19.0 million or 22.8% of the $83.3 million of the homeowners’ premiums we underwrote were produced under ISA. This network of agents began writing for FNIC in March 2013. During the three months ended September 30, 2014, 90.5%, 3.4%, 2.5% and 3.6% of the premiums we underwrote were for homeowners’, commercial general liability, federal flood, and automobile insurance, respectively.

- 9 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

During the nine months ended September 30, 2015, 92.3%, 3.0%, 2.9% and 1.8% of the premiums we underwrote were for homeowners’, commercial general liability, automobile insurance, and federal flood, respectively. During the nine months ended September 30, 2015, $75.7 million or 22.2% of the $340.2 million of the homeowners’ premiums we underwrote were produced under ISA. The $26.3 million increased homeowners’ premiums we underwrote under ISA represents 31.2% of the $84.3 million increased total homeowners’ premiums we underwrote during the nine months ended September 30, 2015. During the nine months ended September 30, 2014, $49.4 million or 19.3% of the $255.9 million of the homeowners’ premiums we underwrote were produced under ISA. This network of agents began writing for FNIC in March 2013. During the nine months ended September 30, 2014, 91.2%, 3.4%, 2.2% and 3.2% of the premiums we underwrote were for homeowners’, commercial general liability, federal flood, and automobile insurance, respectively.

Our business, results of operations and financial condition are subject to fluctuations due to a variety of factors. Abnormally high severity or frequency of claims in any period could have a material adverse effect on us. When our estimated liabilities for unpaid losses and loss adjustment expenses (“LAE”) are less than the actuarially determined amounts, we increase the expense in the current period. Conversely, when our estimated liabilities for unpaid losses and LAE are greater than the actuarially determined amounts, we decrease the expense in the current period.

We are focusing our marketing efforts on continuing to expand our distribution network while maintaining our commitment to long-term relationships. We market our products and services throughout Florida and in other states by establishing relationships with additional independent agents and general agents. There can be no assurance, however, that we will be able to obtain the required regulatory approvals to offer additional insurance products or expand into other states.

FNU, a wholly owned subsidiary of the Company, acts as FNIC’s and MNIC’s exclusive managing general agent and is also licensed as a managing general agent in the States of  Florida, Alabama, Georgia, Louisiana, Mississippi, Nevada, South Carolina and Texas. FNU is an appointed Lloyds of London coverholder to write homeowners’ multi peril insurance in Florida on an excess and surplus lines basis and has contracted with other unaffiliated insurance companies to sell personal umbrella coverage through FNU’s existing network of agents. Operations for Lloyds of London commenced in the third quarter of this year.

 FNU earns commissions and fees for providing policy administration, marketing, accounting and analytical services, and for participating in the negotiation of reinsurance contracts. FNU earns a per policy fee which ranges from $25 to $55 and a commission fee from its affiliate, FNIC and MNIC, which totaled 4% during the three months ended September 30, 2015. The Florida OIR periodically reviews our managing general agent’s fee structure to ensure that it is neither excessive nor inadequate to operate.

We internally process claims made by our insureds through our wholly owned claims adjusting company, Federated National Adjusting, Inc. (“FNA”). Our agents have no authority to settle claims or otherwise exercise control over the claims process. Furthermore, we believe that the retention of independent adjusters, in addition to the employment of salaried claims personnel, results in reduced ultimate loss payments, lower LAE and improved customer service for our claimants and policyholders. We also employ an in-house litigation management team to cost effectively manage claims-related litigation and to monitor our claims handling practices for efficiency and regulatory compliance.

During 2014, the Florida OIR approved an application to allow the claims administration operations of FNA to be assumed by FNU. Under the amended managing general agency agreement between FNU and FNIC, FNU will provide the same claims administration services. The combination of these services in FNU had no effect on consolidated net income.

- 10 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Insure-Link, Inc. (“Insure-Link”) is our independent insurance agency.The insurance agency markets direct to the public to provide a variety of insurance products and services to individual clients, as well as business clients, by offering a full line of insurance products including, but not limited to,  homeowners’, flood, personal and commercial automobile, commercial general liability, workers’ compensation, boat and recreational vehicle and personal articles and jewelry insurance through their agency appointments with over one hundred different carrier relationships.

(2) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements for the Company and its majority-owned subsidiaries and its consolidated variable interest entity (“VIE”) have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s financial position as of September 30, 2015 and the results of operations and cash flows for the periods presented.

The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2015. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2014 included in the Company’s Form 10-K, which was filed with the SEC on March 16, 2015.

In preparing the interim unaudited condensed consolidated financial statements, management was required to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the financial reporting date and throughout the periods being reported upon. Certain of the estimates result from judgments that can be subjective and complex and consequently actual results may differ from these estimates.

All significant intercompany balances and transactions have been eliminated.

(3) Summary of Significant Accounting Policies and Practices

(A)  Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with management’s evaluation of the determination of (i) liability for unpaid losses and LAE, (ii) the amount and recoverability of amortization of DPAC, and (iii) estimates for our reserves with respect to finance contracts, premiums receivable and deferred income taxes. Various assumptions and other factors underlie the determination of these significant estimates, which are described in greater detail in Footnote 2 of the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2014, which we included in the Company’s Annual Report on Form 10-K which was filed with the SEC on March 16, 2015.

- 11 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

We believe that there were no significant changes in those critical accounting policies and estimates during the nine months ended September 30, 2015. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Form 10-Q with the Audit Committee of our Board of Directors.

The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, and in the case of unpaid losses and LAE, an actuarial valuation. Management regularly reevaluates these significant factors and makes adjustments where facts and circumstances dictate. In selecting the best estimate, we utilize various actuarial methodologies. Each of these methodologies is designed to forecast the number of claims we will be called upon to pay and the amounts we will pay on average to settle those claims. In arriving at our best estimate, our actuaries consider the likely predictive value of the various loss development methodologies employed in light of underwriting practices, premium rate changes and claim settlement practices that may have occurred, and weight the credibility of each methodology. Our actuarial methodologies take into account various factors, including, but not limited to, paid losses, liability estimates for reported losses, paid allocated LAE, salvage and other recoveries received, reported claim counts, open claim counts and counts for claims closed with and without payment for loss.

We are required to review the contractual terms of all our reinsurance purchases to ensure compliance with U.S. GAAP, which establishes the conditions required for a contract with a reinsurer to be accounted for as reinsurance and prescribes accounting and reporting standards for those contracts. Contracts that do not result in the reasonable possibility that the reinsurer may realize a significant loss from the insurance risk assumed generally do not meet the conditions for reinsurance accounting and must be accounted for as deposits. The guidance also requires us to disclose the nature, purpose and effect of reinsurance transactions, including the premium amounts associated with reinsurance assumed and ceded. It also requires disclosure of concentrations of credit risk associated with reinsurance receivables and prepaid reinsurance premiums.

Investments classified as held-to-maturity include debt securities wherein the Company’s intent and ability are to hold the investment until maturity and are carried at amortized cost without consideration to unrealized gains or losses. Investments classified as trading securities include debt and equity securities bought and held primarily for sale in the near term and are carried at fair value with unrealized holding gains and losses included in current period operations. Investments classified as available-for-sale include debt and equity securities that are not classified as held-to-maturity or as trading security investments and are carried at fair value with unrealized holding gains and losses excluded from earnings and reported as a separate component of shareholders’ equity, namely “Other Comprehensive Income”.

A decline in the fair value of an available-for-sale security below cost that is deemed other-than-temporary results in a charge to income, resulting in the establishment of a new cost basis for the security. Premiums and discounts are amortized or accreted, respectively, over the life of the related debt security as an adjustment to yield using a method that approximates the effective interest method. Dividends and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific-identification method for determining the cost of securities sold.

- 12 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Financial instruments, which potentially expose us to concentrations of credit risk, consist primarily of investments, premiums receivable, amounts due from reinsurers on paid and unpaid losses and finance contracts. We have not experienced significant losses related to premiums receivable from individual policyholders or groups of policyholders in a particular industry or geographic area. We believe no credit risk beyond the amounts provided for collection losses is inherent in our premiums receivable or finance contracts. In order to reduce credit risk for amounts due from reinsurers, we seek to do business with financially sound reinsurance companies and regularly review the financial strength of all reinsurers used. Additionally, our credit risk in connection with our reinsurers is frequently mitigated by the establishment of irrevocable clean letters of credit in favor of FNIC.

The fair value of our investments is estimated based on prices published by financial services or quotations received from securities dealers and is reflective of the interest rate environment that existed as of the close of business on September 30, 2015 and December 31, 2014. Changes in interest rates subsequent to September 30, 2015 and December 31, 2014 may affect the fair value of our investments.

The carrying amounts for the following financial instrument categories approximate their fair values at September 30, 2015 and December 31, 2014 because of their short-term nature: cash and short-term investments, premiums receivable, finance contracts, due from reinsurers, revolving credit outstanding, claims payments outstanding, accounts payable and accrued expenses.

(B) Impact of New Accounting Pronouncements

In May 2015, the FASB issued Accounting Standard Update (“ASU”) 2015-09, Financial Services – Insurance (Topic 944): Disclosures about Short-Duration-Contracts. The amendments in this ASU apply to all insurance entities that issue short-duration contracts as defined in Topic 944, Financial Services—Insurance. The amendments require insurance entities to disclose for annual reporting periods the following information about the liability for unpaid claims and claim adjustment expenses: (1) Incurred and paid claims development information by accident year, on a net basis after risk mitigation through reinsurance, for the number of years for which claims incurred typically remain outstanding (that need not exceed 10 years, including the most recent reporting period presented in the statement of financial position). Each period presented in the disclosure about claims development that precedes the current reporting period is considered to be supplementary information. (2) A reconciliation of incurred and paid claims development information to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, with separate disclosure of reinsurance recoverable on unpaid claims for each period presented in the statement of financial position. (3) For each accident year presented of incurred claims development information, the total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses, accompanied by a description of reserving methodologies (as well as any changes to those methodologies). (4) For each accident year presented of incurred claims development information, quantitative information about claim frequency (unless it is impracticable to do so) accompanied by a qualitative description of methodologies used for determining claim frequency information (as well as any changes to these methodologies). (5) For all claims except health insurance claims, the average annual percentage payout of incurred claims by age (that is, history of claims duration) for the same number of accident years as presented in (3) and (4) above. The amendments in this ASU are effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. Because the new guidance does not affect the existing recognition or measurement guidance, the adoption is not expected to have any effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and significantly changes the consolidation analysis required. The amendments in this ASU affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (i) modify the evaluation of whether limited partnership and similar legal entities are VIEs ,(ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (iv) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and, earlier adoption is permitted. The adoption of the amendments in this ASU will not have a material impact on our financial position, results of operations or cash flows.

- 13 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Other recent accounting pronouncements issued by FASB, the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

(C) Stock Options

Pursuant to FASB issued guidance, compensation cost recognized during the nine months ended September 30, 2015 includes compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the guidance.

(D) Earnings per Share

Basic earnings per share (“Basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period presented. Diluted earnings per share (“Diluted EPS”) is computed by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period presented.

(E) Adjustments

In conjunction with our third quarter 2015 analysis of actual experience to date under the July 1, 2014 quota share reinsurance contract, we re-evaluated the accounting treatment for quota share reinsurance contracts with retrospective rating provisions.  As a result of this re-evaluation, we have concluded reinsurance contracts which have retrospective rating provisions should be accounted for under Accounting Standards Codification 944, Financial Services — Insurance (“ASC 944”), where amounts due to (from) the assuming companies are accrued based on estimated contract experience to date as though the contracts were terminated.  The adjustment to the accounting treatment related to reinsurance contracts with retrospective rated provisions resulted in the following changes:

(a) We eliminated recording of future estimated quota share profits in one line item, “Quota Share Profit Sharing,” in the financial statements.

(b) Amounts due to (from) the assuming companies have been accrued based on actual contract experience to date as though the contracts were terminated.  These accruals impacted the following income statement line items: gross ceded premiums, loss and loss adjustment expenses, and deferred policy acquisition costs.

The adjustments to our accounting for the July 1, 2014 quota share reinsurance treaty, inclusive of other adjustments, are not material in any prior quarter or annual period based on an analysis of quantitative and qualitative factors in accordance with SEC Guidance.

As a result, we recorded these adjustments during the third quarter of 2015.  These adjustments increased net income by $2.2 million for the three and nine month periods ended on September 30, 2015.

Additionally, the quota share reinsurance accounting adjustments impacted the following income statement line items for the three and nine month periods ended on September 30, 2015:

· Gross ceded premiums decreased by $10.9 million,

- 14 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

· Loss and loss adjustment expenses increased by $4.5 million, and

· Deferred acquisition costs increased by $1.5 million.

Finally, the quota share reinsurance accounting adjustments impacted the following balance sheet line items for the three and nine months periods ended on September 30, 2015:

· Prepaid reinsurance premiums increased by $10.9 million,

· Reinsurance recoverable, net decreased by $4.5 million, and

· Deferred policy acquisition costs decreased by $1.5 million.

· The $14 million balance previously reported under Contingent quota-share profit sharing has been reclassed to the prepaid reinsurance premiums line item

· The $7 million balance previously reported under Deferred quota-share profit sharing has been reclassed to the reinsurance recoverable, net line item

(4) Commitments and Contingencies

Management has a responsibility to continually measure and monitor its commitments and its contingencies. The nature of the Company’s commitments and contingencies can be grouped into three major categories: insured claim activity, assessment related activities and operational matters.

(A) Insured Claim Activity

We are involved in claims and legal actions arising in the ordinary course of business. The amount of liability for these claims and lawsuits is uncertain. Revisions to our estimates are based on our analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) legislative enactments, judicial decisions, legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation. Management revises its estimates based on the results of its analysis. This process assumes that experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for estimating the ultimate settlement of all claims. There is no precise method for subsequently evaluating the impact of any specific factor on the adequacy of the reserves, because the eventual redundancy or deficiency is affected by multiple factors. In the opinion of management, the ultimate disposition of these matters may have a material adverse effect on our consolidated financial position, results of operations, or liquidity.

The Company’s subsidiaries are, from time to time, named as defendants in various lawsuits incidental to their insurance operations. Legal actions relating to claims made in the ordinary course of seeking indemnification for a loss covered by the insurance policy are considered by the Company in establishing loss and LAE reserves.

The Company also faces, in the ordinary course of business, lawsuits that seek damages beyond policy limits. The Company continually evaluates potential liabilities and reserves for litigation of these types. Reserves for a loss are recorded if the likelihood of occurrence is probable and the amount can be reasonably estimated. If a loss, while not probable, is judged to be reasonably possible, management will make an estimate of a possible range of loss or state that an estimate cannot be made. Management considers each legal action using this guidance and records reserves for losses as warranted.

(B) Assessment Related Activity

We operate in a regulatory environment where certain entities and organizations have the authority to require us to participate in assessments. Currently these entities and organizations include, but are not limited to, Florida Insurance Guaranty Association (“FIGA”), Citizens Property Insurance Corporation (“Citizens”), Florida Hurricane Catastrophe Fund (“FHCF”) and Florida Joint Underwriters Insurance Association (“JUA”). As a direct premium writer in the state of Florida, we are required to participate in certain insurer solvency associations under Florida Statutes Section 631.57(3) (a), administered by FIGA.

- 15 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

FNIC is also required to participate in an insurance apportionment plan under Florida Statutes Section 627.351, which is referred to as a JUA Plan. The JUA Plan provides for the equitable apportionment of any profits realized, or losses and expenses incurred, among participating automobile insurers. In the event of an underwriting deficit incurred by the JUA Plan which is not recovered through the policyholders in the JUA Plan, such deficit shall be recovered from the companies participating in the JUA Plan in the proportion that the net direct written premiums of each such member during the preceding calendar year bear to the aggregate net direct premiums written in this state by all members of the JUA Plan. FNIC was not assessed by the JUA Plan during 2015 or 2014. Future assessments by this association are undeterminable at this time.

(C) Operational Matters

The Company files federal income tax returns as well as multiple state and local tax returns.The Company’s consolidated federal and state income tax returns for 2012 - 2014 are open for review by the Internal Revenue Service (“IRS”) and the various state taxing authorities. The Company’s 2011 federal tax return was reviewed by the IRS and a “no change” report was issued indicating that the IRS is in agreement with the tax positions presented on the 2011 return. The 2014 federal and state income tax returns were timely filed by the extended filing deadline of September 15, 2015.The Company does not have any known uncertain tax positions and all tax positions are evaluated in accordance with FIN 48. Any change to or resolution of tax reserves could be material to the Company’s results of operations for any period, but is not expected to be material to the Company’s financial position.

The Company has recorded a net deferred tax liability of $4.8 million as of September 30, 2015 compared with $1.3 million as of December 31, 2014.

The calculation of current and deferred income taxes presents management’s assessment of the amount of current and future taxes to be paid. The calculation of deferred tax assets and liabilities is in accordance with ASC 740. These assets and liabilities may be impacted if new information not previously available is considered in future analysis and calculations. Because of the unpredictability and complexity of these future uncertainties the ultimate resolution of the tax payment may be an amount that is materially different from the current estimate of the tax liabilities. As of September 30, 2015 the Company has recorded a net deferred taxliability of $4.8million. The primary reason for the change in deferred tax liabilities include the tax impact of the appreciation in the market value of the available-for-sale securities.  Any change in circumstances leading to a change in the tax liability would be recorded in the period that the change in circumstances occurs.

- 16 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company is not currently involved in any material legal actions arising from the ordinary course of business that are not related to the insured claims activity.

(5) Variable Interest Entity

Our consolidated financial statements include Monarch Delaware because we have determined Monarch Delaware is a VIE, we have a variable interest in Monarch Delaware and we are the primary beneficiary. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. The primary beneficiary of a VIE is defined as the enterprise with (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. On an ongoing basis, we assess whether we are the primary beneficiary of VIEs in which we have a relationship.

The carrying amount of our VIE consolidated assets and liabilities are as follows.

	September 30, 2015			December 31, 2014
ASSETS	(Dollars in Thousands)
Investments
Debt maturities, held to maturity, at amortized cost	$	21,877		$	-
Equity securities, available for sale, at fair value		1,350			-
Total investments		23,227			-
Cash and short term investments		13,492			-
Premiums receivable, net		326			-
Deferred policy acquisition costs		168			-
Deferred income taxes, net		665			-
Other assets		178			-
Total assets	$	38,056		$	-
LIABILITIES AND SHAREHOLDERS' EQUITY
Unpaid losses and LAE	$	112		$	-
Unearned premiums		1,072			-
Income taxes payable		110			-
Accounts payable and accrued expenses		249			-
Debt		5,000			-
Total liabilities	$	6,543		$	-
Shareholders' equity:
Common stock, $0.01 par value. Issued and outstanding 100 shares		-			-
Additional paid-in capital		32,413			-
Accumulated other comprehensive income
Unrealized net gains on investments, available for sale		(234	)		-
Total accumulated other comprehensive income		(234	)		-
Retained earnings		(666	)		-
Total shareholders' equity		31,513			-
Total liabilities and shareholders' equity	$	38,056		$	-

- 17 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(6) Investments

We account for our investment securities consistent with FASB issued guidance that requires our securities to be classified into one of three categories: (i) held-to-maturity, (ii) trading securities or (iii) available-for-sale.

Investments classified as held-to-maturity include debt securities wherein the Company’s intent and ability are to hold the investment until maturity and are carried at amortized cost without consideration to unrealized gains or losses. Investments classified as trading securities include debt and equity securities bought and held primarily for sale in the near term and are carried at fair value with unrealized holding gains and losses included in current period operations. Investments classified as available-for-sale include debt and equity securities that are not classified as held-to-maturity or as trading security investments and are carried at fair value with unrealized holding gains and losses excluded from earnings and reported as a separate component of shareholders’ equity, namely “Other Comprehensive Income”.

The following table summarizes, by type, our investments as of September 30, 2015 and December 31, 2014.

	September 30, 2015					December 31, 2014
	Carrying Amount		Percent of Total			Carrying Amount		Percent of Total
	(Dollars in Thousands)
Debt securities, at fair value:
United States government obligations and authorities	$	65,994		17.08	%	$	62,323		18.84	%
Obligations of states and political subdivisions		108,597		28.11	%		91,614		27.70	%
Corporate		155,324		40.20	%		119,024		35.99	%
International		12,000		3.11	%		11,138		3.37	%
		341,915		88.50	%		284,099		85.90	%
Debt securities, at amortized cost:
United States government obligations and authorities		4,221		1.09	%		4,490		1.36	%
Corporate		2,101		0.54	%		2,681		0.81	%
International		65		0.02	%		246		0.07	%
		6,387		1.65	%		7,417		2.24	%
Total debt securities		348,302		90.15	%		291,516		88.14	%
Equity securities, at fair value:		38,086		9.85	%		39,247		11.86	%
Total investments	$	386,388		100.00	%	$	330,763		100.00	%

- 18 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table shows the realized gains (losses) for debt and equity securities for the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015					2014
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
	(Dollars in Thousands)
Debt securities	$	226		$	21,843	$	241		$	16,413
Equity securities		1,847			4,226		453			1,642
Total realized gains		2,073			26,069		694			18,055
Debt securities		(178	)		9,744		(20	)		1,627
Equity securities		(769	)		3,306		(15	)		118
Total realized losses		(947	)		13,050		(35	)		1,745
Net realized gains on investments	$	1,126		$	39,119	$	659		$	19,800

Net realized investment gains totaled $1.1 million for the three months endedSeptember 30, 2015, compared with $0.7 million during the three months ended September 30, 2014.From time to time, our asset managers, at their discretion, make periodic sales from the portfolio and during the three months ended September 30, 2015, the majority of the realized gains were from equity sales.   

Total investments increased $55.6 million, or 16.8%, to $386.4 million as of September 30, 2015, compared with $330.8 million as of December 31, 2014.

The debt and equity securities that are available-for-sale and carried at fair value represent 98% of total investments as of September 30, 2015 and December 31, 2014.

We did not hold any trading investment securities during the nine months ended September 30, 2015.

The Company’s policy for the valuation of temporarily impaired securities is to determine impairment based on the analysis of the following factors.

· rating downgrade or other credit event (eg., failure to pay interest when due);

· length of time and the extent to which the fair value has been less than amortized cost;

· financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology or discontinuance of a business segment;

· prospects for the issuer’s industry segment;

· intent and ability of the Company to retain the investment for a period of time sufficient to allow for anticipated recovery in market value;

· historical volatility of the fair value of the security;

· intent to sale the security.

· Whether it is more likely than not that there would be a requirement to sell the security before its anticipated recovery.

- 19 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

During the nine months ended September 30, 2015, we have charged to operations, realized investment losses of less than $0.1 million. The charges relate to common stock held in diverse industries. During the nine months ended September 30, 2014, in connection with the process, we have not charged operations with investment losses.

As of September 30, 2015 and December 31, 2014, respectively, all of our securities are in good standing and not impaired as defined by FASB issued guidance except as noted above.

As of September 30, 2015 and December 31, 2014, our investments consisted primarily of corporate bonds held in various industries, municipal bonds and United States government bonds. As of September 30, 2015, 80% of our debt portfolio was in diverse industries and 20% was in United States government bonds. As of September 30, 2015, approximately 86% of our equity holdings were in equities related to diverse industries and 14% were in mutual funds. As of December 31, 2014, 77% of our debt portfolio was in diverse industries and 23% is in United States government bonds. As of December 31, 2014, approximately 88% of our equity holdings were in equities related to diverse industries and 12% were in mutual funds.

As of September 30, 2015 and December 31, 2014, we have classified $6.4 million and $7.4 million, respectively, of our bond portfolio as held-to-maturity. We classify bonds as held-to-maturity to support securitization of credit requirements.

The following table shows the realized gains (losses) for debt and equity securities for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015					2014
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
	(Dollars in Thousands)
Debt securities	$	973		$	71,869	$	533		$	38,657
Equity securities		4,189			9,985		4,013			12,595
Total realized gains		5,162			81,854		4,546			51,252
Debt securities		(504	)		39,926		(118	)		8,333
Equity securities		(915	)		3,959		(381	)		1,639
Total realized losses		(1,419	)		43,885		(499	)		9,972
Net realized gains on investments	$	3,743		$	125,739	$	4,047		$	61,224

Net realized investment gains totaled $3.7 million for the nine months ended September 30, 2015,compared with $4.0 million during the nine months ended September 30, 2014. During the nine months ended September 30, 2015, the investment committee decided to increase the fixed income asset allocation by directing new invested dollars and reducing our exposure to equities.

- 20 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

A summary of the amortized cost, estimated fair value and gross unrealized gains and losses of debt and equity securities at September 30, 2015 and December 31, 2014 is as follows.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(Dollars in Thousands)
September 30, 2015
Debt Securities - Available-For-Sale:
United States government obligations and authorities	$	64,876	$	1,233	$	115	$	65,994
Obligations of states and political subdivisions		107,211		1,428		42		108,597
Corporate		154,469		1,625		770		155,324
International		12,104		55		159		12,000
	$	338,660	$	4,341	$	1,086	$	341,915
Debt Securities - Held-To-Maturity:
United States government obligations and authorities	$	4,221	$	51	$	184	$	4,088
Corporate		2,101		25		6		2,120
International		65		-		-		65
	$	6,387	$	76	$	190	$	6,273
Equity securities - common stocks	$	33,605	$	6,391	$	1,910	$	38,086
December 31, 2014
Debt Securities - Available-For-Sale:
United States government obligations and authorities	$	61,376	$	1,022	$	75	$	62,323
Obligations of states and political subdivisions		90,728		956		70		91,614
Corporate		117,778		1,578		332		119,024
International		11,139		53		54		11,138
	$	281,021	$	3,609	$	531	$	284,099
Debt Securities - Held-To-Maturity:
United States government obligations and authorities	$	4,490	$	41	$	225	$	4,306
Corporate		2,681		31		5		2,707
International		246		1		1		246
	$	7,417	$	73	$	231	$	7,259
Equity securities - common stocks	$	29,908	$	9,836	$	497	$	39,247

- 21 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The table below reflects our unrealized investment losses by investment class, aged for length of time in a continuous unrealized loss position as of September 30, 2015.

	Unrealized Losses		Less than 12 months		12 months or longer
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	115	$	95	$	20
Obligations of states and political subdivisions		42		42		-
Corporate		770		740		30
International		159		159		-
		1,086		1,036		50
Equity securities:
Common stocks		1,910		1,881		29
Total debt and equity securities	$	2,996	$	2,917	$	79

The table below reflects our unrealized investment losses by investment class, aged for length of time in a continuous unrealized loss position as of December 31, 2014.

	Unrealized Losses		Less than 12 months		12 months or longer
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	75	$	22	$	53
Obligations of states and political subdivisions		70		66		4
Corporate		332		260		72
International		54		54		-
		531		402		129
Equity securities:
Common stocks		497		461		36
Total debt and equity securities	$	1,028	$	863	$	165

Below is a summary of debt securities at September 30, 2015 and December 31, 2014, by contractual or expected maturity periods. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2015				December 31, 2014
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due in one year or less	$	19,635	$	19,659	$	16,777	$	16,797
Due after one through five years		188,397		190,047		173,236		174,273
Due after five through ten years		136,989		138,449		98,404		100,259
Due after ten years		26		33		26		33
Total	$	345,047	$	348,188	$	288,443	$	291,362

- 22 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

United States Treasury notes with a book value of$60,674 and $2,204,798, maturing in 2016 and 2022, and a statutory deposit held in trust with a book value of $0.3 million, were on deposit with the Florida OIR as of September 30, 2015, as required by law for FNIC and MNIC, respectively, and are included with other investments held until maturity.

United States Treasury notes with a book value of $61,465 and $2,208,588, maturing in 2016 and 2022, respectively, were on deposit with the Florida OIR as of December 31, 2014, as required by law for FNIC, and are included with other investments held until maturity.

The table below sets forth investment results for the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Interest on debt securities	$	1,755	$	1,328
Dividends on equity securities		147		121
Interest on cash and cash equivalents		5		1
Total investment income	$	1,907	$	1,450

Proceeds from sales, pay downs and maturities of debt securities and proceeds from sales of equity securities during the three months ended September 30, 2015 and 2014, were approximately $42.5 million and $21.8 million, respectively.

The table below sets forth investment results for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Interest on debt securities	$	4,713	$	3,432
Dividends on equity securities		381		324
Interest on cash and cash equivalents		60		2
Total investment income	$	5,154	$	3,758

Proceeds from sales, pay downs and maturities of debt securities and proceeds from sales of equity securities during the nine months ended September 30, 2015 and 2014, were approximately $134.9 million and $65.9 million, respectively.

The table below sets forth a summary of net realized investment gains during the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Net realized gains
Debt securities	$	48	$	221
Equity securities		1,078		438
Total	$	1,126	$	659

- 23 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The table below sets forth a summary of net realized investment gains during the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Net realized gains
Debt securities	$	469	$	415
Equity securities		3,274		3,632
Total	$	3,743	$	4,047

The table below sets forth a summary of net unrealized investment gains as of September 30, 2015 and December 31, 2014.

	Unrealized Gains
	September 30, 2015		December 31, 2014
	(Dollars in Thousands)
Net unrealized gains
Debt securities	$	3,255	$	3,078
Equity securities		4,481		9,339
Total	$	7,736	$	12,417

(7) Fair Value Disclosure

Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs are based on market data from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. All assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price for an identical asset or liability in an active market provides the most reliable fair value measurement because it is directly observable to the market.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs are observable for an asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Securities available-for-sale: The fair value of securities available-for-sale is determined by obtaining quoted prices on nationally recognized security exchanges.

- 24 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Assets measured at fair value on a recurring basis as of September 30, 2015, presented in accordance with this guidance, are as follows.

	As of September 30, 2015
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	40,833	$	25,161	$	-	$	65,994
Obligations of states and political subdivisions		-		108,597		-		108,597
Corporate		-		155,324		-		155,324
International		-		12,000		-		12,000
		40,833		301,082		-		341,915
Equity securities:
Common stocks		38,086		-		-		38,086
		38,086		-		-		38,086
Total debt and equity securities	$	78,919	$	301,082	$	-	$	380,001

Assets measured at fair value on a recurring basis as of December 31, 2014, presented in accordance with this guidance, are as follows.

	As of December 31, 2014
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	46,002	$	16,321	$	-	$	62,323
Obligations of states and political subdivisions		-		91,614		-		91,614
Corporate		-		119,024		-		119,024
International		-		11,138		-		11,138
		46,002		238,097		-		284,099
Equity securities:
Common stocks		39,247		-		-		39,247
		39,247		-		-		39,247
Total debt and equity securities	$	85,249	$	238,097	$	-	$	323,346

(8) Reinsurance Agreements

Financing risk generally involves a combination of risk retention and risk transfer techniques. “Retention”, similar to a deductible, involves financing losses by funds internally generated. “Transfer” involves the existence of a contractual arrangement designed to shift financial responsibility to another party in exchange for premium. Secondary to the primary risk-transfer agreements, we use reinsurance agreements to transfer a portion of the risks insured under our policies to other companies through the purchase of reinsurance. We utilize reinsurance to reduce exposure to catastrophic and non-catastrophic risks and to help manage the cost of capital. Reinsurance techniques are designed to lessen earnings volatility, improve shareholder return, and to support the required statutory surplus requirements. We also use reinsurance to realize an arbitrage of premium rates, benefit from the availability of our reinsurers’ expertise, and benefit from the management of a profitable portfolio of insureds by way of enhanced analytical capacities. Our primary property line that is subject to catastrophic reinsurance is Homeowners’ Multiple Peril. FNIC cedes these risks to domestic and foreign reinsurance participants around the world as well as to the FHCF.

- 25 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Quota share reinsurance is a pro rata agreement among the primary insurer and one or more reinsurers where each party shares a fixed and predetermined percentage of the program’s premiums and losses. Excess of loss risk transfer agreements involve the transfer of premium in exchange for reimbursement for claims, if they occur, as a result of specific events such as severe catastrophic weather. For quota share and excess of loss reinsurance, coverage is generally afforded based on meeting predetermined risk characteristics. In contrast, facultative reinsurance is negotiated between the primary insurer and the reinsurer(s) on a case-by-case basis with no obligation on either part to cede or assume share of the risk.

Generally, there are three separate kinds of reinsurance structures – quota share, excess of loss, and facultative, each considered either proportional or non-proportional. Our reinsurance structures are maintained to protect our insurance subsidiary against the severity of losses on individual claims or unusually serious occurrences in which the frequency and or the severity of claims produce an aggregate extraordinary loss from catastrophic events. In addition to reinsurance agreements, we also from time to time enter into retro-cessionary reinsurance agreements; each designed to shift financial responsibility based on predefined conditions.

Although reinsurance does not discharge us from our primary obligation to pay for losses insured under the policies we issue, reinsurance does make the assuming reinsurer liable to the insurance subsidiary for the reinsured portion of the risk. A credit risk exposure exists with respect to ceded losses to the extent that any reinsurer is unable or unwilling to meet the obligations assumed under the reinsurance contracts. The collectability of reinsurance is subject to the solvency of the reinsurers, interpretation of contract language and other factors. A reinsurer's insolvency or inability to make payments under the terms of a reinsurance contract could have a material adverse effect on our results of operations and financial condition. Our reinsurance structure has significant risks, including the fact that the FHCF may not be able to raise sufficient money to pay its claims or impair its ability to pay its claims in a timely manner. This could result in significant financial, legal and operational challenges to all property and casualty companies associated with FHCF, including our company.

The availability and costs associated with the acquisition of reinsurance will vary year to year. These fluctuations, which can be significant, are not subject to our control and may limit our ability to purchase adequate coverage. For example, FHCF continues to restrict its reinsurance capacity and is expected to continue constricting capacity for future seasons. This gradual restriction is requiring us to replace that capacity with private market reinsurance. Our reinsurance program is subject to approval by the Florida OIR and review by Demotech, Inc. (“Demotech”). The recovery of increased reinsurance costs through rate action is not immediate and cannot be presumed and is subject to Florida OIR approval.

For the 2015–2016 hurricane season, the excess of loss and FHCF treaties insured the property lines for approximately $1.82 billion of aggregate catastrophic losses and LAE with a maximum single event coverage totaling approximately $1.26 billion, with the Company retaining the first $12.9 million in Florida and $5.0 million in Louisiana, Alabama and South Carolina for losses and LAE from each event. The reinstatement treaty will provide for 50% of the covered losses between $15.0 million and $100 million. The Company retains 10% or up to $2.5 million of a covered loss in excess of $21.5 million resulting in the Company’s maximum retention of $15.4 million for losses incurred both in and out of Florida. Florida risks represent 95.5%, or $1.74 billion of the $1.82 billion of total aggregate catastrophic losses and LAE.

The reinsurance program includes coverage purchased from the private market, which is prepaid and affords reinstatement premium protection that provides coverage beyond the first event, along with any remaining coverage from the FHCF. The FHCF only affords coverage for losses sustained in Florida. Coverage afforded by the FHCF totals approximately $581.2 million, or 33.4% of Florida’s $1.74 billion of aggregate catastrophic losses and LAE. The FHCF affords coverage for the entire season, subject to maximum payouts, without regard to any particular insurable event.

- 26 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The estimated cost to the Company for the excess of loss reinsurance products for the 2015–2016 hurricane season, inclusive of approximately $44.83 million payable to the FHCF and the prepaid automatic premium reinstatement protection, is approximately $149.37 million.

Included in this year’s program are two quota share treaties that are similar in terms; one for 30% entered into in 2014, and one for 10% which became effective July 1, 2015. This is the second year of a two-year term for the 30% quota share treaty and the first year of a two-year term for the new 10% quota share treaty. For the 2015 – 2016 Catastrophic wind season only, both treaties combined provide a 40% quota share reinsurance treaty on the first $100 million of covered losses for the Company’s in-force new and renewal homeowners’ insurance program in the State of Florida.

The original two-year quota share reinsurance treaty provides 30% of $200 million of aggregate catastrophe coverage per year with maximum single event coverage of 30% of $100 million per year. The new two-year quota share reinsurance treaty provides 10% of $200 million of aggregate catastrophe coverage per year with maximum single event coverage of 10% of $100 million per year. The projected cost of the quota share treaties are $8.5 million for the 30% treaty and $2.8 million for the 10% treaty, both of which are included in the $149.4 million amount referenced above.

- 27 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The 2015-2016 private reinsurance companies and their respective A.M. Best Company (“A.M. Best”) and S&P ratings are listed in the table as follows.

Reinsurer	A.M. Best Rating			S&P Rating
UNITED STATES
American Agricultural Insurance Company		A-			NR
American Standard Insurance Company of Wisconsin		A			NR
Everest Reinsurance Company		A+			A+
Odyssey Reinsurance Company		A			A-
Partner Reinsurance Company of the US		A+			A+
QBE Reinsurance Corporation		A			A+
RLI Insurance Company		A+			A+
Transatlantic Reinsurance Company		A			A+
BERMUDA
ACE Tempest Reinsurance Ltd.		A++			AA
Allianz Risk Transfer AG, Bermuda Branch (obo Nephila)		A+			AA-
Allied World Assurance Company, Limited		A			A
Arch Reinsurance Limited		A+			A+
Argo Re Ltd		A			NR
Ariel Reinsurance Bermuda Ltd for and on Behalf of Ariel Syndicate 1910 (ARE)		A-			A+
Ascot Underwriting (Bermuda) Limited/AIG per AIRCO agreement		A			NR
Aspen Bermuda Limited		A			A
AXIS Specialty Limited		A+			A+
BGS Services (Bermuda) Limited/Lloyds Syndicate 2987		A			A+
Collateralised Re Ltd - LGT Capital		NR	*	**	NR
DaVinci Reinsurance Ltd.		A			AA-
Endurance Specialty Insurance Ltd.		A			A
Hamilton Re, Ltd.		A-			NR
Hiscox Insurance Company (Bermuda) Limited		A			NR
Horseshoe Re (obo Coriolis)		NR	*	**	NR
Markel Bermuda Limited		A			A
Partner Reinsurance Company Limited		A+			A+
Renaissance Reinsurance, Ltd.		A+			AA-
Securis Re II Ltd. Bermuda		NR	*	**	NR
Securis Re IV Ltd. Bermuda		NR	*	**	NR
Securis Re V Ltd. Bermuda		NR	*	**	NR
Tokio Millennium Re AG, Bermuda Branch		A++			AA-
XL RE Limited		A			A+
UNITED KINGDOM
A.F. Beazley Syndicate No. 623 (AFB)		A			A+
A.F. Beazley Syndicate No. 2623 (AFB)		A			A+
Amlin Syndicate No. 2001 (AML)		A			A+
Antares Syndicate No. 1274 (AUL)		A			A+
Ariel Syndicate No. 1910 (ARE)		A			A+
ARK Syndicate No. 4020 (ARK)		A			A+
Ascot Syndicate No. 1414 (ASC)		A			A+
Barbican Syndication No. 1955 (BAR)		A			A+
Canopius Syndicate No. 958 (CNP)		A			A+
Canopius Syndicate No. 4444 (CNP)		A			A+
Cathederal Syndicate No. 2010 (MMX)		A			A+
China Re Syndicate No. 2088 (CNR)		A			A+
Dale Underwriting Syndicate No. 1729 (DUW)		A			A+
Faraday Syndicate No. 435 (FDY)		A			A+
Hiscox Syndicate No. 0033 (HIS)		A			A+
Liberty Syndicates Services Limited, Paris for and on behalf of Lloyd's Syndicate No. 4472 (LIB)		A			A+
MAP Underwriting Syndicate No. 2791 (MAP)		A			A+
MAP Underwriting Syndicate No. 2791 (Parallel) (MAP)		A			A+
Novae Syndicate No. 2007 (NVA)		A			A+
Renaissance Re Syndicate No. 1458 (RNR)		A			A+
S.J.O, Catlin & Others No. 2003 (SJC)		A			A+
Vibe Syndicate No. 5678 (VSM)		A			A+
EUROPE
Amlin AG, Switzerland, Bermuda Branch		A			A
Hannover Rueck SE (obo Pillar Capital Management)		NR	*	**	NR
Lansforsakringar Sak Forsakringsaktiebolag (publ)		NR			A
SCOR Global P&C SE, Paris, Zurich Branch		A			A
ASIA
China Reinsurance (Group) Corporation		A			NR
Fubon Insurance Co., Ltd.		A			A-
General Insurance Corporation of India, trading as GIC Re		A-			NR
Peak Re		A-			NR
Pioneer CAT (obo Peak Re)		A-			NR
Pioneer CAT (obo Taiping)		A-			NR
Qatar Reinsurance Company LLC		A			A
* Reinstatement Premium Protection Program Participants
** Participant will fund a trust agreement for their exposure with cash and U.S. Government obligations of American institutions at fair market value.

- 28 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

For the 2014–2015 hurricane season, the excess of loss and FHCF treaties insured the property lines for approximately $1.49 billion of aggregate catastrophic losses and LAE with a maximum single event coverage totaling approximately $1.01 billion, with the Company retaining the first $11.20 million in Florida and $3.0 million in Louisiana for losses and LAE from each event. Florida risks represent 98.5%, or $1.46 billion of the $1.49 billion of total aggregate catastrophic losses and LAE.

The reinsurance program includes coverage purchased from the private market, which affords optional reinstatement premium protection that provides coverage beyond the first event, along with any remaining coverage from the FHCF. The FHCF only affords coverage for losses sustained in Florida. Coverage afforded by the FHCF totals approximately $546.3 million, or 37.4% of Florida’s $1.46 billion of aggregate catastrophic losses and LAE. The FHCF affords coverage for the entire season, subject to maximum payouts, without regard to any particular insurable event.

The actual cost to the Company for the excess of loss reinsurance products for the 2014–2015 hurricane season, inclusive of approximately $40.20 million payable to the FHCF and the prepaid automatic premium reinstatement protection, is approximately $117.0 million.

Included in the 2014–2015 hurricane season program was a 30% quota share reinsurance treaty for the Company’s in-force new and renewal homeowners’ insurance program in the State of Florida. This two-year quota share reinsurance treaty continues to provide 30% of $200 million of aggregate catastrophe coverage per year with maximum single event coverage of 30% of $100 million per year. The cost of this quota share was $6.7 million, net of ceding commissions, and it was included in the $117.0 million amount referenced above.

- 29 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The 2014-2015 private reinsurance companies and their respective A.M. Best and S&P ratings are listed in the table as follows.

Reinsurer	A.M. Best Rating			S&P Rating
UNITED STATES
American Agricultural Insurance Company		A-			NR
American Standard Insurance Company of Wisconsin		A			NR
AIG (National Union Fire Insurance Company of Pittsburgh, PA)		A			A+
Everest Reinsurance Company		A+			A+
Odyssey Reinsurance Company		A			A-
QBE Reinsurance Corporation		A			A+
RLI Insurance Company		A+			A+
Transatlantic Reinsurance Company		A			A+
BERMUDA
ACE Tempest Reinsurance Limited		A++			AA-
Allied World Assurance Company, Limited		A			A
Arch Reinsurance Limited		A+			A+
Argo Reinsurance Limited		A			NR
Ariel Reinsurance Bermuda Ltd for and on Behalf of Ariel Syndicate 1910 (ARE)		A-			A+
Aspen Bermuda Limited		A			A
AXIS Specialty Limited		A+			A+
BGS Services (Bermuda) Limited/Lloyds Syndicate 2987		A			A+
DaVinci Reinsurance Ltd		A			AA-
Endurance Specialty Insurance Limited		A			A
Hamilton Re, Limited		A-			NR
Hiscox Insurance Company (Bermuda) Limited		A			NR
Partner Reinsurance Company Limited		A+			A+
Platinum Underwriters Bermuda Limited		A			A-
Renaissance Reinsurance, Limited		A+			AA-
Securis Re III Limited Bermuda		NR	*	**	NR
Securis Re IV Limited Bermuda		NR	*	**	NR
Tokio Millennium Re AG, Bermuda Branch		A++			AA-
XL RE Limited		A			A+
UNITED KINGDOM
A.F. Beazley Syndicate No. 623 (AFB)		A			A+
A.F. Beazley Syndicate No. 2623 (AFB)		A			A+
Amlin Syndicate No. 2001 (AML)		A			A+
Antares Syndicate No. 1274 (AUL)		A			A+
Ariel Syndicate No. 1910 (ARE)		A			A+
ARK Syndicate No. 4020 (ARK)		A			A+
Ascot Syndicate No. 1414 (ASC)		A			A+
Barbican Syndication No. 1955 (BAR)		A			A+
Canopius Syndicate No. 958 (CNP)		A			A+
Canopius Syndicate No. 4444 (CNP)		A			A+
Cathederal Syndicate No. 2010 (MMX)		A			A+
Chaucer Syndicate No. 1084 (CSL)		A			A+
Dale Underwriting Syndicate No. 1729 (DUW)		A			A+
Faraday Syndicate No. 435 (FDY)		A			A+
Hiscox Syndicate No. 0033 (HIS)		A			A+
Kiln Syndicate No. 510 (KLN)		A			A+
Liberty Syndicates Services Limited, Paris for and on behalf of Lloyd's Syndicate No. 4472 (LIB)		A			A+
MAP Underwriting Syndicate No. 2791 (MAP)		A			A+
MAP Underwriting Syndicate No. 2791 (Parallel) (MAP)		A			A+
Novae Syndicate No. 2007 (NVA)		A			A+
S.J.O, Catlin & Others No. 2003 (SJC)		A			A+
EUROPE
Amlin AG, Switzerland, Bermuda Branch		A			A
Hannover Rueck SE (obo Pillar Capital Management)		NR	*	**	NR
Lansforsakringar Sak Forsakringsaktiebolag (publ)		NR			A
SCOR Global P&C SE, Paris, Zurich Branch		A			A
ASIA
China Reinsurance (Group) Corporation		A			NR
Qatar Reinsurance Company LLC		A			A
* Reinstatement Premium Protection Program Participants
** Participant will fund a trust agreement for their exposure with cash and U.S. Government obligations of American institutions at fair market value.

- 30 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Annually, the cost and amounts of reinsurance are based on management's analysis of FNIC's exposure to catastrophic risk as of June 30 and estimated to September 30. Our data is then subjected to actual exposure level analysis as of September 30. This analysis of our exposure level in relation to the total exposures to the FHCF and excess of loss treaties may produce changes in limits and reinsurance premiums as a result of the reconciliation of estimated to actual exposure level. The September 30, 2015 change to total insured value and reinsurance premiums was zero.

To date, we have made no claims asserted against our reinsurers in connection with the 2015–2016 and 2014–2015 excess of loss and FHCF treaties.

The quota share retrocessionaire reinsurance agreements require FNIC to secure the credit, regulatory and business risk. Fully funded trust agreements securing these risks totaled $4.0 million and $4.9 million, respectively, as of September 30, 2015 and December 31, 2014.

We are selective in choosing reinsurers and consider numerous factors, the most important of which are the financial stability of the reinsurer, its history of responding to claims and its overall reputation. In an effort to minimize our exposure to the insolvency of a reinsurer, we evaluate the acceptability and review the financial condition of the reinsurer at least annually.

(9) Unpaid losses and LAE

The liability for unpaid losses and LAE is determined on an individual-case basis for all incidents reported. The liability also includes amounts for unallocated expenses, anticipated future claim development and Incurred but Not Yet Reported (“IBNR”).

Activity in the liability for unpaid losses and LAE is summarized as follows.

	Period Ending
	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Balance at January 1	$	78,330		$	61,016
Less reinsurance recoverables		(12,534	)		(2,742	)
Net balance at January 1	$	65,796		$	58,274
Incurred related to
Current year	$	73,895		$	79,932
Prior years		1,615			1,104
Total incurred	$	75,510		$	81,036
Paid related to
Current year	$	30,739		$	42,391
Prior years		27,243			31,123
Total paid	$	57,982		$	73,514
Net balance at period end	$	83,324		$	65,796
Plus reinsurance recoverables		8,349			12,534
Balance as of period end	$	91,673		$	78,330

We believe that the liability for unpaid losses and LAE is adequate to cover all claims and related expenses that may arise from incidents reported.

- 31 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Our review of the liability for losses and LAE includes a re-evaluation of the adequacy of reserve levels for prior year’s claims. We increased the liability for losses and LAE for claims occurring in prior years by $1.6 million during the nine months ended September 30, 2015.We increased the liability for losses and LAE for claims occurring in prior years by $1.1 million during the year ended December 31, 2014.

We continue to revise our estimates of the ultimate financial impact of claims made resulting from past storms. The revisions to our estimates are based on our analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) Company and industry historical loss experience; (iii) legislative enactments, judicial decisions, legal developments in the awarding of damages, and (iv) trends in general economic conditions, including the effects of inflation.

(10) Stock Compensation Plans

We implemented a stock option plan in 2002 (the “2002 Plan”), which expired in April 2012. Under this plan, we were authorized to grant options to purchase up to 1,800,000 common shares, and as of September 30, 2015 and December 31, 2014, we had outstanding exercisable options to purchase 185,150 and 219,285 shares, respectively.

In April 2012, our Board of Directors adopted, and in September 2012 our shareholders approved, the Company’s 2012 Stock Incentive Plan (the “2012 Plan”). The 2012 Plan permits the issuance of up to 1,000,000 shares of our common stock, subject to adjustment as provided for in the 2012 Plan, in connection with the grant of a variety of equity incentive awards, such as incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units, and performance shares. Officers, directors and executive, managerial, administrative and professional employees of the Company and its subsidiaries are eligible to participate in the 2012 Plan. Awards may be granted singly, in combination, or in tandem. The 2012 Plan was amended and restated in March 2013 to clarify the plan administrator’s authority to permit the vesting of unvested restricted shares in the event of the death of the grantee. The 2012 Plan will expire on April 5, 2022.

On March 4, 2013, a total of 100,000 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 25,000 shares were granted to the Company's Chief Executive Officer and President and 15,000 shares were granted to the Company's Chief Financial Officer. An aggregate of 20,000 shares were granted to the Company's directors and the remaining 40,000 shares were granted to other employees of the Company.

On August 5, 2013, a total of 150,000 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 100,000 shares were granted to the Company's Chief Executive Officer and President and 50,000 shares were granted to the Company's Chief Financial Officer.

On March 4, 2014, a total of 88,648 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 43,997 shares were granted to the Company's Chief Executive Officer and President and 16,341 shares were granted to the Company's Chief Financial Officer. An aggregate of 15,710 shares were granted to the Company's directors and the remaining 12,600 shares were granted to other employees of the Company.

On September 9, 2014, a total of 130,000 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 45,000 shares were granted to the Company's Chief Executive Officer and President and 15,000 shares were granted to the Company's Chief Financial Officer. An aggregate of 50,000 shares were granted to the Company's directors and the remaining 20,000 shares were granted to other employees of the Company.

On December 9, 2014, a total of 50,000 restricted shares from the 2012 Plan were granted to the Company’s Chief Executive Officer and President pursuant to the vesting requirements and other terms and conditions set forth in the restricted stock agreement.

- 32 -

Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On March 10, 2015, a total of 66,140 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 32,997 shares were granted to the Company's Chief Executive Officer and President and 9,551 shares were granted to the Company's Chief Financial Officer. An aggregate of 6,252 shares were granted to the Company's directors and the remaining 17,340 shares were granted to other employees of the Company.

On May 5, 2015, a total of 50,000 restricted shares from the 2012 Plan were granted to the Company’s Chief Executive Officer and President pursuant to the vesting requirements and other terms and conditions set forth in the restricted stock agreement.

Activity in our stock option and incentive plans for the period from January 1, 2013 to September 30, 2015 is as follows.

	1998 Plan					2002 Plan					2012 Plan
	Number of Shares			Weighted Average Option Exercise Price		Number of Shares			Weighted Average Option Exercise Price		Number of Shares			Fair Market Value at Grant
Outstanding at January 1, 2013		78,500		$	12.73		702,597		$	5.17		-		$	-
Granted		-		$	-		-		$	-		250,000		$	5.54
Exercised		(500	)	$	8.67		(165,577	)	$	7.15		-		$	-
Cancelled		(75,000	)	$	12.92		(13,499	)	$	5.41		(500	)	$	5.54
Outstanding at January 1, 2014		3,000		$	8.67		523,521		$	4.54		249,500		$	5.54
Granted		-		$	-		-		$	-		268,648		$	5.54
Exercised		(3,000	)	$	8.67		(299,735	)	$	5.10		(68,988	)	$	-
Cancelled		-		$	-		(4,501	)	$	3.49		(1,359	)	$	5.54
Outstanding at January 1, 2015		-		$	8.67		219,285		$	3.79		447,801		$	5.54
Granted		-		$	-		-		$	-		116,140		$	26.81
Exercised		-		$	-		(34,135	)	$	3.81		(135,134	)	$	16.03
Cancelled		-		$	-		-		$	-		-		$	-
Outstanding at September 30, 2015		-		$	-		185,150		$	3.79		428,807		$	14.57

Options outstanding as of September 30, 2015 are exercisable as follows.

	2002 Plan
Options Exercisable at:	Number of Shares		Weighted Average Option Exercise Price
September 30, 2015		184,150	$	3.79
December 31, 2015		1,000	$	3.79
December 31, 2016		-	$	3.79
December 31, 2017		-	$	3.79
December 31, 2018		-	$	3.79
December 31, 2019		-	$	3.79
Thereafter		-	$	3.79
Total options exercisable		185,150

Upon the exercise of options, the Company issues authorized shares.

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Federated National Holding Company

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Summary information about the Company’s stock option plans at September 30, 2015 is as follows.

	Range of Exercise Price		Outstanding at September 30, 2015		Weighted Average Contractual Periods in Years		Weighted Average Exercise Price		Exercisable at September 30, 2015
2002 Plan	$	2.45 - $4.40		185,150		5.86	$	3.79		184,150

(11) Earnings per Share

Basic EPS is computed by dividing net income attributable to Federated National Holding Company common stockholders by the weighted average number of common shares outstanding during the period presented. Diluted EPS is computed by dividing net income attributable to Federated National Holding Company common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding during the period presented. The following table illustrates our computations of basic and diluted net income per common share.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Figures)
Net income attributable to Federated National Holding Company common stockholders	$	10,593	$	7,227	$	31,611	$	27,204
Weighted average number of common shares outstanding - basic		13,749		12,625		13,710		11,563
Net income per share - basic	$	0.77	$	0.57	$	2.31	$	2.35
Weighted average number of common shares outstanding - basic		13,749		12,625		13,710		11,563
Dilutive effect of stock compensation plans		228		332		268		371
Weighted average number of common shares outstanding - diluted		13,977		12,957		13,978		11,934
Net income per share - diluted	$	0.76	$	0.56	$	2.26	$	2.28

(12) Stockholders’ Equity

Capital Stock

The Company’s authorized capital consists of 1,000,000 shares of preferred stock, par value $0.01 per share, and 25,000,000 shares of common stock, par value $0.01 per share. As of September 30, 2015, there were no preferred shares issued or outstanding and there were 13,773,130 shares of common stock outstanding.

(13) Subsequent Events

We have evaluated all subsequent events or transactions for potential recognition or disclosure that occurred after the balance sheet date through the date on which the financial statement were issued.

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Federated National Holding Company

General information about Federated National Holding Company can be found at www.FedNat.com; however, the information that can be accessed through our web site is not part of our report. We make our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 available free of charge on our web site, as soon as reasonably practicable after they are electronically filed with the SEC.

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes and information included under this Item 2 and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 16, 2015 (“Form 10-K”). Unless the context requires otherwise, as used in this Form 10-Q, the terms “FNHC” “Company,” “we,” “us” and “our,” refers to Federated National Holding Company and its subsidiaries.

Forward-Looking Statements

Statements in this Quarterly Report on Form 10-Q for the three months ended September 30, 2015 (“Form 10-Q”) or in documents that are incorporated by reference that are not historical fact are forward-looking statements that are subject to certain risks and uncertainties that could cause actual events and results to differ materially from those discussed herein. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” or “continue” or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. The risks and uncertainties include, without limitation, uncertainties related to estimates, assumptions and projections relating to unpaid losses and loss adjustment expenses (“LAE”) and other accounting policies, losses from the nine hurricanes that occurred in fiscal years 2005 and 2004 and in other estimates, assumptions and projections contained in this Form 10-Q; inflation and other changes in economic conditions (including changes in interest rates and financial markets); the impact of new regulations adopted in Florida which affect the property and casualty insurance market; the costs of reinsurance, assessments charged by various governmental agencies; pricing competition and other initiatives by competitors; our ability to obtain regulatory approval for requested rate changes and the timing thereof; legislative and regulatory developments; the outcome of various litigation matters pending against us, including the terms of any settlements; risks related to the nature of our business; dependence on investment income and the composition of our investment portfolio; the adequacy of our liability for loss and loss adjustment expense; insurance agents; claims experience; ratings by industry services; catastrophe losses; reliance on key personnel; weather conditions (including the severity and frequency of storms, hurricanes, tornadoes and hail); changes in driving patterns and loss trends; acts of war and terrorist activities; court decisions and trends in litigation and health care and auto repair costs; and other matters described from time to time by us in this report, and in our other filings with the SEC, including the Company’s Form 10-K.

You are cautioned not to place reliance on these forward-looking statements, which are valid only as of the date they were made. The Company undertakes no obligation to update or revise any forward-looking statements to reflect new information or the occurrence of unanticipated events or otherwise. In addition, readers should be aware that Generally Accepted Accounting Principles (“GAAP”) prescribes when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected when a reserve is established for a major contingency. Reported results may therefore appear to be volatile in certain accounting periods.

Overview

FNHC is an insurance holding company that controls substantially all steps in the insurance underwriting, distribution and claims processes through our subsidiaries and our contractual relationships with our independent agents and general agents.

We are authorized to underwrite, and/or place through our wholly owned subsidiaries, homeowners’ multi-peril (“homeowners”), commercial general liability, federal flood, personal auto and various other lines of insurance in Florida and various other states. We market and distribute our own and third-party insurers’ products and our other services through a network of independent agents.

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Federated National Holding Company

Our wholly owned insurance subsidiary is Federated National Insurance Company (“FNIC”) and is licensed as an admitted carrier in Florida. An admitted carrier is an insurance company that has received a license from the state department of insurance giving the company the authority to write specific lines of insurance in that state. These companies are also bound by rate and form regulations, and are strictly regulated to protect policyholders from a variety of illegal and unethical practices, including fraud. Admitted carriers are also required to financially contribute to the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due their policyholders. Through contractual relationships with a network of approximately 3,900 independent agents, of which approximately 2,500 actively sell and service our products. FNIC operates in several states authorized to write various lines of business.

The table below reflects the states and lines of business that FNIC operates in as of September 30, 2015.

	Fire		Allied Lines	Private Passenger Automobile	Homeowners' Multiperil	Commercial General Liability
Florida (Domestic)	a		a	a	a	a
Alabama	d		d	d	a	c
Georgia	-		-	a	-	c
Louisiana	-		-	-	a	c
South Carolina	-		-	-	b	-
Texas	-		-	a	b	c
	a	Ongoing operations for more than one year
	b	Ongoing operations for less than one year
	c	Working with state to discontinue line of authority
	d	Licensed, but no current operations

Non-Florida commercial general liability operations have not been material to the Company’s overall operations. Although FNIC has underwritten commercial general liability insurance in those states, the Company has decided to wind-down its commercial general liability operations in Alabama, Georgia, Louisiana and Texas ultimately resulting in no new premium for this particular line of business. FNIC continues to underwrite commercial general liability operations in Florida.

FNIC is licensed as a non-admitted carrier in Missouri and Nevada and can underwrite commercial general liability insurance in these states. Currently, we do not have any operations in these states. A non-admitted carrier, sometimes referred to as an “excess and surplus lines” carrier, is permitted to do business in a state and, although it is strictly regulated to protect policyholders from a variety of illegal and unethical practices, including fraud, non-admitted carriers are subject to considerably less regulation with respect to policy rates and forms. Non-admitted carriers are not required to financially contribute to and benefit from the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due their policyholders.

On October 20, 2015, the Florida Office of Insurance Regulation (the “Florida OIR”) approved the filing made by FNIC to comply with the cease and desist order dated May 19, 2015 to enable the Florida OIR to review and approve FNIC’s analytic models. On October 21, 2015, the Florida OIR rescinded the cease and desist order based upon its approval of the Company’s filing.

Pending approval of its underwriting analytics, FNIC used its current filed and approved rule-based underwriting to manage all new and existing business since early June 2015.  Prior to this change, the average weekly new premium written was approximately $3.3 million.  Since discontinuing the use of the underwriting analytics, the average weekly new premium written during the next seven weeks increased to $4.9 million, a 48% increase. Since that peak, the average written premium returned to an anticipated $3.3 million level.  The Company does not believe that the additional written premium will have a material impact on the Company’s results of operations.

We previously entered into a Coexistence Agreement effective August 30, 2013 (the “Coexistence Agreement”) with Federated Mutual Insurance Company (“Federated Mutual”) pursuant to which, among other things, we may continue to use “Federated” until at least August 30, 2020, after which time we have agreed to either cease using “Federated” in commerce or otherwise adopt and use trade names that are not confusingly similar to Federated Mutual’s trademarks. We continue to develop our brand under the “FedNat” name, which is the name by which agents generally know us.

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Federated National Holding Company

Organization of Monarch National Insurance Company

The Company has entered into a joint venture to organize Monarch National Insurance Company (“MNIC”), which received its certificate of authority to write homeowners’ property and casualty insurance in Florida from the Florida OIR on March 19, 2015. The Company’s joint venture partners are a majority-owned limited partnership of Crosswinds Holdings Inc., f/k/a C.A. Bancorp Inc., a publicly traded Canadian private equity firm and asset manager (“Crosswinds”); and Transatlantic Reinsurance Company (“TransRe”).

The Company and Crosswinds have each invested $14.0 million in Monarch Delaware Holdings LLC (“Monarch Delaware”), the indirect parent company of MNIC, for a 42.4% interest in Monarch Delaware (each holding 50% of the voting interests in Monarch Delaware).  TransRe has invested $5.0 million for a 15.2% non-voting interest in Monarch Delaware and has advanced an additional $5.0 million in debt evidenced by a six-year promissory note bearing 6% annual interest payable by Monarch National Holding Company (“MNHC”), a wholly owned subsidiary of Monarch Delaware and the direct parent company of MNIC.

In connection with the organization of MNIC, the parties entered into the following agreements dated as of March 17, 2015:

· MNIC entered into a Managing General Agent and Claims Administration Agreement (the “Monarch MGA Agreement”) with FedNat Underwriters, Inc. (“FNU”), a wholly owned subsidiary of the Company, pursuant to which FNU provides underwriting, accounting, reinsurance placement and claims administration services to Monarch. For its services under the Monarch MGA Agreement, FNU will receive 4% of Monarch’s total written annual premium, excluding acquisition expenses payable to agents, for FNU’s managing general agent services; 3.6% of Monarch’s total earned annual premium for FNU’s claims administration services; and a per-policy administrative fee of $25 for each policy underwritten for Monarch. The Company will also receive an annual expense reimbursement for accounting and related services.

· MNIC, MNHC and Monarch Delaware (collectively, the “Monarch Entities”) entered into an Investment Management Agreement (the “Monarch Investment Agreement”) with Crosswinds AUM LLC, a wholly owned subsidiary of Crosswinds (“Crosswinds AUM”), pursuant to which Crosswinds AUM will manage the investment portfolios of the Monarch Entities. The management fee, on an annual basis, is 0.75% of assets under management up to $100 million; 0.50% of assets under management of more than $100 million but less than $200 million; and 0.30% of assets under management of more than $200 million.

· MNIC also entered into a Reinsurance Capacity Right of First Refusal Agreement with TransRe, pursuant to which TransRe has a right of first refusal for all quota share and excess of loss reinsurance that MNIC deems necessary in its sole discretion for so long as TransRe remains a member of Monarch Delaware or the MNHC debt remains outstanding. Pursuant to this agreement, TransRe has the right to provide, at market rates and terms, a maximum of 15% of any reinsurance coverage obtained by Monarch Delaware in any individual reinsurance contract.

· The Limited Liability Company Agreement of Monarch Delaware Holdings LLC dated as of March 17, 2015 (the “Monarch LLC Agreement”) provides that Monarch Delaware is managed by a seven-member Board of Managers, three of whom have been designated by the Company, three of whom have been designated by Crosswinds, and one who will be jointly selected by the Company and Crosswinds. The Company’s designees are Michael H. Braun, the Company’s President and Chief Executive Officer and a director of the Company; Peter J. Prygelski, III, the Company’s Chief Financial Officer and a director of the Company; and Jenifer G. Kimbrough, a director of the Company. Crosswinds’ designees are Colin E. King, Robert T. Wolf, and Charles S. Duncker. The Company and Crosswinds have agreed to identify the seventh member of the Board of Managers within six months.

· The Monarch LLC Agreement provides that certain material transactions must be approved by a supermajority of the managers, including a termination, amendment or non-renewal of the Monarch MGA Agreement or the Monarch Investment Agreement. The Company will be entitled to receive a termination fee equal to the aggregate fees paid under the Monarch MGA Agreement for the 12 calendar months prior to the date of termination, if the Monarch MGA Agreement is terminated other than for cause. The Monarch LLC Agreement also provides the members with certain redemption, tag-along, drag-along and buy-sell rights. In addition, the Monarch LLC Agreement provides the Company and Crosswinds with the right, for 24 months from the closing date, to participate in certain other transactions relating to the formation or acquisition of homeowners’ property and casualty insurers undertaken by the other.

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Federated National Holding Company

Our executive offices are located at 14050 N.W. 14th Street, Suite 180, Sunrise, Florida 33323 and our telephone number is (800) 293-2532.

Our Subsidiaries

During the three months ended September 30, 2015, 91.6%, 2.6%, 3.8% and 2.0% of the premiums we underwrote were for homeowners’, commercial general liability, automobile insurance, and federal flood, respectively. During the three months ended September 30, 2015, $28.6 million or 24.1% of the $118.9 million of the homeowners’ premiums we underwrote were produced under Ivantage Select Agency, Inc. (“ISA”), an affiliate of Allstate Insurance Company, that grants Allstate agents the authority to offer certain FNIC products. The $9.6 million increased homeowners’ premiums we underwrote under ISA represents 27.0% of the $35.6 million increased total homeowners’ premiums we underwrote during the three months ended September 30, 2015. During the three months ended September 30, 2014, $19.0 million or 22.8% of the $83.3 million of the homeowners’ premiums we underwrote were produced under ISA. This network of agents began writing for FNIC in March 2013. During the three months ended September 30, 2014, 90.5%, 3.4%, 2.5% and 3.6% of the premiums we underwrote were for homeowners’, commercial general liability, federal flood, and automobile insurance, respectively.
 

During the nine months ended September 30, 2015, 92.3%, 3.0%, 2.9% and 1.8% of the premiums we underwrote were for homeowners’, commercial general liability, automobile insurance, and federal flood, respectively. During the nine months ended September 30, 2015, $75.7 million or 22.2% of the $340.2 million of the homeowners’ premiums we underwrote were produced under ISA. The $26.3 million increased homeowners’ premiums we underwrote under ISA represents 31.2% of the $84.3 million increased total homeowners’ premiums we underwrote during the nine months ended September 30, 2015. During the nine months ended September 30, 2014, $49.4 million or 19.3% of the $255.9 million of the homeowners’ premiums we underwrote were produced under ISA. This network of agents began writing for FNIC in March 2013. During the nine months ended September 30, 2014, 91.2%, 3.4%, 2.2% and 3.2% of the premiums we underwrote were for homeowners’, commercial general liability, federal flood, and automobile insurance, respectively.

Our business, results of operations and financial condition are subject to fluctuations due to a variety of factors. Abnormally high severity or frequency of claims in any period could have a material adverse effect on us. When our estimated liabilities for unpaid losses and LAE are less than the actuarially determined amounts, we increase the expense in the current period. Conversely, when our estimated liabilities for unpaid losses and LAE are greater than the actuarially determined amounts, we decrease the expense in the current period.

We are focusing our marketing efforts on continuing to expand our distribution network while maintaining our commitment to long-term relationships. We market our products and services throughout Florida and in other states by establishing relationships with additional independent agents and general agents. There can be no assurance, however, that we will be able to obtain the required regulatory approvals to offer additional insurance products or expand into other states.

FNU, a wholly owned subsidiary of the Company, acts as FNIC’s and MNIC’s exclusive managing general agent and is also licensed as a managing general agent in the States of Florida, Alabama, Georgia, Louisiana, Mississippi, Nevada, South Carolina and Texas. FNU is an appointed Lloyds of London coverholder to write homeowners’ multi peril insurance in Florida on an excess and surplus lines basis and has contracted with other unaffiliated insurance companies to sell personal umbrella coverage through FNU’s existing network of agents. Operations for Lloyds of London commenced in the third quarter of this year.

FNU earns commissions and fees for providing policy administration, marketing, accounting and analytical services, and for participating in the negotiation of reinsurance contracts. FNU earns a per policy fee which ranges from $25 to $55 and a commission fee from its affiliate, FNIC and MNIC, which totaled 4% during the three months ended September 30, 2015. The Florida OIR periodically reviews our managing general agent’s fee structure to ensure that it is neither excessive nor inadequate to operate.

We internally process claims made by our insureds through our wholly owned claims adjusting company, Federated National Adjusting, Inc. (“FNA”). Our agents have no authority to settle claims or otherwise exercise control over the claims process. Furthermore, we believe that the retention of independent adjusters, in addition to the employment of salaried claims personnel, results in reduced ultimate loss payments, lower LAE and improved customer service for our claimants and policyholders. We also employ an in-house litigation management team to cost effectively manage claims-related litigation and to monitor our claims handling practices for efficiency and regulatory compliance.

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Federated National Holding Company

During 2014, the Florida OIR approved an application to allow the claims administration operations of FNA to be assumed by FNU. Under the amended managing general agency agreement between FNU and FNIC, FNU will provide the same claims administration services. The combination of these services in FNU had no effect on consolidated net income.

Insure-Link, Inc. (“Insure-Link”) is our independent insurance agency.The insurance agency markets direct to the public to provide a variety of insurance products and services to individual clients, as well as business clients, by offering a full line of insurance products including, but not limited to, homeowners’, flood, personal and commercial automobile, commercial general liability, workers’ compensation, boat and recreational vehicle and personal articles and jewelry insurance through their agency appointments with over one hundred different carrier relationships.

Insurance Markets in Which We Operate

We operate in highly competitive markets and face competition from national, regional and residual market insurance companies in the homeowners’, commercial general liability, and automobile markets. Our competitors include companies that market their products through agents, as well as companies that sell insurance directly to their customers. Large national writers may have certain competitive advantages over agency writers, including increased name recognition, increased loyalty of their customer base and reduced policy acquisition costs. We compete based on underwriting criteria, our distribution network and superior service to our agents and insureds. Although our pricing is inevitably influenced to some degree by that of our competitors, we believe that it is generally not in our best interest to compete solely on price.

In Florida, more than 50 companies compete with us in the homeowners’ insurance market. Three of our larger competitors are Citizens Property Insurance Corporation (“Citizens”), Universal Property and Casualty Insurance Company and St. Johns Insurance Company. In Florida, more than one dozen companies compete with us in the commercial general liability insurance market.

In May 2013, SB 1770 was signed by the Governor of Florida and passed during the 2013 legislative session. This bill is intended to reform Citizens by reducing its insurance policy count and establishing the Property Insurance Clearinghouse (“Clearinghouse”). The Clearinghouse launched in January 2014, for new business ineligible for Citizens if a participating insurance company is willing to afford similar coverage at a price that is no more than 15% above the price of a policy with Citizens. Similarly, existing Citizens policies will not be eligible for renewal with Citizens if a participating insurance company is willing to afford similar coverage at no additional cost over the price for a Citizens policy. This will allow potentially new and renewal policies of Citizens to be comparatively shopped by participating private market insurers before becoming, or remaining, policies of Citizens. Effective March 30, 2014 FNIC joined as a participating insurance company in the Clearinghouse.

Critical Accounting Policies

There have been no significant changes to our critical accounting policies during the nine months ended September 30, 2015, compared with those disclosed in Item 7, “Managements Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” included in our Annual Report on Form 10-K for the year ended December 31, 2014, other than that described in Note 3(E) Adjustments of this report.

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Federated National Holding Company

Analysis of Financial Condition

As of September 30, 2015 Compared with December 31, 2014

Our recent investment in Monarch Delaware has impacted our consolidated balance sheet at September 30, 2015 by inclusion of Monarch Delaware’s asset and liability line items and recognition of the non-controlling interest within shareholders’ equity.

Total Investments

The following table summarizes, by type, our investments as of September 30, 2015 and December 31, 2014.

	September 30, 2015					December 31, 2014
	Carrying Amount		Percent of Total			Carrying Amount		Percent of Total
	(Dollars in Thousands)
Debt securities, at fair value:
United States government obligations and authorities	$	65,994		17.08	%	$	62,323		18.84	%
Obligations of states and political subdivisions		108,597		28.11	%		91,614		27.70	%
Corporate		155,324		40.20	%		119,024		35.99	%
International		12,000		3.11	%		11,138		3.37	%
		341,915		88.50	%		284,099		85.90	%
Debt securities, at amortized cost:
United States government obligations and authorities		4,221		1.09	%		4,490		1.36	%
Corporate		2,101		0.54	%		2,681		0.81	%
International		65		0.02	%		246		0.07	%
		6,387		1.65	%		7,417		2.24	%
Total debt securities		348,302		90.15	%		291,516		88.14	%
Equity securities, at fair value:		38,086		9.85	%		39,247		11.86	%
Total investments	$	386,388		100.00	%	$	330,763		100.00	%

As of September 30, 2015 and December 31, 2014, our investments consisted primarily of corporate bonds held in various industries, municipal bonds and United States government bonds. As of September 30, 2015, 80% of our debt portfolio was in diverse industries and 20% was in United States government bonds. As of September 30, 2015, approximately 86% of our equity holdings were in equities related to diverse industries and 14% were in mutual funds. As of December 31, 2014, 77% of our debt portfolio was in diverse industries and 23% is in United States government bonds. As of December 31, 2014, approximately 88% of our equity holdings were in equities related to diverse industries and 12% were in mutual funds.

As of September 30, 2015 and December 31, 2014, we have classified $6.4 million and $7.4 million, respectively, of our bond portfolio as held-to-maturity. We classify bonds as held-to-maturity to support securitization of credit requirements.

Total investments increased $55.6 million, or 16.8%, to $386.4 million as of September 30, 2015, compared with $330.8 million as of December 31, 2014.

The debt and equity securities that are available-for-sale and carried at fair value represent 98% of total investments as of September 30, 2015 and December 31, 2014.

We did not hold any trading investment securities during the nine months ended September 30, 2015.

The Company’s policy for the valuation of temporarily impaired securities is to determine impairment based on the analysis of the following factors.

· rating downgrade or other credit event (eg., failure to pay interest when due);

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Federated National Holding Company

· length of time and the extent to which the fair value has been less than amortized cost;

· financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology or discontinuance of a business segment;

· prospects for the issuer’s industry segment;

· intent and ability of the Company to retain the investment for a period of time sufficient to allow for anticipated recovery in market value;

· historical volatility of the fair value of the security.

The Company records the unrealized losses, net of estimated income taxes that are associated with that part of our portfolio classified as available-for-sale through the shareholders' equity account titled “Other Comprehensive Income”. Management periodically reviews the individual investments that comprise our portfolio in order to determine whether a decline in fair value below our cost either is other-than temporarily or permanently impaired based on the above factors.

During the nine months ended September 30, 2015, we have charged to operations, realized investment losses of less than $0.1 million. The charges relate to common stock held in diverse industries. During the nine months ended September 30, 2014, in connection with the process, we have not charged operations with investment losses.

Below is a summary of net unrealized gains (losses) as of September 30, 2015 and December 31, 2014, by category.

	Unrealized Gains (Losses)
	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	1,119		$	945
Obligations of states and political subdivisions		1,386			886
Corporate		855			1,249
International		(105	)		(1	)
		3,255			3,079
Equity securities:
Common stocks		4,481			9,338
Total debt and equity securities	$	7,736		$	12,417

The net unrealized gain of $7.7 million is inclusive of$0.4 million of unrealized losses; $0.3 million of unrealized losses are from debt securities and less than $0.1 million of unrealized losses are from equity securities.

The $0.3 million of unrealized losses from debt securities consisted primarily of corporate bonds held in various industries, municipal bonds and United States government bonds.The Company does not expect to settle at prices less than the amortized cost basis. The Company does not consider these investments to be other-than-temporarily impaired at September 30, 2015 because we neither currently intend to sell these investments nor consider it likely that we will be required to sell these investments before recovery of the amortized cost basis.

The less than $0.1 million of unrealized losses from equity securities are from common stocks and mutual funds held in diverse industries as of September 30, 2015.The Company evaluated the near-term prospects in relation to the severity and duration of the impairment. Based on this evaluation and the Company’s ability and intent to hold these investments for a reasonable period of time sufficient for a forecasted recovery of fair value, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2015.

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Federated National Holding Company

Cash and Short-Term Investments

Cash and short-term investments, which include cash, certificates of deposits, and money market accounts, increased $36.0 million, or 89.7%, to $76.2 million as of September 30, 2015, compared with $40.2 million as of December 31, 2014. The change is due primarily to our gross written premium, which increased by $88.1 million, or 31.4%, to $368.6 million for the nine months ended September 30, 2015, compared with $280.5 million for the nine months ended September 30, 2014. The increased homeowners’ gross written premium generated additional cash available for investment, of which approximately $29.0 million was transferred to the investment accounts during the nine months ended September 30, 2015 and the remainder of cash is for a planned reinsurance payment.

Prepaid Reinsurance Premiums

Prepaid reinsurance premiums increased $41.0 million, or 75.2%, to $95.5 million as of September 30, 2015, compared with the $54.5 million as of December 31, 2014 The change is due to payments to reinsurers, offset by the amortization of prepaid reinsurance premiums. We believe concentrations of credit risk associated with our prepaid reinsurance premiums are not significant. As noted on page 14 under footnote E, Adjustments, there were quota share accounting changes consistent with ASC 944 whereby certain balance sheet line items were reclassed. As a result, $14 million from the formerly reported line item, Contingent quota-share profit sharing is now being reported here.

Premiums Receivable, Net of Allowance for Credit Losses

Premiums receivable, net of allowance for credit losses, increased $7.6 million, or 28.1%, to $34.9 million as of September 30, 2015, compared with $27.3 million as of December 31, 2014.

Our homeowners’ insurance premiums receivable increased $6.6 million, or 29.7%, to $29.0 million as of September 30, 2015, compared with $22.4 million as of December 31, 2014. Our commercial general liability insurance premiums receivable increased less than $0.1 million, or 18.5%, to $0.3 million as of September 30, 2015, compared with $0.2 million as of December 31, 2014. Our automobile insurance premiums receivable increased $1.1 million, or 23.5%, to $5.9 million as of September 30, 2015, compared with $4.8 million as of December 31, 2014. Our allowance for credit losses decreased $0.2 million, or 110.9%, to $0.3 million as of September 30, 2015, compared with nothing as of December 31, 2014.

Reinsurance Recoverable, Net

Reinsurance recoverable, net, decreased $4.2 million, or 33.4%, to $8.3 million as of September 30, 2015, compared with $12.5 million as of December 31, 2014. The change is due to the payment patterns by our reinsurers, as influenced by the diminishing catastrophe related claims. All amounts are current and deemed collectable. We believe concentrations of credit risk associated with our reinsurance recoverables, net, are not significant. As noted on page 14 under footnote E, Adjustments, there were quota share accounting changes consistent with ASC 944 whereby certain balance sheet line items were reclassed. As a result, $7 million from the formerly reported line item, Deferred quota-share profit sharing is now being reported here.

Deferred Policy Acquisition Costs (“DPAC”)

DPAC decreased $0.1 million, or 0.6%, to $13.5 million as of September 30, 2015, compared with $13.6 million as of December 31, 2014.The change reflects in part the deferral of the actual policy acquisition costs, including commissions, payroll and premium taxes, less commissions earned on reinsurance ceded and policy fees earned associated with our increased unearned premium. As noted on page 14 under footnote E, Adjustments, there were quota share accounting changes consistent with ASC 944 whereby certain balance sheet line items were reclassed.

Income Taxes Receivable

Income taxes receivable totaled $5.8 million as of September 30, 2015, compared with $1.8 million as of December 31, 2014.The change is due to estimated tax payments made in excess of the related accrued liability.

Property, Plant and Equipment, Net

Property, plant and equipment, net increased $1.1 million, or 57.4%, to $2.8 million as of September 30, 2015, compared with $1.7 million as of December 31, 2014.

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Federated National Holding Company

Other Assets

Other assets increased $3.8 million, or 51.7%, to $11.0 million as of September 30, 2015, compared with $7.2 million as of December 31, 2014.Major components of other assets are shown in the following table. The accrued interest income receivable is primarily investment related and the commission receivable is primarily related to the commission income sharing agreement with our reinsurance intermediary.

	September 30, 2015		December 31, 2014
	(Dollars in Thousands)
Accrued interest income receivable	$	3,095	$	2,600
Commission receivable		6,284		2,077
Deposits		122		281
Prepaid expenses		1,065		1,496
Receivable for investments sold		-		31
Other		407		746
Total	$	10,973	$	7,231

Contingent Quota-Share Profit Sharing

Contingent quota-share profit sharing totaled nothing as of September 30, 2015, compared with $14.0 million as of December 31, 2014. As noted above on page 42 under Prepaid Reinsurance Premiums, and again on page 14 under footnote E, Adjustments, there were quota share accounting changes consistent with ASC 944 whereby certain balance sheet line items were reclassed. As a result, $14 million previously reported here was reclassed to the aforementioned prepaid reinsurance premiums line item.

Unpaid Losses and LAE

Unpaid losses and LAEincreased $13.4 million, or 17.0%, to $91.7 million as of September 30, 2015, compared with $78.3 million as of December 31, 2014.

The composition of unpaid losses and LAE by product line is as follows.

	September 30, 2015						December 31, 2014
	Case		Bulk		Total		Case		Bulk		Total
	(Dollars in Thousands)						(Dollars in Thousands)
Homeowners'	$	26,684	$	32,675	$	59,359	$	14,223	$	35,192	$	49,415
Commercial General Liability		5,026		14,467		19,493		5,646		12,505		18,151
Automobile		3,879		8,942		12,821		3,672		7,092		10,764
Total	$	35,589	$	56,084	$	91,673	$	23,541	$	54,789	$	78,330

Please see “Results of Operations - Nine Months Ended September 30, 2015 Compared with Nine Months Ended September 30, 2014 - Losses and LAE” for a description of the factors that affect unpaid losses and LAE.

Unearned Premium

Unearned premiums increased $58.0 million, or 30.1%, to $250.4 million as of September 30, 2015, compared with $192.4 million as of December 31, 2014. The change was due to a $54.0 million increase in unearned homeowners’ insurance premiums, a $0.7 million increase in unearned flood insurance premiums, a $1.1 million increase in unearned commercial general liability premiums and a $2.2 million increase in unearned automobile premiums. Generally, as is in this case, an increase in unearned premium directly relates to an increase in written premium on a rolling twelve-month basis.

Debt

Debt totaled$5.0 million as of September 30, 2015, compared with nothing as of December 31, 2014, reflecting the $5.0 million loan to MNHC from TransRe.

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Federated National Holding Company

Premium Deposits and Customer Credit Balances

Premium deposits and customer credit balances increased $3.9 million, or 52.6%, to $11.3 million as of September 30, 2015, compared with $7.4 million as of December 31, 2014. Premium deposits are monies received on policies not yet in-force, the change of which is due to the increase in gross written premiums during this same period.

Deferred Income Taxes, Net

Deferred income taxes, net, increased $3.5 million to a net liability balance of $4.8 million as of September 30, 2015, compared with $1.3 million as of December 31, 2014. Deferred income taxes, net, is comprised of approximately $10.4 million and $9.7 million of deferred tax assets, net of approximately $15.2 million and $11.0 million of deferred tax liabilities as of September 30, 2015 and December 31, 2014.

Claims Payments Outstanding

Claims payments outstanding increased $3.1 million, or 30.7%, to $13.3 million as of September 30, 2015, compared with $10.2 million as of December 31, 2014.The claims payments outstanding relate primarily to losses and LAE disbursements paid but not presented for payment by the policyholder or vendor. The change relates to the timing of presentation of claims checks to the issuing bank.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses increased $5.5 million, or 50.2%, to $16.4 million as of September 30, 2015, compared with $10.9 million as of December 31, 2014. The change is due to increases in the recognition of employment bonuses, premium taxes and commissions.

Deferred Quota-Share Profit Sharing

Deferred quota-share profit sharing totaled nothing as of September 30, 2015, compared with $10.5 million as of December 31, 2014. As noted above on page 42 under Reinsurance Recoverable, net, and again on page 14 under footnote E, Adjustments, there were quota share accounting changes consistent with ASC 944 whereby certain balance sheet line items were reclassed. As a result, $7 million previously reported here was reclassed to the aforementioned reinsurance recoverable, net line item.

Results of Operations

Three Months Ended September 30, 2015 Compared with Three Months Ended September 30, 2014

Our recent investment in MNHC has impacted our consolidated statement of operations for the three months ended September 30, 2015 by inclusion of MNHC’S revenue and expense line items and recognition of the non-controlling interest when computing net income attributable to FNHC common stockholders.

Gross Premiums Written

Gross premiums written increased $37.8 million, or 41.1%, to $129.8 million for the three months ended September 30, 2015, compared with $92.0 million for the three months ended September 30, 2014. The following table denotes gross premiums written by major product line. The increase in gross premiums written during the 2015 period is primarily due to both the increase in the sale of homeowners’ policies and, as noted on page 9, to the transition from using analytic models to our approved rule-based underwriting. Beginning in 2013, our improved underwriting, risk management and product distribution enabled us to write more policies than in prior years.

	Three Months Ended September 30,
	2015					2014
			(Dollars in Thousands)
	Amount		Percentage			Amount		Percentage
Homeowners'	$	118,929		91.60	%	$	83,280		90.49	%
Commercial General Liability		3,391		2.61	%		3,161		3.43	%
Federal Flood		2,529		1.95	%		2,299		2.50	%
Automobile		4,991		3.84	%		3,292		3.58	%
Gross written premiums	$	129,840		100.00	%	$	92,032		100.00	%

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Federated National Holding Company

The increase in the sale of homeowners’ policies by $35.6 million, or 42.8%, to $118.9 million for the three months ended September 30, 2015, compared with $83.3 million for the three months ended September 30, 2014, is gross of reinsurance costs and net of Florida’s mandated homeowners’ wind mitigation discounts. As noted on page 9, the increase in gross premiums written can be partially attributed to the transition from using analytic models to our approved rule-based underwriting. We offer premium discounts for wind mitigation efforts by policyholders, as required by Florida law. As of September 30, 2015, 74.6% of our in-force homeowners’ policyholders were receiving wind mitigation credits totaling approximately $414.1 million (a 50.2% reduction of in-force premium), while 76.9% of our in-force homeowners’ policyholders were receiving wind mitigation credits totaling approximately $312.8 million, (a 50.1% reduction of in-force premium), as of September 30, 2014.

During the three months ended September 30, 2015, $28.6 million or 24.1% of the $118.9 million of the homeowners’ premiums we underwrote were produced under ISA, an affiliate of Allstate Insurance Company, that grants Allstate agents the authority to offer certain FNIC products. The $9.6 million increased homeowners’ premiums we underwrote under ISA represents 27.0% of the $35.6 million increased total homeowners’ premiums we underwrote during the three months ended September 30, 2015. During the three months ended September 30, 2014, $19.0 million or 22.8% of the $83.3 million of the homeowners’ premiums we underwrote were produced under ISA. This network of agents began writing for FNIC in March 2013.

During the three months ended September 30, 2015 and 2014, the change to the cumulative wind mitigation credits afforded our policyholders totaled $56.8 million and $22.8 million, respectively. These premium discounts have had a significant effect on both written and earned premium. Wind mitigation credits are 50.2% of the pre-credit premium, or $824.8 million, as of September 30, 2015, as compared with 50.1% of the pre-credit premium, or $624.4 million, as of September 30, 2014. Our number of in-force homeowners’ policies increased by approximately 19,300 or 9.1%, to approximately 231,800 as of September 30, 2015, compared with approximately 212,500 as of June 30, 2015.

We are required to report write-your-own flood premiums on a direct and 100% ceded basis.

The Company’s sale of commercial general liability policies increased $0.2 million, or 7.3%, to $3.4 million for the three months ended September 30, 2015, compared with $3.2 million for the three months ended September 30, 2014.

The following table sets forth the amounts and percentages of our gross premiums written in connection with our commercial general liability program by state.

	Three Months Ended September 30,
	2015					2014
	Amount		Percentage			Amount		Percentage
	(Dollars in Thousands)
State
Alabama	$	6		0.19	%	$	35		1.11	%
Florida		3,370		99.37	%		2,842		89.91	%
Georgia		-		0.00	%		7		0.22	%
Louisiana		8		0.23	%		36		1.14	%
Texas		7		0.21	%		241		7.62	%
Total	$	3,391		100.00	%	$	3,161		100.00	%

The Company’s sale of auto insurance policies increased $1.7 million, or 51.6%, to $5.0 million for the three months ended September 30, 2015, compared with$3.3 million for the three months ended September 30, 2014.

We are currently rated by Demotech, Inc. (“Demotech”) as "A" ("Exceptional"), which is the third of seven ratings, and defined as “Regardless of the severity of a general economic downturn or deterioration in the insurance cycle, insurers earning a Financial Stability Rating (“FSR”) of “A” possess “Exceptional” financial stability related to maintaining surplus as regards to policyholders”. Demotech’s ratings are based upon factors of concern to agents, reinsurers and policyholders and are not primarily directed toward the protection of investors. Our Demotech rating could be jeopardized by factors including adverse development and various surplus related ratio exceptions.

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Federated National Holding Company

The withdrawal of our rating could limit or prevent us from writing or renewing desirable insurance policies, from competing with insurers who have higher ratings, from obtaining adequate reinsurance, or from borrowing on a line of credit. The withdrawal of our rating could have a material adverse effect on the Company’s results of operations and financial position because the Company’s insurance products might no longer be acceptable to the secondary marketplace and mortgage lenders. Furthermore, a withdrawal of our rating could prevent independent agents from selling and servicing our insurance products.

Gross Premiums Ceded

Gross premiums ceded decreased $9.3 million, or 7.2%, to $120.0 million for the three months ended September 30, 2015, compared with $129.3 million for the three months ended September 30, 2014. The change was due to a $11.2 million decrease in homeowners’, a less than $0.1 million increase in commercial general liability, a $0.2 million increase in flood and a $1.6 million increase in automobile.

Increase in Prepaid Reinsurance Premiums

The increase in prepaid reinsurance premiums was $70.0 million for the three months ended September 30, 2015, compared with $80.0 million for the three months ended September 30, 2014. The decreased benefit to written premium is associated with the timing of our reinsurance payments measured against the term of the underlying reinsurance policies.

Increase in Unearned Premiums

The increase in unearned premiums was $17.6 million for the three months ended September 30, 2015, compared with $8.2 million for the three months ended September 30, 2014. The increased charge to written premium was due to a $14.9 million increase in unearned homeowners’ insurance premiums, a $0.6 million increase in unearned flood premiums, a $0.1 million decrease in unearned commercial general liability premiums and a $2.2 million increase in unearned automobile insurance premiums during the three months ended September 30, 2015. These changes are a result of differences in written premium volume during this period as compared with the same period last year. See “Gross Premiums Written” above.

Net Premiums Earned

Net premiums earned increased $27.8 million, or 80.4%, to $62.3 million for the three months ended September 30, 2015, compared with $34.5 million for the three months ended September 30, 2014.

The following table denotes net premiums earned by product line.

	Three Months Ended September 30,
	2015					2014
	Amount		Percentage			Amount		Percentage
			(Dollars in Thousands)
Homeowners'	$	58,352		93.68	%	$	30,907		89.54	%
Commercial General Liability		3,307		5.31	%		2,787		8.07	%
Automobile		627		1.01	%		824		2.39	%
Net premiums earned	$	62,286		100.00	%	$	34,518		100.00	%

The $27.4 million increase in homeowners’ net premiums earned is due to a $35.6 million increase in gross written premium as discussed, a $11.2 million decrease in gross premiums ceded and a $19.4 million decrease in the net change to prepaid reinsurance premiums and unearned premium.

The $0.5 million increase in commercial general liability net premiums earned is a result of a $0.2 million increase in gross written premium, a less than $0.1 million increase in gross premiums ceded and a $0.4 million increase in the net change to prepaid reinsurance premiums and unearned premium.

The $0.1 million decrease in automobile net premiums earned is a result of a $1.7 million increase in gross written premium as discussed, a $1.6 million increase in gross premiums ceded and a $0.2 million decrease in the net change to prepaid reinsurance premiums and unearned premium.

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Federated National Holding Company

Commission Income

Commission income increased $0.7 million, or 58.9%, to $1.9 million for the three months ended September 30, 2015, compared with $1.2 million for the three months ended September 30, 2014. The primary sources of our commission income are our managing general agent services, write-your-own flood premiums and our independent insurance agency, Insure-Link.

Finance Revenue

Finance revenue remained unchanged at$0.4 million for the three months ended September 30, 2015 and 2014. The primary source of finance revenue is service fees and interest income from our direct billing program, wherein we accept receivables from our insureds.

Direct Written Policy Fees

Direct written policy fees increased $0.6 million, or 24.3%, to $2.8 million for the three months ended September 30, 2015, compared with $2.2 million for the three months ended September 30, 2014.The change is due to the increase in gross premiums written during this same period.

Net Investment Income

Net investment income increased $0.5 million, or 31.5%, to $1.9 million for the three months ended September 30, 2015, compared with $1.4 million for the three months ended September 30, 2014.

Our investment yields, net and gross of investment expenses, excluding equities and including cash, were 2.6% and 2.7%, respectively, for the three months ended September 30, 2015. Our investment yields, net and gross of investment expenses, excluding equities and including cash, were 2.2% and 2.5%, respectively, for the three months ended September 30, 2014.

Our investment yield, net and gross of investment expenses measured against debt securities, excluding equities and cash, were 2.7% and 2.8%,respectively, for the three months ended September 30, 2015. Our investment yield, net and gross of investment expenses measured against debt securities, excluding equities and cash, were 2.3% and 2.6%, respectively, for the three months ended September 30, 2014.

See also “Analysis of Financial Condition as of September 30, 2015 Compared with December 31, 2014 – Investments” for a further discussion on our investment portfolio.

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Federated National Holding Company

Net Realized Investment Gains

Net realized investment gains totaled $1.1 million for the three months ended September 30, 2015, compared with $0.7 million during the three months ended September 30, 2014.

The table below depicts the net realized investment gains (losses) by investment category during the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015			2014
	(Dollars in Thousands)
Realized gains:
Debt securities	$	226		$	241
Equity securities		1,847			453
Total realized gains		2,073			694
Realized losses:
Debt securities		(178	)		(20	)
Equity securities		(769	)		(15	)
Total realized losses		(947	)		(35	)
Net realized gains on investments	$	1,126		$	659

Other Income

Other income increased to $2.2 million for the three months ended September 30, 2015, compared with$1.0 million for the three months ended September 30, 2014. The increase is primarily due to the commission sharing agreement with our reinsurance intermediary.

Quota-Share Profit Sharing

Quota-share profit sharing totalednothing for the three months ended September 30, 2015, compared with $1.7 million for the three months ended September 30, 2014.

In conjunction with our third quarter 2015 analysis of actual experience to date under the July 1, 2014 quota share reinsurance contract, we re-evaluated the accounting treatment for quota share reinsurance contracts with retrospective rating provisions. As a result of this re-evaluation, we have concluded reinsurance contracts which have retrospective rating provisions should be accounted for under Accounting Standards Codification 944, Financial Services — Insurance (“ASC 944”), where amounts due to (from) the assuming companies are accrued based on estimated contract experience to date as though the contracts were terminated. The adjustment to the accounting treatment related to reinsurance contracts with retrospective rated provisions resulted in the following changes:

(a) We eliminated recording of future estimated quota share profits in one line item, “Quota Share Profit Sharing,” in the financial statements.

(b) Amounts due to (from) the assuming companies have been accrued based on actual contract experience to date as though the contracts were terminated. These accruals impacted the following income statement line items: gross ceded premiums, loss and loss adjustment expenses, and deferred policy acquisition costs.

The adjustments to our accounting for the July 1, 2014 quota share reinsurance contract, inclusive of other adjustments, are not material in any prior quarter or annual period based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletin 108.

As a result, we recorded these adjustments during the third quarter of 2015. These adjustments increased net income by $2.2 million for the three month period ended on September 30, 2015.

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Federated National Holding Company

Additionally, the quota share reinsurance accounting adjustments impacted the following income statement line items for the three month period ended on September 30, 2015:

· Gross ceded premiums decreased by $10.9 million,

· Loss and loss adjustment expenses increased by $4.5 million, and

· Deferred acquisition costs increased by $1.5 million.

Losses and LAE

Losses and LAE, our most significant expense, represent actual payments made and changes in estimated future payments to be made to or on behalf of our policyholders, including expenses required to settle claims and losses. We revise our estimates based on the results of analysis of estimated future payments to be made. This process assumes that experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting future events.

Losses and LAE increased $13.3 million, or 87.8%, to $28.4 million for the three months ended September 30, 2015, compared with $15.1 million for the three months ended September 30, 2014.The overall change includes a $10.8 million increase in our homeowners’ program, a $2.0 million increase in our commercial general liability program and a $0.5 million increase in connection with our automobile program.

The change to losses and LAE typically reflects the change to reserves in response to the change in the number of policies we wrote during the same period.

We continue to revise our estimates of the ultimate financial impact of claims made resulting from past storms. The revisions to our estimates are based on our analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) Company and industry historical loss experience; (iii) legislative enactments, judicial decisions, legal developments in the awarding of damages, and (iv) trends in general economic conditions, including the effects of inflation.

The composition of unpaid losses and LAE by product line is as follows.

	September 30, 2015						December 31, 2014
	Case		Bulk		Total		Case		Bulk		Total
	(Dollars in Thousands)						(Dollars in Thousands)
Homeowners'	$	26,684	$	32,675	$	59,359	$	14,223	$	35,192	$	49,415
Commercial General Liability		5,026		14,467		19,493		5,646		12,505		18,151
Automobile		3,879		8,942		12,821		3,672		7,092		10,764
Total	$	35,589	$	56,084	$	91,673	$	23,541	$	54,789	$	78,330

Factors that affect unpaid losses and LAE include the estimates made on a claim-by-claim basis known as “case reserves” coupled with bulk estimates known as Incurred but Not Yet Reported (“IBNR”). Periodic estimates by management of the ultimate costs required to settle all claim files are based on the Company’s analysis of historical data and estimations of the impact of numerous factors such as (i) per claim information; (ii) Company and industry historical loss experience; (iii) legislative enactments, judicial decisions, legal developments in the awarding of damages, and changes in political attitudes; and (iv) trends in general economic conditions, including the effects of inflation.

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Federated National Holding Company

Management revises its estimates based on the results of its analysis. This process assumes that experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for estimating the ultimate settlement of all claims. There is no precise method for subsequently evaluating the impact of any specific factor on the adequacy of the reserves, because the eventual redundancy or deficiency is affected by multiple factors. Because of our process, reserves were increased by approximately $3.6 million during the three months ended September 30, 2015. This overall change includes a $2.0 million increase in reserves for our homeowners’ program,a $1.3 million increase in reserves for commercial general liability program and a $0.3 million increase in reserves for our automobile program.

In accordance with GAAP and as discussed above, our loss ratio is computed as losses and LAE divided by net premiums earned. A lower loss ratio generally results in higher operating income. Our loss ratio for the three months ended September 30, 2015 was 45.6% compared with 43.8% for the same period in 2014.

Operating and Underwriting Expenses

Operating and underwriting expenses increased $5.1 million, or 74.8%, to $11.8 million for the three months ended September 30, 2015, compared with $6.7 million for the three months ended September 30, 2014. The change is due to increases in our SageSure profit sharing agreement, premium taxes, professional service fees, licenses and other such expenses.

Salaries and Wages

Salaries and wages increased $3.9 million, or 97.4%, to $7.9 million for the three months ended September 30, 2015, compared with $4.0 million for the three months ended September 30, 2014. The change is due to the recognition of increased employment bonuses and stock-based compensation associated in part with our increased employment base. The charge to operations for stock-based compensation, in accordance with FASB guidance, was approximately $941,300 during the three months ended September 30, 2015 compared with approximately $367,000 for the three months ended September 30, 2014.

Policy Acquisition Costs

Policy Acquisition Costs increased $1.0 million, or 16.7%, to $6.8 million for the three months ended September 30, 2015, compared with $5.8 million for the three months ended September 30, 2014. The change to policy acquisition costs typically corresponds to the change in net premiums earned during the same period, and consists of the actual policy acquisition costs, including commissions, payroll and premium taxes, less commissions earned on reinsurance ceded and policy fees earned.

Interest Expense

Interest expense was$0.1 million for the three months ended September 30, 2015, compared with nothing for the three months ended September 30, 2014.

Provision for Income Tax Expense

The provision for income tax expense was $7.1 million for the three months ended September 30, 2015, compared with $4.2 million for the three months ended September 30, 2014. The effective rate for income taxes was 40.02% for the three months ended September 30, 2015, compared with 36.91% for the three months ended September 30, 2014.

Non-Controlling Interest

The benefit to the consolidated statement of operations for non-controlling interest was less than $0.1 million for the three months ended September 30, 2015, compared with nothing for the three months ended September 30, 2014.  Because our interest in Monarch Delaware is approximately 42.4%, our consolidated statement of operations has been adjusted for the other 57.6% non-controlling interest held by our joint-venture partners.

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Federated National Holding Company

Net Income Attributable to FNHC Common Stockholders

Net income attributable to FNHC common stockholders increased $3.4 million, or 46.6%, to $10.6 million for the three months ended September 30, 2015, compared with $7.2 million for the three months ended September 30, 2014.

Results of Operations

Nine Months Ended September 30, 2015 Compared with Nine Months Ended September 30, 2014

Our recent investment in MNHC has impacted our consolidated statement of operations for the nine months ended September 30, 2015 by inclusion of MNHC’S revenue and expense line items and recognition of the non-controlling interest when computing net income attributable to FNHC common stockholders.

Gross Premiums Written

Gross premiums written increased $88.1 million, or 31.4%, to $368.6 million for the nine months ended September 30, 2015, compared with $280.5 million for the nine months ended September 30, 2014. The following table denotes gross premiums written by major product line. The increase in gross premiums written during the 2015 period is primarily due to both the increase in the sale of homeowners’ policies and, as noted on page 9, to the transition from using analytic models to our approved rule-based underwriting. Beginning in 2013, our improved underwriting, risk management and product distribution enabled us to write more policies than in prior years.

	Nine Months Ended September 30,
	2015					2014
			(Dollars in Thousands)
	Amount		Percentage			Amount		Percentage
Homeowners'	$	340,205		92.30	%	$	255,858		91.21	%
Commercial General Liability		11,123		3.02	%		9,473		3.38	%
Federal Flood		6,397		1.74	%		6,192		2.21	%
Automobile		10,836		2.94	%		8,964		3.20	%
Gross written premiums	$	368,561		100.00	%	$	280,487		100.00	%

The increase in the sale of homeowners’ policies by $84.3 million, or 33.0%, to $340.2 million for the nine months ended September 30, 2015, compared with $255.9 million for the nine months ended September 30, 2014, is gross of reinsurance costs and net of Florida’s mandated homeowners’ wind mitigation discounts. As noted on page 9, the increase in gross premiums written can be partially attributed to the transition from using analytic models to our approved rule-based underwriting. We offer premium discounts for wind mitigation efforts by policyholders, as required by Florida law. As of September 30, 2015, 74.6% of our in-force homeowners’ policyholders were receiving wind mitigation credits totaling approximately $414.1 million (a 50.2% reduction of in-force premium), while 76.9% of our in-force homeowners’ policyholders were receiving wind mitigation credits totaling approximately $312.8 million, (a 50.1% reduction of in-force premium), as of September 30, 2014.

During the nine months ended September 30, 2015, $75.7 million or 22.2% of the $340.2  million of the homeowners’ premiums we underwrote were produced under ISA. The $26.3 million increased homeowners’ premiums we underwrote under ISA represents 31.2% of the $84.3 million increased total homeowners’ premiums we underwrote during the nine months ended September 30, 2015. During the nine months ended September 30, 2014, $49.4 million or 19.3% of the $255.9 million of the homeowners’ premiums we underwrote were produced under ISA. This network of agents began writing for FNIC in March 2013.

During the nine months ended September 30, 2015 and 2014, the change to the cumulative wind mitigation credits afforded our policyholders totaled $77.5 million and $96.0 million, respectively. Our number of in-force homeowners’ policies increased by approximately 49,200 or 27.0%, to approximately 231,800 as of September 30, 2015, compared with approximately 182,600 as of December 31, 2014.

We are required to report write-your-own flood premiums on a direct and 100% ceded basis.

The Company’s sale of commercial general liability policies increased $1.6 million, or 17.4%, to $11.1 million for the nine months ended September 30, 2015, compared with$9.5 million for the nine months ended September 30, 2014.

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Federated National Holding Company

The following table sets forth the amounts and percentages of our gross premiums written in connection with our commercial general liability program by state.

	Nine Months Ended September 30,
	2015					2014
	Amount		Percentage			Amount		Percentage
	(Dollars in Thousands)
State
Alabama	$	121		1.09	%	$	124		1.31	%
Florida		10,475		94.17	%		8,730		92.16	%
Georgia		59		0.53	%		7		0.07	%
Louisiana		51		0.46	%		82		0.87	%
Texas		417		3.75	%		530		5.59	%
Total	$	11,123		100.00	%	$	9,473		100.00	%

The Company’s sale of auto insurance policies increased $1.8 million, or 20.9%, to $10.8 million for the nine months ended September 30, 2015, compared with$9.0 million for the nine months ended September 30, 2014.

We are currently rated by Demotech, Inc. (“Demotech”) as "A" ("Exceptional"), which is the third of seven ratings, and defined as “Regardless of the severity of a general economic downturn or deterioration in the insurance cycle, insurers earning a Financial Stability Rating (“FSR”) of “A” possess “Exceptional” financial stability related to maintaining surplus as regards to policyholders”. Demotech’s ratings are based upon factors of concern to agents, reinsurers and policyholders and are not primarily directed toward the protection of investors. Our Demotech rating could be jeopardized by factors including adverse development and various surplus related ratio exceptions.

The withdrawal of our rating could limit or prevent us from writing or renewing desirable insurance policies, from competing with insurers who have higher ratings, from obtaining adequate reinsurance, or from borrowing on a line of credit. The withdrawal of our rating could have a material adverse effect on the Company’s results of operations and financial position because the Company’s insurance products might no longer be acceptable to the secondary marketplace and mortgage lenders. Furthermore, a withdrawal of our rating could prevent independent agents from selling and servicing our insurance products.

Gross Premiums Ceded

Gross premiums ceded increased $51.9 million, or 29.0%, to $231.0 million for the nine months ended September 30, 2015, compared with $179.1 million for the nine months ended September 30, 2014. The change was due to a $49.8 million increase in homeowners’, a $0.1 million increase in commercial general liability, a $0.2 million increase in flood and a $1.8 million increase in automobile. Gross premiums ceded relating to our homeowners’ are increased by our 30% and 10% property quota share agreements effective July 1, 2014 and July 1, 2015, respectively, and were also impacted by an additional reinsurance coverage purchased for the 2015-2016 season as compared with the 2014-2015 season.

Increase in Prepaid Reinsurance Premiums

The increase in prepaid reinsurance premiums was $76.8million for the nine months ended September 30, 2015, compared with $86.9 million for the nine months ended September 30, 2014.The decreased benefit to written premium is associated with the timing of our reinsurance payments measured against the term of the underlying reinsurance policies.

Increase in Unearned Premiums

The increase in unearned premiums was $58.0 million for the nine months ended September 30, 2015, compared with $58.3 million for the nine months ended September 30, 2014. The decreased charge to written premium was due to a $54.0 million increase in unearned homeowners’ insurance premiums, a $0.7 million increase in unearned flood premiums, $1.1 million increase in unearned commercial general liability premiums and a $2.2 million increase in unearned automobile insurance premiums during the nine months ended September 30, 2015. These changes are a result of differences in written premium volume during this period as compared with the same period last year. See “Gross Premiums Written” above.

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Federated National Holding Company

Net Premiums Earned

Net premiums earned increased $26.3 million, or 20.3%, to $156.3 million for the nine months ended September 30, 2015, compared with $130.0 million for the nine months ended September 30, 2014.

The following table denotes net premiums earned by product line.

	Nine Months Ended September 30,
	2015					2014
	Amount		Percentage			Amount		Percentage
			(Dollars in Thousands)
Homeowners'	$	144,712		92.59	%	$	119,903		92.26	%
Commercial General Liability		9,547		6.11	%		7,869		6.06	%
Automobile		2,039		1.30	%		2,183		1.68	%
Net premiums earned	$	156,298		100.00	%	$	129,955		100.00	%

The $24.8 million increase in homeowners’ net premiums earned is due to a $84.3 million increase in gross written premium as discussed, a $49.7 million increase in gross premiums ceded and a $9.8 million decrease in the net change to prepaid reinsurance premiums and unearned premium.

The $1.6 million increase in commercial general liability net premiums earned is a result of a $1.6 million increase in gross written premium, a $0.1 million increase in gross premiums ceded remained and a $0.1 million decrease in the net change to prepaid reinsurance premiums and unearned premium.

The $0.1 million decrease in automobile net premiums earned is a result of a $1.9 million increase in gross written premium as discussed, a $1.8 million increase in gross premiums ceded and a $0.2 million increase in the net change to prepaid reinsurance premiums and unearned premium.

Commission Income

Commission income increased $1.0 million, or 28.3%, to $4.3 million for the nine months ended September 30, 2015, compared with $3.3 million for the nine months ended September 30, 2014. The primary sources of our commission income are our managing general agent services, write-your-own flood premiums and our independent insurance agency, Insure-Link.

Finance Revenue

Finance revenue increased $0.2 million, or 25.7%, to $1.3 million for the nine months ended September 30, 2015, compared with $1.1 million for the nine months ended September 30, 2014. The primary source of finance revenue is service fees and interest income from our direct billing program, wherein we accept receivables from our insureds.

Direct Written Policy Fees

Direct written policy fees increased $1.5 million, or 22.9%, to $7.9 million for the nine months ended September 30, 2015, compared with $6.4 million for the nine months ended September 30, 2014. The change is due to the increase in gross premiums written during this same period.

Net Investment Income

Net investment income increased $1.4 million, or 37.2%, to $5.2 million for the nine months ended September 30, 2015, compared with $3.8 million for the nine months ended September 30, 2014.

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Federated National Holding Company

Our investment yields, net and gross of investment expenses, excluding equities and including cash, were 2.3% and 2.4% respectively, for the nine months ended September 30, 2015. Our investment yields, net and gross of investment expenses, excluding equities and including cash, were 2.1% and 2.4%, respectively, for the nine months ended September 30, 2014.

Our investment yield, net and gross of investment expenses measured against debt securities, excluding equities and cash, were 2.4% and 2.6%, respectively, for the nine months ended September 30, 2015. Our investment yield, net and gross of investment expenses measured against debt securities, excluding equities and cash, were 2.1% and 2.5%, respectively, for the nine months ended September 30, 2014.

See also “Analysis of Financial Condition as of September 30, 2015 Compared with December 31, 2014 – Investments” for a further discussion on our investment portfolio.

Net Realized Investment Gains

Net realized investment gains totaled $3.7 million for the nine months ended September 30, 2015, compared with $4.0 million during the nine months ended September 30, 2014.

The table below depicts the net realized investment gains (losses) by investment category during the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015			2014
	(Dollars in Thousands)
Realized gains:
Debt securities	$	973		$	533
Equity securities		4,189			4,013
Total realized gains		5,162			4,546
Realized losses:
Debt securities		(504	)		(118	)
Equity securities		(915	)		(381	)
Total realized losses		(1,419	)		(499	)
Net realized gains on investments	$	3,743		$	4,047

Other Income

Other income increased to $4.5 million for the nine months ended September 30, 2015, compared with $1.5 million for the nine months ended September 30, 2014. The increase is primarily due to the commission sharing agreement with our reinsurance intermediary.

Quota-Share Profit Sharing

Quota-share profit sharing totaled $3.1 million for the nine months ended September 30, 2015, compared with $1.7 million for the nine months ended September 30, 2014.

In conjunction with our third quarter 2015 analysis of actual experience to date under the July 1, 2014 quota share reinsurance contract, we re-evaluated the accounting treatment for quota share reinsurance contracts with retrospective rating provisions. As a result of this re-evaluation, we have concluded reinsurance contracts which have retrospective rating provisions should be accounted for under Accounting Standards Codification 944, Financial Services — Insurance (“ASC 944”), where amounts due to (from) the assuming companies are accrued based on estimated contract experience to date as though the contracts were terminated. The adjustment to the accounting treatment related to reinsurance contracts with retrospective rated provisions will result in the following changes:

(a) We eliminated recording of future estimated quota share profits in one line item, “Quota Share Profit Sharing,” in the financial statements.

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Federated National Holding Company

(b) Amounts due to (from) the assuming companies have been accrued based on estimated contract experience to date as though the contracts were terminated. These accruals impacted the following income statement line items: gross ceded premiums, loss and loss adjustment expenses, and deferred policy acquisition costs.

The adjustments to our accounting for the July 1, 2014 quota share reinsurance contract, inclusive of other adjustments, are not material in any prior quarter or annual period based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletin 108.

As a result, we recorded these adjustments during the third quarter of 2015. These adjustments increased net income by $2.2 million for the nine month period ended on September 30, 2015.

Additionally, the quota share reinsurance adjustments impacted the following income statement line items for the nine month period ended on September 30, 2015:

● Gross ceded premiums decreased by $10.9 million,

● Loss and loss adjustment expenses increased by $4.5 million, and

● Deferred acquisition costs increased by $1.5 million.

Losses and LAE

Losses and LAE, our most significant expense, represent actual payments made and changes in estimated future payments to be made to or on behalf of our policyholders, including expenses required to settle claims and losses. We revise our estimates based on the results of analysis of estimated future payments to be made. This process assumes that experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting future events.

Losses and LAE increased $15.0 million, or 24.9%, to $75.5 million for the nine months ended September 30, 2015, compared with $60.5 million for the nine months ended September 30, 2014. The overall change includes a $14.8 million increase in our homeowners’ program, a $1.3 million increase in our commercial general liability program and a $1.1 million decrease in connection with our automobile program.

The change to losses and LAE typically reflects the change to reserves in response to the change in the number of policies we wrote during the same period.

We continue to revise our estimates of the ultimate financial impact of claims made resulting from past storms. The revisions to our estimates are based on our analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) Company and industry historical loss experience; (iii) legislative enactments, judicial decisions, legal developments in the awarding of damages, and (iv) trends in general economic conditions, including the effects of inflation.

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Federated National Holding Company

The composition of unpaid losses and LAE by product line is as follows.

	September 30, 2015						December 31, 2014
	Case		Bulk		Total		Case		Bulk		Total
	(Dollars in Thousands)						(Dollars in Thousands)
Homeowners'	$	26,684	$	32,675	$	59,359	$	14,223	$	35,192	$	49,415
Commercial General Liability		5,026		14,467		19,493		5,646		12,505		18,151
Automobile		3,879		8,942		12,821		3,672		7,092		10,764
Total	$	35,589	$	56,084	$	91,673	$	23,541	$	54,789	$	78,330

Factors that affect unpaid losses and LAE include the estimates made on a claim-by-claim basis known as “case reserves” coupled with bulk estimates known as IBNR. Periodic estimates by management of the ultimate costs required to settle all claim files are based on the Company’s analysis of historical data and estimations of the impact of numerous factors such as (i) per claim information; (ii) Company and industry historical loss experience; (iii) legislative enactments, judicial decisions, legal developments in the awarding of damages, and changes in political attitudes; and (iv) trends in general economic conditions, including the effects of inflation.

Management revises its estimates based on the results of its analysis. This process assumes that experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for estimating the ultimate settlement of all claims. There is no precise method for subsequently evaluating the impact of any specific factor on the adequacy of the reserves, because the eventual redundancy or deficiency is affected by multiple factors. Because of our process, reserves were increased by approximately $13.3 million during the nine months ended September 30, 2015. This overall change includes a $9.9 million increase in reserves for our homeowners’ program, a $1.3 million increase in reserves for commercial general liability program and a $2.1 million increase in reserves for our automobile program.

In accordance with GAAP and as discussed above, our loss ratio is computed as losses and LAE divided by net premiums earned. A lower loss ratio generally results in higher operating income. Our loss ratio for the nine months ended September 30, 2015 was 48.3% compared with 46.5% for the same period in 2014.

Operating and Underwriting Expenses

Operating and underwriting expenses increased $10.3 million, or 70.5%, to $24.9 million for the nine months ended September 30, 2015, compared with $14.6 million for the nine months ended September 30, 2014. The change is due to increases in our SageSure profit sharing agreement, premium taxes, professional service fees, licenses and other such expenses.

Salaries and Wages

Salaries and wages increased $7.6 million, or 72.0%, to $18.1 million for the nine months ended September 30, 2015, compared with $10.5 million for the nine months ended September 30, 2014. The change is due to the recognition of increased employment bonuses and stock-based compensation associated in part with our increased employment base. The charge to operations for stock-based compensation, in accordance with FASB guidance, was approximately $2,305,700 during the nine months ended September 30, 2015 compared with approximately $831,000 for the nine months ended September 30, 2014.

Policy Acquisition Costs

Policy Acquisition Costs decreased $6.2 million, or 26.7%, to $16.9 million for the nine months ended September 30, 2015, compared with $23.1 million for the nine months ended September 30, 2014. The change to policy acquisition costs typically corresponds to the change in net premiums earned during the same period, and consists of the actual policy acquisition costs, including commissions, payroll and premium taxes, less commissions earned on reinsurance ceded and policy fees earned. Policy Acquisition Costs relating to our homeowners’ are impacted by our 30% and 10% property quota share agreements effective July 1, 2014 and July 1, 2015, respectively.

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Federated National Holding Company

Interest Expense

Interest expense was $0.2 million for the nine months ended September 30, 2015, compared with nothing for the nine months ended September 30, 2014.

Provision for Income Tax Expense

The provision for income tax expense was $19.5 million for the nine months ended September 30, 2015, compared with $16.0 million for the nine months ended September 30, 2014. The effective rate for income taxes was 38.46% for the nine months ended September 30, 2015, compared with 36.99% for the nine months ended September 30, 2014.

Non-Controlling Interest

The benefit to the consolidated statement of operations for non-controlling interest was $0.4 million for the nine months ended September 30, 2015, compared with nothing for the nine months ended September 30, 2014. Because our interest in Monarch Delaware is approximately 42.4%, our consolidated statement of operations has been adjusted for the other 57.6% non-controlling interest held by our joint-venture partners.

Net Income Attributable to FNHC Common Stockholders

Net income attributable to FNHC common stockholders increased $4.4 million, or 16.2%, to $31.6 million for the nine months ended September 30, 2015, compared with $27.2 million for the nine months ended September 30, 2014.

Liquidity and Capital Resources

During the nine months ended September 30, 2015, our primary sources of capital included proceeds from the sale of investment securities, increased unearned premiums, recognition of a non-controlling interest, increased unpaid losses and LAE, increased accounts payable and accrued expenses, decreased deferred income tax expense, net of other comprehensive income, increased debt, decreased reinsurance recoverable, net and increased premium deposits and customer credit balances. Additional sources of capital included amortization of investment premium or discount, net, decreased contingent quota-share profit sharing, increased claims payments outstanding, non-cash compensation, a tax benefit related to non-cash compensation, depreciation and amortization, exercised stock options, decreased policy acquisition costs and non-cash impairment recognition. Because we are a holding company, we are largely dependent upon fees and commissions from our subsidiaries for cash flow.

During the nine months ended September 30, 2015 and 2014, operations provided net operating cash flow of $80.2 million and $58.7 million, respectively.

During the nine months ended September 30, 2015, operations generated $140.3 million of gross cash flow, due to a $58.0 million increase in unearned premiums, a $13.3 million increase in unpaid losses and LAE, a $5.5 million increase in accounts payable and accrued expenses, a $5.3 million decrease in deferred income tax expense, net of other comprehensive income, a $5.0 million increase in debt, a $4.2 million decrease in reinsurance recoverable, net, a $3.9 million increase in premium deposits and customer credit balances and $3.8 million of amortization of investment premium or discount, net. Additional sources of cash included a $3.5 million decrease in contingent quota-share profit sharing, a $3.1 million increase in claims payments outstanding, $2.9 million non-cash compensation, $0.5 million of depreciation and amortization and a $0.1 million decrease in policy acquisition costs, all in conjunction with $31.2 million of income before non-controlling interest.

During the nine months ended September 30, 2015, operations used $60.1 million of gross cash flow, due to a $41.0 million increase in prepaid reinsurance premiums, a $7.7 million increase in premiums receivable, net and a $4.0 million increase in income taxes recoverable. Additional uses of cash included $3.7 million in net realized investment gains, and a $3.7 million increase in other assets.

During the nine months ended September 30, 2015 and 2014, net cash used by investing activities was $61.9 million and $98.1 million, respectively. Our available-for-sale investment portfolio is highly liquid as it consists entirely of readily marketable securities. During the nine months ended September 30, 2015, investing activities generated $134.9 million and used $196.8 million.

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Federated National Holding Company

During the nine months ended September 30, 2015 and 2014, net financing activities provided $17.6 million and $43.8 million, respectively. In 2015, the sources of cash in connection with financing activities included $18.4 million from the recognition of a non-controlling interest, $0.9 million from a tax benefit related to non-cash compensation and $0.1 million from exercised stock options, while the useage included $1.8 million for dividends paid.

We offer direct billing in connection with our homeowners’ and commercial general liability programs. Direct billing is an agreement in which the insurance company accepts from the insured, as a receivable, a promise to pay the premium, as opposed to requiring the full amount of the policy at policy inception, either directly from the insured or from a premium finance company. The advantage of direct billing a policyholder by the insurance company is that we are not reliant on a credit facility, but remain able to charge and collect interest from the policyholder.

As discussed above, we have experienced significant growth, as evidenced by the 31.4% increase in gross premiums written during the first nine months of 2015 as compared with the same period in 2014. We believe that our current capital resources will be sufficient to meet currently anticipated working capital requirements. There can be no assurances, however, that such will be the case. We continue to evaluate our liquidity and the possibility that we may require additional working capital.

As of September 30, 2015, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as “structured finance” or “special purpose” entities, which were established for the purpose of facilitating off-balance-sheet arrangements or other contractually narrow or limited purposes. As such, management believes that we currently are not exposed to any financing, liquidity, market or credit risks that could arise if we had engaged in transactions of that type requiring disclosure herein.

Impact of Inflation and Changing Prices

The consolidated financial statements and related data presented herein have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Our primary assets and liabilities are monetary in nature. As a result, interest rates have a more significant impact on performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or with the same magnitude as the inflationary effect on the cost of paying losses and LAE.

Insurance premiums are established before we know the amount of losses and LAE and the extent to which inflation may affect such expenses. Consequently, we attempt to anticipate the future impact of inflation when establishing rate levels. While we attempt to charge adequate premiums, we may be limited in raising premium levels for competitive and regulatory reasons. Inflation may also affect the market value of our investment portfolio and the investment rate of return. Any future economic changes that result in prolonged and increasing levels of inflation could cause increases in the dollar amount of incurred losses and LAE and thereby materially adversely affect future liability requirements.

Item 3

Quantitative and Qualitative Disclosures about Market Risk

Our investment objective is to maximize total rate of return after federal income taxes while maintaining liquidity and minimizing risk. Our current investment policy limits investment in non-investment-grade debt securities (including high-yield bonds), and limits total investments in preferred stock, common stock and mortgage notes receivable. We also comply with applicable laws and regulations that further restrict the type, quality and concentration of our investments. In general, these laws and regulations permit investments, within specified limits and subject to certain qualifications, in federal, state and municipal obligations, corporate bonds, preferred and common equity securities and real estate mortgages.

Our investment policy is established by the Board of Directors Investment Committee and is reviewed on a regular basis. Pursuant to this investment policy, as of September 30, 2015, approximately 92% of investments were in debt securities and cash and cash equivalents, which are considered to be either held until maturity or available-for-sale, based upon our estimates of required liquidity. Approximately 98% of the debt securities are considered available-for-sale and are marked to market. We may in the future consider additional debt securities to be held-to-maturity and carried at amortized cost. We do not use any swaps, options, futures or forward contracts to hedge or enhance our investment portfolio.

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Federated National Holding Company

The following table summarizes, by type, our investments as of September 30, 2015 and December 31, 2014.

	September 30, 2015					December 31, 2014
	Carrying Amount		Percent of Total			Carrying Amount		Percent of Total
	(Dollars in Thousands)
Debt securities, at fair value:
United States government obligations and authorities	$	65,994		17.08	%	$	62,323		18.84	%
Obligations of states and political subdivisions		108,597		28.11	%		91,614		27.70	%
Corporate		155,324		40.20	%		119,024		35.99	%
International		12,000		3.11	%		11,138		3.37	%
		341,915		88.50	%		284,099		85.90	%
Debt securities, at amortized cost:
United States government obligations and authorities		4,221		1.09	%		4,490		1.36	%
Corporate		2,101		0.54	%		2,681		0.81	%
International		65		0.02	%		246		0.07	%
		6,387		1.65	%		7,417		2.24	%
Total debt securities		348,302		90.15	%		291,516		88.14	%
Equity securities, at fair value:		38,086		9.85	%		39,247		11.86	%
Total investments	$	386,388		100.00	%	$	330,763		100.00	%

Available-for-sale debt securities are carried on the balance sheet at market and held-to-maturity debt securities are carried on the balance sheet at amortized cost. As of September 30, 2015 and December 31, 2014, debt securities has had the following quality ratings by S&P and for securities not assigned a rating by S&P, Moody’s or Fitch ratings were used.

	September 30, 2015					December 31, 2014
	Carrying Amount		Percent of Total			Carrying Amount		Percent of Total
	(Dollars in Thousands)
AAA	$	43,191		12.40	%	$	40,119		13.76	%
AA		146,863		42.16	%		125,385		43.01	%
A		80,085		22.99	%		67,818		23.26	%
BBB		77,203		22.17	%		58,172		19.96	%
BB		960		0.28	%		-		-
Not rated		-		0.00	%		22		0.01	%
	$	348,302		100.00	%	$	291,516		100.00	%

The following table summarizes, by maturity, the debt securities as of September 30, 2015 and December 31, 2014.

	September 30, 2015					December 31, 2014
	Carrying Amount		Percent of Total			Carrying Amount		Percent of Total
	(Dollars in Thousands)
Matures In:
One year or less	$	19,657		5.64	%	$	16,796		5.76	%
One year to five years		190,010		54.56	%		174,260		59.78	%
Five years to 10 years		138,602		39.79	%		100,427		34.45	%
More than 10 years		33		0.01	%		33		0.01	%
Total debt securities	$	348,302		100.00	%	$	291,516		100.00	%

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Federated National Holding Company

At September 30, 2015, the duration of the debt portfolio was approximately 3.8 years.

The following table provides information about the financial instruments as of September 30, 2015 that are sensitive to changes in interest rates. The table presents principal cash flows and the related weighted average interest rate by expected maturity date based upon par values.

	2015			2016			2017			2018			2019			Thereafter			Total			Carrying Amount
Principal amount by expected maturity:
United States government obligations and authorities	$	-		$	1,439		$	4,698		$	4,665		$	6,811		$	26,161		$	43,774		$	44,831
Obligations of states and political subdivisions		1,240			8,305			18,420			13,245			13,080			42,015			96,305			108,597
Corporate securities		711			12,989			21,444			22,049			15,938			68,817			141,948			147,987
International securities		-			1,250			2,238			3,095			1,093			4,074			11,750			12,065
Collateralized mortgage obligations		833			3,166			3,549			500			3,038			21,906			32,992			34,822
Equity securities, at market		-			-			-			-			-			-			-			38,086
All investments	$	2,784		$	27,149		$	50,349		$	43,554		$	39,960		$	162,973		$	326,769		$	386,388
Weighted average interest rate by expected maturity:
United States government obligations and authorities		0.00	%		1.94	%		0.70	%		1.31	%		1.70	%		2.11	%		1.80	%
Obligations of states and political subdivisions		3.93	%		4.72	%		4.52	%		5.00	%		5.00	%		4.87	%		4.81	%
Corporate securities		3.01	%		4.03	%		3.40	%		4.21	%		4.55	%		3.93	%		3.97	%
International securities		0.00	%		2.46	%		3.18	%		3.02	%		2.92	%		4.35	%		3.44	%
Collateralized mortgage obligations		5.39	%		5.58	%		4.05	%		3.02	%		3.84	%		3.80	%		4.03	%
Equity securities, at market		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
All investments		3.62	%		4.12	%		3.58	%		4.05	%		4.07	%		3.84	%		3.91	%

Item 4

Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as of September 30, 2015. Based upon their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of September 30, 2015, were effective to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes during the nine months ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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Federated National Holding Company

Part II: OTHER INFORMATION

Item 1

Legal Proceedings

See Item 1 of Part I, “Financial Statements – Note 4 – Commitments and Contingencies.”

Item 1A

Risk Factors

There have been no material changes from the risk factors previously disclosed in Item 1, Risk Factors, in the Company’s Form 10-K for the fiscal year ended December 31, 2014.

Additional Risk Factors

The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

(a) None

(b) None

(c) None

Item 3

Defaults upon Senior Securities

(a) None

(b) None

Item 4

Mine Safety Disclosures

Not applicable

Item 5

Other Information

(a) None

(b) None

- 61 -

Federated National Holding Company

Item 6

Exhibits

10.1 Excess Catastrophe Reinsurance Contract, effective July 1, 2015, between Federated National Insurance Company and subscribing reinsurers. *

10.2 Reinstatement Premium Protection Reinsurance Contract, effective July 1, 2015, between Federated National Insurance Company and subscribing reinsurers. *

10.3 Homeowners Quota Share Reinsurance Contract, effective July 1, 2015 between Federated National Insurance Company and subscribing reinsurers.*

10.4 Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract, effective July 1, 2015 between Federated National Insurance Company and subscribing reinsurers.*

10.5 Non-Florida Reinstatement Premium Protection Reinsurance Contract, effective July 1, 2015 between Federated National Insurance Company and subscribing reinsurers.*

10.6 FHCF Supplement Layer Reinsurance Contract, effective June 1, 2015 between Federated National Insurance Company and subscribing reinsurers. *

10.7 Final Order dated October 21, 2015 from the Florida Office of Insurance Regulation to Federated National Insurance Company (incorporated by reference to Exhibit 99.1 in the Company’s Current Report on Form 8-K filed with the SEC on October 26, 2015).

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. *

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act. *

32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act. *

32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act. *

101.INS-XBRL Instance Document. ***

101.SCH-XBRL Taxonomy Extension Schema Document. ***

101.CAL-XBRL Taxonomy Extension Calculation Linkbase Document. ***

101.LAB-XBRL Taxonomy Extension Label Linkbase Document. ***

101.PRE-XBRL Taxonomy Extension Presentation Linkbase Document. ***

*filed herewith

** filed herewith. Portions of this document are omitted pursuant to an application for an order for confidential treatment pursuant to Rule 24b-2 under the Exchange Act. Confidential portions of this document have been filed separately with the Securities and Exchange Commission.

*** In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

- 62 -

Federated National Holding Company

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FEDERATED NATIONAL HOLDING COMPANY
	By:	/s/ Michael H. Braun
		Michael H. Braun, Chief Executive Officer
		(Principal Executive Officer)
		/s/ Peter J. Prygelski, III
		Peter J. Prygelski, III, Chief Financial Officer
		(Principal Financial and Accounting Officer)
Date: November 9, 2015

- 63 -

Federated National Holding Company

EXHIBIT INDEX

10.1 Excess Catastrophe Reinsurance Contract, effective July 1, 2015, between Federated National Insurance Company and subscribing reinsurers. *

10.2 Reinstatement Premium Protection Reinsurance Contract, effective July 1, 2015, between Federated National Insurance Company and subscribing reinsurers. *

10.3 Homeowners Quota Share Reinsurance Contract, effective July 1, 2015 between Federated National Insurance Company and subscribing reinsurers.*

10.4 Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract, effective July 1, 2015 between Federated National Insurance Company and subscribing reinsurers.*

10.5 Non-Florida Reinstatement Premium Protection Reinsurance Contract, effective July 1, 2015 between Federated National Insurance Company and subscribing reinsurers.*

10.6 FHCF Supplement Layer Reinsurance Contract, effective June 1, 2015 between Federated National Insurance Company and subscribing reinsurers. *

10.7 Final Order dated October 21, 2015 from the Florida Office of Insurance Regulation to Federated National Insurance Company (incorporated by reference to Exhibit 99.1 in the Company’s Current Report on Form 8-K filed with the SEC on October 26, 2015).

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act. *

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act. *

32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act. *

32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act. *

101.INS-XBRL Instance Document. ***

101.SCH-XBRL Taxonomy Extension Schema Document. ***

101.CAL-XBRL Taxonomy Extension Calculation Linkbase Document. ***

101.LAB-XBRL Taxonomy Extension Label Linkbase Document. ***

101.PRE-XBRL Taxonomy Extension Presentation Linkbase Document. ***

*filed herewith

** filed herewith. Portions of this document are omitted pursuant to an application for an order for confidential treatment pursuant to Rule 24b-2 under the Exchange Act. Confidential portions of this document have been filed separately with the Securities and Exchange Commission.

*** In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

- 64 -

EX-10.1

Exhibit 10.1

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

First Excess Catastrophe

Reinsurer(s)	Participation(s)
Arch Reinsurance Ltd.*		3.60	%
Argo Re Ltd.		0.95	%
Aspen Bermuda Limited		1.25	%
Endurance Specialty Insurance Ltd.		15.00	%
Everest Reinsurance Company		12.00	%
Hamilton Re, Ltd.		4.00	%
Partner Reinsurance Company Ltd.*		2.00	%
RLI Insurance Company		3.20	%
Transatlantic Reinsurance Company		2.00	%
Through Aon UK Limited trading as Aon Benfield (Placement Only)
Amlin Bermuda, branch of Amlin AG		2.50	%
China Reinsurance (Group) Corporation		0.50	%
General Insurance Corporation of India		2.50	%
Through Aon UK Limited trading as Aon Benfield
Lloyd's Underwriters Per Signing Page(s)*		8.50	%
SCOR Global P&C SE, Paris, Zurich Branch*		2.00	%
Total		60.00	%

  Page 1 of 4

Second Excess Catastrophe

Reinsurer(s)	Participation(s)
ACE Tempest Reinsurance Ltd.		9.50	%
American Standard Insurance Company of Wisconsin		1.00	%
Arch Reinsurance Ltd.*		7.00	%
Argo Re Ltd.		0.75	%
Ariel Re Bda Limited for and on behalf of Ariel Syndicate No. 1910*		4.00	%
Aspen Bermuda Limited		2.30	%
DaVinci Reinsurance Ltd.		1.90	%
Endurance Specialty Insurance Ltd.		17.50	%
Everest Reinsurance Company		10.00	%
Hamilton Re, Ltd.		4.00	%
Hiscox Insurance Company (Bermuda) Limited		0.90	%
Partner Reinsurance Company Ltd.*		10.00	%
Renaissance Reinsurance Ltd.		2.85	%
RLI Insurance Company		1.80	%
Transatlantic Reinsurance Company		5.00	%
XL Re Ltd		3.00	%
Through Aon UK Limited trading as Aon Benfield (Placement Only)
Amlin Bermuda, branch of Amlin AG		0.75	%
Ascot Underwriting (Bermuda) Limited for and on behalf of American International Reinsurance Company, Ltd.		3.00	%
China Reinsurance (Group) Corporation		0.75	%
General Insurance Corporation of India		2.00	%
Liberty Syndicates LIB 4472, Paris Office Underwriting for and on behalf of Lloyd's Syndicate No. 4472		0.50	%
Through Aon UK Limited trading as Aon Benfield
Lloyd's Underwriters Per Signing Page(s)*		11.50	%
Total		100.00	%

  Page 2 of 4

Third Excess Catastrophe

Reinsurer(s)	Participation(s)
Allied World Assurance Company, Ltd		10.00	%
American Standard Insurance Company of Wisconsin		1.50	%
Argo Re Ltd.		3.25	%
Ariel Re Bda Limited for and on behalf of Ariel Syndicate No. 1910*		4.00	%
Aspen Bermuda Limited		2.35	%
BGS Services (Bermuda) Limited  for and on behalf of Lloyd's Syndicate No. 2987		4.50	%
Hamilton Re, Ltd.		2.00	%
Odyssey Reinsurance Company		2.00	%
Qatar Reinsurance Company LLC		1.25	%
QBE Reinsurance Corporation		0.40	%
Tokio Millennium Re AG (Bermuda Branch)		2.25	%
Transatlantic Reinsurance Company		11.00	%
XL Re Ltd		4.50	%
Through Aon UK Limited trading as Aon Benfield (Placement Only)
Amlin Bermuda, branch of Amlin AG		3.00	%
Ascot Underwriting (Bermuda) Limited for and on behalf of American International Reinsurance Company, Ltd.		13.00	%
China Reinsurance (Group) Corporation		0.75	%
General Insurance Corporation of India		2.00	%
Liberty Syndicates LIB 4472, Paris Office Underwriting for and on behalf of  Lloyd's Syndicate No. 4472		0.50	%
Peak Reinsurance Company Limited		2.00	%
Pioneer Underwriting Limited for and on behalf of Peak Reinsurance Company Limited		0.60	%
Through Aon UK Limited trading as Aon Benfield
Lloyd's Underwriters Per Signing Page(s)*		29.15	%
Total		100.00	%

  Page 3 of 4

Fourth Excess Catastrophe

Reinsurer(s)	Participation(s)
ACE Tempest Reinsurance Ltd.		2.00	%
Allied World Assurance Company, Ltd		4.50	%
American Agricultural Insurance Company		0.50	%
American Standard Insurance Company of Wisconsin		2.75	%
Arch Reinsurance Ltd.*		6.00	%
Aspen Bermuda Limited		2.50	%
BGS Services (Bermuda) Limited for and on behalf of Lloyd's Syndicate No. 2987		4.50	%
DaVinci Reinsurance Ltd.		3.06	%
Hamilton Re, Ltd.		2.00	%
Odyssey Reinsurance Company		1.95	%
Partner Reinsurance Company Ltd.*		1.50	%
Qatar Reinsurance Company LLC		1.50	%
QBE Reinsurance Corporation		0.40	%
Renaissance Reinsurance Ltd.		4.59	%
Transatlantic Reinsurance Company		7.00	%
XL Re Ltd		7.00	%
Through Aon UK Limited trading as Aon Benfield (Placement Only)
Amlin Bermuda, branch of Amlin AG		3.00	%
Ascot Underwriting (Bermuda) Limited for and on behalf of American International Reinsurance Company, Ltd.		5.50	%
China Reinsurance (Group) Corporation		0.75	%
Fubon Insurance Co., Ltd.		1.50	%
General Insurance Corporation of India		2.00	%
Liberty Syndicates LIB 4472, Paris Office Underwriting for and on behalf of Lloyd's Syndicate No. 4472		1.00	%
Peak Reinsurance Company Limited		2.00	%
Pioneer Underwriting Limited for and on behalf of Peak Reinsurance Company Limited		1.00	%
Pioneer Underwriting Limited for and on behalf of Taiping Reinsurance Co. Ltd.		1.00	%
Through Aon UK Limited trading as Aon Benfield
Lloyd's Underwriters Per Signing Page(s)*		30.50	%
Total		100.00	%

*Both the Company and the Subscribing Reinsurer sign the Interests and Liabilities Agreement.

  Page 4 of 4

Table of Contents

Article		Page
1	Classes of Business Reinsured	1
2	Commencement and Termination	1
3	Territory	3
4	Exclusions	3
5	Retention and Limit	4
6	Florida Hurricane Catastrophe Fund	5
7	Other Reinsurance	5
8	Reinstatement	6
9	Definitions	6
10	Loss Occurrence	8
11	Loss Notices and Settlements	9
12	Cash Call	9
13	Salvage and Subrogation	9
14	Reinsurance Premium	10
15	Sanctions	11
16	Late Payments	11
17	Offset	12
18	Access to Records	12
19	Liability of the Reinsurer	12
20	Net Retained Lines (BRMA 32E)	13
21	Errors and Omissions (BRMA 14F)	13
22	Currency (BRMA 12A)	13
23	Taxes (BRMA 50B)	13
24	Federal Excise Tax (BRMA 17D)	14
25	Foreign Account Tax Compliance Act	14
26	Reserves	14
27	Insolvency	15
28	Arbitration	16
29	Service of Suit (BRMA 49C)	17
30	Severability (BRMA 72E)	17
31	Governing Law (BRMA 71B)	18
32	Confidentiality	18
33	Non-Waiver	19
34	Notices and Contract Execution	19
35	Intermediary	20
	Schedule A

Excess Catastrophe Reinsurance Contract

Effective: July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

(hereinafter referred to as the "Company")

and

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the "Reinsurer")

Article 1 - Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies in force at the effective time and date hereof or issued or renewed at or after that time and date, and classified by the Company as Property business, including but not limited to, Dwelling Fire, Inland Marine, Mobile Home, Commercial and Homeowners business (including any business assumed from Citizens Property Insurance Corporation), subject to the terms, conditions and limitations set forth herein and in Schedule A attached hereto.

Article 2 - Commencement and Termination

A. This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, with respect to losses arising out of loss occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2016.

B. Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur:

1. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or

2. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or

  Page 1

3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or

4. The Subscribing Reinsurer has become, or has announced its intention to become, merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or

5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or

6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or

8. The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or

9. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid; or

10. The Subscribing Reinsurer has failed to comply with the funding requirements set forth in the Reserves Article.

C. The "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2015 to 12:01 a.m., Eastern Standard Time, July 1, 2016.  However, if this Contract is terminated, the "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2015 to the effective time and date of termination.

D. If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract.

  Page 2

Article 3 - Territory

The territorial limits of this Contract shall be identical with those of the Company's policies.

Article 4 - Exclusions

A. This Contract does not apply to and specifically excludes the following:

1. Reinsurance assumed by the Company under obligatory reinsurance agreements, except business assumed by the Company from Citizens Property Insurance Corporation.

2. Hail damage to growing or standing crops.

3. Business rated, coded or classified as Flood insurance or which should have been rated, coded or classified as such.

4. Business rated, coded or classified as Mortgage Impairment and Difference in Conditions insurance or which should have been rated, coded or classified as such.

5. Title insurance and all forms of Financial Guarantee, Credit and Insolvency.

6. Aviation, Ocean Marine, Boiler and Machinery, Fidelity and Surety, Accident and Health, Animal Mortality and Workers Compensation and Employers Liability.

7. Errors and Omissions, Malpractice and any other type of Professional Liability insurance.

8. Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke.  Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company's property loss under the applicable original policy.

9. Loss or liability as excluded under the provisions of the "War Exclusion Clause" attached to and forming part of this Contract.

10. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)" attached to and forming part of this Contract.

11. Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the FHCF or Citizens Property Insurance Corporation.

12. Loss or liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund.  "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

  Page 3

13. Losses in the respect of overhead transmission and distribution lines other than those on or within 150 meters (or 500 feet) of the insured premises.

14. Mold, unless resulting from a peril otherwise covered under the policy involved.

15. Loss or liability as excluded under the provisions of the "Terrorism Exclusion" attached to and forming part of this Contract.

16. All property loss, damage, destruction, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including, but not limited to, Computer Virus) or loss of use, reduction in functionality, cost, expense or whatsoever nature resulting therefrom, unless resulting from a peril otherwise covered under the policy involved.

"Electronic Data" as used herein means facts, concepts and information converted to a form usable for communications, interpretation or processing by electronic and electromechanical data processing or electronically-controlled equipment and includes programs, software and other coded instructions for the processing and manipulation of data or the direction and manipulation of such equipment.

"Computer Virus" as used herein means a set of corrupting, harmful or otherwise unauthorized instructions or code, including a set of maliciously-introduced, unauthorized instructions or code, that propagate themselves through a computer system network of whatsoever nature.

However, in the event that a peril otherwise covered under the policy results from any of the matters described above, this Contract, subject to all other terms and conditions, will cover physical damage directly caused by such listed peril.

Article 5 - Retention and Limit

A. The Company shall retain and be liable for the first $21,500,000 of ultimate net loss arising out of each loss occurrence.  The Reinsurer shall then be liable, as respects each excess layer, for the amount by which such ultimate net loss exceeds the Company's retention, but the liability of the Reinsurer under each excess layer shall not exceed the amount, shown as "Reinsurer's Per Occurrence Limit" for that excess layer in Schedule A attached hereto, as respects any one loss occurrence.

Whether a loss occurrence results in an ultimate net loss under one or more of the excess layers set forth in Schedule A attached hereto, the Company's retention will not exceed the first $21,500,000 of ultimate net loss arising out of such loss occurrence.

B. Recoveries shall always be made, in the first instance, under the lowest excess layer that is not entirely exhausted.  If there is any amount of ultimate net loss arising out of a loss occurrence in excess of the Company's retention under the lowest excess layer that has not been recovered thereunder, such amount shall be recovered under the next or subsequent excess layer or layers, as appropriate.  Recoveries under each excess layer set forth in Schedule A attached to and forming part of this Contract shall inure as follows:

  Page 4

1. Recoveries under the First Excess layer shall inure to the benefit of the Second Excess layer;

2. Recoveries under the First and Second Excess layers shall inure to the benefit of the Third Excess layer; and

3. Recoveries under the First, Second and Third Excess layers shall inure to the benefit of the Fourth Excess layer.

It is understood, however, that any fully exhausted excess layer or the exhausted portion of any excess layer shall no longer inure to the benefit of any subsequent excess layer(s).

C. Notwithstanding the provisions above, no claim shall be made hereunder as respects losses arising out of loss occurrences commencing during the term of this Contract unless at least two risks insured or reinsured by the Company are involved in such loss occurrence.  For purposes hereof, the Company shall be the sole judge of what constitutes "one risk."

Article 6 - Florida Hurricane Catastrophe Fund

The Company has purchased 75.0% of the FHCF mandatory layer of coverage and shall be deemed to inure to the benefit of this Contract.  Further, any FHCF loss reimbursement shall be deemed to be paid to the Company in accordance with the FHCF reimbursement contract at the full payout level set forth therein and will be deemed not to be reduced by any reduction or exhaustion of the FHCF's claims-paying capacity as respects the mandatory FHCF coverage.

Article 7 - Other Reinsurance

A. The Company shall be permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract.

B. Any loss reimbursement received under the Company's FHCF Supplement Layer Reinsurance Contract (15\F7V1085), which shall be deemed to be placed at 15.0%, shall be deemed to inure to the benefit of this Contract.

  Page 5

Article 8 - Reinstatement

A. In the event all or any portion of the reinsurance under any excess layer of reinsurance coverage provided by this Contract is exhausted by ultimate net loss, the amount so exhausted shall be reinstated immediately from the time the loss occurrence commences hereon.  For each amount so reinstated the Company agrees to pay additional premium equal to the product of the following:

1. The percentage of the occurrence limit for the excess layer reinstated (based on the ultimate net loss paid by the Reinsurer under that excess layer); times

2. The earned reinsurance premium for the excess layer reinstated for the term of this Contract (exclusive of reinstatement premium).

B. Whenever the Company requests payment by the Reinsurer of any ultimate net loss under any excess layer hereunder, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer for that excess layer.  If the earned reinsurance premium for any excess layer for the term of this Contract has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due for that excess layer shall be based on the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto, and shall be readjusted when the earned reinsurance premium for that excess layer for the term of this Contract has been finally determined.  Any reinstatement premium shown to be due the Reinsurer for any excess layer as reflected by any such statement (less prior payments, if any, for that excess layer) shall be payable by the Company concurrently with payment by the Reinsurer of the requested ultimate net loss for that excess layer.  Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement.

C. Notwithstanding anything stated herein, the liability of the Reinsurer for ultimate net loss under any excess layer of reinsurance coverage provided by this Contract shall not exceed either of the following:

1. The amount, shown as "Reinsurer's Per Occurrence Limit" for that excess layer in Schedule A attached hereto, as respects loss or losses arising out of any one loss occurrence; or

2. The amount, shown as "Reinsurer's Term Limit" for that excess layer in Schedule A attached hereto, in all during the term of this Contract.

Article 9 - Definitions

A. "Loss adjustment expense," regardless of how such expenses are classified for statutory reporting purposes, as used in this Contract shall mean all costs and expenses allocable to a specific claim that are incurred by the Company in the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a specific claim, including court costs and costs of supersedeas and appeal bonds, and including a) pre-judgment interest, unless included as part of the award or judgment; b) post-judgment interest; c) legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including Declaratory Judgment Expense; and d) expenses and a pro rata share of salaries of the Company field employees, and expenses of other Company employees who have been temporarily diverted from their normal and customary duties and assigned to the field adjustment of losses covered by this Contract.

  Page 6

Loss adjustment expense as defined above does not include unallocated loss adjustment expense.  Unallocated loss adjustment expense includes, but is not limited to, salaries and expenses of employees, other than in (d) above, and office and other overhead expenses.

B. "Loss in excess of policy limits" and "extra contractual obligations" as used in this Contract shall mean:

1. "Loss in excess of policy limits" shall mean 90.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action.  Any loss in excess of policy limits that is made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.

2. "Extra contractual obligations" shall mean 90.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action.  An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy.  Any extra contractual obligations that are made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.

Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of policy limits or any extra contractual obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder.

C. "Policies" as used in this Contract shall mean all policies, contracts and binders of insurance or reinsurance.

D. "Ultimate net loss" as used in this Contract shall mean the sum or sums (including loss in excess of policy limits, extra contractual obligations and loss adjustment expense, as defined herein) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not.  Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained.

  Page 7

Article 10 - Loss Occurrence

A. The term "loss occurrence" shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another.  However, the duration and extent of any one "loss occurrence" shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event, except that the term "loss occurrence" shall be further defined as follows:

1. As regards windstorm, hail, tornado, hurricane and cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 120 consecutive hours arising out of and directly occasioned by the same event.  However, the event need not be limited to one state or province or states or provinces contiguous thereto.

2. As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event.  The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such occupation commenced during the aforesaid period.

3. As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the introductory portion of this paragraph A) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's "loss occurrence."

4. As regards "freeze," only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting frozen pipes and tanks) may be included in the Company's "loss occurrence."

5. As regards conflagration, brush fires and any other fires, irrespective of origin (except as provided in subparagraphs 2 and 3 above), all individual losses sustained by the Company which occur during any period of 168 consecutive hours within a 150-mile radius of any fixed point selected by the Company may be included in the Company's "loss occurrence."

B. Except for those "loss occurrences" referred to in subparagraph 2 of paragraph A above, the Company may choose the date and time when any such period of consecutive hours commences, provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss, and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any "loss occurrence" referred to in subparagraph 1 of paragraph A above where only one such period of 120 consecutive hours shall apply with respect to one event, regardless of the duration of the event.

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C. However, as respects those "loss occurrences" referred to in subparagraph 2 of paragraph A above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more "loss occurrences," provided that no two periods overlap and no individual loss is included in more than one such period, and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

D. No individual losses occasioned by an event that would be covered by a 120 or 72 hours clause may be included in any "loss occurrence" claimed under a 168 hours provision.

Article 11 - Loss Notices and Settlements

A. Whenever losses sustained by the Company are reserved by the Company for an amount greater than 50.0% of the Company's retention under any excess layer hereunder and/or appear likely to result in a claim under such excess layer, the Company shall notify the Subscribing Reinsurers under that excess layer and shall provide updates related to development of such losses.  The Reinsurer shall have the right to participate in the adjustment of such losses at its own expense.

B. All loss settlements made by the Company, provided they are within the terms of this Contract and the terms of the original policy (with the exception of loss in excess of policy limits or extra contractual obligations coverage, if any, under this Contract), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of reasonable evidence of the amount paid by the Company.

Article 12 - Cash Call

Notwithstanding the provisions of the Loss Notices and Settlements Article, upon the request of the Company, the Reinsurer shall pay any amount with regard to a loss settlement or settlements that are scheduled to be made (including any payments projected to be made) within the next 20 days by the Company, subject to receipt by the Reinsurer of a satisfactory proof of loss.  Such agreed payment shall be made within 10 days from the date the demand for payment was transmitted to the Reinsurer.

Article 13 - Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder.  Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss.  The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights, if, in the Company's opinion, it is economically reasonable to do so.

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Article 14 - Reinsurance Premium

A. As premium for each excess layer of reinsurance coverage provided by this Contract, the Company shall pay the Reinsurer a premium equal to the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months), subject to a minimum premium of the amount, shown as "Minimum Premium" for that excess layer in Schedule A attached hereto (or a pro rata portion thereof in the event the term of this Contract is less than 12 months):

1. The amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto; times

2. The percentage calculated by dividing (a) the actual Average Annual Loss ("AAL") determined by the Company's wind insurance in force on September 30, 2015, by (b) the original AAL of the amount, shown as "AAL" for that excess layer in Schedule A attached hereto.

However, if the difference between the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto, and the premium calculated in accordance with this paragraph A for the excess layer is less than a 10.0% increase or decrease, the premium due the Reinsurer will equal the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto.

The Company's AAL shall be derived by averaging the applicable data produced by Applied Insurance Research (AIR) Touchstone v2.0 and Risk Management Solutions (RMS) RiskLink v15 catastrophe modeling software, in the long-term perspective, including secondary uncertainty and loss amplification, but excluding storm surge.  It is understood that the calculation of the actual AAL shall be based on the amount, shown as "Reinsurer's Per Occurrence Limit" for that excess layer in Schedule A attached hereto, net of (1) the FHCF mandatory layer of coverage purchased by the Company using the current estimates of the mandatory FHCF coverage of 75% of $775,000,000 excess of $265,000,000, and of (2) the Company's FHCF Supplement Layer Reinsurance Contract (15\F7V1085), which shall be deemed to be placed at 15.0%.

B. The Company shall pay the Reinsurer an annual deposit premium for each excess layer of the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto, in four equal installments of the amount, shown as "Deposit Premium Installment" for that excess layer in Schedule A attached hereto, on July 1 and October 1 of 2015, and on January 1 and April 1 of 2016.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

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C. On or before June 30, 2016, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for each excess layer for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company for each such excess layer shall be remitted promptly.

Article 15 - Sanctions

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party.

Article 16 - Late Payments

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the six-month United States Treasury Bill rateas quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

3. The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest charges have been received by the Intermediary.

C. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

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3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract.  If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings.  If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

E. Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

Article 17 - Offset

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The provisions of this Article shall not be affected by the insolvency of either party.

Article 18 - Access to Records

The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance, provided the Reinsurer gives the Company at least 15 days prior notice of request for such access.  However, a Subscribing Reinsurer or its designated representatives shall not have any right of access to the records of the Company if it is not current in all undisputed payments due the Company.  "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not contested in writing to the Company specifying the reason(s) why the payments are disputed.

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Article 19 - Liability of the Reinsurer

A. The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon.  However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract.

Article 20 - Net Retained Lines (BRMA 32E)

A. This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included.

B. The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.

Article 21 - Errors and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

Article 22 - Currency (BRMA 12A)

A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

B. Amounts paid or received by the Company in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Company.

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Article 23 - Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia.

Article 24 - Federal Excise Tax (BRMA 17D)

A. The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

Article 25 - Foreign Account Tax Compliance Act

A. To the extent the Reinsurer is subject to the deduction and withholding of premium payable hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the Internal Revenue Code), the Reinsurer shall allow such deduction and withholding from the premium payable under this Contract.

B. In the event of any return of premium becoming due hereunder, the return premium shall be determined and paid in full without regard to any amounts deducted or withheld under paragraph A of this Article.  In the event the Company or its agent recovers such premium deductions and withholdings on the return premium from the United States Government, the Company or its agent shall reimburse the Reinsurer for such amounts.

Article 26 - Reserves

A. The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences) (hereinafter referred to as "Reinsurer's Obligations") by:

1. Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

2. Escrow accounts for the benefit of the Company; and/or

3. Cash advances;

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if the Reinsurer:

1. Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and if, without such funding, a penalty would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved; or

2. Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract.

The Reinsurer, at its sole option, may fund in other than cash if its method and form of funding are acceptable to the insurance regulatory authorities involved.

B. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause," which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than 30 days prior to said expiration date.  The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer;

3. To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

4. To fund a cash account in an amount equal to the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, funded by means of a letter of credit which is under non-renewal notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date;

5. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any letter of credit is in excess of the actual amount required for B(1), B(2) or B(4), or in the case of B(3), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

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Article 27 - Insolvency

A. In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more Subscribing Reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company.

C. It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees.

Article 28 - Arbitration

A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration.  One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.  In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

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B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law.  The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties.  Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

C. If more than one Subscribing Reinsurer is involved in the same dispute, all such Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the Subscribing Reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the Subscribing Reinsurers participating under the terms of this Contract from several to joint.

D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration.  In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

Article 29 - Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities)

A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States.  Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract.

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Article 30 - Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

Article 31 - Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of Florida.

Article 32 - Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract, including all information obtained through any audits and any claims information between the Company and the Reinsurer, and any submission or other materials relating to any renewal (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Company.

B. Except as provided for in paragraph C below, the Reinsurer shall not disclose any Confidential Information to any third parties, including but not limited to the Reinsurer's subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, any unaffiliated entity engaged in modeling insurance or reinsurance data, and statistical rating organizations.

C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, (3) external auditors performing an audit of the Reinsurer's records in the normal course of business, or (4) the Reinsurer's legal counsel; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Company may require that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.  If a third-party representative of the Reinsurer is not bound, in writing, by this Confidentiality Article or by a separate written confidentiality agreement, the Reinsurer shall be responsible for any breach of this provision by such third-party representative of the Reinsurer.

D. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure, to the extent legally permissible, and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

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E. Any disclosure of Non-Public Personally Identifiable Information shall comply with all state and federal statutes and regulations governing the disclosure of Non-Public Personally Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as this term or a similar term is defined in any applicable state, provincial, territory, or federal law.  Disclosing or using this information for any purpose not authorized by applicable law is expressly forbidden without the prior consent of the Company.

F. The parties agree that any information subject to privilege, including the attorney-client privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore, the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential Information has been waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.

G. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

Article 33 - Non-Waiver

The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in the future, nor (4) affect the validity of this Contract or any part thereof.

Article 34 - Notices and Contract Execution

A. Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile.  With the exception of notices of termination, first class mail is also acceptable.

B. The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

1. Paper documents with an original ink signature;

2. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

3. Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

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C. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Article 35 - Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder.  All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating to this Contract will be transmitted to the Company or the Reinsurer through the Intermediary.  Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as of the date specified below:

This 5^th day of August in the year 2015 .

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Schedule A

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First Excess		Second Excess		Third Excess		Fourth Excess
Reinsurer's Per Occurrence Limit	$	78,500,000	$	165,000,000	$	77,500,000	$	192,000,000
Reinsurer's Term Limit	$	157,000,000	$	330,000,000		155,000,000	$	384,000,000
Minimum Premium	$	19,782,000	$	27,060,000	$	5,890,000	$	8,448,000
AAL	$	20,595,267	$	19,606,618	$	2,666,032	$	2,516,479
Annual Deposit Premium	$	24,727,500	$	33,825,000	$	7,362,500	$	10,560,000
Deposit Premium Installments	$	6,181,875	$	8,456,250	$	1,840,625	$	2,640,000

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer in the percentage share for that excess layer as expressed in its Interests and Liabilities Agreement attached hereto.

  Schedule A

War Exclusion Clause

As regards interests which at time of loss or damage are on shore, no liability shall attach hereto in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority.

Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)

1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I. Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused.  However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

(a) substantial quantities, and

(b) the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

12/12/57

N.M.A. 1119

BRMA 35B

Terrorism Exclusion

(Property Treaty Reinsurance)

Notwithstanding any provision to the contrary within this Contract or any amendment thereto, it is agreed that this Contract excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence the government de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organization(s) or government(s) de jure or de facto, and which:

1. Involves violence against one or more persons, or

2. Involves damage to property; or

3. Endangers life other than the person committing the action; or

4. Creates a risk to health or safety of the public or a section of the public; or

5. Is designed to interfere with or disrupt an electronic system.

This Contract also excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this Contract, in respect only of personal lines, this Contract will pay actual loss or damage (but not related cost and expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with radiological, biological, chemical, or nuclear pollution or contamination.

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

ACE Tempest Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
9.50%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
2.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 6^th day of August in the year 2015 .

ACE Tempest Reinsurance Ltd.

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Allied World Assurance Company, Ltd

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
10.00%	of the Third Excess Catastrophe
4.50%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 13^th day of August in the year 2015 .

Allied World Assurance Company, Ltd

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

American Agricultural Insurance Company

Indianapolis, Indiana

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
0.50%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 13^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

American Standard Insurance Company of Wisconsin

Madison, Wisconsin

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
1.00%	of the Second Excess Catastrophe
1.50%	of the Third Excess Catastrophe
2.75%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of AUGUST in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Amlin Bermuda, branch of Amlin AG

Zurich, Switzerland

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.50%	of the First Excess Catastrophe
0.75%	of the Second Excess Catastrophe
3.00%	of the Third Excess Catastrophe
3.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Arch Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

3.60%	of the First Excess Catastrophe
7.00%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
6.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, the following shall apply in lieu of the provisions of paragraphs B. and C. of Article 32 - Confidentiality:

"B. Except as provided for in paragraph C. below, the Reinsurer shall not disclose any Confidential Information to any third parties, including but not limited to the Reinsurer's subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, and statistical rating organizations.

C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, (3) external auditors performing an audit of the Reinsurer's records in the normal course of business, or (4) the Reinsurer's in-house or outside legal counsel; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Company may require that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.  If a third-party representative of the Reinsurer is not bound, in writing, by this Confidentiality Article or by a separate written confidentiality agreement, the Reinsurer shall be responsible for any breach of this provision by such third-party representative of the Reinsurer."

  Page 1 of 2

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 13^th day of August in the year 2015 .

Arch Reinsurance Ltd.

  Page 2 of 2

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Argo Re Ltd.

Pembroke, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0.95%	of the First Excess Catastrophe
0.75%	of the Second Excess Catastrophe
3.25%	of the Third Excess Catastrophe
0%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 1^st day of SEPTEMBER in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Ariel Re Bda Limited

for and on behalf of Ariel Syndicate No. 1910

London, England

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
4.00%	of the Second Excess Catastrophe	401948001
4.00%	of the Third Excess Catastrophe	401949001
0%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, the following shall apply in lieu of the provisions of paragraph C. of Article 32 - Confidentiality:

"C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, (3) external auditors performing an audit of the Reinsurer's records in the normal course of business, (4) the Reinsurer's legal counsel, or (5) the Reinsurer's agent, Asta Managing Agent; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Company may require that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.  If a third-party representative of the Reinsurer is not bound, in writing, by this Confidentiality Article or by a separate written confidentiality agreement, the Reinsurer shall be responsible for any breach of this provision by such third-party representative of the Reinsurer."

Page 1 of 2

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 25^th day of August in the year 2015 .

Ariel Re Bda Limited

for and on behalf of Ariel Syndicate No. 1910

  Page 2 of 2

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Ascot Underwriting (Bermuda) Limited

for and on behalf of

American International Reinsurance Company, Ltd.

Pembroke, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
3.00%	of the Second Excess Catastrophe
13.00%	of the Third Excess Catastrophe
5.50%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 26^th day of SEPTEMBER in the year 2015 .

Ascot Underwriting (Bermuda) Limited

for and on behalf of American International Reinsurance Company, Ltd.

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Aspen Bermuda Limited

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

1.25%	of the First Excess Catastrophe	- POA2G3X15AOJ
2.30%	of the Second Excess Catastrophe	- POA534J15AON
2.35%	of the Third Excess Catastrophe	- POA534K15AOV
2.50%	of the Fourth Excess Catastrophe	- POA534L15AOD

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 6^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

BGS Services (Bermuda) Limited

for and on behalf of Lloyd's Syndicate No. 2987

London, England

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
4.50%	of the Third Excess Catastrophe
4.50%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 7^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

China Reinsurance (Group) Corporation

Beijing, China

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0.50%	of the First Excess Catastrophe
0.75%	of the Second Excess Catastrophe
0.75%	of the Third Excess Catastrophe
0.75%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 7^th day of August in the year 2015 .

China Reinsurance (Group) Corporation

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

DaVinci Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
1.90%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
3.06%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Thomas Dawson, Drinker Biddle & Reath, LLP, 1177 Avenue of the Americas, 41st Floor, New York, New York  10036-2714.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 28^th day of September in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Endurance Specialty Insurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

15.00%	of the First Excess Catastrophe
17.50%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
0%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 7^th day of AUGUST in the year 2015 .

Endurance Specialty Insurance Ltd.

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Everest Reinsurance Company

A Delaware Corporation

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

12.00%	of the First Excess Catastrophe
10.00%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
0%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 20^th day of August in the year 2015 .

Everest Reinsurance Company

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Fubon Insurance Co., Ltd.

Taipei, Taiwan

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
1.50%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015 .

Fubon Insurance Co., Ltd.

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

General Insurance Corporation of India

Mumbai, India

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.50%	of the First Excess Catastrophe
2.00%	of the Second Excess Catastrophe
2.00%	of the Third Excess Catastrophe
2.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015 .

General Insurance Corporation of India

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Hamilton Re, Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

4.00%	of the First Excess Catastrophe
4.00%	of the Second Excess Catastrophe
2.00%	of the Third Excess Catastrophe
2.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 7^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Hiscox Insurance Company (Bermuda) Limited

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0.90%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
0%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New York, New York  10019.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 7^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Liberty Syndicates LIB 4472, Paris Office Underwriting

for and on behalf of Lloyd's Syndicate No. 4472

London, England

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0.50%	of the Second Excess Catastrophe	3558610115V2
0.50%	of the Third Excess Catastrophe	3569170115V2
1.00%	of the Fourth Excess Catastrophe	3569180115V2

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015 .

Liberty Syndicates LIB 4472, Paris Office Underwriting

for and on behalf of Lloyd's Syndicate No. 4472

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Odyssey Reinsurance Company

Stamford, Connecticut

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
2.00%	of the Third Excess Catastrophe
1.95%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 14 day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Partner Reinsurance Company Ltd.

Pembroke, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.00%	of the First Excess Catastrophe
10.00%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
1.50%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, the provisions of subparagraph 4 of paragraph B of Article 2 - Commencement and Termination - shall not apply.

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 25^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Peak Reinsurance Company Limited

Hong Kong

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
2.00%	of the Third Excess Catastrophe
2.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 24 day of August in the year 2015 .

Peak Reinsurance Company Limited

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Pioneer Underwriting Limited

for and on behalf of Taiping Reinsurance Co. Ltd.

Hong Kong

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
1.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 18^th day of AUGUST in the year 2015 .

Pioneer Underwriting Limited

for and on behalf of Taiping Reinsurance Co. Ltd.

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Pioneer Underwriting Limited

for and on behalf of Peak Reinsurance Company Limited

Hong Kong

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
0.60%	of the Third Excess Catastrophe
1.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 18^th day of AUGUST in the year 2015 .

Pioneer Underwriting Limited

for and on behalf of Peak Reinsurance Company Limited

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Qatar Reinsurance Company LLC

Doha, Qatar

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
1.25%	of the Third Excess Catastrophe
1.50%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 7^th day of August in the year 2015 .

3rd- 4502060315

4th- 4502060415

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

QBE Reinsurance Corporation

A Pennsylvania Corporation

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
0.40%	of the Third Excess Catastrophe
0.40%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Renaissance Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
2.85%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
4.59%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Thomas Dawson, Drinker Biddle & Reath, LLP, 1177 Avenue of the Americas, 41st Floor, New York, New York  10036-2714.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 28^th day of September in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

RLI Insurance Company

An Illinois Corporation

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

3.20%	of the First Excess Catastrophe
1.80%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
0%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 17^th day of August in the year 2015 .

RLI Insurance Company

Senior Vice President RLI Re

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

SCOR Global P&C SE, Paris, Zurich Branch

a French Corporation

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.00%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
0%	of the Third Excess Catastrophe
0%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

As respects the Subscribing Reinsurer's share in the attached Contract, the following shall apply:

1. The following shall apply in lieu of the provisions of Article 15 - Sanctions:

"Article 15 - Sanctions

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom, Switzerland or United States of America that are applicable to either party."

  Page 1 of 2

2. The following shall apply in lieu of the provisions of the last subparagraph of paragraph A. of Article 26 - Reserves:

"The Reinsurer, at its sole option, may fund in other than cash (including the use of the Lloyd's Credit for Reinsurance Trust Funds as a funding instrument) if such method and form of funding are acceptable to the Company and to the insurance regulatory authorities involved, as the case may be."

3. The provisions of the Service of Suit Article (BRMA 49C) in the attached Contract shall apply to the Subscribing Reinsurer, except that service of process shall be made upon General Counsel, SCOR Reinsurance Company, 199 Water Street, New York, NY  10038, and, where required by law, shall additionally be made upon the Superintendent, Commissioner, or Director of Insurance in the state of the Company's domicile.  The provisions of the Service of Suit Article (BRMA 49C) in the attached Contract shall not be read to conflict with or override, the arbitration provisions in the Arbitration Article in the attached Contract.

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 7^th day of August in the year 2015 .

SCOR Global P&C SE, Paris, Zurich Branch

  Page 2 of 2

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Tokio Millennium Re AG (Bermuda Branch)

Zurich, Switzerland

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe
2.25%	of the Third Excess Catastrophe
0%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 6^th day of AUGUST in the year 2015 .

Tokio Millennium Re AG (Bermuda Branch)      

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Transatlantic Reinsurance Company

New York, New York

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.00%	of the First Excess Catastrophe
5.00%	of the Second Excess Catastrophe
11.00%	of the Third Excess Catastrophe
7.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015 .

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

XL Re Ltd

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Excess Catastrophe
3.00%	of the Second Excess Catastrophe
4.50%	of the Third Excess Catastrophe
7.00%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 17^th day of September in the year 2015 .

XL Refs : 460270-1-2015-1 (2ND LAYER)

464654-1-2015-1 (3RD LAYER)

464655-1-2015-1 (4TH LAYER)

Interests and Liabilities Agreement

attached to and forming part of the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Certain Underwriting Members of Lloyd's

shown in the Signing Page(s) attached hereto

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

8.50%	of the First Excess Catastrophe
11.50%	of the Second Excess Catastrophe
29.15%	of the Third Excess Catastrophe
30.50%	of the Fourth Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

As respects the Subscribing Reinsurer's share in the attached Contract, in lieu of the provisions of the last subparagraph of paragraph A of Article 26 - Reserves - the following paragraph shall apply:

"The Reinsurer, at its sole option, may fund in other than cash (including the use of the Lloyd's Credit for Reinsurance Trust Funds as a funding instrument) if such method and form of funding are acceptable to the Company and to the insurance regulatory authorities involved, as the case may be."

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New York, New York  10019.

  Page  1 of 2

In Witness Whereof, the Company by its duly authorized representative has executed this Agreement as of the date specified below:

This 5^th day of August in the year 2015 .

Signed for and on behalf of the Subscribing Reinsurer in the Signing Page(s) attached hereto.

  Page  2 of 2

Signing Page

attached to and forming part of the

Interests and Liabilities Agreement

with respect to the

Excess Catastrophe Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Certain Underwriting Members of Lloyd's

(Re)Insurer's Liability Clause - LMA3333

(Re)Insurer's liability several not joint

The liability of a (re)insurer under this contract is several and not joint with other (re)insurers party to this contract. A (re)insurer is liable only for the proportion of liability it has underwritten. A (re)insurer is not jointly liable for the proportion of liability underwritten by any other (re)insurer. Nor is a (re)insurer otherwise responsible for any liability of any other (re)insurer that may underwrite this contract.

The proportion of liability under this contract underwritten by a (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together) is shown next to its stamp. This is subject always to the provision concerning "signing" below.

In the case of a Lloyd's syndicate, each member of the syndicate (rather than the syndicate itself) is a (re)insurer. Each member has underwritten a proportion of the total shown for the syndicate (that total itself being the total of the proportions underwritten by all the members of the syndicate taken together). The liability of each member of the syndicate is several and not joint with other members. A member is liable only for that member's proportion. A member is not jointly liable for any other member's proportion. Nor is any member otherwise responsible for any liability of any other (re)insurer that may underwrite this contract. The business address of each member is Lloyd's, One Lime Street, London EC3M 7HA. The identity of each member of a Lloyd's syndicate and their respective proportion may be obtained by writing to Market Services, Lloyd's, at the above address.

Proportion of liability

Unless there is "signing" (see below), the proportion of liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together) is shown next to its stamp and is referred to as its "written line".

Where this contract permits, written lines, or certain written lines, may be adjusted ("signed"). In that case a schedule is to be appended to this contract to show the definitive proportion of liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together). A definitive proportion (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of a Lloyd's syndicate taken together) is referred to as a "signed line". The signed lines shown in the schedule will prevail over the written lines unless a proven error in calculation has occurred.

Although reference is made at various points in this clause to "this contract" in the singular, where the circumstances so require this should be read as a reference to contracts in the plural.

Now Know Ye thatwe the Underwriters, Members of the Syndicates whose definitive numbers in the after mentioned List of Underwriting Members of Lloyd's are set out in the attached Table, hereby bind ourselves each for his own part and not one for another, our Executors and Administrators, and in respect of his due proportion only, to pay or make good to the Assured or to the Assured's Executors or Administrators or to indemnify him or them against all such loss, damage of liability as herein provided, such payment to be made after such loss, damage or liability is proved and the due proportion for which each of us, the Underwriters, is liable shall be ascertained by reference to his share, as shown in the said List, of the Amount, Percentage or Proportion of the total sum insured hereunder which is in the Table set opposite the definitive number of the Syndicate of which such Underwriter is a Member AND FURTHER THAT the List of Underwriting Members of Lloyd's referred to above shows their respective Syndicates and Shares therein, is deemed to be incorporated in and to form part of this policy, bears the number specified in the attached Table and is available for inspection at Lloyd's Policy Signing Office by the Assured or his or their representatives and a true copy of the material parts of the said List certified by the General Manager of Lloyd's Policy Signing Office will be furnished to the Assured on application.

In Witness  whereof the General Manager of Lloyd's Policy Signing Office has subscribed his name on behalf of each of us.

LLOYD'S POLICY SIGNING OFFICE,

General Manager

If this policy (or any subsequent endorsement) has been produced to you in electronic form, the original document is stored on the Insurer's Market Repository to which your broker has access.

(NM)

Definitive Numbers of Syndicates and Amount, Percentage or Proportion of the Total Sum insured hereunder shared between the Members of those Syndicates.

The Table of Syndicates referred to on the face of this policy follows:

BUREAU REFERENCE PROPORTION %	61435 22/07/2015 SYNDICATE	BROKER NUMBER     1108 UNDERWRITER'S REFERENCE
3.500	2001	CAC2884615HB
0.360	623	TG267X15APCW
1.640	2623	TG267X15APCW
1.250	2003	AF6000513473
1.575	2791	X1115BG02184
0.175	2791	X1115KX03100
TOTAL LINE	No. OF SYNDICATES
8.500	6

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2015

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUL 2015

BUREAU USE ONLY USE3 72       12832 RISK CODE: XA Page 1 of 1

The Table of Syndicates referred to on the face of this policy follows:

BUREAU REFERENCE PROPORTION %	61436 22/07/2015 SYNDICATE	BROKER NUMBER     1108 UNDERWRITER'S REFERENCE
2.00	2001	CAC2958715MA
3.00	2001	XBB0387115YC
3.00	1910	001619012015
0.36	623	TG268F15APCW
1.64	2623	TG268F15APCW
0.50	33	Y2L73150AKWE
1.00	4020	P0315LA01500
TOTAL LINE	No. OF SYNDICATES
11.50	7

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2015

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUL 2015

BUREAU USE ONLY USE3 72       13211 RISK CODE: XA Page 1 of 1

The Table of Syndicates referred to on the face of this policy follows:

BUREAU REFERENCE PROPORTION %	61437 22/07/2015 SYNDICATE	BROKER NUMBER     1108 UNDERWRITER'S REFERENCE
3.50	2001	CAC2958615YA
4.00	2001	XBB0387215BC
4.00	4444	L20060CAA
1.00	958	L20060CAA
2.00	1729	000284G15AD
3.00	435	TB252X15A000
2.00	1910	001620012015
0.54	623	TC126X15APCW
2.46	2623	TC126X15APCW
3.00	1458	IAB101715900
2.00	2010	N15E4580A001
0.65	1955	011950021500
1.00	4020	P0315MA01501
TOTAL LINE	No. OF SYNDICATES
29.15	13

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2015

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUL 2015

BUREAU USE ONLY USE3 72       26167 RISK CODE: XA Page 1 of 1

The Table of Syndicates referred to on the face of this policy follows:

BUREAU REFERENCE PROPORTION %	61438 22/07/2015 SYNDICATE	BROKER NUMBER     1108 UNDERWRITER'S REFERENCE
3.50	2001	CAC2884715WB
1.75	1274	300778700015
8.00	1414	XC15GD158J3X
4.00	4444	L20060CBA
1.00	958	L20060CBA
3.00	435	TB288E15A000
1.00	1910	001621012015
0.54	623	TC250Z15APCW
2.46	2623	TC250Z15APCW
2.00	2007	TM66015ACSA7
1.35	2791	X1115EG05913
0.15	2791	X1115FX05914
0.75	2088	AA345D15D000
1.00	4020	P0315NA01502
TOTAL LINE	No. OF SYNDICATES
30.50	14

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2015

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUL 2015

BUREAU USE ONLY USE3 72       29379 RISK CODE: XA Page 1 of 1

EX-10.2

Exhibit 10.2

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

First Reinstatement Premium Protection Reinsurance

Reinsurers	Participations
Arch Reinsurance Ltd. *		10.800	%
Aspen Bermuda Limited *		4.000	%
DaVinci Reinsurance Ltd. *		4.408	%
Endurance Specialty Insurance Ltd. *		8.000	%
Hannover Rück SE *		16.180	%
Renaissance Reinsurance Ltd. *		6.612	%
Total		50.000	%

Second Reinstatement Premium Protection Reinsurance

Reinsurers	Participations
Ariel Re Bda Limited for and on behalf of Ariel Syndicate No. 1910 *		10.000	%
Hannover Rück SE *		75.000	%
Through Aon UK Limited trading as Aon Benfield (Placement Only)
Collateralised Re Ltd. *		15.000	%
Total		100.000	%

  Page 1 of 2

Third Reinstatement Premium Protection Reinsurance

Reinsurers	Participations
Through Aon UK Limited trading as Aon Benfield (Placement Only)
Collateralised Re Ltd. *		67.000	%
Through Aon UK Limited trading as Aon Benfield
Lloyd's Underwriters Per Signing Page(s) *		33.000	%
Total		100.000	%

Fourth Reinstatement Premium Protection Reinsurance

Reinsurer	Participation
Through Aon UK Limited trading as Aon Benfield (Placement Only)
Collateralised Re Ltd. *		100.000	%
Total		100.000	%

* Both the Company and the Subscribing Reinsurer sign the Interests and Liabilities Agreement.

  Page 2 of 2

Table of Contents

Article		Page
1	Coverage	1
2	Commencement and Termination	1
3	Concurrency of Conditions	2
4	Premium	3
5	Sanctions	3
6	Loss Notices and Settlements	4
7	Late Payments	4
8	Offset	5
9	Access to Records	5
10	Errors and Omissions (BRMA 14F)	6
11	Currency (BRMA 12A)	6
12	Taxes (BRMA 50B)	6
13	Federal Excise Tax (BRMA 17D)	6
14	Foreign Account Tax Compliance Act	6
15	Reserves	7
16	Insolvency	8
17	Arbitration	9
18	Service of Suit (BRMA 49C)	10
19	Severability (BRMA 72E)	10
20	Governing Law (BRMA 71B)	10
21	Confidentiality	10
22	Non-Waiver	11
23	Notices and Contract Execution	12
24	Intermediary	12
	Schedule A
	Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

(hereinafter referred to as the "Company")

and

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the "Reinsurer")

Article 1 - Coverage

By this Contract the Reinsurer agrees to indemnify the Company for 100% of any reinstatement premium which the Company pays or becomes liable to pay as a result of loss occurrences covered under the Company's Excess Catastrophe Reinsurance Contract, effective July 1, 2015 (hereinafter referred to as the "Original Contract" and described in Schedule A attached hereto), subject to the terms, conditions and limitations set forth herein and in Schedules A and B attached to and forming part of this Contract.

Article 2 - Commencement and Termination

A. This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, with respect to reinstatement premium payable by the Company under the Original Contract as a result of losses arising out of loss occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2016.

B. Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur:

1. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or

2. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or

  Page 1

3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or

4. The Subscribing Reinsurer has become, or has announced its intention to become, merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or

5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or

6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or

8. The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or

9. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid; or

10. The Subscribing Reinsurer has failed to comply with the funding requirements set forth in the Reserves Article.

C. If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract.

Article 3 - Concurrency of Conditions

A. It is agreed that this Contract will follow the terms, conditions, exclusions, definitions, warranties and settlements of the Company under the Original Contract, which are not inconsistent with the provisions of this Contract.

B. The Company shall advise the Reinsurer of any material changes in the Original Contract which may affect the liability of the Reinsurer under this Contract.

  Page 2

Article 4 - Premium

A. As premium for the reinsurance coverage provided hereunder for each excess layer for the term of this Contract, the Company shall pay the Reinsurer the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months and for purposes of calculating subparagraph 3 below, the term of the Original Contract is a full 12 months):

1. The amount, shown as "Reinstatement Factor" for that excess layer in Schedule B attached hereto; times

2. The Final Adjusted Rate on Line for the corresponding excess layer of the Original Contract; times

3. An amount equal to 100% reinsurance placement percentage under each excess layer of the Original Contract of the final adjusted premium paid by the Company for the corresponding excess layer of the Original Contract.

"Final Adjusted Rate on Line" as used herein shall mean an amount equal to a 100% reinsurance placement percentage under each excess layer of the Original Contract of the final adjusted premium paid by the Company for the corresponding excess layer of the Original Contract divided by the amount, shown as the "Reinsurer's Per Occurrence Limit" for that excess layer under the Original Contract in Schedule A attached hereto.

B. The Company shall pay the Reinsurer a deposit premium for each excess layer of the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule B attached hereto, in four equal installments of the amount, shown as "Deposit Premium Installment" for that excess layer in Schedule B attached hereto, on July 1 and October 1 of 2015, and January 1 and April 1 of 2016.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

C. As soon as possible after the termination or expiration of this Contract, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for each excess layer for the term of this Contract, computed in accordance with paragraph A, and any additional premium due the Reinsurer or return premium due the Company for each such excess layer shall be remitted promptly.

Article 5 - Sanctions

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party.

  Page 3

Article 6 - Loss Notices and Settlements

A. Whenever reinstatement premium settlements made by the Company under the Original Contract appear likely to result in a claim hereunder, the Company shall notify the Reinsurer.  The Company will advise the Reinsurer of all subsequent developments relating to such claims that, in the opinion of the Company, may materially affect the position of the Reinsurer.

B. All reinstatement premium settlements made by the Company under the Original Contract, provided they are within the terms of the Original Contract and within the terms of this Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable within 10 days of receipt of reasonable evidence of the amount paid (or scheduled to be paid) by the Company.

Article 7 - Late Payments

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the six-month United States Treasury Bill rateas quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

3. The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest charges have been received by the Intermediary.

C. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

  Page 4

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract.  If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings.  If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

E. Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

Article 8 - Offset

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The provisions of this Article shall not be affected by the insolvency of either party.

Article 9 - Access to Records

The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance, provided the Reinsurer gives the Company at least 15 days prior notice of request for such access.  However, a Subscribing Reinsurer or its designated representatives shall not have any right of access to the records of the Company if it is not current in all undisputed payments due the Company.  "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not contested in writing to the Company specifying the reason(s) why the payments are disputed.

  Page 5

Article 10 - Errors and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

Article 11 - Currency (BRMA 12A)

A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

B. Amounts paid or received by the Company in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Company.

Article 12 - Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia.

Article 13 - Federal Excise Tax (BRMA 17D)

A. The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

Article 14 - Foreign Account Tax Compliance Act

A. To the extent the Reinsurer is subject to the deduction and withholding of premium payable hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the Internal Revenue Code), the Reinsurer shall allow such deduction and withholding from the premium payable under this Contract.

B. In the event of any return of premium becoming due hereunder, the return premium shall be determined and paid in full without regard to any amounts deducted or withheld under paragraph A of this Article.  In the event the Company or its agent recovers such premium deductions and withholdings on the return premium from the United States Government, the Company or its agent shall reimburse the Reinsurer for such amounts.

  Page 6

Article 15 - Reserves

A. The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss reserves (being the sum of all reinstatement premiums paid by the Company under the Original Contract but not yet recovered from the Reinsurer, plus the Company's reserves for reinstatement premium due under the Original Contract, if any) (hereinafter referred to as "Reinsurer's Obligations") by:

1. Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

2. Escrow accounts for the benefit of the Company; and/or

3. Cash advances;

if the Reinsurer:

1. Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and if, without such funding, a penalty would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved; or

2. Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract.

The Reinsurer, at its sole option, may fund in other than cash if its method and form of funding are acceptable to the insurance regulatory authorities involved.

B. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause," which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than 30 days prior to said expiration date.  The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of reinstatement premiums paid by the Company under the terms of the Original Contract, unless paid in cash by the Reinsurer;

  Page 7

3. To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

4. To fund a cash account in an amount equal to the Reinsurer's share of amounts, including, but not limited to, the Reinsurer's Obligations as set forth above, funded by means of a letter of credit which is under non-renewal notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date;

5. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any letter of credit is in excess of the actual amount required for B(1), B(2) or B(4), or in the case of B(3), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

Article 16 - Insolvency

A. In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more Subscribing Reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company.

C. It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees.

  Page 8

Article 17 - Arbitration

A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration.  One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.  In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law.  The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties.  Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

C. If more than one Subscribing Reinsurer is involved in the same dispute, all such Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the Subscribing Reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the Subscribing Reinsurers participating under the terms of this Contract from several to joint.

D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration.  In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

  Page 9

Article 18 - Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities)

A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States.  Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract.

Article 19 - Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

Article 20 - Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of Florida.

Article 21 - Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract, including all information obtained through any audits and any claims information between the Company and the Reinsurer, and any submission or other materials relating to any renewal (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Company.

B. Except as provided for in paragraph C below, the Reinsurer shall not disclose any Confidential Information to any third parties, including but not limited to the Reinsurer's subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, any unaffiliated entity engaged in modeling insurance or reinsurance data, and statistical rating organizations.

  Page 10

C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, or (3) external auditors performing an audit of the Reinsurer's records in the normal course of business; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Reinsurer shall be responsible for any breach of this provision by any third-party representatives of the Reinsurer.  The Company requires that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.

D. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

E. Any disclosure of Non-Public Personally Identifiable Information shall comply with all state and federal statutes and regulations governing the disclosure of Non-Public Personally Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as this term or a similar term is defined in any applicable state, provincial, territory, or federal law.  Disclosing or using this information for any purpose not authorized by applicable law is expressly forbidden without the prior consent of the Company.

F. The parties agree that any information subject to privilege, including the attorney-client privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore, the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential Information has been waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.

G. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

Article 22 - Non-Waiver

The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in the future, nor (4) affect the validity of this Contract or any part thereof.

  Page 11

Article 23 - Notices and Contract Execution

A. Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile.  With the exception of notices of termination, first class mail is also acceptable.

B. The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

1. Paper documents with an original ink signature;

2. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

3. Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

C. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Article 24 - Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder.  All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating to this Contract will be transmitted to the Company or the Reinsurer through the Intermediary.  Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as of the date specified below:

This 5^th day of August in the year 2015 .

  Page 12

Schedule A

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	Original Contract First Excess		Original Contract Second Excess		Original Contract Third Excess		Original Contract Fourth Excess
Reinsurer's Per Occurrence Limit	$	78,500,000	$	165,000,000	$	77,500,000	$	192,000,000
Reinsurer's Term Limit	$	157,000,000	$	330,000,000		155,000,000	$	384,000,000
Minimum Premium	$	19,782,000	$	27,060,000	$	5,890,000	$	8,448,000
AAL	$	20,595,267	$	19,606,618	$	2,666,032	$	2,516,479
Annual Deposit Premium	$	24,727,500	$	33,825,000	$	7,362,500	$	10,560,000
Deposit Premium Installments	$	6,181,875	$	8,456,250	$	1,840,625	$	2,640,000

  Schedule A

Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer		Third RPP Layer		Fourth RPP Layer
Reinstatement Factor		1.0400		1.0000		1.0000		1.0000
Annual Deposit Premium	$	8,100,729.00	$	6,934,125.00	$	699,438.00	$	580,800.00
Deposit Premium Installments	$	2,025,182.25	$	1,733,531.25	$	174,859.50	$	145,200.00

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

  Schedule B

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Arch Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

10.800%	of the First Reinstatement Premium Protection Reinsurance
0%	of the Second Reinstatement Premium Protection Reinsurance
0%	of the Third Reinstatement Premium Protection Reinsurance
0%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, Schedule B attached to and forming part of this Agreement shall apply in lieu of Schedule B attached to and forming part of the captioned Contract.

  Page 1 of 3

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 13^th day of August in the year 2015 .

  Page 2 of 3

Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer		Third RPP Layer		Fourth RPP Layer
Reinstatement Factor		1.1500		1.0000		1.0000		1.0000
Annual Deposit Premium	$	8,957,536.00	$	6,934,125.00	$	699,438.00	$	580,800.00
Deposit Premium Installments	$	2,239,384.00	$	1,733,531.25	$	174,859.50	$	145,200.00

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

  Page 3 of 3

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Ariel Re Bda Limited

for and on behalf of Ariel Syndicate No. 1910

London, England

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Reinstatement Premium Protection Reinsurance
10.000%	of the Second Reinstatement Premium Protection Reinsurance
0%	of the Third Reinstatement Premium Protection Reinsurance
0%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, Schedule B attached to and forming part of this Agreement shall apply in lieu of Schedule B attached to and forming part of the captioned Contract.

  Page 1 of 3

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 25^th day of August in the year 2015 .

Ariel Re Bda Limited

for and on behalf of Ariel Syndicate No. 1910

  Page 2 of 3

Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer		Third RPP Layer		Fourth RPP Layer
Reinstatement Factor		1.0400		1.1000		1.0000		1.0000
Annual Deposit Premium	$	8,100,729.00	$	7,627,537.52	$	699,438.00	$	580,800.00
Deposit Premium Installments	$	2,025,182.25	$	1,906,884.38	$	174,859.50	$	145,200.00

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

  Page 3 of 3

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Aspen Bermuda Limited

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

4.000%	of the First Reinstatement Premium Protection Reinsurance - POA554115AOY
0%	of the Second Reinstatement Premium Protection Reinsurance
0%	of the Third Reinstatement Premium Protection Reinsurance
0%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, Schedule B attached to and forming part of this Agreement shall apply in lieu of Schedule B attached to and forming part of the captioned Contract.

  Page 1 of 3

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 6^th day of August in the year 2015 .

  Page 2 of 3

Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer		Third RPP Layer		Fourth RPP Layer
Reinstatement Factor		1.1500		1.0000		1.0000		1.0000
Annual Deposit Premium	$	8,957,536.00	$	6,934,125.00	$	699,438.00	$	580,800.00
Deposit Premium Installments	$	2,239,384.00	$	1,733,531.25	$	174,859.50	$	145,200.00

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

  Page 3 of 3

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Collateralised Re Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Reinstatement Premium Protection Reinsurance
15.000%	of the Second Reinstatement Premium Protection Reinsurance
67.000%	of the Third Reinstatement Premium Protection Reinsurance
100.000%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, the following shall apply:

1. The provisions of subparagraphs 1, 2 and 3 of paragraph B of Article 2 - Commencement and Termination - shall not apply.

2. In lieu of Article 8 - Offset - the following shall apply.

"Article 8 - Offset

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract.  The provisions of this Article shall not be affected by the insolvency of either party."

  Page 1 of 4

3. The provisions of Article 15 - Reserves - shall not apply.

4. The following Articles shall be added to and made part of this Contract:

"Article 25 - Obligations

A. Within 10 days after the execution of this Contract, the Reinsurer shall provide security for its balance of (a) the their share of all reinstatement premiums for which the Company may be liable under the Original Contract and less reinstatement premiums recovered from the Reinsurer hereunder by either:

1. Delivering to the Company one or more clean, irrevocable and unconditional letters of credit (the 'letter of credit'), issued by a financial institution to be approved by the Company in an amount equal to the obligations (as defined herein); or

2. Causing the delivery of permitted investments (as defined in the trust agreement) having an aggregate value equal to the collateral amount to Wells Fargo Bank in its capacity as trustee (the 'trustee') under a trust agreement dated July 1, 2015 and made by and among the Company, the Reinsurer, and the Trustee (the 'trust agreement') for deposit in the trust account established thereunder (the 'trust account').

'Obligations' as used in this Contract shall mean an amount equal to $20,566,625, less loss and loss adjustment expense recovered from the Reinsurer.

B. The Company shall be permitted to draw under the letter of credit as follows:

1. Only if the Reinsurer shall have failed to pay any amount owed by the Reinsurer to the Company hereunder within 10 days after the delivery of notice thereof by the Company to the Reinsurer; or

2. In the undrawn amount of the letter of credit, if the letter of credit has not been renewed or replaced at least 20 days before the expiration date specified therein.

If at any time the amount drawn by the Company under the letter of credit is greater than the amount owed by the Reinsurer to the Company, then such excess amount shall be promptly returned to the Reinsurer by the Company.

C. The Company shall be permitted to withdraw assets (as defined in the trust agreement) from the trust account only in accordance with the trust agreement.

D. The Reinsurer shall be solely responsible for the cost of providing security pursuant to this Article.

E. Upon the commutation of this Contract pursuant to the Commutation Article or otherwise, the Company shall promptly (as applicable):

1. Return the letter of credit to the Reinsurer; or

  Page 2 of 4

2. Deliver a termination notice to the Trustee signed by the Company and the Grantor (as defined in the trust agreement).

Article 26 - Commutation

A. The Company agrees to review the aggregate amount of paid losses, reserves for advised claims (hereinafter 'case reserves') and reserves for incurred but not reported losses in respect of known loss occurrences (hereinafter 'IBNR') in respect of reinstatement premiums for which the Company may be liable under the Original Contract (such aggregate amount shall hereinafter be referred to as 'incurred losses') on September 30, 2016 and March 31 and September 30 of 2017 and March 31, 2018 (hereinafter referred to as the 'first, second, third and fourth loss review dates,' respectively and each separately referred to as a 'loss review date') with the intention of commuting this Contract in accordance with the terms of this Article.  Notwithstanding the first loss review date, the Company may elect to commute this Contract earlier than that date at terms to be mutually agreed upon between the Company and the Reinsurer.  For purposes of each loss review, all case reserves and IBNR shall be set by the Company at its sole discretion and in accordance with generally accepted reinsurance reserving and financial accounting principles.

B. If at the:

1. First loss review date, incurred losses are an amount less than 50% of the Company's retention hereunder; or

2. Second loss review date, incurred losses are an amount less than 65% of the Company's retention hereunder; or

3. Third loss review date, incurred losses are an amount less than 80% of the Company's retention hereunder; or

4. Fourth loss review date, incurred losses are an amount less than 100% of the Company's retention hereunder;

then this Contract shall be commuted immediately with each party fully and finally releasing the other from any further obligation or liability under this Contract.

C. The Company shall be permitted, in its sole discretion, to require the commutation of this Contract at any time.

D. A final settlement of all claims under this Contract shall be made no later than July 1, 2019.  Such final settlement shall be computed using the most recent case reserves for reinstatement premiums arising from known loss occurrences for which the Company may be liable under the Original Contract as reserved in the Company's books at the date of commutation.  Such settlement shall be final upon all parties and shall not be subject to future adjustment, regardless of any changes in the Company's incurred loss position.

  Page 3 of 4

Article 27 - Limited Recourse and Bermuda Regulations

A. The Company acknowledges and agrees that the Reinsurer will enter into multiple reinsurance treaties with third parties and as such, other parties may have claim to any assets of the Reinsurer, except for the amount secured by a letter of credit or a trust account of which the Company is the exclusive beneficiary.

B. Notwithstanding anything to the contrary herein, the total liability of the Reinsurer for the performance and discharge of all of its obligations, however they may arise, in relation to this Contract, shall be limited to and payable solely from the proceeds of realization of the assets of the Reinsurer and any letter of credit or trust account linked to this Contract and, accordingly, the Company shall not have any recourse, direct or indirect, to any other assets of the Reinsurer.  In the event that the proceeds of realization of the assets of the Reinsurer linked to this Contract are insufficient to meet all obligations, any such obligations remaining after the application of such proceeds shall be extinguished, and the Company undertakes in such circumstances to take no further action against the Reinsurer in respect of any such obligations.  In particular, neither the Company nor any party acting on its behalf shall petition or take any steps for the winding up or receivership of the Reinsurer.

C. Notwithstanding anything herein, the Company understands and accepts that all corporate matters relating to the creation of the Reinsurer, capacity of the Reinsurer, operation and liquidation of the Reinsurer and any matters relating to the Reinsurer thereof shall be governed by, and construed in accordance with, the laws of Bermuda.  The Company has had the opportunity to take advice and to obtain all such additional information that it considers necessary to evaluate the terms, conditions and risks of entering into this Contract with the Reinsurer."

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 13^th day of August in the year 2015 .

Collateralised Re Ltd.

  Page 4 of 4

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

DaVinci Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

4.408%	of the First Reinstatement Premium Protection Reinsurance
0%	of the Second Reinstatement Premium Protection Reinsurance
0%	of the Third Reinstatement Premium Protection Reinsurance
0%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Thomas Dawson, Drinker Biddle & Reath, LLP, 1177 Avenue of the Americas, 41st Floor, New York, New York  10036-2714.

As respects the Subscribing Reinsurer's share in the attached Contract, Schedule B attached to and forming part of this Agreement shall apply in lieu of Schedule B attached to and forming part of the captioned Contract.

  Page 1 of 3

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 28^th day of September in the year 2015 .

  Page 2 of 3

Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer		Third RPP Layer		Fourth RPP Layer
Reinstatement Factor		1.2222		1.0000		1.0000		1.0000
Annual Deposit Premium	$	9,520,087.52	$	6,934,125.00	$	699,438.00	$	580,800.00
Deposit Premium Installments	$	2,380,021.88	$	1,733,531.25	$	174,859.50	$	145,200.00

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

  Page 3 of 3

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Endurance Specialty Insurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

8.000%	of the First Reinstatement Premium Protection Reinsurance
0%	of the Second Reinstatement Premium Protection Reinsurance
0%	of the Third Reinstatement Premium Protection Reinsurance
0%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, Schedule B attached to and forming part of this Agreement shall apply in lieu of Schedule B attached to and forming part of the captioned Contract.

  Page 1 of 3

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 7^th day of August in the year 2015 .

Endurance Specialty Insurance Ltd.

  Page 2 of 3

Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer		Third RPP Layer		Fourth RPP Layer
Reinstatement Factor		1.1900		1.0000		1.0000		1.0000
Annual Deposit Premium	$	9,272,812.52	$	6,934,125.00	$	699,438.00	$	580,800.00
Deposit Premium Installments	$	2,318,203.13	$	1,733,531.25	$	174,859.50	$	145,200.00

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

  Page 3 of 3

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Hannover Rück SE

Hannover, Germany

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

16.180%	of the First Reinstatement Premium Protection Reinsurance
75.000%	of the Second Reinstatement Premium Protection Reinsurance
0%	of the Third Reinstatement Premium Protection Reinsurance
0%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New York, New York  10019.

As respects the Subscribing Reinsurer's share in the attached Contract, Schedule B attached to and forming part of this Agreement shall apply in lieu of Schedule B attached to and forming part of the captioned Contract.

  Page 1 of 3

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 12^th day of August in the year 2015 .

  Page 2 of 3

Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer		Third RPP Layer		Fourth RPP Layer
Reinstatement Factor		1.1825		1.0000		1.0000		1.0000
Annual Deposit Premium	$	9,210,993.76	$	6,934,125.00	$	699,438.00	$	580,800.00
Deposit Premium Installments	$	2,302,748.44	$	1,733,531.25	$	174,859.50	$	145,200.00

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

  Page 3 of 3

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Renaissance Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

6.612%	of the First Reinstatement Premium Protection Reinsurance
0%	of the Second Reinstatement Premium Protection Reinsurance
0%	of the Third Reinstatement Premium Protection Reinsurance
0%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Thomas Dawson, Drinker Biddle & Reath, LLP, 1177 Avenue of the Americas, 41st Floor, New York, New York  10036-2714.

As respects the Subscribing Reinsurer's share in the attached Contract, Schedule B attached to and forming part of this Agreement shall apply in lieu of Schedule B attached to and forming part of the captioned Contract.

  Page 1 of 3

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August in the year 2015 .

This 28^th day of September in the year 2015 .

  Page 2 of 3

Schedule B

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer		Third RPP Layer		Fourth RPP Layer
Reinstatement Factor		1.2222		1.0000		1.0000		1.0000
Annual Deposit Premium	$	9,520,087.52	$	6,934,125.00	$	699,438.00	$	580,800.00
Deposit Premium Installments	$	2,380,021.88	$	1,733,531.25	$	174,859.50	$	145,200.00

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

  Page 3 of 3

Interests and Liabilities Agreement

attached to and forming part of the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Certain Underwriting Members of Lloyd's

shown in the Signing Page(s) attached hereto

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Reinstatement Premium Protection Reinsurance
0%	of the Second Reinstatement Premium Protection Reinsurance
33.000%	of the Third Reinstatement Premium Protection Reinsurance
0%	of the Fourth Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

As respects the Subscribing Reinsurer's share in the attached Contract, in lieu of the provisions of the last subparagraph of paragraph A of Article 15 - Reserves - the following paragraph shall apply:

"The Reinsurer, at its sole option, may fund in other than cash (including the use of the Lloyd's Credit for Reinsurance Trust Funds as a funding instrument) if such method and form of funding are acceptable to the Company and to the insurance regulatory authorities involved, as the case may be."

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New York, New York 10019-6829.

  Page 1 of 2

In Witness Whereof, the Company by its duly authorized representative has executed this Agreement as of the date specified below:

This 5^th day of August in the year 2015 .

Signed for and on behalf of the Subscribing Reinsurer in the Signing Page(s) attached hereto.

  Page 2 of 2

Signing Page

attached to and forming part of the

Interests and Liabilities Agreement

with respect to the

Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Certain Underwriting Members of Lloyd's

(Re)Insurer's Liability Clause - LMA3333

(Re)Insurer's liability several not joint

The liability of a (re)insurer under this contract is several and not joint with other (re)insurers party to this contract. A (re)insurer is liable only for the proportion of liability it has underwritten. A (re)insurer is not jointly liable for the proportion of liability underwritten by any other (re)insurer. Nor is a (re)insurer otherwise responsible for any liability of any other (re)insurer that may underwrite this contract.

The proportion of liability under this contract underwritten by a (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together) is shown next to its stamp. This is subject always to the provision concerning "signing" below.

In the case of a Lloyd's syndicate, each member of the syndicate (rather than the syndicate itself) is a (re)insurer. Each member has underwritten a proportion of the total shown for the syndicate (that total itself being the total of the proportions underwritten by all the members of the syndicate taken together). The liability of each member of the syndicate is several and not joint with other members. A member is liable only for that member's proportion. A member is not jointly liable for any other member's proportion. Nor is any member otherwise responsible for any liability of any other (re)insurer that may underwrite this contract. The business address of each member is Lloyd's, One Lime Street, London EC3M 7HA. The identity of each member of a Lloyd's syndicate and their respective proportion may be obtained by writing to Market Services, Lloyd's, at the above address.

Proportion of liability

Unless there is "signing" (see below), the proportion of liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together) is shown next to its stamp and is referred to as its "written line".

Where this contract permits, written lines, or certain written lines, may be adjusted ("signed"). In that case a schedule is to be appended to this contract to show the definitive proportion of liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together). A definitive proportion (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of a Lloyd's syndicate taken together) is referred to as a "signed line". The signed lines shown in the schedule will prevail over the written lines unless a proven error in calculation has occurred.

Although reference is made at various points in this clause to "this contract" in the singular, where the circumstances so require this should be read as a reference to contracts in the plural.

Now Know Yethatwe the Underwriters, Members of the Syndicates whose definitive numbers in the aftermentioned List of Underwriting Members of Lloyd's are set out in the attached Table, hereby bind ourselves each for his own part and not one for another, our Executors and Administrators, and in respect of his due proportion only, to pay or make good to the Assured or to the Assured's Executors or Administrators or to indemnify him or them against all such loss, damage of liability as herein provided, such payment to be made after such loss, damage or liability is proved and the due proportion for which each of us, the Underwriters, is liable shall be ascertained by reference to his share, as shown in the said List, of the Amount, Percentage or Proportion of the total sum insured hereunder which is in the Table set opposite the definitive number of the Syndicate of which such Underwriter is a Member AND FURTHER THAT the List of Underwriting Members of Lloyd's referred to above shows their respective Syndicates and Shares therein, is deemed to be incorporated in and to form part of this policy, bears the number specified in the attached Table and is available for inspection at Lloyd's Policy Signing Office by the Assured or his or their representatives and a true copy of the material parts of the said List certified by the General Manager of Lloyd's Policy Signing Office will be furnished to the

Assured on application.

In Witness  whereof  the General Manager of Lloyd's Policy Signing Office has subscribed his name on behalf of each of us.

LLOYD'S POLICY SIGNING OFFICE,

General Manager

If this policy (or any subsequent endorsement) has been produced to you in electronic form, the original

document is stored on the Insurer's Market Repository to which your broker has access.

(NM)

Definitive Numbers of Syndicates and Amount, Percentage or Proportion of the Total Sum insured hereunder shared between the Members of those Syndicates.

The Table of Syndicate referred to on the face of this Policy follows:

BUREAU REFERENCE	61459 30/07/2015	BROKER NUMBER            1108
PROPORTION %	SYNDICATE	UNDERWRITER'S REFERENCE
33.00	2001	XBB0441515FA
TOTAL LINE	No. OF SYNDICATES
33.00	1

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2015

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUL 2015

BUREAU USE ONLY USE3 72 2001 RISK CODE: XA Page 1 of 1

EX-10.3

Exhibit 10.3

Homeowners Quota Share

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

Homeowners Quota Share

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

Reinsurer(s)	Participation(s)
Partner Reinsurance Company of the U.S.		100.0	%
Total		100.0	%

Table of Contents

Article		Page
1	Classes of Business Reinsured	1
2	Commencement and Termination	1
3	Territory	3
4	Exclusions	3
5	Retention and Limit	5
6	Loss in Excess of Policy Limits/Extra-Contractual Obligations	7
7	Other Reinsurance	8
8	Claims and Loss Adjustment Expenses	8
9	Salvage and Subrogation	9
10	Original Conditions	9
11	Commission (BRMA 10A)	9
12	Reinsurer's Expense	10
13	Experience Account	10
14	Commutation	10
15	Reports and Remittances	11
16	Sanctions	11
17	Late Payments	11
18	Offset	13
19	Access to Records	13
20	Errors and Omissions (BRMA 14F)	13
21	Currency (BRMA 12A)	13
22	Taxes (BRMA 50B)	13
23	Federal Excise Tax (BRMA 17D)	14
24	Foreign Account Tax Compliance Act	14
25	Unauthorized Reinsurers	14
26	Special Funding	15
27	Insolvency	16
28	Arbitration	17
29	Confidentiality	17
30	Service of Suit (BRMA 49C)	19
31	Governing Law (BRMA 71B)	19
32	Severability (BRMA 72E)	19
33	Assignment and Assumption	19
34	Non-Waiver	19
35	Notices and Contract Execution	20
36	Intermediary	20

Homeowners Quota Share

Reinsurance Contract

Effective:  July 1, 2015

entered into by and among

Federated National Insurance Company

Sunrise, Florida

(hereinafter referred to collectively as the "Company")

and

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the "Reinsurer")

Article 1 - Classes of Business Reinsured

A. By this Contract the Company obligates itself to cede to the Reinsurer and the Reinsurer obligates itself to accept quota share reinsurance of the Company's Net Liability under policies, contracts, and binders of insurance or reinsurance (hereinafter called "Policies") in force at the effective date hereof or issued or renewed on or after that date, and classified by the Company as Homeowners Multiple Peril (Sections I and II) and Dwelling Fire business located in the State of Florida.

B. "Net Liability" as used in this Contract shall mean the Company's gross liability (including Loss in Excess of Policy Limits, Extra Contractual Obligations, and Loss Adjustment Expenses) reinsured under this Contract remaining after cessions, if any, to other inuring reinsurance.

C. The liability of the Reinsurer with respect to each cession hereunder shall commence obligatorily and simultaneously with that of the Company, subject to the terms, conditions and limitations hereinafter set forth.

Article 2 - Commencement and Termination

A. This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, with respect to losses arising out of Occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2017.

  Page 1 

B. Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur:

1. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the beginning of any Contract Year has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or

2. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during any Contract Year has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the beginning of that Contract Year; or

3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or

4. The Subscribing Reinsurer has become, or has announced its intention to become, merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously (however, this subparagraph shall not apply with respect to a Subscribing Reinsurer’s merger or acquisition with AXIS Capital Holdings Ltd. and/or EXOR S.p.A.); or

5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or

6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or

8. The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or

9. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid; or

10. The Subscribing Reinsurer has failed to comply with the funding requirements set forth in the Unauthorized Reinsurers Article.

Page 2

C. As promptly as possible after termination or expiration of this Contract, the Reinsurer shall return the ceded unearned premium (less any ceding commission thereon) on business in force at the effective time and date of termination or expiration, and whereby the Reinsurer shall have no liability for losses occurring subsequent to the effective time and date of termination or expiration of this Contract.

D. Notwithstanding the provisions of paragraph C above, if the Company is prohibited or precluded by the appropriate regulatory authorities, or by law (in those states where applicable), from arranging mid-term cancellation or non-renewal of any Policies subject to this Contract beyond their natural expiry, the Reinsurer agrees to extend coverage under this Contract until such Policies may be terminated or non-renewed by the Company, but in no event beyond 33 months after the effective date of termination or expiration.

E. "Contract Year" as used in this Contract shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2015, to 12:01 a.m., Eastern Standard Time, July 1, 2016, and each respective 12-month period (or portion thereof) thereafter that this Contract continues in force.

Article 3 - Territory

The territorial limits of this Contract shall be identical with those of the Company's Policies, but is limited to risks located within the State of Florida.

Article 4 - Exclusions

A. This Contract does not apply to and specifically excludes the following:

1. Reinsurance assumed by the Company under obligatory reinsurance agreements, except business assumed by the Company from Citizens Property Insurance Corporation.

2. Hail damage to growing or standing crops.

3. Business rated, coded or classified as Flood insurance or which should have been rated, coded or classified as such.

4. Business rated, coded or classified as Mortgage Impairment and Difference in Conditions insurance or which should have been rated, coded or classified as such.

5. Title insurance and all forms of Financial Guarantee, Credit and Insolvency.

6. Aviation, Ocean Marine, Boiler and Machinery, Fidelity and Surety, Accident and Health, Animal Mortality and Workers Compensation and Employers Liability.

7. Errors and Omissions, Malpractice and any other type of Professional Liability insurance.

Page 3

8. Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke.  Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company's property loss under the applicable original policy.

9. Loss or liability as excluded under the provisions of the "War Exclusion Clause" attached to and forming part of this Contract.

10. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance" and the "Nuclear Incident Exclusion Clause - Liability - Reinsurance" attached to and forming part of this Contract.

11. Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the FHCF or Citizens Property Insurance Corporation.

12. Loss or liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund.  "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

13. Losses in the respect of overhead transmission and distribution lines other than those on or within 150 meters (or 500 feet) of the insured premises.

14. Mold, unless resulting from a peril otherwise covered under the policy involved.

15. Loss or liability as excluded under the provisions of the "Terrorism Exclusion" attached to and forming part of this Contract.

16. All property loss, damage, destruction, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including, but not limited to, Computer Virus) or loss of use, reduction in functionality, cost, expense or whatsoever nature resulting therefrom, unless resulting from a peril otherwise covered under the policy involved.

"Electronic Data" as used herein means facts, concepts and information converted to a form usable for communications, interpretation or processing by electronic and electromechanical data processing or electronically-controlled equipment and includes programs, software and other coded instructions for the processing and manipulation of data or the direction and manipulation of such equipment.

"Computer Virus" as used herein means a set of corrupting, harmful or otherwise unauthorized instructions or code, including a set of maliciously-introduced, unauthorized instructions or code, that propagate themselves through a computer system network of whatsoever nature.

Page 4

However, in the event that a peril otherwise covered under the policy results from any of the matters described above, this Contract, subject to all other terms and conditions, will cover physical damage directly caused by such listed peril.

Article 5 - Retention and Limit

A. As respects business subject to this Contract, the Company shall retain and be liable for 90.0% of its Net Liability. The Company shall cede to the Reinsurer and the Reinsurer agrees to accept 10.0% of the Company's Net Liability.

B. Notwithstanding the provisions above, the liability (including Loss in Excess of Policy Limits, Extra-Contractual Obligations and/or Loss Adjustment Expenses) of the Reinsurer shall not exceed the following:

1. As respects Homeowners Multiple Peril (Section I) and Dwelling Fire (property only) business:

a. 10.0% of $7,500,000 any one risk;

b. 10.0% of $100,000,000 any one Occurrence;

c. 10.0% of $200,000,000 as respects all Occurrences during any one Contract Year; and

d. 10.0% of $400,000,000 in all during the Term of this Contract.

2. As respects Homeowners Multiple Peril (Section II) business and Dwelling Fire (liability only) business, 10.0% of $5,000,000 any one Occurrence.

C. In no event shall the liability of the Reinsurer for loss, Loss Adjustment Expense, Loss in Excess of Policy Limits and/or Extra-Contractual Obligations exceed 115% of Premiums Earned.

The liability of the Reinsurer for loss, Loss Adjustment Expense, Loss in Excess of Policy Limits and/or Extra-Contractual Obligations shall be provisionally limited to $75,244,816, and shall be adjusted after the Premiums Earned for the Term of this Contract have been finally determined.

D. "Premiums Earned" as used in this Contract shall mean 10.0% of the Company's unearned premium at the inception of this Contract (after deduction of the allowance for Catastrophe Excess of Loss Protection in accordance with the provisions of paragraph B of the Reinsurer's Expense Article), plus 10.0% of the Company's Net Written Premium during the Term of this Contract (after deduction of the allowance for Catastrophe Excess of Loss Protection in accordance with the provisions of paragraph B of the Reinsurer's Expense Article), less the 10.0% of the Company's unearned portion thereof as of the effective date of calculation (after deduction of the allowance for Catastrophe Excess of Loss Protection in accordance with the provisions of paragraph B of the Reinsurer's Expense Article), it being understood and agreed that the unearned reinsurance premium (less previously allowed ceding commission) as of the date of termination or expiration shall be returned by the Reinsurer to the Company.

  Page 5

E. As respects Homeowners Multiple Peril (Section I) and Dwelling Fire (property only) business, "Occurrence" as used in this Contract shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another.  However, the duration and extent of any one "Occurrence" shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event, except that the term "Occurrence" shall be further defined as follows:

1. As regards windstorm, hail, tornado, hurricane and cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 120 consecutive hours arising out of and directly occasioned by the same event.  However, the event need not be limited to one state or province or states or provinces contiguous thereto.

2. As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event.  The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such occupation commenced during the aforesaid period.

3. As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the introductory portion of this paragraph A) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's "Occurrence."

4. As regards "freeze," only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting frozen pipes and tanks) may be included in the Company's "Occurrence."

5. As regards conflagration, brush fires and any other fires, irrespective of origin (except as provided in subparagraphs 2 and 3 above), all individual losses sustained by the Company which occur during any period of 168 consecutive hours within a 150-mile radius of any fixed point selected by the Company may be included in the Company's "Occurrence."

Except for those "Occurrences" referred to in subparagraph 2 of paragraph E above, the Company may choose the date and time when any such period of consecutive hours commences, provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss, and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any "Occurrence" referred to in subparagraph 1 of paragraph E above where only one such period of 120 consecutive hours shall apply with respect to one event, regardless of the duration of the event.

Page 6

However, as respects those "Occurrences" referred to in subparagraph 2 of paragraph E above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more "Occurrences," provided that no two periods overlap and no individual loss is included in more than one such period, and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

No individual losses occasioned by an event that would be covered by a 120 or 72 hours clause may be included in any "Occurrence" claimed under a 168 hours provision.

F. As respects Homeowners Multiple Peril (Section II) and Dwelling Fire (liability only) business, "Occurrence" as used in this Contract shall mean an accident or loss or a series of accidents or losses arising out of or caused by one event.

G. The Company shall be the sole judge of what constitutes one "risk."

H. "Term of this Contract" as used in this Contract shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2015, to 12:01 a.m., Eastern Standard Time, July 1, 2017.  If, however, this Contract is terminated, the "Term of this Contract" as used in this Contract shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2015, to the effective time and date of the termination.

Article 6 - Loss in Excess of Policy Limits/Extra-Contractual Obligations

A. In the event that the Company pays or is held liable to pay an amount of Loss in Excess of its Policy Limit, but otherwise within the terms of its Policy (hereinafter called "Loss in Excess of Policy Limits") or any punitive, exemplary, compensatory, or consequential damages or other amounts, including payments pursuant to applicable statutes, other than Loss in Excess of Policy Limits (hereinafter called "Extra-Contractual Obligations") because of alleged or actual bad faith or negligence on its part in rejecting a settlement within Policy limits, or in discharging its duty to defend or prepare the defense in the trial of an action against its policyholder, or in discharging its duty to prepare or prosecute an appeal consequent upon such an action, or in otherwise handling a claim under a Policy subject to this Contract, 100% of the Loss in Excess of Policy Limits and/or 100% of the Extra-Contractual Obligations shall be added to the Company's loss, if any, under the Policy involved, and the sum thereof shall be subject to the provisions of the Retention and Limit Article.

B. An Extra-Contractual Obligation shall be deemed to have occurred on the same date as the loss covered or alleged to be covered under the Policy.

C. Notwithstanding anything stated herein, this Contract shall not apply to any Loss in Excess of Policy Limits or any Extra-Contractual Obligation incurred by the Company as a result of any fraudulent and/or criminal act by any Executive Officer or member of the Board of Directors of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense, or settlement of any claim covered hereunder (as determined by the final decision by a court of competent jurisdiction).  "Executive Officer" as used herein shall mean any senior executive who performs a policy-making function.

Page 7

D. Recoveries from any form of insurance or reinsurance that protects the Company against claims the subject matter of this Article shall inure to the benefit of this Contract.

E. Savings Clause (applicable only if the Subscribing Reinsurer is domiciled in the State of New York):  In no event shall coverage be provided to the extent that such coverage is not permitted under New York law.

Article 7 - Other Reinsurance

The Company shall be permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract.

Article 8 - Claims and Loss Adjustment Expenses

A. Losses shall be reported by the Company in summary form as hereinafter provided, but the Company shall notify the Reinsurer immediately when a specific case involves unusual circumstances or large loss possibilities.  The Reinsurer shall have the right to participate, at its own expense, provided that it shall cooperate fully with the Company, in the defense of any claim or suit or proceeding involving this reinsurance.

B. All loss settlements made by the Company, whether under strict Policy conditions or by way of compromise, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or allow, as the case may be, its proportion of each such settlement in accordance with the Reports and Remittances Article.  It is agreed, however, that if the Reinsurer's share of any loss is equal to or greater than $100,000, the Reinsurer will pay its share of such loss as promptly as possible after receipt of reasonable evidence of the amount paid by the Company.  Inadvertent omission in dispatching the aforementioned notices will in no way affect the obligation of the Reinsurer under this Contract, provided that the Company informs the Reinsurer of such omission promptly upon discovery.

C. In the event of a claim under a Policy subject hereto, the Reinsurer shall be liable for its proportionate share of Loss Adjustment Expenses (as defined herein) incurred by the Company in connection therewith, and shall be credited with its proportionate share of any recoveries of such expense.

D. "Loss Adjustment Expenses" as used in this Contract shall mean expenses assignable to the investigation, appraisal, adjustment, settlement, litigation, defense and/or appeal of 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, other extraordinary communication expenses incurred as a result of a covered Occurrence, costs of supersedeas and appeal bonds, monitoring counsel expenses, expenses and a pro rata share of salaries of the Company's field employees, and expenses of other employees of the Company who have been temporarily diverted from their normal and customary duties and assigned to the adjustment of losses covered by this Contract, and declaratory judgment expenses or other legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto.  Loss Adjustment Expenses shall not include normal office expenses or salaries of the Company's officers.

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Article 9 - Salvage and Subrogation

The Reinsurer shall be credited with its proportionate share of salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officers and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder.  The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights if, in the Company's opinion, it is economically reasonable to do so.

Article 10 - Original Conditions

A. All reinsurance under this Contract shall be subject to the same rates, terms, conditions, waivers and interpretations, and to the same modifications and alterations as the respective Policies of the Company.  The Reinsurer shall be credited with its exact proportion of the original premiums received by the Company, prior to disbursement of any dividends, but after deduction of premiums, if any, ceded by the Company for inuring reinsurance.

B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract.

C. It is the intent of the parties that the Reinsurer shall follow the fortunes of the Company, provided that the loss(es) within the applicable time period are within the terms, conditions and limits of the original Policies.

D. However, in no event shall anything contained in this Article be construed in any way to provide coverage outside the terms, conditions and limitations set forth in this Contract.

Article 11 - Commission (BRMA 10A)

A. The Reinsurer shall allow the Company a 33.84% commission on all premiums ceded to the Reinsurer hereunder.  The Company shall allow the Reinsurer return commission on return premiums at the same rate.

B. It is expressly agreed that the ceding commission allowed the Company includes provision for all dividends, commissions, taxes, assessments, and all other expenses of whatever nature, except Loss Adjustment Expenses.

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Article 12 - Reinsurer's Expense

A. "Reinsurer's Expense" as used in this Contract shall mean an amount equal to 9.14% of the net unearned premium at inception, plus an amount equal to 9.14% of Net Written Premium for the Term of this Contract.  The Reinsurer's Expense shall be deducted from, not in addition to, the ceded premium.

B. "Net Written Premium" as used in this Contract shall mean Company's gross written premium for the classes of business reinsured hereunder, less cancellations and return premiums, and less premiums, if any, ceded by the Company for reinsurance which inures to the benefit of this Contract and less an allowance for premium ceded by the Company for Catastrophe Excess of Loss Protection, which allowance shall be equal to 26.13% of the total gross written premium for the classes of business reinsured hereunder, less cancellations and return premiums, for the Term of this Contract.

C. "Catastrophe Excess of Loss Protection" as used herein includes any catastrophe excess of loss reinsurance and/or protection purchased by the Company.

Article 13 - Experience Account

A. The Reinsurer shall maintain a notional experience account from the effective date of this Contract until the full and final release of each party's known or unknown obligations and liabilities under this Contract.

B. The experience account is defined on a cumulative basis as:

1. Ceded net unearned premium applicable to subject business in force at the effective date of this Contract plus ceded Net Written Premium (and less net unearned premium applicable to subject business in force at the termination or expiration date of this Contract); less

2. Ceding commission thereon; less

3. Reinsurer's Expense on (1) above; less

4. Ceded paid losses, Loss Adjustment Expenses, Loss in Excess of Policy Limits and/or Extra-Contractual Obligations.

Article 14 - Commutation

A. The Company has the unilateral right to commute this entire Contract at any time after June 30, 2017, provided that the balance of the Experience Account on the proposed date of commutation is positive.

B. Commutation of this Contract represents a full and final release of each party's known or unknown obligations and liabilities under this Contract.  The Company shall receive 100% of the positive balance of the Experience Account, if any, upon commutation.

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C. If the balance of the Experience Account is negative, this Contract may be commuted upon the mutual agreement of the Company and the Reinsurer and for an amount to be mutually agreed.

Article 15 - Reports and Remittances

A. Within 30 days after the effective date of this Contract, the Company shall remit the Reinsurer's share of the unearned premium (less commission thereon) applicable to subject business in force at the effective date of this Contract.

B. Within 30 days after the end of each month, the Company shall report to the Reinsurer:

1. Ceded Net Written Premium for the month;

2. Commission thereon;

3. Ceded losses and Loss Adjustment Expenses paid during the month (net of any recoveries during the month under the "cash call" provisions of the Claims and Loss Adjustment Expenses Article).

The positive balance of (1) less (2) less (3) shall be remitted by the Company with its report.  Any balance shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's report.

C. Within 60 days after the end of each calendar quarter, the Company shall report to the Reinsurer the ceded unearned premiums and ceded outstanding loss reserves as of the end of the calendar quarter.

D. The Company shall furnish the Reinsurer with such information as the Reinsurer may require to complete its Annual Convention Statement.

Article 16 - Sanctions

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party.

Article 17 - Late Payments

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:

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1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the six-month United States Treasury Bill rateas quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

3. The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest charges have been received by the Intermediary.

C. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

2. As respects a "cash call" made in accordance with the penultimate sentence of paragraph B of the Claims and Loss Adjustment Expenses Article, payment shall be deemed due thirty days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date on which the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract.  If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings.  If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

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E. Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

Article 18 - Offset

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The provisions of this Article shall not be affected by the insolvency of either party.

Article 19 - Access to Records

The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance, provided the Reinsurer gives the Company at least 15 days prior notice of request for such access.  However, a Subscribing Reinsurer or its designated representatives shall not have any right of access to the records of the Company if it is not current in all undisputed payments due the Company.  "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not contested in writing to the Company specifying the reason(s) why the payments are disputed.

Article 20 - Errors and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

Article 21 - Currency (BRMA 12A)

A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

B. Amounts paid or received by the Company in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Company.

Article 22 - Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia.

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Article 23 - Federal Excise Tax (BRMA 17D)

A. The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon as imposed under Section 4371 of the Internal Revenue Code to the extent such premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

Article 24 - Foreign Account Tax Compliance Act

A. To the extent the Reinsurer is subject to the deduction and withholding of premium payable hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the Internal Revenue Code), the Reinsurer shall allow such deduction and withholding from the premium payable under this Contract.

B. In the event of any return of premium becoming due hereunder, the return premium shall be determined and paid in full without regard to any amounts deducted or withheld under paragraph A of this Article.  In the event the Company or its agent recovers such premium deductions and withholdings on the return premium from the United States Government, the Company or its agent shall reimburse the Reinsurer for such amounts.

Article 25 - Unauthorized Reinsurers

A. If the Reinsurer is unauthorized in any state of the United States of America or the District of Columbia, the Reinsurer agrees to fund its share of the Company's United States ceded unearned premium and outstanding loss and Loss Adjustment Expenses reserves (including incurred but not reported loss reserves) by:

1. Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

2. Trust accounts for the benefit of the Company; and/or

3. Cash advances;

if, without such funding, a penalty or other negative consequence, including without limitation loss of credit for such reinsurance, either as an admitted asset or as a deduction from liability on account of reinsurance ceded, would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved.  The Reinsurer, at its option, may fund in other than cash if its method and form of funding are acceptable to the Company and the insurance regulatory authorities involved.

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B. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause," which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than thirty days prior to such expiration date.  The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of Policy cancellations, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of losses and/or Loss Adjustment Expenses paid under the terms of Policies reinsured hereunder, unless paid in cash by the Reinsurer;

3. To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

4. To fund a cash account in an amount equal to the Reinsurer's share of any ceded unearned premium and/or outstanding loss and Loss Adjustment Expenses reserves (including incurred but not reported loss reserves) funded by means of a letter of credit which is under non-renewal notice, if such letter of credit has not been renewed or replaced by the Reinsurer ten days or more prior to its expiration date;

5. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of the Company's ceded unearned premium and/or outstanding loss and Loss Adjustment Expenses reserves (including incurred but not reported loss reserves), if so requested by the Reinsurer.

In the event that the amount drawn by the Company on any letter of credit is in excess of the actual amount required for B(1), B(2) or B(4), or in the case of B(3), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

Article 26 - Special Funding

(This Article does not apply to any Subscribing Reinsurer (i) with a rating of A+ or higher at the time of inception from A.M. Best Company or Standard & Poor's, (ii) that is an Underwriter at Lloyd's of London, or (iii) that is unauthorized in any state of the United States of America or the District of Columbia or any province or jurisdiction of Canada.)

A. If, during the Term of this Contract or thereafter, as respects any outstanding liabilities hereunder, the Subscribing Reinsurer experiences any of the events or circumstances set forth in paragraph B of the Commencement and Termination Article, the Subscribing Reinsurer shall fund known outstanding losses and Loss Adjustment Expenses (including incurred but not reported loss reserves) related thereto and uncollected paid losses and Loss Adjustment Expenses (including incurred but not reported loss reserves) within fifteen business days from the date of written demand by the Company to so fund.

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B. The Subscribing Reinsurer shall have the option of determining the method of funding referred to in paragraph A above, provided it is acceptable to the Company and the insurance regulatory agency involved.  If the Subscribing Reinsurer elects to fund the aforesaid loss by a letter of credit, the procedures set forth in the Unauthorized Reinsurers Article as respects letters of credit shall apply.

C. If, during the Term of this Contract or thereafter, the Subscribing Reinsurer subsequently remedies the applicable trigger(s) described in subparagraphs 1 and 2 of paragraph A above which brought rise to the funding, the Company agrees to release those funds within thirty days of the Company receiving proof of said remedy.

Article 27 - Insolvency

A. In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more Subscribing Reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company.

C. It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees.

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Article 28 - Arbitration

A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration.  One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.  In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law.  The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties.  Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

C. If more than one Subscribing Reinsurer is involved in the same dispute, all such Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the Subscribing Reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the Subscribing Reinsurers participating under the terms of this Contract from several to joint.

D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration.  In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

Article 29 - Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract, including all information obtained through any audits and any claims information between the Company and the Reinsurer, and any submission or other materials relating to any renewal (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Company.

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B. Except as provided for in paragraph C below, the Reinsurer shall not disclose any Confidential Information to any third parties, including but not limited to the Reinsurer's subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, any unaffiliated entity engaged in modeling insurance or reinsurance data, and statistical rating organizations.

C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, or (3) external auditors performing an audit of the Reinsurer's records in the normal course of business; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Reinsurer shall be responsible for any breach of this provision by any third-party representatives of the Reinsurer.  The Company requires that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.

D. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

E. Any disclosure of Non-Public Personally Identifiable Information shall comply with all state and federal statutes and regulations governing the disclosure of Non-Public Personally Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as this term or a similar term is defined in any applicable state, provincial, territory, or federal law.  Disclosing or using this information for any purpose not authorized by applicable law is expressly forbidden without the prior consent of the Company.

F. The parties agree that any information subject to privilege, including the attorney-client privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore, the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential Information has been waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.

G. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

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Article 30 - Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities)

A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States.  Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract.

Article 31 - Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of Florida.

Article 32 - Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

Article 33 - Assignment and Assumption

The obligations and duties of the Reinsurer under this Contract shall not be assigned to or assumed by another reinsurer or other entity without the prior written consent of the Company.

Article 34 - Non-Waiver

The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in the future, nor (4) affect the validity of this Contract or any part thereof.

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Article 35 - Notices and Contract Execution

A. Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile.  With the exception of notices of termination, first class mail is also acceptable.

B. The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

1. Paper documents with an original ink signature;

2. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

3. Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

C. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Article 36 - Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder.  All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating to this Contract will be transmitted to the Company or the Reinsurer through the Intermediary.  Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as of the date specified below:

This 5^th day of August in the year 2015 .

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War Exclusion Clause

As regards interests which at time of loss or damage are on shore, no liability shall attach hereto in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority.

Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)

1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I. Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused.  However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

(a) substantial quantities, and

(b) the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

12/12/57

N.M.A. 1119

BRMA 35B

Nuclear Incident Exclusion Clause - Liability - Reinsurance (U.S.A.)

(Approved by Lloyd's Underwriters' Fire and Non-Marine Association)

(1) This reinsurance does not cover any loss or liability accruing to the Reassured as a member of, or subscriber to, any association of insurers or reinsurers formed for the purpose of covering nuclear energy risks or as a direct or indirect reinsurer of any such member, subscriber or association.

(2) Without in any way restricting the operation of paragraph (1) of this Clause it is understood and agreed that for all purposes of this reinsurance all the original policies of the Reassured (new, renewal and replacement) of the classes specified in Clause II of this paragraph (2) from the time specified in Clause III in this paragraph (2) shall be deemed to include the following provision (specified as the Limited Exclusion Provision):

Limited Exclusion Provision.*

I. It is agreed that the policy does not apply under any liability coverage, to

(injurysickness, disease, death or destruction

(bodilyinjury or property damage

with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability.

II. Family Automobile Policies (liability only), Special Automobile Policies (private passenger automobiles, liability only), Farmers Comprehensive Personal Liability Policies (liability only), Comprehensive Personal Liability Policies (liability only) or policies of a similar nature; and the liability portion of combination forms related to the four classes of policies stated above, such as the Comprehensive Dwelling Policy and the applicable types of Homeowners Policies.

III. The inception dates and thereafter of all original policies as described in II above, whether new, renewal or replacement, being policies which either

   (a) become effective on or after 1st May, 1960, or

   (b) become effective before that date and contain the Limited Exclusion Provision set out above;

provided this paragraph (2) shall not be applicable to Family Automobile Policies, Special Automobile Policies, or policies or combination policies of a similar nature, issued by the Reassured on New York risks, until 90 days following approval of the Limited Exclusion Provision by the Governmental Authority having jurisdiction thereof.

(3) Except for those classes of policies specified in Clause II of paragraph (2) and without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that for all purposes of this reinsurance the original liability policies of the Reassured (new, renewal and replacement) affording the following coverages:

Owners, Landlords and Tenants Liability, Contractual Liability, Elevator Liability, Owners or Contractors (including railroad) Protective Liability, Manufacturers and Contractors Liability, Product Liability, Professional and Malpractice Liability, Storekeepers Liability, Garage Liability, Automobile Liability (including Massachusetts Motor Vehicle or Garage Liability)

shall be deemed to include, with respect to such coverages, from the time specified in Clause V of this paragraph (3), the following provision (specified as the Broad Exclusion Provision):

Broad Exclusion Provision.*

It is agreed that the policy does not apply:

I. Under any Liability Coverage to

(injury, sickness, disease, death or destruction

(bodily injury or property damage

   (a) with respect to which an insured under the policy is also an insured under a nuclear energy liability policy issued by Nuclear Energy Liability Insurance Association, Mutual Atomic Energy Liability Underwriters or Nuclear Insurance Association of Canada, or would be an insured under any such policy but for its termination upon exhaustion of its limit of liability; or

   (b) resulting from the hazardous properties of nuclear material and with respect to which (1) any person or organization is required to maintain financial protection pursuant to the Atomic Energy Act of 1954, or any law amendatory thereof, or (2) the insured is, or had this policy not been issued would be, entitled to indemnity from the United States of America, or any agency thereof, under any agreement entered into by the United States of America, or any agency thereof, with any person or organization.

Page 1of 2

II. Under any Medical Payments Coverage, or under any Supplementary Payments Provision relating to

(immediate medical or surgical relief

(first aid,

to expenses incurred with respect to

(bodily injury, sickness, disease or death

(bodily injury

resulting from the hazardous properties of nuclear material and arising out of the operation of a nuclear facility by any person or organization.

III. Under any Liability Coverage to

(injury, sickness, disease, death or destruction

(bodily injury or property damage

resulting from the hazardous properties of nuclear material, if

   (a) the nuclear material (1) is at any nuclear facility owned by, or operated by or on behalf of, an insured or (2) has been discharged or dispersed therefrom;

   (b) the nuclear material is contained in spent fuel or waste at any time possessed, handled, used, processed, stored, transported or disposed of by or on behalf of an insured; or

   (c) the

(injury, sickness, disease, death or destruction

(bodily injury or property damage

arises out of the furnishing by an insured of services, materials, parts or equipment in connection with the planning, construction, maintenance, operation or use of any nuclear facility, but if such facility is located within the United States of America, its territories, or possessions or Canada, this exclusion (c) applies only to

(injury to or destruction of property at such nuclear facility

(property damage to such nuclear facility and any property thereat.

IV. As used in this endorsement:

"hazardous properties" include radioactive, toxic or explosive properties; "nuclear material" means source material, special nuclear material or byproduct material; "source material", "special nuclear material", and "byproduct material" have the meanings given them in the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent fuel" means any fuel element or fuel component, solid or liquid, which has been used or exposed to radiation in a nuclear reactor; "waste" means any waste material (1) containing byproduct material and (2) resulting from the operation by any person or organization of any nuclear facility included within the definition of nuclear facility under paragraph (a) or (b) thereof; "nuclear facility" means

   (a) any nuclear reactor,

   (b) any equipment or device designed or used for (1) separating the isotopes of uranium or plutonium, (2) processing or utilizing spent fuel, or (3) handling processing or packaging waste,

   (c) any equipment or device used for the processing, fabricating or alloying of special nuclear material if at any time the total amount of such material in the custody of the insured at the premises where such equipment or device is located consists of or contains more than 25 grams of plutonium or uranium 233 or any combination thereof, or more than 250 grams of uranium 235,

   (d) any structure, basin, excavation, premises or place prepared or used for the storage or disposal of waste, and includes the site on which any of the foregoing is located, all operations conducted on such site and all premises used for such operations; "nuclear reactor" means any apparatus designed or used to sustain nuclear fission in a self-supporting chain reaction or to contain a critical mass of fissionable material;

(With respect to injury to or destruction of property, the word "injury" or "destruction,"

("property damage" includes all forms of radioactive contamination of property,

(includes all forms of radioactive contamination of property.

V. The inception dates and thereafter of all original policies affording coverages specified in this paragraph (3), whether new, renewal or replacement, being policies which become effective on or after 1st May, 1960, provided this paragraph (3) shall not be applicable to

(i) Garage and Automobile Policies issued by the Reassured on New York risks, or

(ii) statutory liability insurance required under Chapter 90, General Laws of Massachusetts, until 90 days following approval of the Broad Exclusion Provision by the Governmental Authority having jurisdiction thereof.

(4) Without in any way restricting the operation of paragraph (1) of this Clause, it is understood and agreed that paragraphs (2) and (3) above are not applicable to original liability policies of the Reassured in Canada and that with respect to such policies this Clause shall be deemed to include the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian Underwriters' Association or the Independent Insurance Conference of Canada.

*NOTE. The words printed in italics in the Limited Exclusion Provision and in the Broad Exclusion Provision shall apply only in relation to original liability policies which include a Limited Exclusion Provision or a Broad Exclusion Provision containing those words.

21/9/67

N.M.A. 1590

Page 2of 2

Terrorism Exclusion

(Property Treaty Reinsurance)

Notwithstanding any provision to the contrary within this Contract or any amendment thereto, it is agreed that this Contract excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence the government de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organization(s) or government(s) de jure or de facto, and which:

1. Involves violence against one or more persons, or

2. Involves damage to property; or

3. Endangers life other than the person committing the action; or

4. Creates a risk to health or safety of the public or a section of the public; or

5. Is designed to interfere with or disrupt an electronic system.

This Contract also excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this Contract, in respect only of personal lines, this Contract will pay actual loss or damage (but not related cost and expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with radiological, biological, chemical, or nuclear pollution or contamination.

Interests and Liabilities Agreement

attached to and forming part of the

Homeowners Quota Share

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Partner Reinsurance Company of the U.S.

New York, New York

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 100.0% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2017, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 7^th day of August in the year 2015 .

EX-10.4

Exhibit 10.4

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

First Excess Catastrophe

Reinsurer(s)	Participation(s)
ACE Tempest Reinsurance Ltd.		10.00	%
Allied World Assurance Company, Ltd		2.75	%
American Agricultural Insurance Company		7.50	%
American Standard Insurance Company of Wisconsin		10.00	%
AXIS Specialty Limited		24.25	%
Everest Reinsurance Company		5.00	%
Partner Reinsurance Company Ltd.*		20.00	%
Through Aon UK Limited trading as Aon Benfield (Placement Only)
General Insurance Corporation of India		10.00	%
Länsförsäkringar Sak Forsäkringsaktiebolag (publ)		2.00	%
Pioneer Underwriting Limited for and on behalf of Taiping Reinsurance Co. Ltd.		2.50	%
Pioneer Underwriting Limited for and on behalf of Peak Reinsurance Company Limited		2.50	%
Through Aon UK Limited trading as Aon Benfield
Lloyd's Underwriters Per Signing Page(s)*		3.50	%
Total		100.00	%

  Page 1 of 2

Second Excess Catastrophe

Reinsurer(s)	Participation(s)
ACE Tempest Reinsurance Ltd.		10.00	%
Allied World Assurance Company, Ltd		2.75	%
American Standard Insurance Company of Wisconsin		5.00	%
AXIS Specialty Limited		9.75	%
Through Aon UK Limited trading as Aon Benfield (Placement Only)
General Insurance Corporation of India		5.00	%
Pioneer Underwriting Limited for and on behalf of Taiping Reinsurance Co. Ltd.		1.25	%
Pioneer Underwriting Limited for and on behalf of Peak Reinsurance Company Limited		1.25	%
Through Aon UK Limited trading as Aon Benfield
Lloyd's Underwriters Per Signing Page(s)*		5.00	%
Total		40.00	%

*Both the Company and the Subscribing Reinsurer sign the Interests and Liabilities Agreement.

  Page 2 of 2

Table of Contents

Article		Page
1	Classes of Business Reinsured	1
2	Commencement and Termination	1
3	Territory	3
4	Exclusions	3
5	Retention and Limit	4
6	Other Reinsurance	5
7	Reinstatement	5
8	Definitions	6
9	Loss Occurrence	7
10	Loss Notices and Settlements	8
11	Cash Call	9
12	Salvage and Subrogation	9
13	Reinsurance Premium	9
14	Sanctions	10
15	Late Payments	10
16	Offset	11
17	Access to Records	12
18	Liability of the Reinsurer	12
19	Net Retained Lines (BRMA 32E)	12
20	Errors and Omissions (BRMA 14F)	12
21	Currency (BRMA 12A)	13
22	Taxes (BRMA 50B)	13
23	Federal Excise Tax (BRMA 17D)	13
24	Foreign Account Tax Compliance Act	13
25	Reserves	13
26	Insolvency	15
27	Arbitration	15
28	Service of Suit (BRMA 49C)	16
29	Severability (BRMA 72E)	17
30	Governing Law (BRMA 71B)	17
31	Confidentiality	17
32	Non-Waiver	18
33	Notices and Contract Execution	18
34	Intermediary	19
	Schedule A

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective: July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

(hereinafter referred to as the "Company")

and

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the "Reinsurer")

Article 1 - Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies in force at the effective time and date hereof or issued or renewed at or after that time and date, and classified by the Company as Property business, including but not limited to, Dwelling Fire, Inland Marine, Mobile Home, Commercial and Homeowners business (including any business assumed from Citizens Property Insurance Corporation), subject to the terms, conditions and limitations set forth herein and in Schedule A attached hereto.

Article 2 - Commencement and Termination

A. This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, with respect to losses arising out of loss occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2016.

B. Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur:

1. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or

2. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or

  Page 1

3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or

4. The Subscribing Reinsurer has become, or has announced its intention to become, merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or

5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or

6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or

8. The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or

9. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid; or

10. The Subscribing Reinsurer has failed to comply with the funding requirements set forth in the Reserves Article.

C. The "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2015 to 12:01 a.m., Eastern Standard Time, July 1, 2016.  However, if this Contract is terminated, the "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, July 1, 2015 to the effective time and date of termination.

D. If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract.

  Page 2

Article 3 - Territory

The territorial limits of this Contract shall be identical with those of the Company's policies, excluding risks located in the State of Florida.

Article 4 - Exclusions

A. This Contract does not apply to and specifically excludes the following:

1. Reinsurance assumed by the Company under obligatory reinsurance agreements, except business assumed by the Company from Citizens Property Insurance Corporation.

2. Hail damage to growing or standing crops.

3. Business rated, coded or classified as Flood insurance or which should have been rated, coded or classified as such.

4. Business rated, coded or classified as Mortgage Impairment and Difference in Conditions insurance or which should have been rated, coded or classified as such.

5. Title insurance and all forms of Financial Guarantee, Credit and Insolvency.

6. Aviation, Ocean Marine, Boiler and Machinery, Fidelity and Surety, Accident and Health, Animal Mortality and Workers Compensation and Employers Liability.

7. Errors and Omissions, Malpractice and any other type of Professional Liability insurance.

8. Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke.  Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company's property loss under the applicable original policy.

9. Loss or liability as excluded under the provisions of the "War Exclusion Clause" attached to and forming part of this Contract.

10. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)" attached to and forming part of this Contract.

11. Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the FHCF or Citizens Property Insurance Corporation.

12. Loss or liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund.  "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

  Page 3

13. Losses in the respect of overhead transmission and distribution lines other than those on or within 150 meters (or 500 feet) of the insured premises.

14. Mold, unless resulting from a peril otherwise covered under the policy involved.

15. Loss or liability as excluded under the provisions of the "Terrorism Exclusion" attached to and forming part of this Contract.

16. All property loss, damage, destruction, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including, but not limited to, Computer Virus) or loss of use, reduction in functionality, cost, expense or whatsoever nature resulting therefrom, unless resulting from a peril otherwise covered under the policy involved.

"Electronic Data" as used herein means facts, concepts and information converted to a form usable for communications, interpretation or processing by electronic and electromechanical data processing or electronically-controlled equipment and includes programs, software and other coded instructions for the processing and manipulation of data or the direction and manipulation of such equipment.

"Computer Virus" as used herein means a set of corrupting, harmful or otherwise unauthorized instructions or code, including a set of maliciously-introduced, unauthorized instructions or code, that propagate themselves through a computer system network of whatsoever nature.

However, in the event that a peril otherwise covered under the policy results from any of the matters described above, this Contract, subject to all other terms and conditions, will cover physical damage directly caused by such listed peril.

Article 5 - Retention and Limit

A. As respects each excess layer of reinsurance coverage provided by this Contract, the Company shall retain and be liable for the first amount of ultimate net loss, shown as "Company's Retention" for that excess layer in Schedule A attached hereto, arising out of each loss occurrence.  The Reinsurer shall then be liable, as respects each excess layer, for the amount by which such ultimate net loss exceeds the Company's applicable retention, but the liability of the Reinsurer under each excess layer shall not exceed the amount, shown as "Reinsurer's Per Occurrence Limit" for that excess layer in Schedule A attached hereto, as respects any one loss occurrence.

B. Notwithstanding the provisions above, as respects each excess layer, no claim shall be made hereunder as respects losses arising out of loss occurrences commencing during the term of this Contract unless at least two risks insured or reinsured by the Company are involved in such loss occurrence.  For purposes hereof, the Company shall be the sole judge of what constitutes "one risk."

  Page 4

Article 6 - Other Reinsurance

The Company shall be permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract.

Article 7 - Reinstatement

A. In the event all or any portion of the reinsurance under any excess layer of reinsurance coverage provided by this Contract is exhausted by ultimate net loss, the amount so exhausted shall be reinstated immediately from the time the loss occurrence commences hereon.  For each amount so reinstated the Company agrees to pay additional premium equal to the product of the following:

1. The percentage of the occurrence limit for the excess layer reinstated (based on the ultimate net loss paid by the Reinsurer under that excess layer); times

2. The earned reinsurance premium for the excess layer reinstated for the term of this Contract (exclusive of reinstatement premium).

B. Whenever the Company requests payment by the Reinsurer of any ultimate net loss under any excess layer hereunder, the Company shall submit a statement to the Reinsurer of reinstatement premium due the Reinsurer for that excess layer.  If the earned reinsurance premium for any excess layer for the term of this Contract has not been finally determined as of the date of any such statement, the calculation of reinstatement premium due for that excess layer shall be based on the amount shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto, and shall be readjusted when the earned reinsurance premium for that excess layer for the term of this Contract has been finally determined.  Any reinstatement premium shown to be due the Reinsurer for any excess layer as reflected by any such statement (less prior payments, if any, for that excess layer) shall be payable by the Company concurrently with payment by the Reinsurer of the requested ultimate net loss for that excess layer.  Any return reinstatement premium shown to be due the Company shall be remitted by the Reinsurer as promptly as possible after receipt and verification of the Company's statement.

C. Notwithstanding anything stated herein, the liability of the Reinsurer for ultimate net loss under any excess layer of reinsurance coverage provided by this Contract shall not exceed either of the following:

1. The amount, shown as "Reinsurer's Per Occurrence Limit" for that excess layer in Schedule A attached hereto, as respects loss or losses arising out of any one loss occurrence; or

2. The amount, shown as "Reinsurer's Term Limit" for that excess layer in Schedule A attached hereto, in all during the term of this Contract.

  Page 5

Article 8 - Definitions

A. "Loss adjustment expense," regardless of how such expenses are classified for statutory reporting purposes, as used in this Contract shall mean all costs and expenses allocable to a specific claim that are incurred by the Company in the investigation, appraisal, adjustment, settlement, litigation, defense or appeal of a specific claim, including court costs and costs of supersedeas and appeal bonds, and including a) pre-judgment interest, unless included as part of the award or judgment; b) post-judgment interest; c) legal expenses and costs incurred in connection with coverage questions and legal actions connected thereto, including Declaratory Judgment Expense; and d) expenses and a pro rata share of salaries of the Company field employees, and expenses of other Company employees who have been temporarily diverted from their normal and customary duties and assigned to the field adjustment of losses covered by this Contract.

Loss adjustment expense as defined above does not include unallocated loss adjustment expense.  Unallocated loss adjustment expense includes, but is not limited to, salaries and expenses of employees, other than in (d) above, and office and other overhead expenses.

B. "Loss in excess of policy limits" and "extra contractual obligations" as used in this Contract shall mean:

1. "Loss in excess of policy limits" shall mean 90.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action.  Any loss in excess of policy limits that is made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.

2. "Extra contractual obligations" shall mean 90.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action.  An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy.  Any extra contractual obligations that are made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.

Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of policy limits or any extra contractual obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder.

  Page 6

C. "Policies" as used in this Contract shall mean all policies, contracts and binders of insurance or reinsurance.

D. "Total Insured Value" as used in this Contract shall mean the sum of the following coverages (for wind covered policies only):

Coverage A - Structure

Coverage B - Appurtenant Structures

Coverage C - Contents

Coverage D - Loss of Use

E. "Ultimate net loss" as used in this Contract shall mean the sum or sums (including loss in excess of policy limits, extra contractual obligations and loss adjustment expense, as defined herein) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not.  Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained.

Article 9 - Loss Occurrence

A. The term "loss occurrence" shall mean the sum of all individual losses directly occasioned by any one disaster, accident or loss or series of disasters, accidents or losses arising out of one event which occurs within the area of one state of the United States or province of Canada and states or provinces contiguous thereto and to one another.  However, the duration and extent of any one "loss occurrence" shall be limited to all individual losses sustained by the Company occurring during any period of 168 consecutive hours arising out of and directly occasioned by the same event, except that the term "loss occurrence" shall be further defined as follows:

1. As regards windstorm, hail, tornado, hurricane and cyclone, including ensuing collapse and water damage, all individual losses sustained by the Company occurring during any period of 120 consecutive hours arising out of and directly occasioned by the same event.  However, the event need not be limited to one state or province or states or provinces contiguous thereto.

2. As regards riot, riot attending a strike, civil commotion, vandalism and malicious mischief, all individual losses sustained by the Company occurring during any period of 72 consecutive hours within the area of one municipality or county and the municipalities or counties contiguous thereto arising out of and directly occasioned by the same event.  The maximum duration of 72 consecutive hours may be extended in respect of individual losses which occur beyond such 72 consecutive hours during the continued occupation of an assured's premises by strikers, provided such occupation commenced during the aforesaid period.

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3. As regards earthquake (the epicenter of which need not necessarily be within the territorial confines referred to in the introductory portion of this paragraph A) and fire following directly occasioned by the earthquake, only those individual fire losses which commence during the period of 168 consecutive hours may be included in the Company's "loss occurrence."

4. As regards "freeze," only individual losses directly occasioned by collapse, breakage of glass and water damage (caused by bursting frozen pipes and tanks) may be included in the Company's "loss occurrence."

5. As regards conflagration, brush fires and any other fires, irrespective of origin (except as provided in subparagraphs 2 and 3 above), all individual losses sustained by the Company which occur during any period of 168 consecutive hours within a 150-mile radius of any fixed point selected by the Company may be included in the Company's "loss occurrence."

B. Except for those "loss occurrences" referred to in subparagraph 2 of paragraph A above, the Company may choose the date and time when any such period of consecutive hours commences, provided that it is not earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss, and provided that only one such period of 168 consecutive hours shall apply with respect to one event, except for any "loss occurrence" referred to in subparagraph 1 of paragraph A above where only one such period of 120 consecutive hours shall apply with respect to one event, regardless of the duration of the event.

C. However, as respects those "loss occurrences" referred to in subparagraph 2 of paragraph A above, if the disaster, accident or loss occasioned by the event is of greater duration than 72 consecutive hours, then the Company may divide that disaster, accident or loss into two or more "loss occurrences," provided that no two periods overlap and no individual loss is included in more than one such period, and provided that no period commences earlier than the date and time of the occurrence of the first recorded individual loss sustained by the Company arising out of that disaster, accident or loss.

D. No individual losses occasioned by an event that would be covered by a 120 or 72 hours clause may be included in any "loss occurrence" claimed under a 168 hours provision.

Article 10 - Loss Notices and Settlements

A. Whenever losses sustained by the Company are reserved by the Company for an amount greater than 50.0% of the Company's retention under any excess layer hereunder and/or appear likely to result in a claim under such excess layer, the Company shall notify the Subscribing Reinsurers under that excess layer and shall provide updates related to development of such losses.  The Reinsurer shall have the right to participate in the adjustment of such losses at its own expense.

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B. All loss settlements made by the Company, provided they are within the terms of this Contract and the terms of the original policy (with the exception of loss in excess of policy limits or extra contractual obligations coverage, if any, under this Contract), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable upon receipt of reasonable evidence of the amount paid by the Company.

Article 11 - Cash Call

Notwithstanding the provisions of the Loss Notices and Settlements Article, upon the request of the Company, the Reinsurer shall pay any amount with regard to a loss settlement or settlements that are scheduled to be made (including any payments projected to be made) within the next 20 days by the Company, subject to receipt by the Reinsurer of a satisfactory proof of loss.  Such agreed payment shall be made within 10 days from the date the demand for payment was transmitted to the Reinsurer.

Article 12 - Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder.  Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss.  The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights, if, in the Company's opinion, it is economically reasonable to do so.

Article 13 - Reinsurance Premium

A. As premium for each excess layer of reinsurance coverage provided by this Contract, the Company shall pay the Reinsurer a premium equal to the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months), subject to a minimum premium of the amount, shown as "Minimum Premium" for that excess layer in Schedule A attached hereto (or a pro rata portion thereof in the event the term of this Contract is less than 12 months):

1. The amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto; times

2. The percentage calculated by dividing (a) the Company's Total Insured Value ("TIV") applicable to wind endorsed policies in force on September 30, 2015, by (b) the Company TIV applicable wind endorsed policies projected to September 30, 2015, of $5,303,071,323.

However, if the difference between the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto, and the premium calculated in accordance with this paragraph A for the excess layer is less than a 5.0% increase or decrease, the premium due the Reinsurer will equal the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto.

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B. The Company shall pay the Reinsurer an annual deposit premium for each excess layer of the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule A attached hereto, in four equal installments of the amount, shown as "Deposit Premium Installment" for that excess layer in Schedule A attached hereto, on July 1 and October 1 of 2015, and on January 1 and April 1 of 2016.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

C. On or before June 30, 2016, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for each excess layer for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company for each such excess layer shall be remitted promptly.

Article 14 - Sanctions

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party.

Article 15 - Late Payments

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the six-month United States Treasury Bill rateas quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

3. The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest charges have been received by the Intermediary.

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C. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract.  If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings.  If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

E. Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

Article 16 - Offset

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The provisions of this Article shall not be affected by the insolvency of either party.

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Article 17 - Access to Records

The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance, provided the Reinsurer gives the Company at least 15 days prior notice of request for such access.  However, a Subscribing Reinsurer or its designated representatives shall not have any right of access to the records of the Company if it is not current in all undisputed payments due the Company.  "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not contested in writing to the Company specifying the reason(s) why the payments are disputed.

Article 18 - Liability of the Reinsurer

A. The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon.  However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract.

Article 19 - Net Retained Lines (BRMA 32E)

A. This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included.

B. The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.

Article 20 - Errors and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

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Article 21 - Currency (BRMA 12A)

A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

B. Amounts paid or received by the Company in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Company.

Article 22 - Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia.

Article 23 - Federal Excise Tax (BRMA 17D)

A. The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

Article 24 - Foreign Account Tax Compliance Act

A. To the extent the Reinsurer is subject to the deduction and withholding of premium payable hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the Internal Revenue Code), the Reinsurer shall allow such deduction and withholding from the premium payable under this Contract.

B. In the event of any return of premium becoming due hereunder, the return premium shall be determined and paid in full without regard to any amounts deducted or withheld under paragraph A of this Article.  In the event the Company or its agent recovers such premium deductions and withholdings on the return premium from the United States Government, the Company or its agent shall reimburse the Reinsurer for such amounts.

Article 25 - Reserves

A. The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss and loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences) (hereinafter referred to as "Reinsurer's Obligations") by:

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1. Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

2. Escrow accounts for the benefit of the Company; and/or

3. Cash advances;

 if the Reinsurer:

1. Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and if, without such funding, a penalty would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved; or

2. Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract.

The Reinsurer, at its sole option, may fund in other than cash if its method and form of funding are acceptable to the insurance regulatory authorities involved.

B. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause," which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than 30 days prior to said expiration date.  The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer;

3. To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

4. To fund a cash account in an amount equal to the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, funded by means of a letter of credit which is under non-renewal notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date;

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5. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any letter of credit is in excess of the actual amount required for B(1), B(2) or B(4), or in the case of B(3), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

Article 26 - Insolvency

A. In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more Subscribing Reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company.

C. It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees.

Article 27 - Arbitration

A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration.  One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.  In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

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B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law.  The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties.  Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

C. If more than one Subscribing Reinsurer is involved in the same dispute, all such Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the Subscribing Reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the Subscribing Reinsurers participating under the terms of this Contract from several to joint.

D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration.  In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

Article 28 - Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities)

A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States.  Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

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B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract.

Article 29 - Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

Article 30 - Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of Florida.

Article 31 - Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract, including all information obtained through any audits and any claims information between the Company and the Reinsurer, and any submission or other materials relating to any renewal (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Company.

B. Except as provided for in paragraph C below, the Reinsurer shall not disclose any Confidential Information to any third parties, including but not limited to the Reinsurer's subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, any unaffiliated entity engaged in modeling insurance or reinsurance data, and statistical rating organizations.

C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, (3) external auditors performing an audit of the Reinsurer's records in the normal course of business, or (4) the Reinsurer's legal counsel; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Company may require that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.  If a third-party representative of the Reinsurer is not bound, in writing, by this Confidentiality Article or by a separate written confidentiality agreement, the Reinsurer shall be responsible for any breach of this provision by such third-party representative of the Reinsurer.

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D. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure, to the extent legally permissible, and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

E. Any disclosure of Non-Public Personally Identifiable Information shall comply with all state and federal statutes and regulations governing the disclosure of Non-Public Personally Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as this term or a similar term is defined in any applicable state, provincial, territory, or federal law.  Disclosing or using this information for any purpose not authorized by applicable law is expressly forbidden without the prior consent of the Company.

F. The parties agree that any information subject to privilege, including the attorney-client privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore, the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential Information has been waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.

G. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

Article 32 - Non-Waiver

The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in the future, nor (4) affect the validity of this Contract or any part thereof.

Article 33 - Notices and Contract Execution

A. Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile.  With the exception of notices of termination, first class mail is also acceptable.

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B. The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

1. Paper documents with an original ink signature;

2. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

3. Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

C. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Article 34 - Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder.  All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating to this Contract will be transmitted to the Company or the Reinsurer through the Intermediary.  Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as of the date specified below:

This 5^th day of August in the year 2015  .

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Schedule A

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First Excess		Second Excess
Company's Retention	$	5,000,000	$	21,500,000
Reinsurer's Per Occurrence Limit	$	16,500,000	$	61,000,000
Reinsurer's Term Limit	$	33,000,000	$	122,000,000
Minimum Premium	$	1,834,800	$	2,391,200
Annual Deposit Premium	$	2,293,500	$	2,989,000
Deposit Premium Installments	$	573,375	$	747,250

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer in the percentage share for that excess layer as expressed in its Interests and Liabilities Agreement attached hereto.

  Schedule A

War Exclusion Clause

As regards interests which at time of loss or damage are on shore, no liability shall attach hereto in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority.

Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)

1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I. Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused.  However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

(a) substantial quantities, and

(b) the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

12/12/57

N.M.A. 1119

BRMA 35B

Terrorism Exclusion

(Property Treaty Reinsurance)

Notwithstanding any provision to the contrary within this Contract or any amendment thereto, it is agreed that this Contract excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence the government de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organization(s) or government(s) de jure or de facto, and which:

1. Involves violence against one or more persons, or

2. Involves damage to property; or

3. Endangers life other than the person committing the action; or

4. Creates a risk to health or safety of the public or a section of the public; or

5. Is designed to interfere with or disrupt an electronic system.

This Contract also excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this Contract, in respect only of personal lines, this Contract will pay actual loss or damage (but not related cost and expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with radiological, biological, chemical, or nuclear pollution or contamination.

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

ACE Tempest Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

10.00%	of the First Excess Catastrophe
10.00%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 6^th day of August in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Allied World Assurance Company, Ltd

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.75%	of the First Excess Catastrophe
2.75%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 13^th day of August in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

American Agricultural Insurance Company

Indianapolis, Indiana

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

7.50%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 13^th day of August in the year 2015.

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

American Standard Insurance Company of Wisconsin

Madison, Wisconsin

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

10.00%	of the First Excess Catastrophe
5.00%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

AXIS Specialty Limited

Pembroke, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

24.25%	of the First Excess Catastrophe
9.75%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th  day of August in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Everest Reinsurance Company

A Delaware Corporation

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

5.00%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 20^th day of August in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

General Insurance Corporation of India

Mumbai, India

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

10.00%	of the First Excess Catastrophe
5.00%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015  .

General Insurance Corporation of India

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Länsförsäkringar Sak Forsäkringsaktiebolag (publ)

Stockholm, Sweden

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.00%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August  in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Partner Reinsurance Company Ltd.

Pembroke, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

20.00%	of the First Excess Catastrophe
0%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, the provisions of subparagraph 4 of paragraph B of Article 2 - Commencement and Termination - shall not apply.

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 5^th day of August  in the year 2015  .

This 25^th day of August  in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Pioneer Underwriting Limited

for and on behalf of Taiping Reinsurance Co. Ltd.

Hong Kong

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.50%	of the First Excess Catastrophe
1.25%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 18^th day of August  in the year 2015  .

Pioneer Underwriting Limited

for and on behalf of Taiping Reinsurance Co. Ltd.

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Pioneer Underwriting Limited

for and on behalf of Peak Reinsurance Company Limited

Hong Kong

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

2.50%	of the First Excess Catastrophe
1.25%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 18^th day of August  in the year 2015  .

Pioneer Underwriting Limited

for and on behalf of Peak Reinsurance Company Limited

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Certain Underwriting Members of Lloyd's

shown in the Signing Page(s) attached hereto

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

3.50%	of the First Excess Catastrophe
5.00%	of the Second Excess Catastrophe

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

As respects the Subscribing Reinsurer's share in the attached Contract, in lieu of the provisions of the last subparagraph of paragraph A of Article 25 - Reserves - the following paragraph shall apply:

"The Reinsurer, at its sole option, may fund in other than cash (including the use of the Lloyd's Credit for Reinsurance Trust Funds as a funding instrument) if such method and form of funding are acceptable to the Company and to the insurance regulatory authorities involved, as the case may be."

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New York, New York  10019.

In Witness Whereof, the Company by its duly authorized representative has executed this Agreement as of the date specified below:

This 5^th day of August  in the year 2015  .

Signed for and on behalf of the Subscribing Reinsurer in the Signing Page(s) attached hereto.

Signing Page

attached to and forming part of the

Interests and Liabilities Agreement

with respect to the

Non-Florida Property Catastrophe

Excess of Loss Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Certain Underwriting Members of Lloyd's

(Re)Insurer's Liability Clause - LMA3333

(Re)Insurer's liability several not joint

The liability of a (re)insurer under this contract is several and not joint with other (re)insurers party to this contract. A (re)insurer is liable only for the proportion of liability it has underwritten. A (re)insurer is not jointly liable for the proportion of liability underwritten by any other (re)insurer. Nor is a (re)insurer otherwise responsible for any liability of any other (re)insurer that may underwrite this contract.

The proportion of liability under this contract underwritten by a (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together) is shown next to its stamp. This is subject always to the provision concerning "signing" below.

In the case of a Lloyd's syndicate, each member of the syndicate (rather than the syndicate itself) is a (re)insurer. Each member has underwritten a proportion of the total shown for the syndicate (that total itself being the total of the proportions underwritten by all the members of the syndicate taken together). The liability of each member of the syndicate is several and not joint with other members. A member is liable only for that member's proportion. A member is not jointly liable for any other member's proportion. Nor is any member otherwise responsible for any liability of any other (re)insurer that may underwrite this contract. The business address of each member is Lloyd's, One Lime Street, London EC3M 7HA. The identity of each member of a Lloyd's syndicate and their respective proportion may be obtained by writing to Market Services, Lloyd's, at the above address.

Proportion of liability

Unless there is "signing" (see below), the proportion of liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together) is shown next to its stamp and is referred to as its "written line".

Where this contract permits, written lines, or certain written lines, may be adjusted ("signed"). In that case a schedule is to be appended to this contract to show the definitive proportion of liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together). A definitive proportion (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of a Lloyd's syndicate taken together) is referred to as a "signed line". The signed lines shown in the schedule will prevail over the written lines unless a proven error in calculation has occurred.

Although reference is made at various points in this clause to "this contract" in the singular, where the circumstances so require this should be read as a reference to contracts in the plural.

Now Know Ye that we the Underwriters, Members of the Syndicates whose definitive numbers in the after mentioned List of Underwriting Members of Lloyd's are set out in the attached Table, hereby bind ourselves each for his own part and not one for another, our Executors and Administrators, and in respect of his due proportion only, to pay or make good to the Assured or to the Assured's Executors or Administrators or to indemnify him or them against all such loss, damage of liability as herein provided, such payment to be made after such loss, damage or liability is proved and the due proportion for which each of us, the Underwriters, is liable shall be ascertained by reference to his share, as shown in the said List, of the Amount, Percentage or Proportion of the total sum insured hereunder which is in the Table set opposite the definitive number of the Syndicate of which such Underwriter is a Member AND FURTHER THAT the List of Underwriting Members of Lloyd's referred to above shows their respective Syndicates and Shares therein, is deemed to be incorporated in and to form part of this policy, bears the number specified in the attached Table and is available for inspection at Lloyd's Policy Signing Office by the Assured or his or their representatives and a true copy of the material parts of the said List certified by the General Manager of Lloyd's Policy Signing Office will be furnished to the Assured on application. In Witness whereof the General Manager of Lloyd's Policy Signing Office has subscribed his name on behalf of each of us.

In Witness  whereof the General Manager of Lloyd's Policy Signing Office has subscribed his name on behalf of each of us.

LLOYD'S POLICY SIGNING OFFICE,

General Manager

If this policy (or any subsequent endorsement) has been produced to you in electronic form, the original document is stored on the Insurer's Market Repository to which your broker has access.

(NM)

Definitive Numbers of Syndicates and Amount, Percentage or

Proportion of the Total Sum insured hereunder shared between the

Members of those Syndicates.

        The Table of Syndicates referred to on the face of this Policy follows:

BUREAU REFERENCE	61249 16/07/2015	BROKER NUMBER             1108
PROPORTION %	SYNDICATE	UNDERWRITER'S REFERENCE
0.54	623	TH039J15APCZ
2.46	2623	TH039J15APCZ
0.50	1910	001651012015
TOTAL LINE	No. OF SYNDICATES
3.50	3

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2015

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUL 2015

BUREAU USE ONLY USE3 72      5156  RISK CODE: XA   Page 1 of 1

        The Table of Syndicates referred to on the face of this Policy follows:

BUREAU REFERENCE	61251 16/07/2015	BROKER NUMBER              1108
PROPORTION %	SYNDICATE	UNDERWRITER'S REFERENCE
0.360	623	TH040B15APCZ
1.640	2623	TH040B15APCZ
0.175	2791	X1115NX05939
1.575	2791	X1115MG05938
1.250	1729	000284G15AB
TOTAL LINE	No. OF SYNDICATES
5.000	5

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2015

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUL 2015

BUREAU USE ONLY USE3 72      10557  RISK CODE: XA   Page 1 of 1

EX-10.5

Exhibit 10.5

Non-Florida Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

Non-Florida Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

First Reinstatement Premium Protection Reinsurance

Reinsurer(s)	Participation(s)
Allianz Risk Transfer AG (Bermuda Branch)		100.0	%
Total		100.0	%

Second Reinstatement Premium Protection Reinsurance

Reinsurer(s)	Participation(s)
AXIS Specialty Limited		40.0	%
Total		40.0	%

Table of Contents

Article		Page
1	Coverage	1
2	Commencement and Termination	1
3	Concurrency of Conditions	2
4	Premium	3
5	Sanctions	3
6	Loss Notices and Settlements	3
7	Late Payments	4
8	Offset	5
9	Access to Records	5
10	Errors and Omissions (BRMA 14F)	5
11	Currency (BRMA 12A)	6
12	Taxes (BRMA 50B)	6
13	Federal Excise Tax (BRMA 17D)	6
14	Foreign Account Tax Compliance Act	6
15	Reserves	6
16	Insolvency	8
17	Arbitration	9
18	Service of Suit (BRMA 49C)	9
19	Severability (BRMA 72E)	10
20	Governing Law (BRMA 71B)	10
21	Confidentiality	10
22	Non-Waiver	11
23	Notices and Contract Execution	11
24	Intermediary	12
	Schedule A
	Schedule B

Non-Florida Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

(hereinafter referred to as the "Company")

and

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the "Reinsurer")

Article 1 – Coverage

By this Contract the Reinsurer agrees to indemnify the Company for 100% of any reinstatement premium which the Company pays or becomes liable to pay as a result of loss occurrences covered under the Company's Non-Florida Property Catastrophe Excess of Loss Reinsurance Contract, effective July 1, 2015 (hereinafter referred to as the "Original Contract" and described in Schedule A attached hereto), subject to the terms, conditions and limitations set forth herein and in Schedules A and B attached to and forming part of this Contract.

Article 2 - Commencement and Termination

A. This Contract shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, with respect to reinstatement premium payable by the Company under the Original Contract as a result of losses arising out of loss occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Eastern Standard Time, July 1, 2016.

B. Notwithstanding the provisions of paragraph A. above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur:

1. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or

2. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or

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3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below "A-" and/or Standard & Poor's rating has been assigned or downgraded below "BBB+"; or

4. The Subscribing Reinsurer has become, or has announced its intention to become, merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or

5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or

6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or

8. The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or

9. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid; or

10. The Subscribing Reinsurer has failed to comply with the funding requirements set forth in the Reserves Article.

C. If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract.

Article 3 - Concurrency of Conditions

A. It is agreed that this Contract will follow the terms, conditions, exclusions, definitions, warranties and settlements of the Company under the Original Contract, which are not inconsistent with the provisions of this Contract.

B. The Company shall advise the Reinsurer of any material changes in the Original Contract which may affect the liability of the Reinsurer under this Contract.

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Article 4 – Premium

A. As premium for the reinsurance coverage provided hereunder for each excess layer for the term of this Contract, the Company shall pay the Reinsurer the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months and for purposes of calculating subparagraph 3 below, the term of the Original Contract is a full 12 months):

1. The amount, shown as "Reinstatement Factor" for that excess layer in Schedule B attached hereto; times

2. The Final Adjusted Rate on Line for the corresponding excess layer of the Original Contract; times

3. An amount equal to 100% reinsurance placement percentage under each excess layer of the Original Contract of the final adjusted premium paid by the Company for the corresponding excess layer of the Original Contract.

"Final Adjusted Rate on Line" as used herein shall mean an amount equal to a 100% reinsurance placement percentage under each excess layer of the Original Contract of the final adjusted premium paid by the Company for the corresponding excess layer of the Original Contract divided by the amount, shown as the "Reinsurer's Per Occurrence Limit" for that excess layer under the Original Contract in Schedule A attached hereto.

B. The Company shall pay the Reinsurer a deposit premium for each excess layer of the amount, shown as "Annual Deposit Premium" for that excess layer in Schedule B attached hereto, in four equal installments of the amount, shown as "Deposit Premium Installment" for that excess layer in Schedule B attached hereto, on July 1 and October 1 of 2015, and January 1 and April 1 of 2016.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

C. As soon as possible after the termination or expiration of this Contract, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for each excess layer for the term of this Contract, computed in accordance with paragraph A, and any additional premium due the Reinsurer or return premium due the Company for each such excess layer shall be remitted promptly.

Article 5 – Sanctions

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party.

Article 6 – Loss Notices and Settlements

A. Whenever reinstatement premium settlements made by the Company under the Original Contract appear likely to result in a claim hereunder, the Company shall notify the Reinsurer.  The Company will advise the Reinsurer of all subsequent developments relating to such claims that, in the opinion of the Company, may materially affect the position of the Reinsurer.

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B. All reinstatement premium settlements made by the Company under the Original Contract, provided they are within the terms of the Original Contract and within the terms of this Contract, shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable within 10 days of receipt of reasonable evidence of the amount paid (or scheduled to be paid) by the Company.

Article 7 – Late Payments

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the six-month United States Treasury Bill rateas quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

3. The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest charges have been received by the Intermediary.

C. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

2. Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1. and 2. of this paragraph C., the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked.

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For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract.  If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings.  If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

E. Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

Article 8 – Offset

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The provisions of this Article shall not be affected by the insolvency of either party.

Article 9 – Access to Records

The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance, provided the Reinsurer gives the Company at least 15 days prior notice of request for such access.  However, a Subscribing Reinsurer or its designated representatives shall not have any right of access to the records of the Company if it is not current in all undisputed payments due the Company.  "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not contested in writing to the Company specifying the reason(s) why the payments are disputed.

Article 10 – Errors and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

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Article 11 – Currency (BRMA 12A)

A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

B. Amounts paid or received by the Company in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Company.

Article 12 – Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia.

Article 13 – Federal Excise Tax (BRMA 17D)

A. The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

Article 14 – Foreign Account Tax Compliance Act

A. To the extent the Reinsurer is subject to the deduction and withholding of premium payable hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the Internal Revenue Code), the Reinsurer shall allow such deduction and withholding from the premium payable under this Contract.

B. In the event of any return of premium becoming due hereunder, the return premium shall be determined and paid in full without regard to any amounts deducted or withheld under paragraph A of this Article.  In the event the Company or its agent recovers such premium deductions and withholdings on the return premium from the United States Government, the Company or its agent shall reimburse the Reinsurer for such amounts.

Article 15 – Reserves

A. The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss reserves (being the sum of all reinstatement premiums paid by the Company under the Original Contract but not yet recovered from the Reinsurer, plus the Company's reserves for reinstatement premium due under the Original Contract, if any) (hereinafter referred to as "Reinsurer's Obligations") by:

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1. Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

2. Escrow accounts for the benefit of the Company; and/or

3. Cash advances;

if the Reinsurer:

1. Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and if, without such funding, a penalty would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved; or

2. Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract.

The Reinsurer, at its sole option, may fund in other than cash if its method and form of funding are acceptable to the insurance regulatory authorities involved.

B. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause," which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than 30 days prior to said expiration date.  The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of reinstatement premiums paid by the Company under the terms of the Original Contract, unless paid in cash by the Reinsurer;

3. To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

4. To fund a cash account in an amount equal to the Reinsurer's share of amounts, including, but not limited to, the Reinsurer's Obligations as set forth above, funded by means of a letter of credit which is under non-renewal notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date;

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5. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any letter of credit is in excess of the actual amount required for B(1), B(2) or B(4), or in the case of B(3), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

Article 16 – Insolvency

A. In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more Subscribing Reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company.

C. It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees.

Article 17 – Arbitration

A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration.  One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.  In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

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B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law.  The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties.  Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

C. If more than one Subscribing Reinsurer is involved in the same dispute, all such Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the Subscribing Reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the Subscribing Reinsurers participating under the terms of this Contract from several to joint.

D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration.  In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

Article 18 – Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities)

A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States.  Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

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B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract.

Article 19 – Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

Article 20 – Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of Florida.

Article 21 – Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract, including all information obtained through any audits and any claims information between the Company and the Reinsurer, and any submission or other materials relating to any renewal (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Company.

B. Except as provided for in paragraph C. below, the Reinsurer shall not disclose any Confidential Information to any third parties, including but not limited to the Reinsurer's subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, any unaffiliated entity engaged in modeling insurance or reinsurance data, and statistical rating organizations.

C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, or (3) external auditors performing an audit of the Reinsurer's records in the normal course of business; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Reinsurer shall be responsible for any breach of this provision by any third-party representatives of the Reinsurer.  The Company requires that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.

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D. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

E. Any disclosure of Non-Public Personally Identifiable Information shall comply with all state and federal statutes and regulations governing the disclosure of Non-Public Personally Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as this term or a similar term is defined in any applicable state, provincial, territory, or federal law.  Disclosing or using this information for any purpose not authorized by applicable law is expressly forbidden without the prior consent of the Company.

F. The parties agree that any information subject to privilege, including the attorney-client privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore, the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential Information has been waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.

G. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

Article 22 – Non-Waiver

The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in the future, nor (4) affect the validity of this Contract or any part thereof.

Article 23 – Notices and Contract Execution

A. Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile.  With the exception of notices of termination, first class mail is also acceptable.

B. The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

1. Paper documents with an original ink signature;

2. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

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3. Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

C. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Article 24 – Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder.  All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating to this Contract will be transmitted to the Company or the Reinsurer through the Intermediary.  Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as of the date specified below:

This 5^th  day of August  in the year 2015 .

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Schedule A

Non-Florida Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	Original Contract First Excess		Original Contract Second Excess
Company's Retention	$	5,000,000	$	21,500,000
Reinsurer's Per Occurrence Limit	$	16,500,000	$	61,000,000
Reinsurer's Term Limit	$	33,000,000	$	122,000,000
Minimum Premium	$	1,834,800	$	2,391,200
Annual Deposit Premium	$	2,293,500	$	2,989,000
Deposit Premium Installments	$	573,375	$	747,250

Schedule A

Schedule B

Non-Florida Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

Federated National Insurance Company

Sunrise, Florida

	First RPP Layer		Second RPP Layer
Reinstatement Factor		1.0		1.1
Annual Deposit Premium	$	318,797.00	$	161,107.12
Deposit Premium Installments	$	79,699.25	$	40,276.78

The figures listed above for each excess layer shall apply to each Subscribing Reinsurer

in the percentage share for that excess layer as expressed in its

Interests and Liabilities Agreement attached hereto.

Schedule B

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Allianz Risk Transfer AG (Bermuda Branch)

Pembroke, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

100.0%	of the First Reinstatement Premium Protection Reinsurance
0%	of the Second Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Corporation Service Company, 1180 Avenue of the Americas, Suite 210, New York, NY  10036.

As respects the Subscribing Reinsurer's share in the attached Contract, the following shall apply:

1. In lieu of the provisions of subparagraph 7 of paragraph B of Article 2 - Commencement and Termination - the following shall apply:

"7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent.  However, the foregoing shall not apply to any liability of the Subscribing Reinsurer under this Contract that the Subscribing Reinsurer reinsures with Poseidon Re Limited; or"

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2. In lieu of the provisions of Article 5 - Sanctions - the following shall apply:

"Article 5 – Sanctions

“Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom, Switzerland or United States of America that are applicable to either party.”

3. In lieu of the provisions of Article 21 - Confidentiality - the following shall apply:

"Article 21 – Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract, including all information obtained through any audits and any claims information between the Company and the Reinsurer, and any submission or other materials relating to any renewal (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Company.

B. Except as provided for in paragraph C. below, the Reinsurer shall not disclose any Confidential Information to any third parties, including, but not limited to, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, any unaffiliated entity engaged in modeling insurance or reinsurance data, and statistical rating organizations.

C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, or (3) external auditors performing an audit of the Reinsurer's records in the normal course of business; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Reinsurer shall be responsible for any breach of this provision by any third-party representatives of the Reinsurer.

D. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information unless prohibited by law, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

E. Any disclosure of Non-Public Personally Identifiable Information shall comply with all state and federal statutes and regulations governing the disclosure of Non-Public Personally Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as this term or a similar term is defined in any applicable state, provincial, territory, or federal law.  Disclosing or using this information for any purpose not authorized by applicable law is expressly forbidden without the prior consent of the Company.

Page 2 of 3

F. The parties agree that any information subject to privilege, including the attorney-client privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore, the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential Information has been waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.

G. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns."

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 15^th  day of September  in the year 2015 .

This 22^nd  day of September  in the year 2015 .

Page 3 of 3

Interests and Liabilities Agreement

attached to and forming part of the

Non-Florida Reinstatement Premium Protection

Reinsurance Contract

Effective:  July 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

AXIS Specialty Limited

Pembroke, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts the following percentage share(s) in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above:

0%	of the First Reinstatement Premium Protection Reinsurance
40.0%	of the Second Reinstatement Premium Protection Reinsurance

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, July 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, July 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 14^th  day of August  in the year 2015 .

EX-10.6

Exhibit 10.6

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

Federated National Insurance Company

Sunrise, Florida

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

Federated National Insurance Company

Sunrise, Florida

Reinsurer(s)	Participation(s)
ACE Tempest Reinsurance Ltd.		1.30000	%
American Standard Insurance Company of Wisconsin		0.27000	%
Securis Re II Ltd. Bermuda in respect of its segregated account designated "SRB205 Account" *		0.55463	%
Securis Re IV Ltd. Bermuda in respect of its segregated account designated "SRB405 Account" *		1.47174	%
Securis Re V Ltd. Bermuda in respect of its segregated account designated "SRB505 Account" *		0.55463	%
Hamilton Re, Ltd.		0.65000	%
Horseshoe Re Limited for and on behalf of Coriolis Capital Limited *		0.65000	%
Markel Bermuda Limited *		0.64500	%
Partner Reinsurance Company Ltd. *		0.40000	%
Transatlantic Reinsurance Company *		2.33000	%
XL Re Ltd*		4.00000	%
Through Aon UK Limited trading as Aon Benfield (Placement Only)
General Insurance Corporation of India		1.00000	%
Länsförsäkringar Sak Forsäkringsaktiebolag (publ)		0.06400	%
Pioneer Underwriting Limited for and on behalf of Taiping Reinsurance Co. Ltd		0.20000	%
Pioneer Underwriting Limited for and on behalf of Peak Reinsurance Company Limited		0.12500	%
Through Aon UK Limited trading as Aon Benfield
Lloyd's Underwriters Per Signing Page(s) *		0.78500	%
Total		15.00000	%

* Both the Company and the Subscribing Reinsurer sign the Interests and Liabilities Agreement.

Table of Contents

Article		Page
1	Classes of Business Reinsured	1
2	Commencement and Termination	1
3	Territory	3
4	Exclusions	3
5	Retention and Limit	4
6	Other Reinsurance	5
7	Definitions	5
8	Loss Occurrence	6
9	Loss Notices and Settlements	6
10	Cash Call	7
11	Salvage and Subrogation	7
12	Reinsurance Premium	7
13	Sanctions	8
14	Late Payments	8
15	Offset	9
16	Access to Records	9
17	Liability of the Reinsurer	10
18	Net Retained Lines (BRMA 32E)	10
19	Errors and Omissions (BRMA 14F)	10
20	Currency (BRMA 12A)	10
21	Taxes (BRMA 50B)	11
22	Federal Excise Tax (BRMA 17D)	11
23	Foreign Account Tax Compliance Act	11
24	Reserves	11
25	Insolvency	13
26	Arbitration	13
27	Service of Suit (BRMA 49C)	14
28	Severability (BRMA 72E)	15
29	Governing Law (BRMA 71B)	15
30	Confidentiality	15
31	Non-Waiver	16
32	Notices and Contract Execution	16
33	Intermediary	17

FHCF Supplement Layer

Reinsurance Contract

Effective: June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

(hereinafter referred to as the "Company")

and

The Subscribing Reinsurer(s) Executing the

Interests and Liabilities Agreement(s)

Attached Hereto

(hereinafter referred to as the "Reinsurer")

Article 1 - Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess liability which may accrue to the Company under its policies in force at the effective time and date hereof or issued or renewed at or after that time and date, and classified by the Company as Property business, including but not limited to, Dwelling Fire, Inland Marine, Mobile Home, Commercial and Homeowners business (including any business assumed from Citizens Property Insurance Corporation), subject to the terms, conditions and limitations hereinafter set forth.

Article 2 - Commencement and Termination

A. This Contract shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, with respect to losses arising out of loss occurrences commencing at or after that time and date, and shall remain in force until 12:01 a.m., Eastern Standard Time, June 1, 2016.

B. Notwithstanding the provisions of paragraph A above, the Company may terminate a Subscribing Reinsurer's percentage share in this Contract at any time by giving written notice to the Subscribing Reinsurer in the event any of the following circumstances occur:

1. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at the inception of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) 12 months prior to that date; or

2. The Subscribing Reinsurer's policyholders' surplus (or its equivalent under the Subscribing Reinsurer's accounting system) at any time during the term of this Contract has been reduced by 20.0% or more of the amount of surplus (or the applicable equivalent) at the date of the Subscribing Reinsurer's most recent financial statement filed with regulatory authorities and available to the public as of the inception of this Contract; or

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3. The Subscribing Reinsurer's A.M. Best's rating has been assigned or downgraded below A- and/or Standard & Poor's rating has been assigned or downgraded below BBB+; or

4. The Subscribing Reinsurer has become, or has announced its intention to become, merged with, acquired by or controlled by any other entity or individual(s) not controlling the Subscribing Reinsurer's operations previously; or

5. A State Insurance Department or other legal authority has ordered the Subscribing Reinsurer to cease writing business; or

6. The Subscribing Reinsurer has become insolvent or has been placed into liquidation, receivership, supervision, administration, winding-up or under a scheme of arrangement, or similar proceedings (whether voluntary or involuntary) or proceedings have been instituted against the Subscribing Reinsurer for the appointment of a receiver, liquidator, rehabilitator, supervisor, administrator, conservator or trustee in bankruptcy, or other agent known by whatever name, to take possession of its assets or control of its operations; or

7. The Subscribing Reinsurer has reinsured its entire liability under this Contract without the Company's prior written consent; or

8. The Subscribing Reinsurer has ceased assuming new or renewal property or casualty treaty reinsurance business; or

9. The Subscribing Reinsurer has hired an unaffiliated runoff claims manager that is compensated on a contingent basis or is otherwise provided with financial incentives based on the quantum of claims paid; or

10. The Subscribing Reinsurer has failed to comply with the funding requirements set forth in the Reserves Article.

C. The "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, June 1, 2015 to 12:01 a.m., Eastern Standard Time, June 1, 2016.  However, if this Contract is terminated, the "term of this Contract" as used herein shall mean the period from 12:01 a.m., Eastern Standard Time, June 1, 2015 to the effective time and date of termination.

D. If this Contract is terminated or expires while a loss occurrence covered hereunder is in progress, the Reinsurer's liability hereunder shall, subject to the other terms and conditions of this Contract, be determined as if the entire loss occurrence had occurred prior to the termination or expiration of this Contract, provided that no part of such loss occurrence is claimed against any renewal or replacement of this Contract.

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Article 3 - Territory

This Contract shall only apply to risks located in the State of Florida.

Article 4 - Exclusions

A. This Contract does not apply to and specifically excludes the following:

1. Reinsurance assumed by the Company under obligatory reinsurance agreements, except business assumed by the Company from Citizens Property Insurance Corporation.

2. Hail damage to growing or standing crops.

3. Business rated, coded or classified as Flood insurance or which should have been rated, coded or classified as such.

4. Business rated, coded or classified as Mortgage Impairment and Difference in Conditions insurance or which should have been rated, coded or classified as such.

5. Title insurance and all forms of Financial Guarantee, Credit and Insolvency.

6. Aviation, Ocean Marine, Boiler and Machinery, Fidelity and Surety, Accident and Health, Animal Mortality and Workers Compensation and Employers Liability.

7. Errors and Omissions, Malpractice and any other type of Professional Liability insurance.

8. Loss and/or damage and/or costs and/or expenses arising from seepage and/or pollution and/or contamination, other than contamination from smoke.  Nevertheless, this exclusion does not preclude payment of the cost of removing debris of property damaged by a loss otherwise covered hereunder, subject always to a limit of 25.0% of the Company's property loss under the applicable original policy.

9. Loss or liability as excluded under the provisions of the "War Exclusion Clause" attached to and forming part of this Contract.

10. Nuclear risks as defined in the "Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)" attached to and forming part of this Contract.

11. Loss or liability from any Pool, Association or Syndicate and any assessment or similar demand for payment related to the FHCF or Citizens Property Insurance Corporation.

12. Loss or liability of the Company arising by contract, operation of law, or otherwise, from its participation or membership, whether voluntary or involuntary, in any insolvency fund.  "Insolvency fund" includes any guaranty fund, insolvency fund, plan, pool, association, fund or other arrangement, however denominated, established or governed, which provides for any assessment of or payment or assumption by the Company of part or all of any claim, debt, charge, fee or other obligation of an insurer, or its successors or assigns, which has been declared by any competent authority to be insolvent, or which is otherwise deemed unable to meet any claim, debt, charge, fee or other obligation in whole or in part.

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13. Losses in the respect of overhead transmission and distribution lines other than those on or within 150 meters (or 500 feet) of the insured premises.

14. Mold, unless resulting from a peril otherwise covered under the policy involved.

15. Loss or liability as excluded under the provisions of the "Terrorism Exclusion" attached to and forming part of this Contract.

16. All property loss, damage, destruction, erasure, corruption or alteration of Electronic Data from any cause whatsoever (including, but not limited to, Computer Virus) or loss of use, reduction in functionality, cost, expense or whatsoever nature resulting therefrom, unless resulting from a peril otherwise covered under the policy involved.

"Electronic Data" as used herein means facts, concepts and information converted to a form usable for communications, interpretation or processing by electronic and electromechanical data processing or electronically-controlled equipment and includes programs, software and other coded instructions for the processing and manipulation of data or the direction and manipulation of such equipment.

"Computer Virus" as used herein means a set of corrupting, harmful or otherwise unauthorized instructions or code, including a set of maliciously-introduced, unauthorized instructions or code, that propagate themselves through a computer system network of whatsoever nature.

However, in the event that a peril otherwise covered under the policy results from any of the matters described above, this Contract, subject to all other terms and conditions, will cover physical damage directly caused by such listed peril.

Article 5 - Retention and Limit

A. The Company shall retain and be liable for the first $265,000,000 of ultimate net loss arising out of any one loss occurrence.  The Reinsurer shall then be liable for the amount by which such ultimate net loss exceeds the Company's retention, but the Reinsurer's liability for ultimate net loss (plus an allowance for loss adjustment expense) shall not exceed $775,000,000 as respects all losses arising out of loss occurrences commencing during the term of this Contract.

B. Notwithstanding the provisions of paragraph A above, the following shall apply:

1. When the Company experiences ultimate net loss from one or two covered events during the term of this Contract, the Company’s full $265,000,000 retention shall be applied to each of the covered events; and

  Page 4

2. When the Company experiences ultimate net loss from more than two covered events during the term of this Contract, the Company’s full $265,000,000 retention shall be applied to each of the two covered events causing the largest ultimate net loss for the Company.  For each other covered event resulting in ultimate net loss, the Company’s retention shall be reduced to one - third of its full retention ($88,333,333) and applied to all other covered events.

C. No claim will be made under this Contract in any one loss occurrence unless at least two risks insured or reinsured by the Company are involved in such loss occurrence.

D. As part of the Reinsurer's limit of liability set forth in paragraph A above, the Reinsurer shall be liable for an amount equal to 5.0% of ultimate net loss paid or to be paid by the Reinsurer as an allowance for loss adjustment expense incurred by the Company.

Article 6 - Other Reinsurance

The Company shall be permitted to carry other reinsurance, recoveries under which shall inure solely to the benefit of the Company and be entirely disregarded in applying all of the provisions of this Contract.

Article 7 - Definitions

A. "Loss in excess of policy limits" and "extra contractual obligations" as used in this Contract shall mean:

1. "Loss in excess of policy limits" shall mean 90.0% of any amount paid or payable by the Company in excess of its policy limits, but otherwise within the terms of its policy, such loss in excess of the Company's policy limits having been incurred because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action.  Any loss in excess of policy limits that is made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.

2. "Extra contractual obligations" shall mean 90.0% of any punitive, exemplary, compensatory or consequential damages paid or payable by the Company, not covered by any other provision of this Contract and which arise from the handling of any claim on business subject to this Contract, such liabilities arising because of, but not limited to, failure by the Company to settle within the policy limits or by reason of the Company's alleged or actual negligence, fraud or bad faith in rejecting an offer of settlement or in the preparation of the defense or in the trial of an action against its insured or reinsured or in the preparation or prosecution of an appeal consequent upon such an action.  An extra contractual obligation shall be deemed, in all circumstances, to have occurred on the same date as the loss covered or alleged to be covered under the policy.  Any extra contractual obligations that are made in connection with this Contract shall not exceed 25.0% of the actual catastrophe loss.

  Page 5

Notwithstanding anything stated herein, this Contract shall not apply to any loss in excess of policy limits or any extra contractual obligation incurred by the Company as a result of any fraudulent and/or criminal act by any officer or director of the Company acting individually or collectively or in collusion with any individual or corporation or any other organization or party involved in the presentation, defense or settlement of any claim covered hereunder.

B. "Policies" as used in this Contract shall mean all policies, contracts and binders of insurance or reinsurance.

C. "Ultimate net loss" as used in this Contract shall mean the sum or sums (including loss in excess of policy limits and extra contractual obligations, as defined herein) paid or payable by the Company in settlement of claims and in satisfaction of judgments rendered on account of such claims, after deduction of all salvage, all recoveries and all claims on inuring insurance or reinsurance, whether collectible or not.  Nothing herein shall be construed to mean that losses under this Contract are not recoverable until the Company's ultimate net loss has been ascertained.

Article 8 - Loss Occurrence

A. "Loss occurrence" as used in this Contract shall mean the sum of individual insured losses incurred under Policies resulting from the same covered event.

B. "Covered event" as used in this Contract shall mean any one storm declared to be a hurricane by the National Hurricane Center which causes insured losses in Florida.  A covered event begins when a hurricane causes damage in Florida while it is a hurricane and continues throughout any subsequent downgrades in storm status by the National Hurricane Center regardless of whether the hurricane makes landfall.  Any storm, including a tropical storm, which does not become a hurricane is not a covered event.

Article 9 - Loss Notices and Settlements

A. Whenever losses sustained by the Company are reserved by the Company for an amount greater than 50.0% of the Company's retention hereunder and/or appear likely to result in a claim under this Contract, the Company shall notify the Subscribing Reinsurers and shall provide updates related to development of such losses.  The Reinsurer shall have the right to participate in the adjustment of such losses at its own expense.

B. All loss settlements made by the Company, provided they are within the terms of this Contract and the terms of the original policy (with the exception of loss in excess of policy limits or extra contractual obligations coverage, if any, under this Contract), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay all amounts for which it may be liable, including the associated allowance for loss adjustment expense, upon receipt of reasonable evidence of the amount paid by the Company.

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Article 10 - Cash Call

Notwithstanding the provisions of the Loss Notices and Settlements Article, upon the request of the Company, the Reinsurer shall pay any amount with regard to a loss settlement or settlements (including the associated allowance for loss adjustment expense) that are scheduled to be made (including any payments projected to be made) within the next 20 days by the Company, subject to receipt by the Reinsurer of a satisfactory proof of loss.  Such agreed payment shall be made within 10 days from the date the demand for payment was transmitted to the Reinsurer.

Article 11 - Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) on account of claims and settlements involving reinsurance hereunder.  Salvage thereon shall always be used to reimburse the excess carriers in the reverse order of their priority according to their participation before being used in any way to reimburse the Company for its primary loss.  The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights, if, in the Company's opinion, it is economically reasonable to do so.

Article 12 - Reinsurance Premium

A. As premium for reinsurance coverage provided by this Contract, the Company shall pay the Reinsurer a premium equal to the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months), subject to a minimum premium of $48,360,000 (or a pro rata portion thereof in the event the term of this Contract is less than 12 months):

1. An annual deposit premium of $60,450,000; times

2. The percentage calculated by dividing (a) the actual Average Annual Loss ("AAL") determined by the Company's wind insurance in force on September 30, 2015, by (b) the original AAL of $23,459,602.

However, if the difference between annual deposit premium of $60,450,000, and the premium calculated in accordance with this paragraph A is less than a 10.0% increase or decrease, the premium due the Reinsurer will equal the annual deposit premium of $60,450,000.

The Company's AAL shall be derived by averaging the applicable data produced by Applied Insurance Research (AIR) Touchstone v2.0 and Risk Management Solutions (RMS) RiskLink v15 catastrophe modeling software, in the long-term perspective, including secondary uncertainty and loss amplification, but excluding storm surge.  It is understood that the calculation of the actual AAL shall be based on the Reinsurer's per occurrence limit of $775,000,000, net of the FHCF mandatory layer of coverage purchased by the Company using the current estimates of the mandatory FHCF coverage of $775,000,000 excess of $265,000,000.

  Page 7

B. The Company shall pay the Reinsurer an annual deposit premium of $60,450,000, in four equal installments of $15,112,500 on June 1, September 1 and December 1 of 2015, and on March 1 of 2016.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

C. On or before May 31, 2016, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly.

Article 13 - Sanctions

Neither the Company nor any Subscribing Reinsurer shall be liable for premium or loss under this Contract if it would result in a violation of any mandatory sanction, prohibition or restriction under United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union, United Kingdom or United States of America that are applicable to either party.

Article 14 - Late Payments

A. The provisions of this Article shall not be implemented unless specifically invoked, in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either party is not received by the intermediary named in the Intermediary Article (hereinafter referred to as the "Intermediary") by the payment due date, the party to whom payment is due may, by notifying the Intermediary in writing, require the debtor party to pay, and the debtor party agrees to pay, an interest charge on the amount past due calculated for each such payment on the last business day of each month as follows:

1. The number of full days which have expired since the due date or the last monthly calculation, whichever the lesser; times

2. 1/365ths of the six-month United States Treasury Bill rateas quoted in The Wall Street Journal on the first business day of the month for which the calculation is made; times

3. The amount past due, including accrued interest.

It is agreed that interest shall accumulate until payment of the original amount due plus interest charges have been received by the Intermediary.

C. The establishment of the due date shall, for purposes of this Article, be determined as follows:

1. As respects the payment of routine deposits and premiums due the Reinsurer, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 30 days after the date of transmittal by the Intermediary of the initial billing for each such payment.

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2. Any claim or loss payment due the Company hereunder shall be deemed due 10 days after the proof of loss or demand for payment is transmitted to the Reinsurer.  If such loss or claim payment is not received within the 10 days, interest will accrue on the payment or amount overdue in accordance with paragraph B above, from the date the proof of loss or demand for payment was transmitted to the Reinsurer.

3. As respects any payment, adjustment or return due either party not otherwise provided for in subparagraphs 1 and 2 of this paragraph C, the due date shall be as provided for in the applicable section of this Contract.  In the event a due date is not specifically stated for a given payment, it shall be deemed due 10 days following transmittal of written notification that the provisions of this Article have been invoked.

For purposes of interest calculations only, amounts due hereunder shall be deemed paid upon receipt by the Intermediary.

D. Nothing herein shall be construed as limiting or prohibiting a Subscribing Reinsurer from contesting the validity of any claim, or from participating in the defense of any claim or suit, or prohibiting either party from contesting the validity of any payment or from initiating any arbitration or other proceeding in accordance with the provisions of this Contract.  If the debtor party prevails in an arbitration or other proceeding, then any interest charges due hereunder on the amount in dispute shall be null and void.  If the debtor party loses in such proceeding, then the interest charge on the amount determined to be due hereunder shall be calculated in accordance with the provisions set forth above unless otherwise determined by such proceedings.  If a debtor party advances payment of any amount it is contesting, and proves to be correct in its contestation, either in whole or in part, the other party shall reimburse the debtor party for any such excess payment made plus interest on the excess amount calculated in accordance with this Article.

E. Interest charges arising out of the application of this Article that are $1,000 or less from any party shall be waived unless there is a pattern of late payments consisting of three or more items over the course of any 12-month period.

Article 15 - Offset

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract or any other contract heretofore or hereafter entered into between the Company and the Reinsurer, whether acting as assuming reinsurer or ceding company.  The provisions of this Article shall not be affected by the insolvency of either party.

Article 16 - Access to Records

The Reinsurer or its designated representatives shall have access at any reasonable time to all records of the Company which pertain in any way to this reinsurance, provided the Reinsurer gives the Company at least 15 days prior notice of request for such access.  However, a Subscribing Reinsurer or its designated representatives shall not have any right of access to the records of the Company if it is not current in all undisputed payments due the Company.  "Undisputed" as used herein shall mean any amount that the Subscribing Reinsurer has not contested in writing to the Company specifying the reason(s) why the payments are disputed.

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Article 17 - Liability of the Reinsurer

A. The liability of the Reinsurer shall follow that of the Company in every case and be subject in all respects to all the general and specific stipulations, clauses, waivers and modifications of the Company's policies and any endorsements thereon.  However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.

B. Nothing herein shall in any manner create any obligations or establish any rights against the Reinsurer in favor of any third party or any persons not parties to this Contract.

Article 18 - Net Retained Lines (BRMA 32E)

A. This Contract applies only to that portion of any policy which the Company retains net for its own account (prior to deduction of any underlying reinsurance specifically permitted in this Contract), and in calculating the amount of any loss hereunder and also in computing the amount or amounts in excess of which this Contract attaches, only loss or losses in respect of that portion of any policy which the Company retains net for its own account shall be included.

B. The amount of the Reinsurer's liability hereunder in respect of any loss or losses shall not be increased by reason of the inability of the Company to collect from any other reinsurer(s), whether specific or general, any amounts which may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.

Article 19 - Errors and Omissions (BRMA 14F)

Inadvertent delays, errors or omissions made in connection with this Contract or any transaction hereunder shall not relieve either party from any liability which would have attached had such delay, error or omission not occurred, provided always that such error or omission is rectified as soon as possible after discovery.

Article 20 - Currency (BRMA 12A)

A. Whenever the word "Dollars" or the "$" sign appears in this Contract, they shall be construed to mean United States Dollars and all transactions under this Contract shall be in United States Dollars.

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B. Amounts paid or received by the Company in any other currency shall be converted to United States Dollars at the rate of exchange at the date such transaction is entered on the books of the Company.

Article 21 - Taxes (BRMA 50B)

In consideration of the terms under which this Contract is issued, the Company will not claim a deduction in respect of the premium hereon when making tax returns, other than income or profits tax returns, to any state or territory of the United States of America or the District of Columbia.

Article 22 - Federal Excise Tax (BRMA 17D)

A. The Reinsurer has agreed to allow for the purpose of paying the Federal Excise Tax the applicable percentage of the premium payable hereon (as imposed under Section 4371 of the Internal Revenue Code) to the extent such premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer will deduct the applicable percentage from the return premium payable hereon and the Company or its agent should take steps to recover the tax from the United States Government.

Article 23 - Foreign Account Tax Compliance Act

A. To the extent the Reinsurer is subject to the deduction and withholding of premium payable hereon as set forth in the Foreign Account Tax Compliance Act (Sections 1471-1474 of the Internal Revenue Code), the Reinsurer shall allow such deduction and withholding from the premium payable under this Contract.

B. In the event of any return of premium becoming due hereunder, the return premium shall be determined and paid in full without regard to any amounts deducted or withheld under paragraph A of this Article.  In the event the Company or its agent recovers such premium deductions and withholdings on the return premium from the United States Government, the Company or its agent shall reimburse the Reinsurer for such amounts.

Article 24 - Reserves

A. The Reinsurer agrees to fund its share of amounts, including but not limited to, the Company's ceded unearned premium and outstanding loss and the allowance for loss adjustment expense reserves (including all case reserves plus any reasonable amount estimated to be unreported from known loss occurrences) (hereinafter referred to as "Reinsurer's Obligations") by:

1. Clean, irrevocable and unconditional letters of credit issued and confirmed, if confirmation is required by the insurance regulatory authorities involved, by a bank or banks meeting the NAIC Securities Valuation Office credit standards for issuers of letters of credit and acceptable to said insurance regulatory authorities; and/or

  Page 11

2. Escrow accounts for the benefit of the Company; and/or

3. Cash advances;

if the Reinsurer:

1. Is unauthorized in any state of the United States of America or the District of Columbia having jurisdiction over the Company and if, without such funding, a penalty would accrue to the Company on any financial statement it is required to file with the insurance regulatory authorities involved; or

2. Has an A.M. Best Company's rating equal to or below B++ at the inception of this Contract.

The Reinsurer, at its sole option, may fund in other than cash if its method and form of funding are acceptable to the insurance regulatory authorities involved.

B. With regard to funding in whole or in part by letters of credit, it is agreed that each letter of credit will be in a form acceptable to insurance regulatory authorities involved, will be issued for a term of at least one year and will include an "evergreen clause," which automatically extends the term for at least one additional year at each expiration date unless written notice of non-renewal is given to the Company not less than 30 days prior to said expiration date.  The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said letters of credit may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums returned to insureds on account of policy cancellations, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of losses and/or the allowance for loss adjustment expense paid under the terms of policies reinsured hereunder, unless paid in cash by the Reinsurer;

3. To reimburse itself for the Reinsurer's share of any other amounts claimed to be due hereunder, unless paid in cash by the Reinsurer;

4. To fund a cash account in an amount equal to the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, funded by means of a letter of credit which is under non-renewal notice, if said letter of credit has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date;

5. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's share of amounts, including but not limited to, the Reinsurer's Obligations as set forth above, if so requested by the Reinsurer.

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In the event the amount drawn by the Company on any letter of credit is in excess of the actual amount required for B(1), B(2) or B(4), or in the case of B(3), the actual amount determined to be due, the Company shall promptly return to the Reinsurer the excess amount so drawn.

Article 25 - Insolvency

A. In the event of the insolvency of the Company, this reinsurance shall be payable directly to the Company or to its liquidator, receiver, conservator or statutory successor on the basis of the liability of the Company without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the policy or bond reinsured which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the Court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit which may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more Subscribing Reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this Contract as though such expense had been incurred by the Company.

C. It is further understood and agreed that, in the event of the insolvency of the Company, the reinsurance under this Contract shall be payable directly by the Reinsurer to the Company or to its liquidator, receiver or statutory successor, except as provided by Section 4118(a) of the New York Insurance Law or except (1) where this Contract specifically provides another payee of such reinsurance in the event of the insolvency of the Company or (2) where the Reinsurer with the consent of the direct insured or insureds has assumed such policy obligations of the Company as direct obligations of the Reinsurer to the payees under such policies and in substitution for the obligations of the Company to such payees.

Article 26 - Arbitration

A. As a condition precedent to any right of action hereunder, in the event of any dispute or difference of opinion hereafter arising with respect to this Contract, it is hereby mutually agreed that such dispute or difference of opinion shall be submitted to arbitration.  One Arbiter shall be chosen by the Company, the other by the Reinsurer, and an Umpire shall be chosen by the two Arbiters before they enter upon arbitration, all of whom shall be active or retired disinterested executive officers of insurance or reinsurance companies or Lloyd's London Underwriters.  In the event that either party should fail to choose an Arbiter within 30 days following a written request by the other party to do so, the requesting party may choose two Arbiters who shall in turn choose an Umpire before entering upon arbitration.  If the two Arbiters fail to agree upon the selection of an Umpire within 30 days following their appointment, each Arbiter shall nominate three candidates within 10 days thereafter, two of whom the other shall decline, and the decision shall be made by drawing lots.

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B. Each party shall present its case to the Arbiters within 30 days following the date of appointment of the Umpire.  The Arbiters shall consider this Contract as an honorable engagement rather than merely as a legal obligation and they are relieved of all judicial formalities and may abstain from following the strict rules of law.  The decision of the Arbiters shall be final and binding on both parties; but failing to agree, they shall call in the Umpire and the decision of the majority shall be final and binding upon both parties.  Judgment upon the final decision of the Arbiters may be entered in any court of competent jurisdiction.

C. If more than one Subscribing Reinsurer is involved in the same dispute, all such Subscribing Reinsurers shall, at the option of the Company, constitute and act as one party for purposes of this Article and communications shall be made by the Company to each of the Subscribing Reinsurers constituting one party, provided, however, that nothing herein shall impair the rights of such Subscribing Reinsurers to assert several, rather than joint, defenses or claims, nor be construed as changing the liability of the Subscribing Reinsurers participating under the terms of this Contract from several to joint.

D. Each party shall bear the expense of its own Arbiter, and shall jointly and equally bear with the other the expense of the Umpire and of the arbitration.  In the event that the two Arbiters are chosen by one party, as above provided, the expense of the Arbiters, the Umpire and the arbitration shall be equally divided between the two parties.

E. Any arbitration proceedings shall take place at a location mutually agreed upon by the parties to this Contract, but notwithstanding the location of the arbitration, all proceedings pursuant hereto shall be governed by the law of the state in which the Company has its principal office.

Article 27 - Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United States of America, and/or is not authorized in any State, Territory or District of the United States where authorization is required by insurance regulatory authorities)

A. It is agreed that in the event the Reinsurer fails to pay any amount claimed to be due hereunder, the Reinsurer, at the request of the Company, will submit to the jurisdiction of a court of competent jurisdiction within the United States.  Nothing in this Article constitutes or should be understood to constitute a waiver of the Reinsurer's rights to commence an action in any court of competent jurisdiction in the United States, to remove an action to a United States District Court, or to seek a transfer of a case to another court as permitted by the laws of the United States or of any state in the United States.

B. Further, pursuant to any statute of any state, territory or district of the United States which makes provision therefor, the Reinsurer hereby designates the party named in its Interests and Liabilities Agreement, or if no party is named therein, the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as its true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the Company or any beneficiary hereunder arising out of this Contract.

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Article 28 - Severability (BRMA 72E)

If any provision of this Contract shall be rendered illegal or unenforceable by the laws, regulations or public policy of any state, such provision shall be considered void in such state, but this shall not affect the validity or enforceability of any other provision of this Contract or the enforceability of such provision in any other jurisdiction.

Article 29 - Governing Law (BRMA 71B)

This Contract shall be governed by and construed in accordance with the laws of the State of Florida.

Article 30 - Confidentiality

A. The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract, including all information obtained through any audits and any claims information between the Company and the Reinsurer, and any submission or other materials relating to any renewal (hereinafter referred to as "Confidential Information") are proprietary and confidential to the Company.

B. Except as provided for in paragraph C below, the Reinsurer shall not disclose any Confidential Information to any third parties, including but not limited to the Reinsurer's subsidiaries and affiliates, other insurance companies and their subsidiaries and affiliates, underwriting agencies, research organizations, any unaffiliated entity engaged in modeling insurance or reinsurance data, and statistical rating organizations.

C. Confidential Information may be used by the Reinsurer only in connection with the performance of its obligations or enforcement of its rights under this Contract and will only be disclosed when required by (1) retrocessionaires subject to the business ceded to this Contract, (2) regulators performing an audit of the Reinsurer's records and/or financial condition, (3) external auditors performing an audit of the Reinsurer's records in the normal course of business, or (4) the Reinsurer's legal counsel; provided that the Reinsurer advises such parties of the confidential nature of the Confidential Information and their obligation to maintain its confidentiality.  The Company may require that any third-party representatives of the Reinsurer agree, in writing, to be bound by this Confidentiality Article or by a separate written confidentiality agreement, containing terms no less stringent than those set forth in this Article.  If a third-party representative of the Reinsurer is not bound, in writing, by this Confidentiality Article or by a separate written confidentiality agreement, the Reinsurer shall be responsible for any breach of this provision by such third-party representative of the Reinsurer.

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D. Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure, to the extent legally permissible, and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

E. Any disclosure of Non-Public Personally Identifiable Information shall comply with all state and federal statutes and regulations governing the disclosure of Non-Public Personally Identifiable Information.  "Non-Public Personally Identifiable Information" shall be defined as this term or a similar term is defined in any applicable state, provincial, territory, or federal law.  Disclosing or using this information for any purpose not authorized by applicable law is expressly forbidden without the prior consent of the Company.

F. The parties agree that any information subject to privilege, including the attorney-client privilege or attorney work product doctrine (collectively "Privilege") shall not be disclosed to the Reinsurer until, in the Company's opinion, such Privilege is deemed to be waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.  Furthermore, the Reinsurer shall not assert that any Privilege otherwise applicable to the Confidential Information has been waived or otherwise compromised by virtue of its disclosure pursuant to this Contract.

G. The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

Article 31 - Non-Waiver

The failure of the Company or Reinsurer to insist on compliance with this Contract or to exercise any right, remedy or option hereunder shall not:  (1) constitute a waiver of any rights contained in this Contract, (2) prevent the Company or Reinsurer from thereafter demanding full and complete compliance, (3) prevent the Company or Reinsurer from exercising such remedy in the future, nor (4) affect the validity of this Contract or any part thereof.

Article 32 - Notices and Contract Execution

A. Whenever a notice, statement, report or any other written communication is required by this Contract, unless otherwise specified, such notice, statement, report or other written communication may be transmitted by certified or registered mail, nationally or internationally recognized express delivery service, personal delivery, electronic mail, or facsimile.  With the exception of notices of termination, first class mail is also acceptable.

B. The use of any of the following shall constitute a valid execution of this Contract or any amendments thereto:

1. Paper documents with an original ink signature;

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2. Facsimile or electronic copies of paper documents showing an original ink signature; and/or

3. Electronic records with an electronic signature made via an electronic agent.  For the purposes of this Contract, the terms "electronic record," "electronic signature" and "electronic agent" shall have the meanings set forth in the Electronic Signatures in Global and National Commerce Act of 2000 or any amendments thereto.

C. This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

Article 33 - Intermediary

Aon Benfield Inc., or one of its affiliated corporations duly licensed as a reinsurance intermediary, is hereby recognized as the Intermediary negotiating this Contract for all business hereunder.  All communications (including but not limited to notices, statements, premiums, return premiums, commissions, taxes, losses, loss adjustment expense, salvages and loss settlements) relating to this Contract will be transmitted to the Company or the Reinsurer through the Intermediary.  Payments by the Company to the Intermediary will be deemed payment to the Reinsurer.  Payments by the Reinsurer to the Intermediary will be deemed payment to the Company only to the extent that such payments are actually received by the Company.

In Witness Whereof, the Company by its duly authorized representative has executed this Contract as of the date specified below:

This 30^th day of July in the year 2015  .

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War Exclusion Clause

As regards interests which at time of loss or damage are on shore, no liability shall attach hereto in respect of any loss or damage which is occasioned by war, invasion, hostilities, acts of foreign enemies, civil war, rebellion, insurrection, military or usurped power, or martial law or confiscation by order of any government or public authority.

Nuclear Incident Exclusion Clause - Physical Damage - Reinsurance (U.S.A.)

1. This Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or Nuclear Energy risks.

2. Without in any way restricting the operation of paragraph (1) of this Clause, this Reinsurance does not cover any loss or liability accruing to the Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any insurance against Physical Damage (including business interruption or consequential loss arising out of such Physical Damage) to:

I. Nuclear reactor power plants including all auxiliary property on the site, or

II. Any other nuclear reactor installation, including laboratories handling radioactive materials in connection with reactor installations, and "critical facilities" as such, or

III. Installations for fabricating complete fuel elements or for processing substantial quantities of "special nuclear material," and for reprocessing, salvaging, chemically separating, storing or disposing of "spent" nuclear fuel or waste materials, or

IV. Installations other than those listed in paragraph (2) III above using substantial quantities of radioactive isotopes or other products of nuclear fission.

3. Without in any way restricting the operations of paragraphs (1) and (2) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any insurance on property which is on the same site as a nuclear reactor power plant or other nuclear installation and which normally would be insured therewith except that this paragraph (3) shall not operate

(a) where Reassured does not have knowledge of such nuclear reactor power plant or nuclear installation, or

(b) where said insurance contains a provision excluding coverage for damage to property caused by or resulting from radioactive contamination, however caused.  However on and after 1st January 1960 this sub-paragraph (b) shall only apply provided the said radioactive contamination exclusion provision has been approved by the Governmental Authority having jurisdiction thereof.

4. Without in any way restricting the operations of paragraphs (1), (2) and (3) hereof, this Reinsurance does not cover any loss or liability by radioactive contamination accruing to the Reassured, directly or indirectly, and whether as Insurer or Reinsurer, when such radioactive contamination is a named hazard specifically insured against.

5. It is understood and agreed that this Clause shall not extend to risks using radioactive isotopes in any form where the nuclear exposure is not considered by the Reassured to be the primary hazard.

6. The term "special nuclear material" shall have the meaning given it in the Atomic Energy Act of 1954 or by any law amendatory thereof.

7. Reassured to be sole judge of what constitutes:

(a) substantial quantities, and

(b) the extent of installation, plant or site.

Note.-Without in any way restricting the operation of paragraph (1) hereof, it is understood and agreed that

(a) all policies issued by the Reassured on or before 31st December 1957 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

(b) with respect to any risk located in Canada policies issued by the Reassured on or before 31st December 1958 shall be free from the application of the other provisions of this Clause until expiry date or 31st December 1960 whichever first occurs whereupon all the provisions of this Clause shall apply.

12/12/57

N.M.A. 1119

BRMA 35B

Terrorism Exclusion

(Property Treaty Reinsurance)

Notwithstanding any provision to the contrary within this Contract or any amendment thereto, it is agreed that this Contract excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with any act of terrorism, as defined herein, regardless of any other cause or event contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or threat of action designed to influence the government de jure or de facto of any nation or any political division thereof, or in pursuit of political, religious, ideological or similar purposes to intimidate the public or a section of the public of any nation by any person or group(s) of persons whether acting alone or on behalf of or in connection with any organization(s) or government(s) de jure or de facto, and which:

1. Involves violence against one or more persons, or

2. Involves damage to property; or

3. Endangers life other than the person committing the action; or

4. Creates a risk to health or safety of the public or a section of the public; or

5. Is designed to interfere with or disrupt an electronic system.

This Contract also excludes loss, damage, cost or expense directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with any action in controlling, preventing, suppressing, retaliating against or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and limitations of this Contract, in respect only of personal lines, this Contract will pay actual loss or damage (but not related cost and expense) caused by any act of terrorism provided such act is not directly or indirectly caused by, contributed to by, resulting from or arising out of or in connection with radiological, biological, chemical, or nuclear pollution or contamination.

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

ACE Tempest Reinsurance Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 1.300% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 6^th day of August in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

American Standard Insurance Company of Wisconsin

Madison, Wisconsin

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.270% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 3^rd day of August in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

General Insurance Corporation of India

Mumbai, India

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 1.000% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 10^th day of August in the year 2015  .

General Insurance Corporation of India

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Hamilton Re, Ltd.

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.650% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 7^th day of August in the year 2015  .

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Horseshoe Re Limited

on behalf of and for the benefit

of its Separate Account CC0024

London, England Hamilton, Bermuda

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.650% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, the following shall apply:

1. The provisions of subparagraphs 2 and 3 of paragraph B of Article 2 - Commencement and Termination - shall not apply.

2. In lieu of Article 15 - Offset - the following shall apply:

"Article 15 - Offset

The Company and the Reinsurer may offset any balance or amount due from one party to the other under this Contract.  The provisions of this Article shall not be affected by the insolvency of either party."

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3. The following Articles shall be added to and made part of this Contract:

"Article 34 - Obligations

A. The Reinsurer shall establish a Trust Account with HSBC Bank USA, National Association for the benefit of the Company in respect of the Reinsurer’s Obligations under this Contract.  The Reinsurer shall deposit Permitted Investments into the Trust Account in a form as set out in the Trust Agreement to the value as determined below to act as Collateral for 100% of its Obligations hereon.

B. The terms of the Trust Account between the Reinsurer as Grantor, HSBC as Trustee, and the Company as Beneficiary are as set out in the copy of the Trust Agreement attached to this Contract.  All costs and expenses involved in the creation and maintenance of such Trust Account shall be the sole responsibility of the Reinsurer.

C. Reinsurer’s Obligations

1. The Reinsurer agrees that its Obligations under this Contract shall be defined as the Maximum Limit of Liability under this Contract (being USD775,000,000 for 100%), less any unpaid premium hereon (net of brokerage and FET if applicable), less losses and allocated loss expenses paid by the Reinsurer.  Notwithstanding anything to the contrary in this Contract, Premiums (net of brokerage) payable by the Company in respect of this Contract can at the Company’s sole option be paid directly into the Trust Account to the actual amount required to fund the Reinsurer’s Obligations.

2. On expiry of this Contract, it is agreed that the collateral will be released in accordance with the Collateral Release Article.

Article 35 - Collateral Release

A. The Company and Reinsurer each agree, notwithstanding anything to the contrary in this Contract, that Collateral in the Trust Account may be withdrawn by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer’s share of unearned premiums on the account of cancellations, unless paid in cash by the Reinsurer;

2. To reimburse themselves for the Reinsurer’s share of losses and/or allocated loss and adjustment expenses paid by them (or funded by them in accordance with original funding requirements) in the settlement of losses arising from the business covered by this Contract (other than those losses previously paid by the Reinsurer);

3. To fund a cash account in the amount equal to the Reinsurer’s Obligations if the Trust Account has not been renewed or replaced by the Reinsurer 10 days prior to its termination (as defined in the Trust Agreement);

  Page 2 of 4

4. To refund to the Reinsurer, if so requested by them, any sum in excess of the actual amount required to fund the Reinsurer’s Obligations.

B. In the event that the amount withdrawn by the Company from the Trust Account is greater than the actual amount required for 1., 2., 3. or 4. above, the Company shall promptly return to the Trust Account the excess amount so drawn.

C. If at expiration there has been no loss occurrence, the Company agrees that any obligations are reduced to zero, the Contract shall be immediately commuted and all collateral shall be released.

D. 0 - 3 months after the expiry of the Contract, if the loss reports show a loss of no more than 40% of the deductible, the obligations are reduced to zero, the Contract shall be immediately commuted and all collateral shall be released.

E. Between 3 - 6 months after the expiry of the Contract, if the loss reports show a loss of no more than 60% of the deductible, the obligations are reduced to zero, the Contract shall be immediately commuted and all collateral shall be released.

F. Between 6 - 9 months after the expiry of the Contract, if the loss reports show a loss of no more than 70% of the deductible, the obligations are reduced to zero, the Contract shall be immediately commuted and all collateral shall be released.

G. Between 9 -12 months after the expiry of the Contract, if the loss reports show a loss of no more than 75% of the deductible, the obligations are reduced to zero, the Contract shall be immediately commuted and all collateral shall be released.

H. Between 12 -18 months after the expiry of the Contract, if the loss reports show a loss of no more than 80% of the deductible, the obligations are reduced to zero, the Contract shall be immediately commuted and all collateral shall be released.

I. Between 18 - 24 months after the expiry of the Contract, if the loss reports show a loss of no more than 90% of the deductible, the obligations are reduced to zero, the Contract shall be immediately commuted and all collateral shall be released.

J. Furthermore, if Collateral is still held in the Trust Fund 36 months after expiry of this Contract, then the Reinsurer shall have the option to commute this Contract at the Company’s estimated Ultimate Net Loss (including incurred but not reported losses and loss reserves) that exceeds the Company’s retention. The IBNR reserves to be agreed between the Company and the Reinsurer.

K. For the avoidance of doubt, the release of all Collateral from the Trust will result in a full and final commutation.

Article 36 - Limited Recourse And Bermuda Regulations

A. The liability of the Reinsurer for the performance and discharge of all of its obligations, however they may arise, in relation to this Contract (together 'Obligations' for purposes of this Article), shall be limited to and payable solely from the proceeds of realization of the assets of the Reinsurance Trust and accordingly there shall be no recourse to any other assets of Horseshoe Re Limited, whether or not allocated to any other separate account or the general account of Horseshoe Re Limited.  In the event that the proceeds of realization of the assets of the Reinsurance Trust are insufficient to meet all Obligations, any Obligations remaining after the application of such proceeds shall be extinguished, and the Company undertakes in such circumstances to take no further action against the Reinsurer in respect of any such Obligations. In particular, neither the Company nor any party acting on its behalf shall petition or take any steps for the winding up or receivership of the Reinsurer or Horseshoe Re Limited.

  Page 3 of 4

B. Notwithstanding any matter referred to herein, the Company understands and accepts that the Reinsurer is a separate account of Horseshoe Re Limited and that all corporate matters relating to the creation of the Reinsurer, capacity of the Reinsurer, operation and liquidation of the Reinsurer and any matters relating to the Reinsurer thereof shall be governed by, and construed in accordance with, the laws of Bermuda. The Company has had the opportunity to take advice and to obtain all such additional information that it considers necessary to evaluate the terms, conditions and risks of entering into this Contract with the Reinsurer."

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 30^th day of July in the year 2015  .

This 29^th day of July in the year 2015  .

  Page 4 of 4

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Länsförsäkringar Sak Forsäkringsaktiebolag (publ)

Stockholm, Sweden

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.064% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 13^th day of August in the year 2015  .

Länsförsäkringar Sak Forsäkringsaktiebolag (publ)

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Markel Bermuda Limited

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.645% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time,, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New York, New York  10019.

As respects the Subscribing Reinsurer's share in the attached Contract, in lieu of Article 12 - Reinsurance Premium - the following shall apply:

"Article 12 - Reinsurance Premium

A. As premium for reinsurance coverage provided by this Contract, the Company shall pay the Reinsurer a premium equal to the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months), subject to a minimum premium of $55,800,000 (or a pro rata portion thereof in the event the term of this Contract is less than 12 months):

1. An annual deposit premium of $69,750,000; times

  Page 1 of 2

2. The percentage calculated by dividing (a) the actual Average Annual Loss ("AAL") determined by the Company's wind insurance in force on September 30, 2015, by (b) the original AAL of $23,459,602.

However, if the difference between annual deposit premium of $69,750,000, and the premium calculated in accordance with this paragraph A is less than a 10.0% increase or decrease, the premium due the Reinsurer will equal the annual deposit premium of $69,750,000.

The Company's AAL shall be derived by averaging the applicable data produced by Applied Insurance Research (AIR) Touchstone v2.0 and Risk Management Solutions (RMS) RiskLink v15 catastrophe modeling software, in the long-term perspective, including secondary uncertainty and loss amplification, but excluding storm surge.  It is understood that the calculation of the actual AAL shall be based on the Reinsurer's per occurrence limit of $775,000,000, net of the FHCF mandatory layer of coverage purchased by the Company using the current estimates of the mandatory FHCF coverage of $775,000,000 excess of $265,000,000.

B. The Company shall pay the Reinsurer an annual deposit premium of $69,750,000, in four equal installments of $17,437,500 on June 1, September 1 and December 1 of 2015, and on March 1 of 2016.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

C. On or before May 31, 2016, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly."

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 30^th day of July in the year 2015  .

This 06 day of August in the year 2015  .

  Page 2 of 2

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Partner Reinsurance Company Ltd.

Pembroke, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.400% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, the provisions of subparagraph 4 of paragraph B of Article 2 - Commencement and Termination - shall not apply.

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 30^th day of July in the year 2015  .

This 25^th day of August in the year 2015  .

Partner Reinsurance Company Ltd.

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Pioneer Underwriting Limited

for and on behalf of Peak Reinsurance Company Limited

Hong Kong

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.125% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 17^th day of August in the year 2015  .

Pioneer Underwriting Limited

for and on behalf of Peak Reinsurance Company Limited

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Pioneer Underwriting Limited

for and on behalf of Taiping Reinsurance Co. Ltd.

Hong Kong

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.200% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

In Witness Whereof, the Subscribing Reinsurer by its duly authorized representative has executed this Agreement as of the date specified below:

This 17^th day of August in the year 2015  .

Pioneer Underwriting Limited

for and on behalf of Taiping Reinsurance Co. Ltd.

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Securis Re II Ltd. Bermuda

a Bermuda segregated accounts insurance company,

in respect of its segregated account designated "SRB205 Account":

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.55463% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

It is Hereby Agreed, as respects the Subscribing Reinsurer's share in the attached Contract, that the following shall apply:

1. Paragraph B of Article 2 - Commencement and Termination - shall not apply.

2. Article 24 - Reserves - shall not apply.

3. The following Articles shall be added to and made part of this Contract:

"Article 34 - Obligations

A. The Reinsurer will establish a Trust Fund or provide a Letter of Credit (LOC) issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company as security for the Reinsurer's Obligations.

  Page 1 of 5

B. The term 'Obligations' shall mean:

1. During the term of this Contract, the balance of (a) the Reinsurer's term limit as defined under the Retention and Limit Article, less (b) any unpaid reinsurance premium (net of brokerage and Federal Excise Tax payable) under this Contract, and less (c) any amounts already recovered from the Reinsurer;

2. On the expiration of this Contract, the Reinsurer's 'Obligations' shall be determined as the aggregate of the Reinsurer's share of the following:

a. Losses and loss adjustment expense paid by the Company, but not recovered from the Reinsurer; plus

b. The Company's reserves for losses reported and outstanding; plus

c. The Company's reserves for losses incurred but not reported; plus

d. The Company's reserves for loss adjustment expense outstanding.

The amount so determined shall be recalculated at each month end until all liability has been extinguished.

C. On December 15, 2015, collateral will be released consistent with the provisions of the Collateral Release Article.

D. The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said Trust Fund or LOC may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums on the account of cancellations or adjustment premiums, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of this Contract, unless paid in cash by the Reinsurer;

3. To fund a cash account in the amount equal to the Reinsurer's Obligations, if said Trust Fund or LOC has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date; and/or

4. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's Obligations, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any Trust Fund or LOC is in excess of the actual amount required, the Company shall return to the Reinsurer the excess amount so drawn within 10 days of receiving notice of the amount due.

  Page 2 of 5

Article 35 - Collateral Release

A. As of December 15, 2015 or 31 days from the date of loss, whichever is later, the parties shall determine how much collateral will be required to be maintained within the Trust Fund, less any amount required under the Obligations Article.  This calculation will be performed on a monthly basis until all liability has been extinguished.

B. For the purposes of paragraph C below, 'Loss Amount' shall be defined as the sum of:

1. Losses and loss adjustment expense paid by the Company; plus

2. Reserves for losses reported and outstanding; plus

3. Reserves for loss adjustment expense reported and outstanding; plus

4. Reserves for losses incurred but not reported.

C. For each loss occurrence covered hereunder, the Company shall multiply the Loss Amount by the appropriate Buffer Loss Multiplier from the table below, based on the number of days which have elapsed since the loss occurrence.  The product of this calculation shall be defined as the Buffered Loss Amount ('BLA').

Buffer Loss Multiplier table
Number of days since loss occurrence	Windstorm	Earthquake	Other event
0 to 90	180%	250%	200%
91 to 180	145%	200%	165%
181 to 270	125%	175%	140%
271 to 365	110%	150%	115%
366 to 455	100%	125%	100%
456 to 545	100%	110%	100%
Thereafter	100%	100%	100%

D. With respect to each loss occurrence for which the BLA exceeds the Company's retention as defined under the the Retention and Limit Article, an amount equal to the Reinsurer's share of the lesser of (1) the amount by which the BLA exceeds the Company's retention as defined under the Retention and Limit Article, or (2) the Reinsurer's per occurrence limit as defined under the Retention and Limit Article, shall be deemed to equal the event specific collateral amount at the calculation date (the 'Event Collateral Amount' or the 'ECA').

E. In respect of all events for which an ECA exceeds $0, the aggregate amount of the required collateral to be held in the Trust Fund shall be equal to the amount by which the lesser of (1) the sum of the ECAs, or (2) the Reinsurer's term limit as defined in the Retention and Limit Article, exceeds amounts paid to date by the Reinsurer.  Such aggregate amount shall be deemed to be the 'Aggregate Collateral Obligation' or the 'ACO.'

  Page 3 of 5

F. At any month-end at which there is any security on deposit in the Trust Fund, the Company shall perform this calculation within 10 days after the end of such month and report to the Reinsurer and Trustee named in the Trust Agreement information supporting any BLA, ECA and ACO amounts greater than $0.  The Assets in the Trust Fund will be adjusted monthly based on this calculation.  In the event the balance of the Trust Fund is greater than the amount required to fully fund the Obligations, as defined by the ACO, the Company shall promptly, within 10 days, authorize a return of such excess amount to the Reinsurer."

It is Further Agreed, as respects the Subscribing Reinsurer's shares in the attached Contract, that the following shall apply:

"Limited Recourse

A. Segregated Account: This Interests & Liabilities Agreement is entered into by Securis Re II Ltd. Bermuda on behalf and in respect of the segregated account entitled 'SRB205' (the 'Segregated Account') for the purposes of section 11(3) of the Segregated Accounts Companies Act 2000 of Bermuda (the 'SAC Act').  Each party acknowledges that the Subscribing Reinsurer is a segregated accounts company under the SAC Act and agrees that its rights and obligations under this Agreement are subject to the provisions of the SAC Act.

B. Limited Recourse: Except as expressly provided in this Agreement and in accordance with the provisions of sections 11(4) and 17(5) of the SAC Act, the parties agree that their right to claim or proceed against the Segregated Account of the Subscribing Reinsurer in respect of this Agreement is confined to the assets linked to such Segregated Account and, where a claim, liability or obligation of the Subscribing Reinsurer arises from or in connection with this Agreement, recourse shall be limited to the assets linked to such Segregated Account as evidenced in the books and records of the Subscribing Reinsurer.  No such claim, liability or obligation shall extend, and no party shall have recourse, to any asset of the Subscribing Reinsurer linked to any other segregated account established by the Subscribing Reinsurer pursuant to the SAC Act or to the general account (as defined in the SAC Act) of the Subscribing Reinsurer or otherwise. In addition, no asset shall be transferred at any time from the general account of the Subscribing Reinsurer to any segregated account in connection with satisfying any such claim, liability or obligation unless otherwise expressly agreed in writing by the parties hereto in accordance with the requirements of the SAC Act.

C. No Further Action: If the assets linked to the Segregated Account are insufficient to meet the obligations of the Subscribing Reinsurer under this Agreement, the Subscribing Reinsurer's obligations shall be limited to such assets and the parties shall not be entitled to take any further steps against the Subscribing Reinsurer to recover any further sum and no debt shall be owed to the parties by the Subscribing Reinsurer.

D. Governing Law: The effect of this clause and the rights and obligations of any party pursuant to this clause shall, notwithstanding the terms of Article 29 - Governing Law (BRMA 71B) - as it appears in the attached Contract, be governed by the laws of Bermuda with reference to the SAC Act and, for such purpose only, the parties hereto irrevocably submit to the jurisdiction of the Supreme Court of Bermuda.  Except as otherwise defined herein or unless the context otherwise requires, terms and expressions defined in this clause have the same meanings given to them in the SAC Act.  Each party agrees that, if there is an inconsistency between the provisions of this clause and any other provisions of this Agreement, this clause shall prevail."

  Page 4 of 5

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 30^th day of July in the year 2015  .

This 3^rd day of August in the year 2015  .

  Page 5 of 5

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Securis Re IV Ltd. Bermuda

a Bermuda segregated accounts insurance company,

in respect of its segregated account designated "SRB405 Account":

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 1.47174% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

It is Hereby Agreed, as respects the Subscribing Reinsurer's share in the attached Contract, that the following shall apply:

1. Paragraph B of Article 2 - Commencement and Termination - shall not apply.

2. Article 24 - Reserves - shall not apply.

3. The following Articles shall be added to and made part of this Contract:

"Article 34 - Obligations

A. The Reinsurer will establish a Trust Fund or provide a Letter of Credit (LOC) issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company as security for the Reinsurer's Obligations.

  Page 1 of 5

B. The term 'Obligations' shall mean:

1. During the term of this Contract, the balance of (a) the Reinsurer's term limit as defined under the Retention and Limit Article, less (b) any unpaid reinsurance premium (net of brokerage and Federal Excise Tax payable) under this Contract, and less (c) any amounts already recovered from the Reinsurer;

2. On the expiration of this Contract, the Reinsurer's 'Obligations' shall be determined as the aggregate of the Reinsurer's share of the following:

a. Losses and loss adjustment expense paid by the Company, but not recovered from the Reinsurer; plus

b. The Company's reserves for losses reported and outstanding; plus

c. The Company's reserves for losses incurred but not reported; plus

d. The Company's reserves for loss adjustment expense outstanding.

The amount so determined shall be recalculated at each month end until all liability has been extinguished.

C. On December 15, 2015, collateral will be released consistent with the provisions of the Collateral Release Article.

D. The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said Trust Fund or LOC may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums on the account of cancellations or adjustment premiums, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of this Contract, unless paid in cash by the Reinsurer;

3. To fund a cash account in the amount equal to the Reinsurer's Obligations, if said Trust Fund or LOC has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date; and/or

4. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's Obligations, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any Trust Fund or LOC is in excess of the actual amount required, the Company shall return to the Reinsurer the excess amount so drawn within 10 days of receiving notice of the amount due.

  Page 2 of 5

Article 35 - Collateral Release

A. As of December 15, 2015 or 31 days from the date of loss, whichever is later, the parties shall determine how much collateral will be required to be maintained within the Trust Fund, less any amount required under the Obligations Article.  This calculation will be performed on a monthly basis until all liability has been extinguished.

B. For the purposes of paragraph C below, 'Loss Amount' shall be defined as the sum of:

1. Losses and loss adjustment expense paid by the Company; plus

2. Reserves for losses reported and outstanding; plus

3. Reserves for loss adjustment expense reported and outstanding; plus

4. Reserves for losses incurred but not reported.

C. For each loss occurrence covered hereunder, the Company shall multiply the Loss Amount by the appropriate Buffer Loss Multiplier from the table below, based on the number of days which have elapsed since the loss occurrence.  The product of this calculation shall be defined as the Buffered Loss Amount ('BLA').

Buffer Loss Multiplier table
Number of days since loss occurrence	Windstorm	Earthquake	Other event
0 to 90	180%	250%	200%
91 to 180	145%	200%	165%
181 to 270	125%	175%	140%
271 to 365	110%	150%	115%
366 to 455	100%	125%	100%
456 to 545	100%	110%	100%
Thereafter	100%	100%	100%

D. With respect to each loss occurrence for which the BLA exceeds the Company's retention as defined under the the Retention and Limit Article, an amount equal to the Reinsurer's share of the lesser of (1) the amount by which the BLA exceeds the Company's retention as defined under the Retention and Limit Article, or (2) the Reinsurer's per occurrence limit as defined under the Retention and Limit Article, shall be deemed to equal the event specific collateral amount at the calculation date (the 'Event Collateral Amount' or the 'ECA').

E. In respect of all events for which an ECA exceeds $0, the aggregate amount of the required collateral to be held in the Trust Fund shall be equal to the amount by which the lesser of (1) the sum of the ECAs, or (2) the Reinsurer's term limit as defined in the Retention and Limit Article, exceeds amounts paid to date by the Reinsurer.  Such aggregate amount shall be deemed to be the 'Aggregate Collateral Obligation' or the 'ACO.'

  Page 3 of 5

F. At any month-end at which there is any security on deposit in the Trust Fund, the Company shall perform this calculation within 10 days after the end of such month and report to the Reinsurer and Trustee named in the Trust Agreement information supporting any BLA, ECA and ACO amounts greater than $0.  The Assets in the Trust Fund will be adjusted monthly based on this calculation.  In the event the balance of the Trust Fund is greater than the amount required to fully fund the Obligations, as defined by the ACO, the Company shall promptly, within 10 days, authorize a return of such excess amount to the Reinsurer."

It is Further Agreed, as respects the Subscribing Reinsurer's shares in the attached Contract, that the following shall apply:

"Limited Recourse

A. Segregated Account: This Interests & Liabilities Agreement is entered into by Securis Re IV Ltd. Bermuda on behalf and in respect of the segregated account entitled 'SRB405' (the 'Segregated Account') for the purposes of section 11(3) of the Segregated Accounts Companies Act 2000 of Bermuda (the 'SAC Act').  Each party acknowledges that the Subscribing Reinsurer is a segregated accounts company under the SAC Act and agrees that its rights and obligations under this Agreement are subject to the provisions of the SAC Act.

B. Limited Recourse: Except as expressly provided in this Agreement and in accordance with the provisions of sections 11(4) and 17(5) of the SAC Act, the parties agree that their right to claim or proceed against the Segregated Account of the Subscribing Reinsurer in respect of this Agreement is confined to the assets linked to such Segregated Account and, where a claim, liability or obligation of the Subscribing Reinsurer arises from or in connection with this Agreement, recourse shall be limited to the assets linked to such Segregated Account as evidenced in the books and records of the Subscribing Reinsurer.  No such claim, liability or obligation shall extend, and no party shall have recourse, to any asset of the Subscribing Reinsurer linked to any other segregated account established by the Subscribing Reinsurer pursuant to the SAC Act or to the general account (as defined in the SAC Act) of the Subscribing Reinsurer or otherwise. In addition, no asset shall be transferred at any time from the general account of the Subscribing Reinsurer to any segregated account in connection with satisfying any such claim, liability or obligation unless otherwise expressly agreed in writing by the parties hereto in accordance with the requirements of the SAC Act.

C. No Further Action: If the assets linked to the Segregated Account are insufficient to meet the obligations of the Subscribing Reinsurer under this Agreement, the Subscribing Reinsurer's obligations shall be limited to such assets and the parties shall not be entitled to take any further steps against the Subscribing Reinsurer to recover any further sum and no debt shall be owed to the parties by the Subscribing Reinsurer.

D. Governing Law: The effect of this clause and the rights and obligations of any party pursuant to this clause shall, notwithstanding the terms of Article 29 - Governing Law (BRMA 71B) - as it appears in the attached Contract, be governed by the laws of Bermuda with reference to the SAC Act and, for such purpose only, the parties hereto irrevocably submit to the jurisdiction of the Supreme Court of Bermuda.  Except as otherwise defined herein or unless the context otherwise requires, terms and expressions defined in this clause have the same meanings given to them in the SAC Act.  Each party agrees that, if there is an inconsistency between the provisions of this clause and any other provisions of this Agreement, this clause shall prevail."

  Page 4 of 5

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 30^th day of July in the year 2015  .

This 3^rd day of August in the year 2015  .

Securis Re IV Ltd. Bermuda, in respect of its segregated account designated "SRB405 Account"

  Page 5 of 5

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Securis Re V Ltd. Bermuda

a Bermuda segregated accounts insurance company,

in respect of its segregated account designated "SRB505 Account":

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.55463% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

It is Hereby Agreed, as respects the Subscribing Reinsurer's share in the attached Contract, that the following shall apply:

1. Paragraph B of Article 2 - Commencement and Termination - shall not apply.

2. Article 24 - Reserves - shall not apply.

3. The following Articles shall be added to and made part of this Contract:

"Article 34 - Obligations

A. The Reinsurer will establish a Trust Fund or provide a Letter of Credit (LOC) issued by a bank and containing provisions acceptable to the insurance regulatory authorities having jurisdiction over the Company as security for the Reinsurer's Obligations.

  Page 1 of 5

B. The term 'Obligations' shall mean:

1. During the term of this Contract, the balance of (a) the Reinsurer's term limit as defined under the Retention and Limit Article, less (b) any unpaid reinsurance premium (net of brokerage and Federal Excise Tax payable) under this Contract, and less (c) any amounts already recovered from the Reinsurer;

2. On the expiration of this Contract, the Reinsurer's 'Obligations' shall be determined as the aggregate of the Reinsurer's share of the following:

a. Losses and loss adjustment expense paid by the Company, but not recovered from the Reinsurer; plus

b. The Company's reserves for losses reported and outstanding; plus

c. The Company's reserves for losses incurred but not reported; plus

d. The Company's reserves for loss adjustment expense outstanding.

The amount so determined shall be recalculated at each month end until all liability has been extinguished.

C. On December 15, 2015, collateral will be released consistent with the provisions of the Collateral Release Article.

D. The Company and the Reinsurer further agree, notwithstanding anything to the contrary in this Contract, that said Trust Fund or LOC may be drawn upon by the Company or its successors in interest at any time, without diminution because of the insolvency of the Company or the Reinsurer, but only for one or more of the following purposes:

1. To reimburse itself for the Reinsurer's share of unearned premiums on the account of cancellations or adjustment premiums, unless paid in cash by the Reinsurer;

2. To reimburse itself for the Reinsurer's share of losses and/or loss adjustment expense paid under the terms of this Contract, unless paid in cash by the Reinsurer;

3. To fund a cash account in the amount equal to the Reinsurer's Obligations, if said Trust Fund or LOC has not been renewed or replaced by the Reinsurer 10 days prior to its expiration date; and/or

4. To refund to the Reinsurer any sum in excess of the actual amount required to fund the Reinsurer's Obligations, if so requested by the Reinsurer.

In the event the amount drawn by the Company on any Trust Fund or LOC is in excess of the actual amount required, the Company shall return to the Reinsurer the excess amount so drawn within 10 days of receiving notice of the amount due.

  Page 2 of 5

Article 35 - Collateral Release

A. As of December 15, 2015 or 31 days from the date of loss, whichever is later, the parties shall determine how much collateral will be required to be maintained within the Trust Fund, less any amount required under the Obligations Article.  This calculation will be performed on a monthly basis until all liability has been extinguished.

B. For the purposes of paragraph C below, 'Loss Amount' shall be defined as the sum of:

1. Losses and loss adjustment expense paid by the Company; plus

2. Reserves for losses reported and outstanding; plus

3. Reserves for loss adjustment expense reported and outstanding; plus

4. Reserves for losses incurred but not reported.

C. For each loss occurrence covered hereunder, the Company shall multiply the Loss Amount by the appropriate Buffer Loss Multiplier from the table below, based on the number of days which have elapsed since the loss occurrence.  The product of this calculation shall be defined as the Buffered Loss Amount ('BLA').

Buffer Loss Multiplier table
Number of days since loss occurrence	Windstorm	Earthquake	Other event
0 to 90	180%	250%	200%
91 to 180	145%	200%	165%
181 to 270	125%	175%	140%
271 to 365	110%	150%	115%
366 to 455	100%	125%	100%
456 to 545	100%	110%	100%
Thereafter	100%	100%	100%

D. With respect to each loss occurrence for which the BLA exceeds the Company's retention as defined under the the Retention and Limit Article, an amount equal to the Reinsurer's share of the lesser of (1) the amount by which the BLA exceeds the Company's retention as defined under the Retention and Limit Article, or (2) the Reinsurer's per occurrence limit as defined under the Retention and Limit Article, shall be deemed to equal the event specific collateral amount at the calculation date (the 'Event Collateral Amount' or the 'ECA').

E. In respect of all events for which an ECA exceeds $0, the aggregate amount of the required collateral to be held in the Trust Fund shall be equal to the amount by which the lesser of (1) the sum of the ECAs, or (2) the Reinsurer's term limit as defined in the Retention and Limit Article, exceeds amounts paid to date by the Reinsurer.  Such aggregate amount shall be deemed to be the 'Aggregate Collateral Obligation' or the 'ACO.'

  Page 3 of 5

F. At any month-end at which there is any security on deposit in the Trust Fund, the Company shall perform this calculation within 10 days after the end of such month and report to the Reinsurer and Trustee named in the Trust Agreement information supporting any BLA, ECA and ACO amounts greater than $0.  The Assets in the Trust Fund will be adjusted monthly based on this calculation.  In the event the balance of the Trust Fund is greater than the amount required to fully fund the Obligations, as defined by the ACO, the Company shall promptly, within 10 days, authorize a return of such excess amount to the Reinsurer."

It is Further Agreed, as respects the Subscribing Reinsurer's shares in the attached Contract, that the following shall apply:

"Limited Recourse

A. Segregated Account: This Interests & Liabilities Agreement is entered into by Securis Re V Ltd. Bermuda on behalf and in respect of the segregated account entitled 'SRB505' (the 'Segregated Account') for the purposes of section 11(3) of the Segregated Accounts Companies Act 2000 of Bermuda (the 'SAC Act').  Each party acknowledges that the Subscribing Reinsurer is a segregated accounts company under the SAC Act and agrees that its rights and obligations under this Agreement are subject to the provisions of the SAC Act.

B. Limited Recourse: Except as expressly provided in this Agreement and in accordance with the provisions of sections 11(4) and 17(5) of the SAC Act, the parties agree that their right to claim or proceed against the Segregated Account of the Subscribing Reinsurer in respect of this Agreement is confined to the assets linked to such Segregated Account and, where a claim, liability or obligation of the Subscribing Reinsurer arises from or in connection with this Agreement, recourse shall be limited to the assets linked to such Segregated Account as evidenced in the books and records of the Subscribing Reinsurer.  No such claim, liability or obligation shall extend, and no party shall have recourse, to any asset of the Subscribing Reinsurer linked to any other segregated account established by the Subscribing Reinsurer pursuant to the SAC Act or to the general account (as defined in the SAC Act) of the Subscribing Reinsurer or otherwise. In addition, no asset shall be transferred at any time from the general account of the Subscribing Reinsurer to any segregated account in connection with satisfying any such claim, liability or obligation unless otherwise expressly agreed in writing by the parties hereto in accordance with the requirements of the SAC Act.

C. No Further Action: If the assets linked to the Segregated Account are insufficient to meet the obligations of the Subscribing Reinsurer under this Agreement, the Subscribing Reinsurer's obligations shall be limited to such assets and the parties shall not be entitled to take any further steps against the Subscribing Reinsurer to recover any further sum and no debt shall be owed to the parties by the Subscribing Reinsurer.

D. Governing Law: The effect of this clause and the rights and obligations of any party pursuant to this clause shall, notwithstanding the terms of Article 29 - Governing Law (BRMA 71B) - as it appears in the attached Contract, be governed by the laws of Bermuda with reference to the SAC Act and, for such purpose only, the parties hereto irrevocably submit to the jurisdiction of the Supreme Court of Bermuda.  Except as otherwise defined herein or unless the context otherwise requires, terms and expressions defined in this clause have the same meanings given to them in the SAC Act.  Each party agrees that, if there is an inconsistency between the provisions of this clause and any other provisions of this Agreement, this clause shall prevail."

  Page 4 of 5

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 30^th day of July in the year 2015  .

This 3^rd day of August in the year 2015  .

Securis Re V Ltd. Bermuda, in respect of its segregated account designated "SRB505 Account"

  Page 5 of 5

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Transatlantic Reinsurance Company

New York, New York

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 2.330% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

However, it is understood and agreed that as respects 57.08% of the Subscribing Reinsurer's 2.330% share shown in the first paragraph above, in lieu of Article 12 - Reinsurance Premium - the following shall apply:

"Article 12 - Reinsurance Premium

A. As premium for reinsurance coverage provided by this Contract, the Company shall pay the Reinsurer a premium equal to the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months), subject to a minimum premium of $55,800,000 (or a pro rata portion thereof in the event the term of this Contract is less than 12 months):

1. An annual deposit premium of $69,750,000; times

2. The percentage calculated by dividing (a) the actual Average Annual Loss ("AAL") determined by the Company's wind insurance in force on September 30, 2015, by (b) the original AAL of $23,459,602.

  Page 1 of 2

However, if the difference between annual deposit premium of $69,750,000, and the premium calculated in accordance with this paragraph A is less than a 10.0% increase or decrease, the premium due the Reinsurer will equal the annual deposit premium of $69,750,000.

The Company's AAL shall be derived by averaging the applicable data produced by Applied Insurance Research (AIR) Touchstone v2.0 and Risk Management Solutions (RMS) RiskLink v15 catastrophe modeling software, in the long-term perspective, including secondary uncertainty and loss amplification, but excluding storm surge.  It is understood that the calculation of the actual AAL shall be based on the Reinsurer's per occurrence limit of $775,000,000, net of the FHCF mandatory layer of coverage purchased by the Company using the current estimates of the mandatory FHCF coverage of $775,000,000 excess of $265,000,000.

B. The Company shall pay the Reinsurer an annual deposit premium of $69,750,000, in four equal installments of $17,437,500 on June 1, September 1 and December 1 of 2015, and on March 1 of 2016.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

C. On or before May 31, 2016, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly."

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 30^th day of July in the year 2015  .

This 11^th day of August in the year 2015  .

Transatlantic Reinsurance Company

  Page 2 of 2

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

XL Re Ltd

Hamilton, Bermuda

 (hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 4.000% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time,, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

The Subscribing Reinsurer's share in the attached Contract shall be separate and apart from the shares of the other reinsurers, and shall not be joint with the shares of the other reinsurers, it being understood that the Subscribing Reinsurer shall in no event participate in the interests and liabilities of the other reinsurers.

As respects the Subscribing Reinsurer's share in the attached Contract, in lieu of Article 12 - Reinsurance Premium - the following shall apply:

"Article 12 - Reinsurance Premium

A. As premium for reinsurance coverage provided by this Contract, the Company shall pay the Reinsurer a premium equal to the product of the following (or a pro rata portion thereof in the event the term of this Contract is less than 12 months), subject to a minimum premium of $60,450,000 (or a pro rata portion thereof in the event the term of this Contract is less than 12 months):

1. An annual deposit premium of $75,562,500; times

2. The percentage calculated by dividing (a) the actual Average Annual Loss ("AAL") determined by the Company's wind insurance in force on September 30, 2015, by (b) the original AAL of $23,459,602.

  Page 1 of 2

However, if the difference between annual deposit premium of $75,562,500, and the premium calculated in accordance with this paragraph A is less than a 10.0% increase or decrease, the premium due the Reinsurer will equal the annual deposit premium of $75,562,500.

The Company's AAL shall be derived by averaging the applicable data produced by Applied Insurance Research (AIR) Touchstone v2.0 and Risk Management Solutions (RMS) RiskLink v15 catastrophe modeling software, in the long-term perspective, including secondary uncertainty and loss amplification, but excluding storm surge.  It is understood that the calculation of the actual AAL shall be based on the Reinsurer's per occurrence limit of $775,000,000, net of the FHCF mandatory layer of coverage purchased by the Company using the current estimates of the mandatory FHCF coverage of $775,000,000 excess of $265,000,000.

B. The Company shall pay the Reinsurer an annual deposit premium of $75,562,500, in four equal installments of $18,890,625 on June 1, September 1 and December 1 of 2015, and on March 1 of 2016.  However, in the event this Contract is terminated, there shall be no deposit premium installments due after the effective date of termination.

C. On or before May 31, 2016, the Company shall provide a report to the Reinsurer setting forth the premium due hereunder for the term of this Contract, computed in accordance with paragraph A above, and any additional premium due the Reinsurer or return premium due the Company shall be remitted promptly."

In Witness Whereof, the parties hereto by their respective duly authorized representatives have executed this Agreement as of the dates specified below:

This 30^th day of July in the year 2015  .

This 13^th day of August in the year 2015  .

  Page 2 of 2

Interests and Liabilities Agreement

attached to and forming part of the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

Sunrise, Florida

and

Certain Underwriting Members of Lloyd's

shown in the Signing Page(s) attached hereto

(hereinafter referred to as the "Subscribing Reinsurer")

The Subscribing Reinsurer hereby accepts a 0.785% share in the interests and liabilities of the "Reinsurer" as set forth in the attached Contract captioned above.

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time, June 1, 2015, and shall continue in force until 12:01 a.m., Eastern Standard Time, June 1, 2016, unless earlier terminated in accordance with the provisions of the attached Contract.

As respects the Subscribing Reinsurer's share in the attached Contract, in lieu of the provisions of the last subparagraph of paragraph A of Article 24 - Reserves - the following paragraph shall apply:

"The Reinsurer, at its sole option, may fund in other than cash (including the use of the Lloyd's Credit for Reinsurance Trust Funds as a funding instrument) if such method and form of funding are acceptable to the Company and to the insurance regulatory authorities involved, as the case may be."

In any action, suit or proceeding to enforce the Subscribing Reinsurer's obligations under the attached Contract, service of process may be made upon Mendes & Mount, LLP, 750 Seventh Avenue, New York, New York  10019.

In Witness Whereof, the Company by its duly authorized representative has executed this Agreement as of the date specified below:

This 30^th day of July in the year 2015  .

Signed for and on behalf of the Subscribing Reinsurer in the Signing Page(s) attached hereto.

Signing Page

attached to and forming part of the

Interests and Liabilities Agreement

with respect to the

FHCF Supplement Layer

Reinsurance Contract

Effective:  June 1, 2015

entered into by and between

Federated National Insurance Company

and

Certain Underwriting Members of Lloyd's

(Re)Insurer's Liability Clause - LMA3333

(Re)Insurer's liability several not joint

The liability of a (re)insurer under this contract is several and not joint with other (re)insurers party to this contract. A (re)insurer is liable only for the proportion of liability it has underwritten. A (re)insurer is not jointly liable for the proportion of liability underwritten by any other (re)insurer. Nor is a (re)insurer otherwise responsible for any liability of any other (re)insurer that may underwrite this contract.

The proportion of liability under this contract underwritten by a (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together) is shown next to its stamp. This is subject always to the provision concerning "signing" below.

In the case of a Lloyd's syndicate, each member of the syndicate (rather than the syndicate itself) is a (re)insurer. Each member has underwritten a proportion of the total shown for the syndicate (that total itself being the total of the proportions underwritten by all the members of the syndicate taken together). The liability of each member of the syndicate is several and not joint with other members. A member is liable only for that member's proportion. A member is not jointly liable for any other member's proportion. Nor is any member otherwise responsible for any liability of any other (re)insurer that may underwrite this contract. The business address of each member is Lloyd's, One Lime Street, London EC3M 7HA. The identity of each member of a Lloyd's syndicate and their respective proportion may be obtained by writing to Market Services, Lloyd's, at the above address.

Proportion of liability

Unless there is "signing" (see below), the proportion of liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together) is shown next to its stamp and is referred to as its "written line".

Where this contract permits, written lines, or certain written lines, may be adjusted ("signed"). In that case a schedule is to be appended to this contract to show the definitive proportion of liability under this contract underwritten by each (re)insurer (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of the syndicate taken together). A definitive proportion (or, in the case of a Lloyd's syndicate, the total of the proportions underwritten by all the members of a Lloyd's syndicate taken together) is referred to as a "signed line". The signed lines shown in the schedule will prevail over the written lines unless a proven error in calculation has occurred.

Although reference is made at various points in this clause to "this contract" in the singular, where the circumstances so require this should be read as a reference to contracts in the plural.

Now Know Ye that we the Underwriters, Members of the Syndicates whose definitive numbers in the after mentioned List of Underwriting Members of Lloyd's are set out in the attached Table, hereby bind ourselves each for his own part and not one for another, our Executors and Administrators, and in respect of his due proportion only, to pay or make good to the Assured or to the Assured's Executors or Administrators or to indemnify him or them against all such loss, damage of liability as herein provided, such payment to be made after such loss, damage or liability is proved and the due proportion for which each of us, the Underwriters, is liable shall be ascertained by reference to his share, as shown in the said List, of the Amount, Percentage or Proportion of the total sum insured hereunder which is in the Table set opposite the definitive number of the Syndicate of which such Underwriter is a Member AND FURTHER THAT the List of Underwriting Members of Lloyd's referred to above shows their respective Syndicates and Shares therein, is deemed to be incorporated in and to form part of this policy, bears the number specified in the attached Table and is available for inspection at Lloyd's Policy Signing Office by the Assured or his or their representatives and a true copy of the material parts of the said List certified by the General Manager of Lloyd's Policy Signing Office will be furnished to the Assured on application.

In Witness whereof the General Manager of Lloyd's Policy Signing Office has subscribed his name on behalf of each of us.

LLOYD'S POLICY SIGNING OFFICE,

General Manager

If this policy (or any subsequent endorsement) has been produced to you in electronic form, the original document is stored on the Insurer's Market Repository to which your broker has access.

(NM)

Definitive Numbers of Syndicates and Amount, Percentage or

Proportion of the Total Sum insured hereunder shared between the

Members of those Syndicates.

  The Table of Syndicates referred to on the face of this Policy follows:

BUREAU REFERENCE	61376 30/07/2015	BROKER NUMBER     1108
PROPORTION %	SYNDICATE	UNDERWRITER'S REFERENCE
0.369	2623	TG269Q15APCW
0.081	623	TG269Q15APCW
0.200	5678	L10000937A
0.135	2007	WV21815ACSA7
TOTAL LINE	No. OF SYNDICATES
0.785	4

THE LIST OF UNDERWRITING MEMBERS

OF LLOYD'S IS IN RESPECT OF 2015

YEAR OF ACCOUNT

EFFECTIVE FROM: 01 JUN 2015

BUREAU USE ONLY USE3 72      10931 RISK CODE: XA   Page 1 of 1

EX-31.1

Federated National Holding Company

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Michael H. Braun, certify that:

1. I have reviewed this Form 10-Q of Federated National Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Michael H. Braun

Michael H. Braun

Chief Executive Officer

(Principal Executive Officer)

Dated: November 9, 2015

EX-31.2

Federated National Holding Company

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT

I, Peter J. Prygelski, III, certify that:

1. I have reviewed this Form 10-Q of Federated National Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Peter J. Prygelski, III

Peter J. Prygelski, III

Chief Financial Officer

(Principal Financial and Accounting Officer)

Dated: November 9, 2015

EX-32.1

Federated National Holding Company

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

In connection with the Quarterly Report on Form 10-Q of Federated National Holding Company for the quarter ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Michael H. Braun, Chief Executive Officer of Federated National Holding Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Federated National Holding Company.

By:  /s/ Michael H. Braun

Michael H. Braun, Chief Executive Officer (Principal Executive Officer)

November 9, 2015

EX-32.2

Federated National Holding Company

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT

In connection with the Quarterly Report on Form 10-Q of Federated National Holding Company for the quarter ended September 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Peter J. Prygelski, III, Chief Financial Officer of Federated National Holding Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Federated National Holding Company.

By:  /s/ Peter J. Prygelski, III

Peter J. Prygelski, III, Chief Financial Officer (Principal Financial and Accounting Officer)

November 9, 2015

XML

Investments, Investment Results (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Investment income [Abstract]
Interest on debt securities	$ 1,755	$ 1,328	$ 4,713	$ 3,432
Dividends on equity securities	147	121	381	324
Interest on cash and cash equivalents	5	1	60	2
Total investment income	1,907	1,450	5,154	3,758
Proceeds from sales and maturity of marketable securities	$ 42,500	$ 21,800	$ 134,918	$ 65,869

XML

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings per Share [Abstract]
Net income attributable to Federated National Holding Company common stockholders	$ 10,593	$ 7,227	$ 31,611	$ 27,204
Weighted average number of common shares outstanding - basic (in shares)	13,749,394	12,624,746	13,709,605	11,562,709
Net income per share - basic (in dollars per share)	$ 0.77	$ 0.57	$ 2.31	$ 2.35
Dilutive effect of stock compensation plans (in shares)	228,000	332,000	268,000	371,000
Weighted average number of common shares outstanding - diluted (in shares)	13,976,709	12,956,407	13,978,381	11,934,057
Net income per share - diluted (in dollars per share)	$ 0.76	$ 0.56	$ 2.26	$ 2.28

XML

Investments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Investments [Abstract]
Increase in total investments			$ 55,600
Percentage increase in investments			16.80%
Ratio of available-for-sale securities to total investments	98.00%		98.00%		98.00%
Schedule of Available-for-sale Securities [Line Items]
Realized investment losses charged to operations	$ 1,126	$ 659	$ 3,743	$ 4,047
Bond portfolio reclassified as held-to-maturity			$ 6,400		$ 7,400
Diverse Industries Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Percentage of debt securities to total debt portfolio			80.00%		77.00%
United States Government Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Percentage of debt securities to total debt portfolio			20.00%		23.00%
Diverse Industries Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Realized investment losses charged to operations				$ 0
Percentage of equity holdings to total equity portfolio			86.00%		88.00%
Diverse Industries Equity Securities [Member] | Maximum [Member]
Schedule of Available-for-sale Securities [Line Items]
Realized investment losses charged to operations			$ (100)
Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Percentage of equity holdings to total equity portfolio			14.00%		12.00%

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Reinsurance Agreements (Tables)

9 Months Ended

Sep. 30, 2015

Reinsurance Agreements [Abstract]

Private Reinsurance Companies and Their Respective Ratings

The 2015-2016 private reinsurance companies and their respective A.M. Best Company (“A.M. Best”) and S&P ratings are listed in the table as follows.

Reinsurer	A.M. Best Rating			S&P Rating
UNITED STATES
American Agricultural Insurance Company		A-			NR
American Standard Insurance Company of Wisconsin		A			NR
Everest Reinsurance Company		A+			A+
Odyssey Reinsurance Company		A			A-
Partner Reinsurance Company of the US		A+			A+
QBE Reinsurance Corporation		A			A+
RLI Insurance Company		A+			A+
Transatlantic Reinsurance Company		A			A+
BERMUDA
ACE Tempest Reinsurance Ltd.		A++			AA
Allianz Risk Transfer AG, Bermuda Branch (obo Nephila)		A+			AA-
Allied World Assurance Company, Limited		A			A
Arch Reinsurance Limited		A+			A+
Argo Re Ltd		A			NR
Ariel Reinsurance Bermuda Ltd for and on Behalf of Ariel Syndicate 1910 (ARE)		A-			A+
Ascot Underwriting (Bermuda) Limited/AIG per AIRCO agreement		A			NR
Aspen Bermuda Limited		A			A
AXIS Specialty Limited		A+			A+
BGS Services (Bermuda) Limited/Lloyds Syndicate 2987		A			A+
Collateralised Re Ltd - LGT Capital		NR	*	**	NR
DaVinci Reinsurance Ltd.		A			AA-
Endurance Specialty Insurance Ltd.		A			A
Hamilton Re, Ltd.		A-			NR
Hiscox Insurance Company (Bermuda) Limited		A			NR
Horseshoe Re (obo Coriolis)		NR	*	**	NR
Markel Bermuda Limited		A			A
Partner Reinsurance Company Limited		A+			A+
Renaissance Reinsurance, Ltd.		A+			AA-
Securis Re II Ltd. Bermuda		NR	*	**	NR
Securis Re IV Ltd. Bermuda		NR	*	**	NR
Securis Re V Ltd. Bermuda		NR	*	**	NR
Tokio Millennium Re AG, Bermuda Branch		A++			AA-
XL RE Limited		A			A+
UNITED KINGDOM
A.F. Beazley Syndicate No. 623 (AFB)		A			A+
A.F. Beazley Syndicate No. 2623 (AFB)		A			A+
Amlin Syndicate No. 2001 (AML)		A			A+
Antares Syndicate No. 1274 (AUL)		A			A+
Ariel Syndicate No. 1910 (ARE)		A			A+
ARK Syndicate No. 4020 (ARK)		A			A+
Ascot Syndicate No. 1414 (ASC)		A			A+
Barbican Syndication No. 1955 (BAR)		A			A+
Canopius Syndicate No. 958 (CNP)		A			A+
Canopius Syndicate No. 4444 (CNP)		A			A+
Cathederal Syndicate No. 2010 (MMX)		A			A+
China Re Syndicate No. 2088 (CNR)		A			A+
Dale Underwriting Syndicate No. 1729 (DUW)		A			A+
Faraday Syndicate No. 435 (FDY)		A			A+
Hiscox Syndicate No. 0033 (HIS)		A			A+
Liberty Syndicates Services Limited, Paris for and on behalf of Lloyd's Syndicate No. 4472 (LIB)		A			A+
MAP Underwriting Syndicate No. 2791 (MAP)		A			A+
MAP Underwriting Syndicate No. 2791 (Parallel) (MAP)		A			A+
Novae Syndicate No. 2007 (NVA)		A			A+
Renaissance Re Syndicate No. 1458 (RNR)		A			A+
S.J.O, Catlin & Others No. 2003 (SJC)		A			A+
Vibe Syndicate No. 5678 (VSM)		A			A+
EUROPE
Amlin AG, Switzerland, Bermuda Branch		A			A
Hannover Rueck SE (obo Pillar Capital Management)		NR	*	**	NR
Lansforsakringar Sak Forsakringsaktiebolag (publ)		NR			A
SCOR Global P&C SE, Paris, Zurich Branch		A			A
ASIA
China Reinsurance (Group) Corporation		A			NR
Fubon Insurance Co., Ltd.		A			A-
General Insurance Corporation of India, trading as GIC Re		A-			NR
Peak Re		A-			NR
Pioneer CAT (obo Peak Re)		A-			NR
Pioneer CAT (obo Taiping)		A-			NR
Qatar Reinsurance Company LLC		A			A
* Reinstatement Premium Protection Program Participants
** Participant will fund a trust agreement for their exposure with cash and U.S. Government obligations of American institutions at fair market value.

The 2014-2015 private reinsurance companies and their respective A.M. Best and S&P ratings are listed in the table as follows.

Reinsurer	A.M. Best Rating			S&P Rating
UNITED STATES
American Agricultural Insurance Company		A-			NR
American Standard Insurance Company of Wisconsin		A			NR
AIG (National Union Fire Insurance Company of Pittsburgh, PA)		A			A+
Everest Reinsurance Company		A+			A+
Odyssey Reinsurance Company		A			A-
QBE Reinsurance Corporation		A			A+
RLI Insurance Company		A+			A+
Transatlantic Reinsurance Company		A			A+
BERMUDA
ACE Tempest Reinsurance Limited		A++			AA-
Allied World Assurance Company, Limited		A			A
Arch Reinsurance Limited		A+			A+
Argo Reinsurance Limited		A			NR
Ariel Reinsurance Bermuda Ltd for and on Behalf of Ariel Syndicate 1910 (ARE)		A-			A+
Aspen Bermuda Limited		A			A
AXIS Specialty Limited		A+			A+
BGS Services (Bermuda) Limited/Lloyds Syndicate 2987		A			A+
DaVinci Reinsurance Ltd		A			AA-
Endurance Specialty Insurance Limited		A			A
Hamilton Re, Limited		A-			NR
Hiscox Insurance Company (Bermuda) Limited		A			NR
Partner Reinsurance Company Limited		A+			A+
Platinum Underwriters Bermuda Limited		A			A-
Renaissance Reinsurance, Limited		A+			AA-
Securis Re III Limited Bermuda		NR	*	**	NR
Securis Re IV Limited Bermuda		NR	*	**	NR
Tokio Millennium Re AG, Bermuda Branch		A++			AA-
XL RE Limited		A			A+
UNITED KINGDOM
A.F. Beazley Syndicate No. 623 (AFB)		A			A+
A.F. Beazley Syndicate No. 2623 (AFB)		A			A+
Amlin Syndicate No. 2001 (AML)		A			A+
Antares Syndicate No. 1274 (AUL)		A			A+
Ariel Syndicate No. 1910 (ARE)		A			A+
ARK Syndicate No. 4020 (ARK)		A			A+
Ascot Syndicate No. 1414 (ASC)		A			A+
Barbican Syndication No. 1955 (BAR)		A			A+
Canopius Syndicate No. 958 (CNP)		A			A+
Canopius Syndicate No. 4444 (CNP)		A			A+
Cathederal Syndicate No. 2010 (MMX)		A			A+
Chaucer Syndicate No. 1084 (CSL)		A			A+
Dale Underwriting Syndicate No. 1729 (DUW)		A			A+
Faraday Syndicate No. 435 (FDY)		A			A+
Hiscox Syndicate No. 0033 (HIS)		A			A+
Kiln Syndicate No. 510 (KLN)		A			A+
Liberty Syndicates Services Limited, Paris for and on behalf of Lloyd's Syndicate No. 4472 (LIB)		A			A+
MAP Underwriting Syndicate No. 2791 (MAP)		A			A+
MAP Underwriting Syndicate No. 2791 (Parallel) (MAP)		A			A+
Novae Syndicate No. 2007 (NVA)		A			A+
S.J.O, Catlin & Others No. 2003 (SJC)		A			A+
EUROPE
Amlin AG, Switzerland, Bermuda Branch		A			A
Hannover Rueck SE (obo Pillar Capital Management)		NR	*	**	NR
Lansforsakringar Sak Forsakringsaktiebolag (publ)		NR			A
SCOR Global P&C SE, Paris, Zurich Branch		A			A
ASIA
China Reinsurance (Group) Corporation		A			NR
Qatar Reinsurance Company LLC		A			A
* Reinstatement Premium Protection Program Participants
** Participant will fund a trust agreement for their exposure with cash and U.S. Government obligations of American institutions at fair market value.

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Reinsurance Agreements (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) Structure Program	Dec. 31, 2014 USD ($)
Reinsurance Agreements [Abstract]
Number of types of reinsurance structures | Structure	3
Liability for Catastrophe Claims [Line Items]
Increase reinsurance premiums for total insured value	$ 0
Trust agreement for loss exposure	$ 4,000	$ 4,900
Number of quota share treaties | Program	2
Reinsurance premiums	$ 95,470	$ 54,502
Florida [Member]
Liability for Catastrophe Claims [Line Items]
Aggregate catastrophic loss coverage	$ 200,000
Percentage of quota share reinsurance treaty	30.00%
Number of years quota share reinsurance treaty	2 years
Aggregate catastrophic loss coverage of Florida	$ 200,000
Aggregate catastrophe coverage per year with maximum single event coverage	100,000
Aggregate cost of quota share projected	6,700
2014-2015 Hurricane Season [Member]
Liability for Catastrophe Claims [Line Items]
Aggregate catastrophic loss coverage	1,490,000
Maximum single event coverage	1,010,000
Aggregate catastrophic loss coverage of Florida	1,490,000
Reinsurance premium payable	40,200
Reinsurance premiums	117,000
2014-2015 Hurricane Season [Member] | Florida [Member]
Liability for Catastrophe Claims [Line Items]
Aggregate catastrophic loss coverage	1,460,000
Amount retained per loss	$ 11,200
Percentage of Florida coverage to total coverage	98.50%
Aggregate catastrophic loss coverage of Florida	$ 1,460,000
Coverage afforded by FHCF	$ 546,300
Percentage of FHCF coverage to total coverage	37.40%
2014-2015 Hurricane Season [Member] | Louisiana [Member]
Liability for Catastrophe Claims [Line Items]
Amount retained per loss	$ 3,000
2015-2016 Hurricane Season [Member]
Liability for Catastrophe Claims [Line Items]
Aggregate catastrophic loss coverage	1,820,000
Maximum single event coverage	$ 1,260,000
Percentage of loss covered by reinstatement treaty	50.00%
Aggregate catastrophic loss coverage of Florida	$ 1,820,000
Reinsurance premium payable	44,830
Reinsurance premiums	149,370
2015-2016 Hurricane Season [Member] | Maximum [Member]
Liability for Catastrophe Claims [Line Items]
Covered losses	100,000
2015-2016 Hurricane Season [Member] | Minimum [Member]
Liability for Catastrophe Claims [Line Items]
Covered losses	15,000
2015-2016 Hurricane Season [Member] | Quota Share One [Member]
Liability for Catastrophe Claims [Line Items]
Aggregate catastrophic loss coverage	$ 200,000
Percentage of quota share reinsurance treaty	30.00%
Number of years quota share reinsurance treaty	2 years
Aggregate catastrophic loss coverage of Florida	$ 200,000
Aggregate catastrophe coverage per year with maximum single event coverage	100,000
Aggregate cost of quota share projected	8,500
2015-2016 Hurricane Season [Member] | Quota Share Two [Member]
Liability for Catastrophe Claims [Line Items]
Aggregate catastrophic loss coverage	$ 200,000
Percentage of quota share reinsurance treaty	10.00%
Number of years quota share reinsurance treaty	2 years
Aggregate catastrophic loss coverage of Florida	$ 200,000
Aggregate catastrophe coverage per year with maximum single event coverage	100,000
Aggregate cost of quota share projected	2,800
2015-2016 Hurricane Season [Member] | Florida [Member]
Liability for Catastrophe Claims [Line Items]
Aggregate catastrophic loss coverage	1,740,000
Amount retained per loss	$ 12,900
Percentage of covered loss retained	10.00%
Covered loss retained	$ 2,500
Excess of covered loss retained	21,500
Maximum retention of losses incurred	$ 15,400
Percentage of Florida coverage to total coverage	95.50%
Combined percentage of quota share reinstatement treaty	40.00%
Covered losses for the Company's in-force new and renewal homeowners' insurance program	$ 100,000
Aggregate catastrophic loss coverage of Florida	1,740,000
Coverage afforded by FHCF	$ 581,200
Percentage of FHCF coverage to total coverage	33.40%
2015-2016 Hurricane Season [Member] | Louisiana, Alabama and South Carolina [Member]
Liability for Catastrophe Claims [Line Items]
Amount retained per loss	$ 5,000

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Investments, Unrealized Investment Losses by Investment Class (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Continuous unrealized loss position [Abstract]
Debt/Equity securities, Unrealized (Losses)	$ 2,996	$ 1,028
Debt/Equity securities, Less than 12 months	2,917	863
Debt/Equity securities, 12 months or longer	79	165
Debt Securities [Member]
Continuous unrealized loss position [Abstract]
Debt/Equity securities, Unrealized (Losses)	1,086	531
Debt/Equity securities, Less than 12 months	1,036	402
Debt/Equity securities, 12 months or longer	50	129
United States Government Obligations and Authorities [Member]
Continuous unrealized loss position [Abstract]
Debt/Equity securities, Unrealized (Losses)	115	75
Debt/Equity securities, Less than 12 months	95	22
Debt/Equity securities, 12 months or longer	20	53
Obligations of States and Political Subdivisions [Member]
Continuous unrealized loss position [Abstract]
Debt/Equity securities, Unrealized (Losses)	42	70
Debt/Equity securities, Less than 12 months	42	66
Debt/Equity securities, 12 months or longer	0	4
Corporate [Member]
Continuous unrealized loss position [Abstract]
Debt/Equity securities, Unrealized (Losses)	770	332
Debt/Equity securities, Less than 12 months	740	260
Debt/Equity securities, 12 months or longer	30	72
International [Member]
Continuous unrealized loss position [Abstract]
Debt/Equity securities, Unrealized (Losses)	159	54
Debt/Equity securities, Less than 12 months	159	54
Debt/Equity securities, 12 months or longer	0	0
Common Stock [Member]
Continuous unrealized loss position [Abstract]
Debt/Equity securities, Unrealized (Losses)	1,910	497
Debt/Equity securities, Less than 12 months	1,881	461
Debt/Equity securities, 12 months or longer	$ 29	$ 36

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Stockholders' Equity (Details) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Stockholders' Equity [Abstract]
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, outstanding (in shares)	13,773,130	13,632,414

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Summary of Significant Accounting Policies and Practices

9 Months Ended

Sep. 30, 2015

Summary of Significant Accounting Policies and Practices [Abstract]

Summary of Significant Accounting Policies and Practices

(3) Summary of Significant Accounting Policies and Practices

(A)  Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with management’s evaluation of the determination of (i) liability for unpaid losses and LAE, (ii) the amount and recoverability of amortization of DPAC, and (iii) estimates for our reserves with respect to finance contracts, premiums receivable and deferred income taxes. Various assumptions and other factors underlie the determination of these significant estimates, which are described in greater detail in Footnote 2 of the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2014, which we included in the Company’s Annual Report on Form 10-K which was filed with the SEC on March 16, 2015.

We believe that there were no significant changes in those critical accounting policies and estimates during the nine months ended September 30, 2015. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Form 10-Q with the Audit Committee of our Board of Directors.

The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, and in the case of unpaid losses and LAE, an actuarial valuation. Management regularly reevaluates these significant factors and makes adjustments where facts and circumstances dictate. In selecting the best estimate, we utilize various actuarial methodologies. Each of these methodologies is designed to forecast the number of claims we will be called upon to pay and the amounts we will pay on average to settle those claims. In arriving at our best estimate, our actuaries consider the likely predictive value of the various loss development methodologies employed in light of underwriting practices, premium rate changes and claim settlement practices that may have occurred, and weight the credibility of each methodology. Our actuarial methodologies take into account various factors, including, but not limited to, paid losses, liability estimates for reported losses, paid allocated LAE, salvage and other recoveries received, reported claim counts, open claim counts and counts for claims closed with and without payment for loss.

We are required to review the contractual terms of all our reinsurance purchases to ensure compliance with U.S. GAAP, which establishes the conditions required for a contract with a reinsurer to be accounted for as reinsurance and prescribes accounting and reporting standards for those contracts. Contracts that do not result in the reasonable possibility that the reinsurer may realize a significant loss from the insurance risk assumed generally do not meet the conditions for reinsurance accounting and must be accounted for as deposits. The guidance also requires us to disclose the nature, purpose and effect of reinsurance transactions, including the premium amounts associated with reinsurance assumed and ceded. It also requires disclosure of concentrations of credit risk associated with reinsurance receivables and prepaid reinsurance premiums.

Investments classified as held-to-maturity include debt securities wherein the Company’s intent and ability are to hold the investment until maturity and are carried at amortized cost without consideration to unrealized gains or losses. Investments classified as trading securities include debt and equity securities bought and held primarily for sale in the near term and are carried at fair value with unrealized holding gains and losses included in current period operations. Investments classified as available-for-sale include debt and equity securities that are not classified as held-to-maturity or as trading security investments and are carried at fair value with unrealized holding gains and losses excluded from earnings and reported as a separate component of shareholders’ equity, namely “Other Comprehensive Income”.

A decline in the fair value of an available-for-sale security below cost that is deemed other-than-temporary results in a charge to income, resulting in the establishment of a new cost basis for the security. Premiums and discounts are amortized or accreted, respectively, over the life of the related debt security as an adjustment to yield using a method that approximates the effective interest method. Dividends and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific-identification method for determining the cost of securities sold.

Financial instruments, which potentially expose us to concentrations of credit risk, consist primarily of investments, premiums receivable, amounts due from reinsurers on paid and unpaid losses and finance contracts. We have not experienced significant losses related to premiums receivable from individual policyholders or groups of policyholders in a particular industry or geographic area. We believe no credit risk beyond the amounts provided for collection losses is inherent in our premiums receivable or finance contracts. In order to reduce credit risk for amounts due from reinsurers, we seek to do business with financially sound reinsurance companies and regularly review the financial strength of all reinsurers used. Additionally, our credit risk in connection with our reinsurers is frequently mitigated by the establishment of irrevocable clean letters of credit in favor of FNIC.

The fair value of our investments is estimated based on prices published by financial services or quotations received from securities dealers and is reflective of the interest rate environment that existed as of the close of business on September 30, 2015 and December 31, 2014. Changes in interest rates subsequent to September 30, 2015 and December 31, 2014 may affect the fair value of our investments.

The carrying amounts for the following financial instrument categories approximate their fair values at September 30, 2015 and December 31, 2014 because of their short-term nature: cash and short-term investments, premiums receivable, finance contracts, due from reinsurers, revolving credit outstanding, claims payments outstanding, accounts payable and accrued expenses.

(B) Impact of New Accounting Pronouncements

In May 2015, the FASB issued Accounting Standard Update (“ASU”) 2015-09, Financial Services – Insurance (Topic 944): Disclosures about Short-Duration-Contracts. The amendments in this ASU apply to all insurance entities that issue short-duration contracts as defined in Topic 944, Financial Services—Insurance. The amendments require insurance entities to disclose for annual reporting periods the following information about the liability for unpaid claims and claim adjustment expenses: (1) Incurred and paid claims development information by accident year, on a net basis after risk mitigation through reinsurance, for the number of years for which claims incurred typically remain outstanding (that need not exceed 10 years, including the most recent reporting period presented in the statement of financial position). Each period presented in the disclosure about claims development that precedes the current reporting period is considered to be supplementary information. (2) A reconciliation of incurred and paid claims development information to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, with separate disclosure of reinsurance recoverable on unpaid claims for each period presented in the statement of financial position. (3) For each accident year presented of incurred claims development information, the total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses, accompanied by a description of reserving methodologies (as well as any changes to those methodologies). (4) For each accident year presented of incurred claims development information, quantitative information about claim frequency (unless it is impracticable to do so) accompanied by a qualitative description of methodologies used for determining claim frequency information (as well as any changes to these methodologies). (5) For all claims except health insurance claims, the average annual percentage payout of incurred claims by age (that is, history of claims duration) for the same number of accident years as presented in (3) and (4) above. The amendments in this ASU are effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. Because the new guidance does not affect the existing recognition or measurement guidance, the adoption is not expected to have any effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and significantly changes the consolidation analysis required. The amendments in this ASU affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (i) modify the evaluation of whether limited partnership and similar legal entities are VIEs ,(ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (iv) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and, earlier adoption is permitted. The adoption of the amendments in this ASU will not have a material impact on our financial position, results of operations or cash flows.

Other recent accounting pronouncements issued by FASB, the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

(C) Stock Options

Pursuant to FASB issued guidance, compensation cost recognized during the nine months ended September 30, 2015 includes compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the guidance.

(D) Earnings per Share

Basic earnings per share (“Basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period presented. Diluted earnings per share (“Diluted EPS”) is computed by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period presented.

(E) Adjustments

In conjunction with our third quarter 2015 analysis of actual experience to date under the July 1, 2014 quota share reinsurance contract, we re-evaluated the accounting treatment for quota share reinsurance contracts with retrospective rating provisions.  As a result of this re-evaluation, we have concluded reinsurance contracts which have retrospective rating provisions should be accounted for under Accounting Standards Codification 944, Financial Services — Insurance (“ASC 944”), where amounts due to (from) the assuming companies are accrued based on estimated contract experience to date as though the contracts were terminated.  The adjustment to the accounting treatment related to reinsurance contracts with retrospective rated provisions resulted in the following changes:

(a) We eliminated recording of future estimated quota share profits in one line item, “Quota Share Profit Sharing,” in the financial statements.

(b) Amounts due to (from) the assuming companies have been accrued based on actual contract experience to date as though the contracts were terminated.  These accruals impacted the following income statement line items: gross ceded premiums, loss and loss adjustment expenses, and deferred policy acquisition costs.

The adjustments to our accounting for the July 1, 2014 quota share reinsurance treaty, inclusive of other adjustments, are not material in any prior quarter or annual period based on an analysis of quantitative and qualitative factors in accordance with SEC Guidance.

As a result, we recorded these adjustments during the third quarter of 2015.  These adjustments increased net income by $2.2 million for the three and nine month periods ended on September 30, 2015.

Additionally, the quota share reinsurance accounting adjustments impacted the following income statement line items for the three and nine month periods ended on September 30, 2015:

· Gross ceded premiums decreased by $10.9 million,

· Loss and loss adjustment expenses increased by $4.5 million, and

· Deferred acquisition costs increased by $1.5 million.

Finally, the quota share reinsurance accounting adjustments impacted the following balance sheet line items for the three and nine months periods ended on September 30, 2015:

· Prepaid reinsurance premiums increased by $10.9 million,

· Reinsurance recoverable, net decreased by $4.5 million, and

· Deferred policy acquisition costs decreased by $1.5 million.

· The $14 million balance previously reported under Contingent quota-share profit sharing has been reclassed to the prepaid reinsurance premiums line item

· The $7 million balance previously reported under Deferred quota-share profit sharing has been reclassed to the reinsurance recoverable, net line item

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Unpaid losses and LAE (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Unpaid losses and LAE [Abstract]
Balance, beginning of period	$ 78,330	$ 61,016
Less reinsurance recoverables	(12,534)	(2,742)
Net balance, beginning of period	65,796	58,274
Incurred related to [Abstract]
Current year	73,895	79,932
Prior years	1,615	1,104
Total incurred	75,510	81,036
Paid related to [Abstract]
Current year	30,739	42,391
Prior years	27,243	31,123
Total paid	57,982	73,514
Net balance, end of period	83,324	65,796
Plus reinsurance recoverables	8,349	12,534
Balance, end of period	$ 91,673	$ 78,330

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Organization and Business (Details)	2 Months Ended			3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Jul. 31, 2015 USD ($)	Jun. 09, 2015 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) Agent Carrier	Sep. 30, 2014 USD ($)
Business Organization [Line Item]
Number of independent agents | Agent						3,900
Number of agents that actively sell and service the entity's products | Agent						2,500
Ratio of homeowners' premiums underwritten to total premiums underwritten				91.60%	90.50%	92.30%	91.20%
Ratio of commercial general liability premiums underwritten to total premiums underwritten				2.60%	3.40%	3.00%	3.40%
Ratio of federal flood premiums underwritten to total premiums underwritten				3.80%	2.50%	2.90%	2.20%
Ratio of automobile insurance premiums underwritten to total premiums underwritten				2.00%	3.60%	1.80%	3.20%
Portion of homeowners' gross premium written produced under "ISA"				$ 28,600,000	$ 19,000,000	$ 75,700,000	$ 49,400,000
Percentage of homeowners' gross premium written produced under "ISA"				24.10%	22.80%	22.20%	19.30%
Homeowners' gross premiums written				$ 118,900,000	$ 83,300,000	$ 340,200,000	$ 255,900,000
Portion of increased homeowners' gross premium written produced under "ISA"				$ 9,600,000		$ 26,300,000
Percentage of increased homeowners' gross premium written produced under "ISA"				27.00%		31.20%
Increased homeowners' gross premiums written				$ 35,600,000		$ 84,300,000
Original percentage commission fee from its affiliate				4.00%
Minimum [Member]
Business Organization [Line Item]
Number of carriers the entity provides insurance through | Carrier						100
Federated National Underwriters, Inc. [Member] | Minimum [Member]
Business Organization [Line Item]
Fees earned per policy				$ 25
Federated National Underwriters, Inc. [Member] | Maximum [Member]
Business Organization [Line Item]
Fees earned per policy				55
Florida [Member]
Product Information [Line Items]
Weekly homeowners' gross premiums written	$ 3,300,000	$ 4,900,000	$ 3,300,000
Period for average weekly new premium written after discontinuing use of underwriting analytics		49 days
Increase in average weekly new premium written		48.00%
Monarch Delaware Holdings LLC [Member]
Business Organization [Line Item]
Capital contribution for voting interests	$ 14,000,000			$ 14,000,000		$ 14,000,000
Ownership interest in Monarch Parent's equity	42.40%			42.40%		42.40%
Voting interest held in Monarch Parent's equity	50.00%			50.00%		50.00%
Monarch Delaware Holdings LLC [Member] | C.A. Bancorp Inc. [Member]
Business Organization [Line Item]
Capital contribution for voting interests	$ 14,000,000			$ 14,000,000		$ 14,000,000
Ownership interest in Monarch Parent's equity	42.40%			42.40%		42.40%
Voting interest held in Monarch Parent's equity	50.00%			50.00%		50.00%
Monarch Delaware Holdings LLC [Member] | Transatlantic Reinsurance Company [Member]
Business Organization [Line Item]
Capital contribution for voting interests	$ 5,000,000			$ 5,000,000		$ 5,000,000
Ownership interest in Monarch Parent's equity	15.20%			15.20%		15.20%
Monarch Delaware Holdings LLC [Member] | Transatlantic Reinsurance Company [Member] | Senior Debt [Member]
Business Organization [Line Item]
Long-term debt	$ 5,000,000			$ 5,000,000		$ 5,000,000
Maturity period of debt						6 years
Interest rate percentage	6.00%			6.00%		6.00%
Monarch Delaware Holdings LLC [Member] | Federated National Underwriters, Inc. [Member]
Business Organization [Line Item]
Percentage of written annual premium payable to agents for managing general agent services	4.00%			4.00%		4.00%
Percentage of earned annual premium payable for claims administration services	3.60%			3.60%		3.60%
Administrative fee per-policy underwritten	$ 25			$ 25		$ 25
Fire [Member] | Florida [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Fire [Member] | Alabama [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Licensed, but no current operations
Allied Lines [Member] | Florida [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Allied Lines [Member] | Alabama [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Licensed, but no current operations
Private Passenger Automobile [Member] | Florida [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Private Passenger Automobile [Member] | Alabama [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Licensed, but no current operations
Private Passenger Automobile [Member] | Georgia [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Private Passenger Automobile [Member] | Texas [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Homeowners' Multiperil [Member] | Florida [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Homeowners' Multiperil [Member] | Alabama [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Homeowners' Multiperil [Member] | Louisiana [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Homeowners' Multiperil [Member] | South Carolina [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for less than one year
Homeowners' Multiperil [Member] | Texas [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for less than one year
Commercial General Liability [Member] | Florida [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Ongoing operations for more than one year
Commercial General Liability [Member] | Alabama [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Working with state to discontinue line of authority
Commercial General Liability [Member] | Georgia [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Working with state to discontinue line of authority
Commercial General Liability [Member] | Louisiana [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Working with state to discontinue line of authority
Commercial General Liability [Member] | Texas [Member]
Operations by State and Line of Business [Abstract]
Status of operations						Working with state to discontinue line of authority

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Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2015

Earnings per Share [Abstract]

Schedule of Computations of Basic and Diluted Net Income Per Common Share

The following table illustrates our computations of basic and diluted net income per common share.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Figures)
Net income attributable to Federated National Holding Company common stockholders	$	10,593	$	7,227	$	31,611	$	27,204
Weighted average number of common shares outstanding - basic		13,749		12,625		13,710		11,563
Net income per share - basic	$	0.77	$	0.57	$	2.31	$	2.35
Weighted average number of common shares outstanding - basic		13,749		12,625		13,710		11,563
Dilutive effect of stock compensation plans		228		332		268		371
Weighted average number of common shares outstanding - diluted		13,977		12,957		13,978		11,934
Net income per share - diluted	$	0.76	$	0.56	$	2.26	$	2.28

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Stock Compensation Plans (Details) - $ / shares								9 Months Ended	12 Months Ended
	May. 05, 2015	Mar. 10, 2015	Dec. 09, 2014	Sep. 09, 2014	Mar. 04, 2014	Aug. 05, 2013	Mar. 04, 2013	Sep. 30, 2015	Dec. 31, 2014	Dec. 31, 2013
1998 Stock Option Plan [Member] | Stock Option [Member]
Stock Option Plans, Number of Shares [Abstract]
Outstanding, beginning of period (in shares)								0	3,000	78,500
Granted (in shares)								0	0	0
Exercised (in shares)								0	(3,000)	(500)
Cancelled (in shares)								0	0	(75,000)
Outstanding, end of period (in shares)								0	0	3,000
Stock Options, Weighted Average Option Exercise Price [Abstract]
Outstanding, beginning of period (in dollars per share)								$ 8.67	$ 8.67	$ 12.73
Granted (in dollars per share)								0	0	0
Exercised (in dollars per share)								0	8.67	8.67
Cancelled (in dollars per share)								0	0	12.92
Outstanding, end of period (in dollars per share)								$ 0	$ 8.67	$ 8.67
2002 Stock Option Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized to grant options to purchase (in shares)								1,800,000	1,800,000
Share-based payment award, expiration date								Apr. 30, 2012
Options exercisable outstanding (in shares)								185,150	219,285
Options Exercisable at [Abstract]
September 30, 2015 (in shares)								185,150	219,285
2002 Stock Option Plan [Member] | Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options exercisable outstanding (in shares)								184,150
Stock Option Plans, Number of Shares [Abstract]
Outstanding, beginning of period (in shares)								219,285	523,521	702,597
Granted (in shares)								0	0	0
Exercised (in shares)								(34,135)	(299,735)	(165,577)
Cancelled (in shares)								0	(4,501)	(13,499)
Outstanding, end of period (in shares)								185,150	219,285	523,521
Stock Options, Weighted Average Option Exercise Price [Abstract]
Outstanding, beginning of period (in dollars per share)								$ 3.79	$ 4.54	$ 5.17
Granted (in dollars per share)								0	0	0
Exercised (in dollars per share)								3.81	5.10	7.15
Cancelled (in dollars per share)								0	3.49	5.41
Outstanding, end of period (in dollars per share)								$ 3.79	$ 3.79	$ 4.54
Options Exercisable at [Abstract]
September 30, 2015 (in shares)								184,150
December 31, 2015 (in shares)								1,000
December 31, 2016 (in shares)								0
December 31, 2017 (in shares)								0
December 31, 2018 (in shares)								0
December 31, 2019 (in shares)								0
Thereafter (in shares)								0
Total options exercisable (in shares)								185,150
Options Weighted Average Option Exercise Price at [Abstract]
September 30, 2015 (in dollars per share)								$ 3.79
December 31, 2015 (in dollars per share)								3.79
December 31, 2016 (in dollars per share)								3.79
December 31, 2017 (in dollars per share)								3.79
December 31, 2018 (in dollars per share)								3.79
December 31, 2019 (in dollars per share)								3.79
Thereafter (in dollars per share)								$ 3.79
2012 Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized to grant options to purchase (in shares)								1,000,000
Share-based payment award, expiration date								Apr. 05, 2022
Other Than Stock Option Plans, Number of Shares [Abstract]
Granted (in shares)		66,140		130,000	88,648	150,000	100,000
2012 Stock Incentive Plan [Member] | Chief Executive Officer and President [Member]
Other Than Stock Option Plans, Number of Shares [Abstract]
Granted (in shares)	50,000	32,997	50,000	45,000	43,997	100,000	25,000
2012 Stock Incentive Plan [Member] | Chief Financial Officer [Member]
Other Than Stock Option Plans, Number of Shares [Abstract]
Granted (in shares)		9,551		15,000	16,341	50,000	15,000
2012 Stock Incentive Plan [Member] | Director [Member]
Other Than Stock Option Plans, Number of Shares [Abstract]
Granted (in shares)		6,252		50,000	15,710		20,000
2012 Stock Incentive Plan [Member] | Other Employees [Member]
Other Than Stock Option Plans, Number of Shares [Abstract]
Granted (in shares)		17,340		20,000	12,600		40,000
2012 Stock Incentive Plan [Member] | Stock Option [Member]
Other Than Stock Option Plans, Number of Shares [Abstract]
Outstanding, beginning of period (in shares)								447,801	249,500	0
Granted (in shares)								116,140	268,648	250,000
Exercised (in shares)								(135,134)	(68,988)	0
Cancelled (in shares)								0	(1,359)	(500)
Outstanding, end of period (in shares)								428,807	447,801	249,500
Other Than Stock Options, Fair Market Value at Grant [Abstract]
Outstanding, beginning of period (in dollars per share)								$ 5.54	$ 5.54	$ 0
Granted (in dollars per share)								26.81	5.54	5.54
Exercised (in dollars per share)								16.03	0	0
Cancelled (in dollars per share)								0	5.54	5.54
Outstanding, end of period (in dollars per share)								$ 14.57	$ 5.54	$ 5.54

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Summary of Significant Accounting Policies and Practices (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Summary of Significant Accounting Policies and Practices [Abstract]
Maximum number of years for which claims incurred			10 years
Change in Accounting Estimate [Line Items]
Increase in net income	$ 10,593	$ 7,227	$ 31,611	$ 27,204
Decrease in gross ceded premiums	119,985	129,298	231,046	179,137
Increase in loss and loss adjustment expenses	28,412	15,126	75,510	60,476
Increase in deferred acquisition costs			(88)	(5,728)
Increase in prepaid reinsurance premiums			40,967	31,610
Increase (decrease) in reinsurance recoverable			(4,186)	6,494
Decrease in deferred policy acquisition costs	6,788	$ 5,815	16,938	$ 23,095
Change in Accounting Method Accounted for as Change in Estimate [Member] | Quota Share Reinsurance Adjustments [Member]
Change in Accounting Estimate [Line Items]
Increase in net income	2,200		2,200
Decrease in gross ceded premiums	(10,900)		(10,900)
Increase in loss and loss adjustment expenses	4,500		4,500
Increase in deferred acquisition costs	1,500		1,500
Increase in prepaid reinsurance premiums	10,900		10,900
Increase (decrease) in reinsurance recoverable	(4,500)		(4,500)
Decrease in deferred policy acquisition costs	1,500		1,500
Contingent quota-share profit sharing reclassified to prepaid reinsurance premiums	14,000		14,000
Deferred quota-share profit sharing reclassified to reinsurance recoverable	$ 7,000		$ 7,000

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Commitments and Contingencies (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) Category	Dec. 31, 2014 USD ($)
Commitments and Contingencies [Abstract]
Number of major categories the entity commitments and contingencies are grouped into	3
Net deferred tax liability | $	$ 4,815	$ 1,341

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Basis of Presentation

9 Months Ended

Sep. 30, 2015

Basis of Presentation [Abstract]

Basis of Presentation

(2) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements for the Company and its majority-owned subsidiaries and its consolidated variable interest entity (“VIE”) have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s financial position as of September 30, 2015 and the results of operations and cash flows for the periods presented.

The results of operations for the interim periods presented are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2015. The accompanying unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2014 included in the Company’s Form 10-K, which was filed with the SEC on March 16, 2015.

In preparing the interim unaudited condensed consolidated financial statements, management was required to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the financial reporting date and throughout the periods being reported upon. Certain of the estimates result from judgments that can be subjective and complex and consequently actual results may differ from these estimates.

All significant intercompany balances and transactions have been eliminated.

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Variable Interest Entity (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Investments [Abstract]
Debt maturities, held to maturity, at amortized cost	$ 6,387	$ 7,417
Equity securities, available for sale, at fair value	38,086	39,247
Total investments	386,388	330,763
Cash and short term investments	76,161	40,157	$ 45,926	$ 41,446
Premiums receivable, net	34,928	27,275
Deferred policy acquisition costs	13,522	13,610
Other assets	10,973	7,231
Total assets	634,307	503,631
LIABILITIES AND SHAREHOLDERS' EQUITY [Abstract]
Unpaid losses and LAE	91,673	78,330		$ 61,016
Unearned premiums	250,397	192,424
Accounts payable and accrued expenses	16,403	10,924
Debt	5,000	0
Total liabilities	392,825	311,052
Shareholders' equity [Abstract]
Common stock, $0.01 par value. Issued and outstanding 100 shares	138	136
Additional paid-in capital	131,203	127,302
Accumulated other comprehensive income [Abstract]
Unrealized net gains on investments, available for sale	4,838	7,718
Total accumulated other comprehensive income	4,838	7,718
Retained earnings	87,188	57,423
Total shareholders' equity	241,482	192,579
Total liabilities and shareholders' equity	$ 634,307	$ 503,631
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued (in shares)	13,773,130	13,632,414
Common stock, shares outstanding (in shares)	13,773,130	13,632,414
Variable Interest Entity (VIE) [Member]
Investments [Abstract]
Debt maturities, held to maturity, at amortized cost	$ 21,877	$ 0
Equity securities, available for sale, at fair value	1,350	0
Total investments	23,227	0
Cash and short term investments	13,492	0
Premiums receivable, net	326	0
Deferred policy acquisition costs	168	0
Deferred income taxes, net	665	0
Other assets	178	0
Total assets	38,056	0
LIABILITIES AND SHAREHOLDERS' EQUITY [Abstract]
Unpaid losses and LAE	112	0
Unearned premiums	1,072	0
Income taxes payable	110	0
Accounts payable and accrued expenses	249	0
Debt	5,000	0
Total liabilities	6,543	0
Shareholders' equity [Abstract]
Common stock, $0.01 par value. Issued and outstanding 100 shares	0	0
Additional paid-in capital	32,413	0
Accumulated other comprehensive income [Abstract]
Unrealized net gains on investments, available for sale	(234)	0
Total accumulated other comprehensive income	(234)	0
Retained earnings	(666)	0
Total shareholders' equity	31,513	0
Total liabilities and shareholders' equity	$ 38,056	$ 0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued (in shares)	100	100
Common stock, shares outstanding (in shares)	100	100

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Investments, Net Realized and Unrealized Investment Gains (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Net realized and unrealized investment gains [Abstract]
Net realized gains	$ 1,126	$ 659	$ 3,743	$ 4,047
Net unrealized gains			7,736		$ 12,417
Debt Securities [Member]
Net realized and unrealized investment gains [Abstract]
Net realized gains	48	221	469	415
Net unrealized gains			3,255		3,078
Equity Securities [Member]
Net realized and unrealized investment gains [Abstract]
Net realized gains	$ 1,078	$ 438	3,274	$ 3,632
Net unrealized gains			$ 4,481		$ 9,339

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Investments
Debt maturities, available for sale, at fair value	$ 341,915	$ 284,099
Debt maturities, held to maturity, at amortized cost	6,387	7,417
Equity securities, available for sale, at fair value	38,086	39,247
Total investments	386,388	330,763
Cash and short term investments	76,161	40,157
Prepaid reinsurance premiums	95,470	54,502
Premiums receivable, net of allowance for credit losses of $312 and $148, respectively	34,928	27,275
Reinsurance recoverable, net	8,349	12,534
Deferred policy acquisition costs	13,522	13,610
Income taxes receivable	5,763	1,810
Property, plant and equipment, net	2,753	1,749
Other assets	10,973	7,231
Contingent quota-share profit sharing	0	14,000
Total assets	634,307	503,631
LIABILITIES AND SHAREHOLDERS' EQUITY
Unpaid losses and LAE	91,673	78,330
Unearned premiums	250,397	192,424
Debt	5,000	0
Premiums deposits and customer credit balances	11,265	7,381
Deferred income taxes, net	4,815	1,341
Claims payments outstanding	13,272	10,152
Accounts payable and accrued expenses	16,403	10,924
Deferred quota-share profit sharing	0	10,500
Total liabilities	392,825	311,052
Shareholders' equity:
Common stock, $0.01 par value. Authorized 25,000,000 shares; issued and outstanding 13,773,130 and 13,632,414, respectively	138	136
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; none issued or outstanding	0	0
Additional paid-in capital	131,203	127,302
Accumulated other comprehensive income
Unrealized net gains on investments, available for sale	4,838	7,718
Total accumulated other comprehensive income	4,838	7,718
Retained earnings	87,188	57,423
Total Federated National Holding Company equity	223,367	192,579
Non-controlling interest	18,115	0
Total shareholders' equity	241,482	192,579
Total liabilities and shareholders' equity	$ 634,307	$ 503,631

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Stock Compensation Plans, Summary Information about Stock Option Plans (Details) - 2002 Stock Option Plan [Member] - $2.45 - $4.40 [Member]	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Summary information about stock options outstanding [Abstract]
Range of exercise price, lower range limit (in dollars per share)	$ 2.45
Range of exercise price, upper range limit (in dollars per share)	$ 4.40
Options outstanding (in shares) | shares	185,150
Weighted average contractual periods	5 years 10 months 10 days
Weighted average exercise price (in dollars per share)	$ 3.79
Options exercisable (in shares) | shares	184,150

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flow from operating activities:
Income before non-controlling interest	$ 31,228	$ 27,204
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of investment premium or discount, net	3,795	2,909
Depreciation and amortization of property plant and equipment, net	495	334
Net realized investment gains	(3,743)	(4,047)
Non-cash compensation	2,903	72
Changes in operating assets and liabilities:
Premiums receivable, net	(7,653)	(5,698)
Prepaid reinsurance premiums	(40,967)	(31,610)
Reinsurance recoverable, net	4,186	(6,494)
Income taxes recoverable	(3,953)	(2,130)
Deferred income tax expense, net of other comprehensive income	5,277	2,741
Policy acquisition costs, net of amortization	88	5,728
Other assets	(3,742)	(1,941)
Contingent quota-share profit sharing	3,500	(1,750)
Unpaid losses and LAE	13,343	12,093
Unearned premiums	57,973	58,295
Cash received from other entitie's debt instrument	5,000	0
Premium deposits and customer credit balances	3,884	3,261
Income taxes payable	0	(2,379)
Claims payments outstanding	3,120	979
Accounts payable and accrued expenses	5,480	1,158
Net cash provided by operating activities	80,214	58,725
Cash flow used by investing activities:
Proceeds from sale of investment securities	134,918	65,869
Purchases of investment securities available for sale	(195,278)	(162,864)
Purchases of property and equipment	(1,500)	(1,074)
Net cash used by investing activities	(61,860)	(98,069)
Cash flow provided by financing activities:
Exercised stock options	130	1,433
Dividends paid	(1,847)	(1,038)
Non-controlling interest investment in affiliate	18,498	0
Issuance of common stock	0	43,116
Tax benefit related to non-cash compensation	869	313
Net cash provided by financing activities	17,650	43,824
Net increase in cash and short term investments	36,004	4,480
Cash and short term investments at beginning of period	40,157	41,446
Cash and short term investments at end of period	76,161	45,926
Cash paid during the period for:
Income taxes	15,662	18,185
Non-cash investing and finance activities:
Accrued dividends payable	$ 712	$ 350

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Investments, Realized Gains (Losses) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Realized gains (losses) [Abstract]
Total realized gains	$ 2,073	$ 694	$ 5,162	$ 4,546
Fair Value at Sale of securities with realized gains	26,069	18,055	81,854	51,252
Total realized losses	(947)	(35)	(1,419)	(499)
Fair Value at Sale of securities with realized losses	13,050	1,745	43,885	9,972
Net realized gains (losses) on investments	1,126	659	3,743	4,047
Fair Value of Investments at Sale	39,119	19,800	125,739	61,224
Debt Securities [Member]
Realized gains (losses) [Abstract]
Total realized gains	226	241	973	533
Fair Value at Sale of securities with realized gains	21,843	16,413	71,869	38,657
Total realized losses	(178)	(20)	(504)	(118)
Fair Value at Sale of securities with realized losses	9,744	1,627	39,926	8,333
Equity Securities [Member]
Realized gains (losses) [Abstract]
Total realized gains	1,847	453	4,189	4,013
Fair Value at Sale of securities with realized gains	4,226	1,642	9,985	12,595
Total realized losses	(769)	(15)	(915)	(381)
Fair Value at Sale of securities with realized losses	$ 3,306	$ 118	$ 3,959	$ 1,639

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Variable Interest Entity (Tables)

9 Months Ended

Sep. 30, 2015

Variable Interest Entity [Abstract]

Carrying Amount of VIE Consolidated Assets and Liabilities

The carrying amount of our VIE consolidated assets and liabilities are as follows.

	September 30, 2015			December 31, 2014
ASSETS	(Dollars in Thousands)
Investments
Debt maturities, held to maturity, at amortized cost	$	21,877		$	-
Equity securities, available for sale, at fair value		1,350			-
Total investments		23,227			-
Cash and short term investments		13,492			-
Premiums receivable, net		326			-
Deferred policy acquisition costs		168			-
Deferred income taxes, net		665			-
Other assets		178			-
Total assets	$	38,056		$	-
LIABILITIES AND SHAREHOLDERS' EQUITY
Unpaid losses and LAE	$	112		$	-
Unearned premiums		1,072			-
Income taxes payable		110			-
Accounts payable and accrued expenses		249			-
Debt		5,000			-
Total liabilities	$	6,543		$	-
Shareholders' equity:
Common stock, $0.01 par value. Issued and outstanding 100 shares		-			-
Additional paid-in capital		32,413			-
Accumulated other comprehensive income
Unrealized net gains on investments, available for sale		(234	)		-
Total accumulated other comprehensive income		(234	)		-
Retained earnings		(666	)		-
Total shareholders' equity		31,513			-
Total liabilities and shareholders' equity	$	38,056		$	-

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Investments, Amortized Cost, Estimated Fair Value and Gross Unrealized Gains and Losses of Debt and Equity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Amortized cost	$ 338,660	$ 281,021
Gross unrealized gains	4,341	3,609
Gross unrealized losses	1,086	531
Estimated fair value	341,915	284,099
Available-for-sale Equity Securities, Amortized Cost Basis [Abstract]
Amortized cost	33,605	29,908
Gross unrealized gains	6,391	9,836
Gross unrealized losses	1,910	497
Estimated fair value	38,086	39,247
Held-to-maturity Securities [Abstract]
Amortized cost	6,387	7,417
Gross unrealized gains	76	73
Gross unrealized losses	190	231
Estimated fair value	6,273	7,259
United States Government Obligations and Authorities [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Amortized cost	64,876	61,376
Gross unrealized gains	1,233	1,022
Gross unrealized losses	115	75
Estimated fair value	65,994	62,323
Held-to-maturity Securities [Abstract]
Amortized cost	4,221	4,490
Obligations of States and Political Subdivisions [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Amortized cost	107,211	90,728
Gross unrealized gains	1,428	956
Gross unrealized losses	42	70
Estimated fair value	108,597	91,614
Corporate [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Amortized cost	154,469	117,778
Gross unrealized gains	1,625	1,578
Gross unrealized losses	770	332
Estimated fair value	155,324	119,024
Held-to-maturity Securities [Abstract]
Amortized cost	2,101	2,681
International [Member]
Available-for-sale Debt Securities, Amortized Cost Basis [Abstract]
Amortized cost	12,104	11,139
Gross unrealized gains	55	53
Gross unrealized losses	159	54
Estimated fair value	12,000	11,138
Held-to-maturity Securities [Abstract]
Amortized cost	65	246
United States Government Obligations and Authorities [Member]
Held-to-maturity Securities [Abstract]
Amortized cost	4,221	4,490
Gross unrealized gains	51	41
Gross unrealized losses	184	225
Estimated fair value	4,088	4,306
Corporate [Member]
Held-to-maturity Securities [Abstract]
Amortized cost	2,101	2,681
Gross unrealized gains	25	31
Gross unrealized losses	6	5
Estimated fair value	2,120	2,707
International [Member]
Held-to-maturity Securities [Abstract]
Amortized cost	65	246
Gross unrealized gains	0	1
Gross unrealized losses	0	1
Estimated fair value	$ 65	$ 246

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Fair Value Disclosure (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosure [Abstract]

Assets Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis as of September 30, 2015, presented in accordance with this guidance, are as follows.

	As of September 30, 2015
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	40,833	$	25,161	$	-	$	65,994
Obligations of states and political subdivisions		-		108,597		-		108,597
Corporate		-		155,324		-		155,324
International		-		12,000		-		12,000
		40,833		301,082		-		341,915
Equity securities:
Common stocks		38,086		-		-		38,086
		38,086		-		-		38,086
Total debt and equity securities	$	78,919	$	301,082	$	-	$	380,001

Assets measured at fair value on a recurring basis as of December 31, 2014, presented in accordance with this guidance, are as follows.

	As of December 31, 2014
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	46,002	$	16,321	$	-	$	62,323
Obligations of states and political subdivisions		-		91,614		-		91,614
Corporate		-		119,024		-		119,024
International		-		11,138		-		11,138
		46,002		238,097		-		284,099
Equity securities:
Common stocks		39,247		-		-		39,247
		39,247		-		-		39,247
Total debt and equity securities	$	85,249	$	238,097	$	-	$	323,346

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Organization and Business

9 Months Ended

Sep. 30, 2015

Organization and Business [Abstract]

Organization and Business

(1) Organization and Business

In this Quarterly Report on Form 10-Q, “FNHC” and the terms “Company”, “we”, “us” and “our” refer to Federated National Holding Company and its subsidiaries, unless the context indicates otherwise.

FNHC is an insurance holding company that controls substantially all steps in the insurance underwriting, distribution and claims processes through our subsidiaries and our contractual relationships with our independent agents and general agents.

We are authorized to underwrite, and/or place through our wholly owned subsidiaries, homeowners’ multi-peril (“homeowners”), commercial general liability, federal flood, personal auto and various other lines of insurance in Florida and various other states. We market and distribute our own and third-party insurers’ products and our other services through a network of independent agents.

Our wholly owned insurance subsidiary is Federated National Insurance Company (“FNIC”) and is licensed as an admitted carrier in Florida. An admitted carrier is an insurance company that has received a license from the state department of insurance giving the company the authority to write specific lines of insurance in that state. These companies are also bound by rate and form regulations, and are strictly regulated to protect policyholders from a variety of illegal and unethical practices, including fraud. Admitted carriers are also required to financially contribute to the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due their policyholders. Through contractual relationships with a network of approximately 3,900 independent agents, of which approximately 2,500 actively sell and service our products. FNIC operates in several states authorized to write various lines of business.

The table below reflects the states and lines of business that FNIC operates in as of September 30, 2015.

	Fire		Allied Lines	Private Passenger Automobile	Homeowners' Multiperil	Commercial General Liability
Florida (Domestic)	a		a	a	a	a
Alabama	d		d	d	a	c
Georgia	-		-	a	-	c
Louisiana	-		-	-	a	c
South Carolina	-		-	-	b	-
Texas	-		-	a	b	c
	a	Ongoing operations for more than one year
	b	Ongoing operations for less than one year
	c	Working with state to discontinue line of authority
	d	Licensed, but no current operations

Non-Florida commercial general liability operations have not been material to the Company’s overall operations. Although FNIC has underwritten commercial general liability insurance in those states, the Company has decided to wind-down its commercial general liability operations in Alabama, Georgia, Louisiana and Texas, resulting in no new premium for this particular line of business. FNIC continues to underwrite commercial general liability operations in Florida.

FNIC is licensed as a non-admitted carrier in Missouri and Nevada and can underwrite commercial general liability insurance in these states. Currently, we do not have any operations in these states. A non-admitted carrier, sometimes referred to as an “excess and surplus lines” carrier, is permitted to do business in a state and, although it is strictly regulated to protect policyholders from a variety of illegal and unethical practices, including fraud, non-admitted carriers are subject to considerably less regulation with respect to policy rates and forms. Non-admitted carriers are not required to financially contribute to and benefit from the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due their policyholders.

The Company has entered into a joint venture to organize Monarch National Insurance Company (“MNIC”), which received its certificate of authority to write homeowners’ property and casualty insurance in Florida from the Florida Office of Insurance Regulation (the “Florida OIR”) on March 19, 2015.  The Company’s joint venture partners are a majority-owned limited partnership of Crosswinds Holdings Inc., f/k/a C.A. Bancorp Inc., a publicly traded Canadian private equity firm and asset manager (“Crosswinds”); and Transatlantic Reinsurance Company (“TransRe”).

The Company and Crosswinds have each invested $14.0 million in Monarch Delaware Holdings LLC (“Monarch Delaware”), the indirect parent company of MNIC, for a 42.4% interest in Monarch Delaware (each holding 50% of the voting interests in Monarch Delaware).  TransRe has invested $5.0 million for a 15.2% non-voting interest in Monarch Delaware and has advanced an additional $5.0 million in debt evidenced by a six-year promissory note bearing 6% annual interest payable by Monarch National Holding Company (“MNHC”), a wholly owned subsidiary of Monarch Delaware and the direct parent company of MNIC.

In connection with the organization of MNIC, the parties entered into a Managing General Agent and Claims Administration Agreement (the “Monarch MGA Agreement”) dated March 17, 2015, with FedNat Underwriters, Inc. (“FNU”), a wholly owned subsidiary of the Company, pursuant to which FNU provides underwriting, accounting, reinsurance placement and claims administration services to Monarch.  For its services under the Monarch MGA Agreement, FNU will receive 4% of MNIC’s total written annual premium, excluding acquisition expenses payable to agents, for FNU’s managing general agent services; 3.6% of MNIC’s total earned annual premium for FNU’s claims administration services; and a per-policy administrative fee of $25 for each policy underwritten for MNIC.  The Company will also receive an annual expense reimbursement for accounting and related services.

On October 20, 2015, the Florida OIR approved the filing made by FNIC to comply with the cease and desist order dated May 19, 2015 to enable the Florida OIR to review and approve FNIC’s analytic models.  On October 21, 2015, the Florida OIR rescinded the cease and desist order based upon its approval of the Company’s filing.

Pending approval of its underwriting analytics, FNIC used its current filed and approved rule-based underwriting to manage all new and existing business since early June 2015.  Prior to this change, the average weekly new premium written was approximately $3.3 million.  Since discontinuing the use of the underwriting analytics, the average weekly new premium written during the next seven weeks increased to $4.9 million, a 48% increase. Since that peak, the average written premium returned to an anticipated $3.3 million level.  The Company does not believe that the additional written premium will have a material impact on the Company's results of operations.

We previously entered into a Coexistence Agreement effective August 30, 2013 (the “Coexistence Agreement”) with Federated Mutual Insurance Company (“Federated Mutual”) pursuant to which, among other things, we may continue to use “Federated” until at least August 30, 2020, after which time we have agreed to either cease using “Federated” in commerce or otherwise adopt and use trade names that are not confusingly similar to Federated Mutual’s trademarks.  We continue to develop our brand under the “FedNat” name, which is the name by which agents generally know us.

As of September 30, 2014, we had satisfied all applicable conditions of the Consent Order we entered into in January 2011 (the “Consent Order”) with the Florida OIR in connection with the merger of FNIC into American Vehicle Insurance Company (“American Vehicle”). As of the date of this Report, the only operational restriction that remains in effect is a requirement to obtain Florida OIR approval prior to writing commercial multi-peril business or any new commercial property business, including condo associations, under any other line of business for which FNIC is authorized.

During the three months ended September 30, 2015, 91.6%, 2.6%, 3.8% and 2.0% of the premiums we underwrote were for homeowners', commercial general liability, automobile insurance, and federal flood, respectively. During the three months ended September 30, 2015, $28.6 million or 24.1% of the $118.9 million of the homeowners' premiums we underwrote were produced under Ivantage Select Agency, Inc. ("ISA"), an affiliate of Allstate Insurance Company, that grants Allstate agents the authority to offer certain FNIC products. The $9.6 million increased homeowners' premiums we underwrote under ISA represents 27.0% of the $35.6 million increased total homeowners' premiums we underwrote during the three months ended September 30, 2015. During the three months ended September 30, 2014, $19.0 million or 22.8% of the $83.3 million of the homeowners' premiums we underwrote were produced under ISA. This network of agents began writing for FNIC in March 2013. During the three months ended September 30, 2014, 90.5%, 3.4%, 2.5% and 3.6% of the premiums we underwrote were for homeowners', commercial general liability, federal flood, and automobile insurance, respectively.

During the nine months ended September 30, 2015, 92.3%, 3.0%, 2.9% and 1.8% of the premiums we underwrote were for homeowners’, commercial general liability, automobile insurance, and federal flood, respectively. During the nine months ended September 30, 2015, $75.7 million or 22.2% of the $340.2 million of the homeowners’ premiums we underwrote were produced under ISA. The $26.3 million increased homeowners’ premiums we underwrote under ISA represents 31.2% of the $84.3 million increased total homeowners’ premiums we underwrote during the nine months ended September 30, 2015. During the nine months ended September 30, 2014, $49.4 million or 19.3% of the $255.9 million of the homeowners’ premiums we underwrote were produced under ISA. This network of agents began writing for FNIC in March 2013. During the nine months ended September 30, 2014, 91.2%, 3.4%, 2.2% and 3.2% of the premiums we underwrote were for homeowners’, commercial general liability, federal flood, and automobile insurance, respectively.

Our business, results of operations and financial condition are subject to fluctuations due to a variety of factors. Abnormally high severity or frequency of claims in any period could have a material adverse effect on us. When our estimated liabilities for unpaid losses and loss adjustment expenses (“LAE”) are less than the actuarially determined amounts, we increase the expense in the current period. Conversely, when our estimated liabilities for unpaid losses and LAE are greater than the actuarially determined amounts, we decrease the expense in the current period.

We are focusing our marketing efforts on continuing to expand our distribution network while maintaining our commitment to long-term relationships. We market our products and services throughout Florida and in other states by establishing relationships with additional independent agents and general agents. There can be no assurance, however, that we will be able to obtain the required regulatory approvals to offer additional insurance products or expand into other states.

FNU, a wholly owned subsidiary of the Company, acts as FNIC’s and MNIC’s exclusive managing general agent and is also licensed as a managing general agent in the States of  Florida, Alabama, Georgia, Louisiana, Mississippi, Nevada, South Carolina and Texas. FNU is an appointed Lloyds of London coverholder to write homeowners’ multi peril insurance in Florida on an excess and surplus lines basis and has contracted with other unaffiliated insurance companies to sell personal umbrella coverage through FNU’s existing network of agents. Operations for Lloyds of London commenced in the third quarter of this year.

 FNU earns commissions and fees for providing policy administration, marketing, accounting and analytical services, and for participating in the negotiation of reinsurance contracts. FNU earns a per policy fee which ranges from $25 to $55 and a commission fee from its affiliate, FNIC and MNIC, which totaled 4% during the three months ended September 30, 2015. The Florida OIR periodically reviews our managing general agent’s fee structure to ensure that it is neither excessive nor inadequate to operate.

We internally process claims made by our insureds through our wholly owned claims adjusting company, Federated National Adjusting, Inc. (“FNA”). Our agents have no authority to settle claims or otherwise exercise control over the claims process. Furthermore, we believe that the retention of independent adjusters, in addition to the employment of salaried claims personnel, results in reduced ultimate loss payments, lower LAE and improved customer service for our claimants and policyholders. We also employ an in-house litigation management team to cost effectively manage claims-related litigation and to monitor our claims handling practices for efficiency and regulatory compliance.

During 2014, the Florida OIR approved an application to allow the claims administration operations of FNA to be assumed by FNU. Under the amended managing general agency agreement between FNU and FNIC, FNU will provide the same claims administration services. The combination of these services in FNU had no effect on consolidated net income.

Insure-Link, Inc. (“Insure-Link”) is our independent insurance agency.The insurance agency markets direct to the public to provide a variety of insurance products and services to individual clients, as well as business clients, by offering a full line of insurance products including, but not limited to,  homeowners’, flood, personal and commercial automobile, commercial general liability, workers’ compensation, boat and recreational vehicle and personal articles and jewelry insurance through their agency appointments with over one hundred different carrier relationships.

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
ASSETS
Premiums receivable, allowance for credit losses	$ 312	$ 148
Shareholders' equity:
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	13,773,130	13,632,414
Common stock, shares outstanding (in shares)	13,773,130	13,632,414
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0

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Earnings per Share

9 Months Ended

Sep. 30, 2015

Earnings per Share [Abstract]

Earnings per Share

(11) Earnings per Share

Basic EPS is computed by dividing net income attributable to Federated National Holding Company common stockholders by the weighted average number of common shares outstanding during the period presented. Diluted EPS is computed by dividing net income attributable to Federated National Holding Company common stockholders by the weighted average number of shares of common stock and common stock equivalents outstanding during the period presented. The following table illustrates our computations of basic and diluted net income per common share.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Figures)
Net income attributable to Federated National Holding Company common stockholders	$	10,593	$	7,227	$	31,611	$	27,204
Weighted average number of common shares outstanding - basic		13,749		12,625		13,710		11,563
Net income per share - basic	$	0.77	$	0.57	$	2.31	$	2.35
Weighted average number of common shares outstanding - basic		13,749		12,625		13,710		11,563
Dilutive effect of stock compensation plans		228		332		268		371
Weighted average number of common shares outstanding - diluted		13,977		12,957		13,978		11,934
Net income per share - diluted	$	0.76	$	0.56	$	2.26	$	2.28

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 03, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	FEDERATED NATIONAL HOLDING CO
Entity Central Index Key	0001069996
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,230,890
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015

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Stockholders' Equity

9 Months Ended

Sep. 30, 2015

Stockholders' Equity [Abstract]

Stockholders' Equity

(12) Stockholders’ Equity

Capital Stock

The Company’s authorized capital consists of 1,000,000 shares of preferred stock, par value $0.01 per share, and 25,000,000 shares of common stock, par value $0.01 per share. As of September 30, 2015, there were no preferred shares issued or outstanding and there were 13,773,130 shares of common stock outstanding.

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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue:
Gross premiums written	$ 129,840	$ 92,032	$ 368,561	$ 280,487
Gross premiums ceded	(119,985)	(129,298)	(231,046)	(179,137)
Net premiums written	9,855	(37,266)	137,515	101,350
Increase in prepaid reinsurance premiums	70,018	80,013	76,756	86,900
Increase in unearned premiums	(17,587)	(8,229)	(57,973)	(58,295)
Net change in prepaid reinsurance premiums and unearned premiums	52,431	71,784	18,783	28,605
Net premiums earned	62,286	34,518	156,298	129,955
Commission income	1,863	1,173	4,296	3,350
Finance revenue	425	392	1,322	1,051
Direct written policy fees	2,782	2,238	7,887	6,417
Net investment income	1,907	1,450	5,154	3,758
Net realized investment gains	1,126	659	3,743	4,047
Other income	2,210	970	4,548	1,540
Quota-share profit sharing, net	0	1,750	3,077	1,750
Total revenue	72,599	43,150	186,325	151,868
Expenses:
Losses and LAE	28,412	15,126	75,510	60,476
Operating and underwriting expenses	11,769	6,732	24,887	14,600
Salaries and wages	7,940	4,022	18,091	10,520
Policy acquisition costs	6,788	5,815	16,938	23,095
Interest expense	65	0	152	0
Total expenses	54,974	31,695	135,578	108,691
Income before provision for income tax expense	17,625	11,455	50,747	43,177
Provision for income tax expense	7,054	4,228	19,519	15,973
Income before non-controlling interest	10,571	7,227	31,228	27,204
Non-controlling interest	(22)	0	(383)	0
Net income attributable to Federated National Holding Company common stockholders	$ 10,593	$ 7,227	$ 31,611	$ 27,204
Net income per share - basic (in dollars per share)	$ 0.77	$ 0.57	$ 2.31	$ 2.35
Net income per share - diluted (in dollars per share)	$ 0.76	$ 0.56	$ 2.26	$ 2.28
Weighted average number of common shares outstanding - basic (in shares)	13,749,394	12,624,746	13,709,605	11,562,709
Weighted average number of common shares outstanding - diluted (in shares)	13,976,709	12,956,407	13,978,381	11,934,057
Dividends paid per share (in dollars per share)	$ 0.05	$ 0.03	$ 0.13	$ 0.09

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Investments

9 Months Ended

Sep. 30, 2015

Investments [Abstract]

Investments

(6) Investments

We account for our investment securities consistent with FASB issued guidance that requires our securities to be classified into one of three categories: (i) held-to-maturity, (ii) trading securities or (iii) available-for-sale.

Investments classified as held-to-maturity include debt securities wherein the Company’s intent and ability are to hold the investment until maturity and are carried at amortized cost without consideration to unrealized gains or losses. Investments classified as trading securities include debt and equity securities bought and held primarily for sale in the near term and are carried at fair value with unrealized holding gains and losses included in current period operations. Investments classified as available-for-sale include debt and equity securities that are not classified as held-to-maturity or as trading security investments and are carried at fair value with unrealized holding gains and losses excluded from earnings and reported as a separate component of shareholders’ equity, namely “Other Comprehensive Income”.

The following table summarizes, by type, our investments as of September 30, 2015 and December 31, 2014.

	September 30, 2015					December 31, 2014
	Carrying Amount		Percent of Total			Carrying Amount		Percent of Total
	(Dollars in Thousands)
Debt securities, at fair value:
United States government obligations and authorities	$	65,994		17.08	%	$	62,323		18.84	%
Obligations of states and political subdivisions		108,597		28.11	%		91,614		27.70	%
Corporate		155,324		40.20	%		119,024		35.99	%
International		12,000		3.11	%		11,138		3.37	%
		341,915		88.50	%		284,099		85.90	%
Debt securities, at amortized cost:
United States government obligations and authorities		4,221		1.09	%		4,490		1.36	%
Corporate		2,101		0.54	%		2,681		0.81	%
International		65		0.02	%		246		0.07	%
		6,387		1.65	%		7,417		2.24	%
Total debt securities		348,302		90.15	%		291,516		88.14	%
Equity securities, at fair value:		38,086		9.85	%		39,247		11.86	%
Total investments	$	386,388		100.00	%	$	330,763		100.00	%

The following table shows the realized gains (losses) for debt and equity securities for the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015					2014
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
	(Dollars in Thousands)
Debt securities	$	226		$	21,843	$	241		$	16,413
Equity securities		1,847			4,226		453			1,642
Total realized gains		2,073			26,069		694			18,055
Debt securities		(178	)		9,744		(20	)		1,627
Equity securities		(769	)		3,306		(15	)		118
Total realized losses		(947	)		13,050		(35	)		1,745
Net realized gains on investments	$	1,126		$	39,119	$	659		$	19,800

Net realized investment gains totaled $1.1 million for the three months endedSeptember 30, 2015, compared with $0.7 million during the three months ended September 30, 2014.From time to time, our asset managers, at their discretion, make periodic sales from the portfolio and during the three months ended September 30, 2015, the majority of the realized gains were from equity sales.   

Total investments increased $55.6 million, or 16.8%, to $386.4 million as of September 30, 2015, compared with $330.8 million as of December 31, 2014.

The debt and equity securities that are available-for-sale and carried at fair value represent 98% of total investments as of September 30, 2015 and December 31, 2014.

We did not hold any trading investment securities during the nine months ended September 30, 2015.

The Company’s policy for the valuation of temporarily impaired securities is to determine impairment based on the analysis of the following factors.

· rating downgrade or other credit event (eg., failure to pay interest when due);

· length of time and the extent to which the fair value has been less than amortized cost;

· financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology or discontinuance of a business segment;

· prospects for the issuer’s industry segment;

· intent and ability of the Company to retain the investment for a period of time sufficient to allow for anticipated recovery in market value;

· historical volatility of the fair value of the security;

· intent to sale the security.

· Whether it is more likely than not that there would be a requirement to sell the security before its anticipated recovery.

During the nine months ended September 30, 2015, we have charged to operations, realized investment losses of less than $0.1 million. The charges relate to common stock held in diverse industries. During the nine months ended September 30, 2014, in connection with the process, we have not charged operations with investment losses.

As of September 30, 2015 and December 31, 2014, respectively, all of our securities are in good standing and not impaired as defined by FASB issued guidance except as noted above.

As of September 30, 2015 and December 31, 2014, our investments consisted primarily of corporate bonds held in various industries, municipal bonds and United States government bonds. As of September 30, 2015, 80% of our debt portfolio was in diverse industries and 20% was in United States government bonds. As of September 30, 2015, approximately 86% of our equity holdings were in equities related to diverse industries and 14% were in mutual funds. As of December 31, 2014, 77% of our debt portfolio was in diverse industries and 23% is in United States government bonds. As of December 31, 2014, approximately 88% of our equity holdings were in equities related to diverse industries and 12% were in mutual funds.

As of September 30, 2015 and December 31, 2014, we have classified $6.4 million and $7.4 million, respectively, of our bond portfolio as held-to-maturity. We classify bonds as held-to-maturity to support securitization of credit requirements.

The following table shows the realized gains (losses) for debt and equity securities for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015					2014
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
	(Dollars in Thousands)
Debt securities	$	973		$	71,869	$	533		$	38,657
Equity securities		4,189			9,985		4,013			12,595
Total realized gains		5,162			81,854		4,546			51,252
Debt securities		(504	)		39,926		(118	)		8,333
Equity securities		(915	)		3,959		(381	)		1,639
Total realized losses		(1,419	)		43,885		(499	)		9,972
Net realized gains on investments	$	3,743		$	125,739	$	4,047		$	61,224

Net realized investment gains totaled $3.7 million for the nine months ended September 30, 2015,compared with $4.0 million during the nine months ended September 30, 2014. During the nine months ended September 30, 2015, the investment committee decided to increase the fixed income asset allocation by directing new invested dollars and reducing our exposure to equities.

A summary of the amortized cost, estimated fair value and gross unrealized gains and losses of debt and equity securities at September 30, 2015 and December 31, 2014 is as follows.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(Dollars in Thousands)
September 30, 2015
Debt Securities - Available-For-Sale:
United States government obligations and authorities	$	64,876	$	1,233	$	115	$	65,994
Obligations of states and political subdivisions		107,211		1,428		42		108,597
Corporate		154,469		1,625		770		155,324
International		12,104		55		159		12,000
	$	338,660	$	4,341	$	1,086	$	341,915
Debt Securities - Held-To-Maturity:
United States government obligations and authorities	$	4,221	$	51	$	184	$	4,088
Corporate		2,101		25		6		2,120
International		65		-		-		65
	$	6,387	$	76	$	190	$	6,273
Equity securities - common stocks	$	33,605	$	6,391	$	1,910	$	38,086
December 31, 2014
Debt Securities - Available-For-Sale:
United States government obligations and authorities	$	61,376	$	1,022	$	75	$	62,323
Obligations of states and political subdivisions		90,728		956		70		91,614
Corporate		117,778		1,578		332		119,024
International		11,139		53		54		11,138
	$	281,021	$	3,609	$	531	$	284,099
Debt Securities - Held-To-Maturity:
United States government obligations and authorities	$	4,490	$	41	$	225	$	4,306
Corporate		2,681		31		5		2,707
International		246		1		1		246
	$	7,417	$	73	$	231	$	7,259
Equity securities - common stocks	$	29,908	$	9,836	$	497	$	39,247

The table below reflects our unrealized investment losses by investment class, aged for length of time in a continuous unrealized loss position as of September 30, 2015.

	Unrealized Losses		Less than 12 months		12 months or longer
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	115	$	95	$	20
Obligations of states and political subdivisions		42		42		-
Corporate		770		740		30
International		159		159		-
		1,086		1,036		50
Equity securities:
Common stocks		1,910		1,881		29
Total debt and equity securities	$	2,996	$	2,917	$	79

The table below reflects our unrealized investment losses by investment class, aged for length of time in a continuous unrealized loss position as of December 31, 2014.

	Unrealized Losses		Less than 12 months		12 months or longer
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	75	$	22	$	53
Obligations of states and political subdivisions		70		66		4
Corporate		332		260		72
International		54		54		-
		531		402		129
Equity securities:
Common stocks		497		461		36
Total debt and equity securities	$	1,028	$	863	$	165

Below is a summary of debt securities at September 30, 2015 and December 31, 2014, by contractual or expected maturity periods. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2015				December 31, 2014
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due in one year or less	$	19,635	$	19,659	$	16,777	$	16,797
Due after one through five years		188,397		190,047		173,236		174,273
Due after five through ten years		136,989		138,449		98,404		100,259
Due after ten years		26		33		26		33
Total	$	345,047	$	348,188	$	288,443	$	291,362

United States Treasury notes with a book value of$60,674 and $2,204,798, maturing in 2016 and 2022, and a statutory deposit held in trust with a book value of $0.3 million, were on deposit with the Florida OIR as of September 30, 2015, as required by law for FNIC and MNIC, respectively, and are included with other investments held until maturity.

United States Treasury notes with a book value of $61,465 and $2,208,588, maturing in 2016 and 2022, respectively, were on deposit with the Florida OIR as of December 31, 2014, as required by law for FNIC, and are included with other investments held until maturity.

The table below sets forth investment results for the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Interest on debt securities	$	1,755	$	1,328
Dividends on equity securities		147		121
Interest on cash and cash equivalents		5		1
Total investment income	$	1,907	$	1,450

Proceeds from sales, pay downs and maturities of debt securities and proceeds from sales of equity securities during the three months ended September 30, 2015 and 2014, were approximately $42.5 million and $21.8 million, respectively.

The table below sets forth investment results for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Interest on debt securities	$	4,713	$	3,432
Dividends on equity securities		381		324
Interest on cash and cash equivalents		60		2
Total investment income	$	5,154	$	3,758

Proceeds from sales, pay downs and maturities of debt securities and proceeds from sales of equity securities during the nine months ended September 30, 2015 and 2014, were approximately $134.9 million and $65.9 million, respectively.

The table below sets forth a summary of net realized investment gains during the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Net realized gains
Debt securities	$	48	$	221
Equity securities		1,078		438
Total	$	1,126	$	659

The table below sets forth a summary of net realized investment gains during the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Net realized gains
Debt securities	$	469	$	415
Equity securities		3,274		3,632
Total	$	3,743	$	4,047

The table below sets forth a summary of net unrealized investment gains as of September 30, 2015 and December 31, 2014.

	Unrealized Gains
	September 30, 2015		December 31, 2014
	(Dollars in Thousands)
Net unrealized gains
Debt securities	$	3,255	$	3,078
Equity securities		4,481		9,339
Total	$	7,736	$	12,417

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Variable Interest Entity

9 Months Ended

Sep. 30, 2015

Variable Interest Entity [Abstract]

Variable Interest Entity

(5) Variable Interest Entity

Our consolidated financial statements include Monarch Delaware because we have determined Monarch Delaware is a VIE, we have a variable interest in Monarch Delaware and we are the primary beneficiary. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. The primary beneficiary of a VIE is defined as the enterprise with (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. On an ongoing basis, we assess whether we are the primary beneficiary of VIEs in which we have a relationship.

The carrying amount of our VIE consolidated assets and liabilities are as follows.

	September 30, 2015			December 31, 2014
ASSETS	(Dollars in Thousands)
Investments
Debt maturities, held to maturity, at amortized cost	$	21,877		$	-
Equity securities, available for sale, at fair value		1,350			-
Total investments		23,227			-
Cash and short term investments		13,492			-
Premiums receivable, net		326			-
Deferred policy acquisition costs		168			-
Deferred income taxes, net		665			-
Other assets		178			-
Total assets	$	38,056		$	-
LIABILITIES AND SHAREHOLDERS' EQUITY
Unpaid losses and LAE	$	112		$	-
Unearned premiums		1,072			-
Income taxes payable		110			-
Accounts payable and accrued expenses		249			-
Debt		5,000			-
Total liabilities	$	6,543		$	-
Shareholders' equity:
Common stock, $0.01 par value. Issued and outstanding 100 shares		-			-
Additional paid-in capital		32,413			-
Accumulated other comprehensive income
Unrealized net gains on investments, available for sale		(234	)		-
Total accumulated other comprehensive income		(234	)		-
Retained earnings		(666	)		-
Total shareholders' equity		31,513			-
Total liabilities and shareholders' equity	$	38,056		$	-

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Investments (Tables)

9 Months Ended

Sep. 30, 2015

Investments [Abstract]

Summary of Investments by Type

The following table summarizes, by type, our investments as of September 30, 2015 and December 31, 2014.

	September 30, 2015					December 31, 2014
	Carrying Amount		Percent of Total			Carrying Amount		Percent of Total
	(Dollars in Thousands)
Debt securities, at fair value:
United States government obligations and authorities	$	65,994		17.08	%	$	62,323		18.84	%
Obligations of states and political subdivisions		108,597		28.11	%		91,614		27.70	%
Corporate		155,324		40.20	%		119,024		35.99	%
International		12,000		3.11	%		11,138		3.37	%
		341,915		88.50	%		284,099		85.90	%
Debt securities, at amortized cost:
United States government obligations and authorities		4,221		1.09	%		4,490		1.36	%
Corporate		2,101		0.54	%		2,681		0.81	%
International		65		0.02	%		246		0.07	%
		6,387		1.65	%		7,417		2.24	%
Total debt securities		348,302		90.15	%		291,516		88.14	%
Equity securities, at fair value:		38,086		9.85	%		39,247		11.86	%
Total investments	$	386,388		100.00	%	$	330,763		100.00	%

Realized Gains (Losses) for Debt and Equity Securities

The following table shows the realized gains (losses) for debt and equity securities for the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015					2014
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
	(Dollars in Thousands)
Debt securities	$	226		$	21,843	$	241		$	16,413
Equity securities		1,847			4,226		453			1,642
Total realized gains		2,073			26,069		694			18,055
Debt securities		(178	)		9,744		(20	)		1,627
Equity securities		(769	)		3,306		(15	)		118
Total realized losses		(947	)		13,050		(35	)		1,745
Net realized gains on investments	$	1,126		$	39,119	$	659		$	19,800

The following table shows the realized gains (losses) for debt and equity securities for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015					2014
	Gains (Losses)			Fair Value at Sale		Gains (Losses)			Fair Value at Sale
	(Dollars in Thousands)
Debt securities	$	973		$	71,869	$	533		$	38,657
Equity securities		4,189			9,985		4,013			12,595
Total realized gains		5,162			81,854		4,546			51,252
Debt securities		(504	)		39,926		(118	)		8,333
Equity securities		(915	)		3,959		(381	)		1,639
Total realized losses		(1,419	)		43,885		(499	)		9,972
Net realized gains on investments	$	3,743		$	125,739	$	4,047		$	61,224

Summary of Amortized Cost, Estimated Fair Value and Gross Unrealized Gains and Losses of Debt and Equity Securities

A summary of the amortized cost, estimated fair value and gross unrealized gains and losses of debt and equity securities at September 30, 2015 and December 31, 2014 is as follows.

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(Dollars in Thousands)
September 30, 2015
Debt Securities - Available-For-Sale:
United States government obligations and authorities	$	64,876	$	1,233	$	115	$	65,994
Obligations of states and political subdivisions		107,211		1,428		42		108,597
Corporate		154,469		1,625		770		155,324
International		12,104		55		159		12,000
	$	338,660	$	4,341	$	1,086	$	341,915
Debt Securities - Held-To-Maturity:
United States government obligations and authorities	$	4,221	$	51	$	184	$	4,088
Corporate		2,101		25		6		2,120
International		65		-		-		65
	$	6,387	$	76	$	190	$	6,273
Equity securities - common stocks	$	33,605	$	6,391	$	1,910	$	38,086
December 31, 2014
Debt Securities - Available-For-Sale:
United States government obligations and authorities	$	61,376	$	1,022	$	75	$	62,323
Obligations of states and political subdivisions		90,728		956		70		91,614
Corporate		117,778		1,578		332		119,024
International		11,139		53		54		11,138
	$	281,021	$	3,609	$	531	$	284,099
Debt Securities - Held-To-Maturity:
United States government obligations and authorities	$	4,490	$	41	$	225	$	4,306
Corporate		2,681		31		5		2,707
International		246		1		1		246
	$	7,417	$	73	$	231	$	7,259
Equity securities - common stocks	$	29,908	$	9,836	$	497	$	39,247

Unrealized Investment Losses by Investment Class, Aged for Length of Time in Continuous Unrealized Loss Position

The table below reflects our unrealized investment losses by investment class, aged for length of time in a continuous unrealized loss position as of September 30, 2015.

	Unrealized Losses		Less than 12 months		12 months or longer
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	115	$	95	$	20
Obligations of states and political subdivisions		42		42		-
Corporate		770		740		30
International		159		159		-
		1,086		1,036		50
Equity securities:
Common stocks		1,910		1,881		29
Total debt and equity securities	$	2,996	$	2,917	$	79

The table below reflects our unrealized investment losses by investment class, aged for length of time in a continuous unrealized loss position as of December 31, 2014.

	Unrealized Losses		Less than 12 months		12 months or longer
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	75	$	22	$	53
Obligations of states and political subdivisions		70		66		4
Corporate		332		260		72
International		54		54		-
		531		402		129
Equity securities:
Common stocks		497		461		36
Total debt and equity securities	$	1,028	$	863	$	165

Summary of Debt Securities, by Contractual or Expected Maturity Periods

Below is a summary of debt securities at September 30, 2015 and December 31, 2014, by contractual or expected maturity periods. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2015				December 31, 2014
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Due in one year or less	$	19,635	$	19,659	$	16,777	$	16,797
Due after one through five years		188,397		190,047		173,236		174,273
Due after five through ten years		136,989		138,449		98,404		100,259
Due after ten years		26		33		26		33
Total	$	345,047	$	348,188	$	288,443	$	291,362

Investment Results

The table below sets forth investment results for the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Interest on debt securities	$	1,755	$	1,328
Dividends on equity securities		147		121
Interest on cash and cash equivalents		5		1
Total investment income	$	1,907	$	1,450

The table below sets forth investment results for the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Interest on debt securities	$	4,713	$	3,432
Dividends on equity securities		381		324
Interest on cash and cash equivalents		60		2
Total investment income	$	5,154	$	3,758

Summary of Net Realized Investment Gains

The table below sets forth a summary of net realized investment gains during the three months ended September 30, 2015 and 2014.

	Three Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Net realized gains
Debt securities	$	48	$	221
Equity securities		1,078		438
Total	$	1,126	$	659

The table below sets forth a summary of net realized investment gains during the nine months ended September 30, 2015 and 2014.

	Nine Months Ended September 30,
	2015		2014
	(Dollars in Thousands)
Net realized gains
Debt securities	$	469	$	415
Equity securities		3,274		3,632
Total	$	3,743	$	4,047

The table below sets forth a summary of net unrealized investment gains as of September 30, 2015 and December 31, 2014.

	Unrealized Gains
	September 30, 2015		December 31, 2014
	(Dollars in Thousands)
Net unrealized gains
Debt securities	$	3,255	$	3,078
Equity securities		4,481		9,339
Total	$	7,736	$	12,417

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Subsequent Events

9 Months Ended

Sep. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

(13) Subsequent Events

We have evaluated all subsequent events or transactions for potential recognition or disclosure that occurred after the balance sheet date through the date on which the financial statement were issued.

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Unpaid losses and LAE

9 Months Ended

Sep. 30, 2015

Unpaid losses and LAE [Abstract]

Unpaid losses and LAE

(9) Unpaid losses and LAE

The liability for unpaid losses and LAE is determined on an individual-case basis for all incidents reported. The liability also includes amounts for unallocated expenses, anticipated future claim development and Incurred but Not Yet Reported (“IBNR”).

Activity in the liability for unpaid losses and LAE is summarized as follows.

	Period Ending
	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Balance at January 1	$	78,330		$	61,016
Less reinsurance recoverables		(12,534	)		(2,742	)
Net balance at January 1	$	65,796		$	58,274
Incurred related to
Current year	$	73,895		$	79,932
Prior years		1,615			1,104
Total incurred	$	75,510		$	81,036
Paid related to
Current year	$	30,739		$	42,391
Prior years		27,243			31,123
Total paid	$	57,982		$	73,514
Net balance at period end	$	83,324		$	65,796
Plus reinsurance recoverables		8,349			12,534
Balance as of period end	$	91,673		$	78,330

We believe that the liability for unpaid losses and LAE is adequate to cover all claims and related expenses that may arise from incidents reported.

Our review of the liability for losses and LAE includes a re-evaluation of the adequacy of reserve levels for prior year’s claims. We increased the liability for losses and LAE for claims occurring in prior years by $1.6 million during the nine months ended September 30, 2015.We increased the liability for losses and LAE for claims occurring in prior years by $1.1 million during the year ended December 31, 2014.

We continue to revise our estimates of the ultimate financial impact of claims made resulting from past storms. The revisions to our estimates are based on our analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) Company and industry historical loss experience; (iii) legislative enactments, judicial decisions, legal developments in the awarding of damages, and (iv) trends in general economic conditions, including the effects of inflation.

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Fair Value Disclosure

9 Months Ended

Sep. 30, 2015

Fair Value Disclosure [Abstract]

Fair Value Disclosure

(7) Fair Value Disclosure

Fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are generally based upon observable and unobservable inputs. Observable inputs are based on market data from independent sources, while unobservable inputs reflect the Company’s view of market assumptions in the absence of observable market information. All assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price for an identical asset or liability in an active market provides the most reliable fair value measurement because it is directly observable to the market.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs are observable for an asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Securities available-for-sale: The fair value of securities available-for-sale is determined by obtaining quoted prices on nationally recognized security exchanges.

Assets measured at fair value on a recurring basis as of September 30, 2015, presented in accordance with this guidance, are as follows.

	As of September 30, 2015
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	40,833	$	25,161	$	-	$	65,994
Obligations of states and political subdivisions		-		108,597		-		108,597
Corporate		-		155,324		-		155,324
International		-		12,000		-		12,000
		40,833		301,082		-		341,915
Equity securities:
Common stocks		38,086		-		-		38,086
		38,086		-		-		38,086
Total debt and equity securities	$	78,919	$	301,082	$	-	$	380,001

Assets measured at fair value on a recurring basis as of December 31, 2014, presented in accordance with this guidance, are as follows.

	As of December 31, 2014
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Debt securities:
United States government obligations and authorities	$	46,002	$	16,321	$	-	$	62,323
Obligations of states and political subdivisions		-		91,614		-		91,614
Corporate		-		119,024		-		119,024
International		-		11,138		-		11,138
		46,002		238,097		-		284,099
Equity securities:
Common stocks		39,247		-		-		39,247
		39,247		-		-		39,247
Total debt and equity securities	$	85,249	$	238,097	$	-	$	323,346

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Reinsurance Agreements

9 Months Ended

Sep. 30, 2015

Reinsurance Agreements [Abstract]

Reinsurance Agreements

(8) Reinsurance Agreements

Financing risk generally involves a combination of risk retention and risk transfer techniques. “Retention”, similar to a deductible, involves financing losses by funds internally generated. “Transfer” involves the existence of a contractual arrangement designed to shift financial responsibility to another party in exchange for premium. Secondary to the primary risk-transfer agreements, we use reinsurance agreements to transfer a portion of the risks insured under our policies to other companies through the purchase of reinsurance. We utilize reinsurance to reduce exposure to catastrophic and non-catastrophic risks and to help manage the cost of capital. Reinsurance techniques are designed to lessen earnings volatility, improve shareholder return, and to support the required statutory surplus requirements. We also use reinsurance to realize an arbitrage of premium rates, benefit from the availability of our reinsurers’ expertise, and benefit from the management of a profitable portfolio of insureds by way of enhanced analytical capacities. Our primary property line that is subject to catastrophic reinsurance is Homeowners’ Multiple Peril. FNIC cedes these risks to domestic and foreign reinsurance participants around the world as well as to the FHCF.

Quota share reinsurance is a pro rata agreement among the primary insurer and one or more reinsurers where each party shares a fixed and predetermined percentage of the program’s premiums and losses. Excess of loss risk transfer agreements involve the transfer of premium in exchange for reimbursement for claims, if they occur, as a result of specific events such as severe catastrophic weather. For quota share and excess of loss reinsurance, coverage is generally afforded based on meeting predetermined risk characteristics. In contrast, facultative reinsurance is negotiated between the primary insurer and the reinsurer(s) on a case-by-case basis with no obligation on either part to cede or assume share of the risk.

Generally, there are three separate kinds of reinsurance structures – quota share, excess of loss, and facultative, each considered either proportional or non-proportional. Our reinsurance structures are maintained to protect our insurance subsidiary against the severity of losses on individual claims or unusually serious occurrences in which the frequency and or the severity of claims produce an aggregate extraordinary loss from catastrophic events. In addition to reinsurance agreements, we also from time to time enter into retro-cessionary reinsurance agreements; each designed to shift financial responsibility based on predefined conditions.

Although reinsurance does not discharge us from our primary obligation to pay for losses insured under the policies we issue, reinsurance does make the assuming reinsurer liable to the insurance subsidiary for the reinsured portion of the risk. A credit risk exposure exists with respect to ceded losses to the extent that any reinsurer is unable or unwilling to meet the obligations assumed under the reinsurance contracts. The collectability of reinsurance is subject to the solvency of the reinsurers, interpretation of contract language and other factors. A reinsurer's insolvency or inability to make payments under the terms of a reinsurance contract could have a material adverse effect on our results of operations and financial condition. Our reinsurance structure has significant risks, including the fact that the FHCF may not be able to raise sufficient money to pay its claims or impair its ability to pay its claims in a timely manner. This could result in significant financial, legal and operational challenges to all property and casualty companies associated with FHCF, including our company.

The availability and costs associated with the acquisition of reinsurance will vary year to year. These fluctuations, which can be significant, are not subject to our control and may limit our ability to purchase adequate coverage. For example, FHCF continues to restrict its reinsurance capacity and is expected to continue constricting capacity for future seasons. This gradual restriction is requiring us to replace that capacity with private market reinsurance. Our reinsurance program is subject to approval by the Florida OIR and review by Demotech, Inc. (“Demotech”). The recovery of increased reinsurance costs through rate action is not immediate and cannot be presumed and is subject to Florida OIR approval.

For the 2015–2016 hurricane season, the excess of loss and FHCF treaties insured the property lines for approximately $1.82 billion of aggregate catastrophic losses and LAE with a maximum single event coverage totaling approximately $1.26 billion, with the Company retaining the first $12.9 million in Florida and $5.0 million in Louisiana, Alabama and South Carolina for losses and LAE from each event. The reinstatement treaty will provide for 50% of the covered losses between $15.0 million and $100 million. The Company retains 10% or up to $2.5 million of a covered loss in excess of $21.5 million resulting in the Company’s maximum retention of $15.4 million for losses incurred both in and out of Florida. Florida risks represent 95.5%, or $1.74 billion of the $1.82 billion of total aggregate catastrophic losses and LAE.

The reinsurance program includes coverage purchased from the private market, which is prepaid and affords reinstatement premium protection that provides coverage beyond the first event, along with any remaining coverage from the FHCF. The FHCF only affords coverage for losses sustained in Florida. Coverage afforded by the FHCF totals approximately $581.2 million, or 33.4% of Florida’s $1.74 billion of aggregate catastrophic losses and LAE. The FHCF affords coverage for the entire season, subject to maximum payouts, without regard to any particular insurable event.

The estimated cost to the Company for the excess of loss reinsurance products for the 2015–2016 hurricane season, inclusive of approximately $44.83 million payable to the FHCF and the prepaid automatic premium reinstatement protection, is approximately $149.37 million.

Included in this year’s program are two quota share treaties that are similar in terms; one for 30% entered into in 2014, and one for 10% which became effective July 1, 2015. This is the second year of a two-year term for the 30% quota share treaty and the first year of a two-year term for the new 10% quota share treaty. For the 2015 – 2016 Catastrophic wind season only, both treaties combined provide a 40% quota share reinsurance treaty on the first $100 million of covered losses for the Company’s in-force new and renewal homeowners’ insurance program in the State of Florida.

The original two-year quota share reinsurance treaty provides 30% of $200 million of aggregate catastrophe coverage per year with maximum single event coverage of 30% of $100 million per year. The new two-year quota share reinsurance treaty provides 10% of $200 million of aggregate catastrophe coverage per year with maximum single event coverage of 10% of $100 million per year. The projected cost of the quota share treaties are $8.5 million for the 30% treaty and $2.8 million for the 10% treaty, both of which are included in the $149.4 million amount referenced above.

The 2015-2016 private reinsurance companies and their respective A.M. Best Company (“A.M. Best”) and S&P ratings are listed in the table as follows.

Reinsurer	A.M. Best Rating			S&P Rating
UNITED STATES
American Agricultural Insurance Company		A-			NR
American Standard Insurance Company of Wisconsin		A			NR
Everest Reinsurance Company		A+			A+
Odyssey Reinsurance Company		A			A-
Partner Reinsurance Company of the US		A+			A+
QBE Reinsurance Corporation		A			A+
RLI Insurance Company		A+			A+
Transatlantic Reinsurance Company		A			A+
BERMUDA
ACE Tempest Reinsurance Ltd.		A++			AA
Allianz Risk Transfer AG, Bermuda Branch (obo Nephila)		A+			AA-
Allied World Assurance Company, Limited		A			A
Arch Reinsurance Limited		A+			A+
Argo Re Ltd		A			NR
Ariel Reinsurance Bermuda Ltd for and on Behalf of Ariel Syndicate 1910 (ARE)		A-			A+
Ascot Underwriting (Bermuda) Limited/AIG per AIRCO agreement		A			NR
Aspen Bermuda Limited		A			A
AXIS Specialty Limited		A+			A+
BGS Services (Bermuda) Limited/Lloyds Syndicate 2987		A			A+
Collateralised Re Ltd - LGT Capital		NR	*	**	NR
DaVinci Reinsurance Ltd.		A			AA-
Endurance Specialty Insurance Ltd.		A			A
Hamilton Re, Ltd.		A-			NR
Hiscox Insurance Company (Bermuda) Limited		A			NR
Horseshoe Re (obo Coriolis)		NR	*	**	NR
Markel Bermuda Limited		A			A
Partner Reinsurance Company Limited		A+			A+
Renaissance Reinsurance, Ltd.		A+			AA-
Securis Re II Ltd. Bermuda		NR	*	**	NR
Securis Re IV Ltd. Bermuda		NR	*	**	NR
Securis Re V Ltd. Bermuda		NR	*	**	NR
Tokio Millennium Re AG, Bermuda Branch		A++			AA-
XL RE Limited		A			A+
UNITED KINGDOM
A.F. Beazley Syndicate No. 623 (AFB)		A			A+
A.F. Beazley Syndicate No. 2623 (AFB)		A			A+
Amlin Syndicate No. 2001 (AML)		A			A+
Antares Syndicate No. 1274 (AUL)		A			A+
Ariel Syndicate No. 1910 (ARE)		A			A+
ARK Syndicate No. 4020 (ARK)		A			A+
Ascot Syndicate No. 1414 (ASC)		A			A+
Barbican Syndication No. 1955 (BAR)		A			A+
Canopius Syndicate No. 958 (CNP)		A			A+
Canopius Syndicate No. 4444 (CNP)		A			A+
Cathederal Syndicate No. 2010 (MMX)		A			A+
China Re Syndicate No. 2088 (CNR)		A			A+
Dale Underwriting Syndicate No. 1729 (DUW)		A			A+
Faraday Syndicate No. 435 (FDY)		A			A+
Hiscox Syndicate No. 0033 (HIS)		A			A+
Liberty Syndicates Services Limited, Paris for and on behalf of Lloyd's Syndicate No. 4472 (LIB)		A			A+
MAP Underwriting Syndicate No. 2791 (MAP)		A			A+
MAP Underwriting Syndicate No. 2791 (Parallel) (MAP)		A			A+
Novae Syndicate No. 2007 (NVA)		A			A+
Renaissance Re Syndicate No. 1458 (RNR)		A			A+
S.J.O, Catlin & Others No. 2003 (SJC)		A			A+
Vibe Syndicate No. 5678 (VSM)		A			A+
EUROPE
Amlin AG, Switzerland, Bermuda Branch		A			A
Hannover Rueck SE (obo Pillar Capital Management)		NR	*	**	NR
Lansforsakringar Sak Forsakringsaktiebolag (publ)		NR			A
SCOR Global P&C SE, Paris, Zurich Branch		A			A
ASIA
China Reinsurance (Group) Corporation		A			NR
Fubon Insurance Co., Ltd.		A			A-
General Insurance Corporation of India, trading as GIC Re		A-			NR
Peak Re		A-			NR
Pioneer CAT (obo Peak Re)		A-			NR
Pioneer CAT (obo Taiping)		A-			NR
Qatar Reinsurance Company LLC		A			A
* Reinstatement Premium Protection Program Participants
** Participant will fund a trust agreement for their exposure with cash and U.S. Government obligations of American institutions at fair market value.

For the 2014–2015 hurricane season, the excess of loss and FHCF treaties insured the property lines for approximately $1.49 billion of aggregate catastrophic losses and LAE with a maximum single event coverage totaling approximately $1.01 billion, with the Company retaining the first $11.20 million in Florida and $3.0 million in Louisiana for losses and LAE from each event. Florida risks represent 98.5%, or $1.46 billion of the $1.49 billion of total aggregate catastrophic losses and LAE.

The reinsurance program includes coverage purchased from the private market, which affords optional reinstatement premium protection that provides coverage beyond the first event, along with any remaining coverage from the FHCF. The FHCF only affords coverage for losses sustained in Florida. Coverage afforded by the FHCF totals approximately $546.3 million, or 37.4% of Florida’s $1.46 billion of aggregate catastrophic losses and LAE. The FHCF affords coverage for the entire season, subject to maximum payouts, without regard to any particular insurable event.

The actual cost to the Company for the excess of loss reinsurance products for the 2014–2015 hurricane season, inclusive of approximately $40.20 million payable to the FHCF and the prepaid automatic premium reinstatement protection, is approximately $117.0 million.

Included in the 2014–2015 hurricane season program was a 30% quota share reinsurance treaty for the Company’s in-force new and renewal homeowners’ insurance program in the State of Florida. This two-year quota share reinsurance treaty continues to provide 30% of $200 million of aggregate catastrophe coverage per year with maximum single event coverage of 30% of $100 million per year. The cost of this quota share was $6.7 million, net of ceding commissions, and it was included in the $117.0 million amount referenced above.

The 2014-2015 private reinsurance companies and their respective A.M. Best and S&P ratings are listed in the table as follows.

Reinsurer	A.M. Best Rating			S&P Rating
UNITED STATES
American Agricultural Insurance Company		A-			NR
American Standard Insurance Company of Wisconsin		A			NR
AIG (National Union Fire Insurance Company of Pittsburgh, PA)		A			A+
Everest Reinsurance Company		A+			A+
Odyssey Reinsurance Company		A			A-
QBE Reinsurance Corporation		A			A+
RLI Insurance Company		A+			A+
Transatlantic Reinsurance Company		A			A+
BERMUDA
ACE Tempest Reinsurance Limited		A++			AA-
Allied World Assurance Company, Limited		A			A
Arch Reinsurance Limited		A+			A+
Argo Reinsurance Limited		A			NR
Ariel Reinsurance Bermuda Ltd for and on Behalf of Ariel Syndicate 1910 (ARE)		A-			A+
Aspen Bermuda Limited		A			A
AXIS Specialty Limited		A+			A+
BGS Services (Bermuda) Limited/Lloyds Syndicate 2987		A			A+
DaVinci Reinsurance Ltd		A			AA-
Endurance Specialty Insurance Limited		A			A
Hamilton Re, Limited		A-			NR
Hiscox Insurance Company (Bermuda) Limited		A			NR
Partner Reinsurance Company Limited		A+			A+
Platinum Underwriters Bermuda Limited		A			A-
Renaissance Reinsurance, Limited		A+			AA-
Securis Re III Limited Bermuda		NR	*	**	NR
Securis Re IV Limited Bermuda		NR	*	**	NR
Tokio Millennium Re AG, Bermuda Branch		A++			AA-
XL RE Limited		A			A+
UNITED KINGDOM
A.F. Beazley Syndicate No. 623 (AFB)		A			A+
A.F. Beazley Syndicate No. 2623 (AFB)		A			A+
Amlin Syndicate No. 2001 (AML)		A			A+
Antares Syndicate No. 1274 (AUL)		A			A+
Ariel Syndicate No. 1910 (ARE)		A			A+
ARK Syndicate No. 4020 (ARK)		A			A+
Ascot Syndicate No. 1414 (ASC)		A			A+
Barbican Syndication No. 1955 (BAR)		A			A+
Canopius Syndicate No. 958 (CNP)		A			A+
Canopius Syndicate No. 4444 (CNP)		A			A+
Cathederal Syndicate No. 2010 (MMX)		A			A+
Chaucer Syndicate No. 1084 (CSL)		A			A+
Dale Underwriting Syndicate No. 1729 (DUW)		A			A+
Faraday Syndicate No. 435 (FDY)		A			A+
Hiscox Syndicate No. 0033 (HIS)		A			A+
Kiln Syndicate No. 510 (KLN)		A			A+
Liberty Syndicates Services Limited, Paris for and on behalf of Lloyd's Syndicate No. 4472 (LIB)		A			A+
MAP Underwriting Syndicate No. 2791 (MAP)		A			A+
MAP Underwriting Syndicate No. 2791 (Parallel) (MAP)		A			A+
Novae Syndicate No. 2007 (NVA)		A			A+
S.J.O, Catlin & Others No. 2003 (SJC)		A			A+
EUROPE
Amlin AG, Switzerland, Bermuda Branch		A			A
Hannover Rueck SE (obo Pillar Capital Management)		NR	*	**	NR
Lansforsakringar Sak Forsakringsaktiebolag (publ)		NR			A
SCOR Global P&C SE, Paris, Zurich Branch		A			A
ASIA
China Reinsurance (Group) Corporation		A			NR
Qatar Reinsurance Company LLC		A			A
* Reinstatement Premium Protection Program Participants
** Participant will fund a trust agreement for their exposure with cash and U.S. Government obligations of American institutions at fair market value.

Annually, the cost and amounts of reinsurance are based on management's analysis of FNIC's exposure to catastrophic risk as of June 30 and estimated to September 30. Our data is then subjected to actual exposure level analysis as of September 30. This analysis of our exposure level in relation to the total exposures to the FHCF and excess of loss treaties may produce changes in limits and reinsurance premiums as a result of the reconciliation of estimated to actual exposure level. The September 30, 2015 change to total insured value and reinsurance premiums was zero.

To date, we have made no claims asserted against our reinsurers in connection with the 2015–2016 and 2014–2015 excess of loss and FHCF treaties.

The quota share retrocessionaire reinsurance agreements require FNIC to secure the credit, regulatory and business risk. Fully funded trust agreements securing these risks totaled $4.0 million and $4.9 million, respectively, as of September 30, 2015 and December 31, 2014.

We are selective in choosing reinsurers and consider numerous factors, the most important of which are the financial stability of the reinsurer, its history of responding to claims and its overall reputation. In an effort to minimize our exposure to the insolvency of a reinsurer, we evaluate the acceptability and review the financial condition of the reinsurer at least annually.

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Stock Compensation Plans

9 Months Ended

Sep. 30, 2015

Stock Compensation Plans [Abstract]

Stock Compensation Plans

(10) Stock Compensation Plans

We implemented a stock option plan in 2002 (the “2002 Plan”), which expired in April 2012. Under this plan, we were authorized to grant options to purchase up to 1,800,000 common shares, and as of September 30, 2015 and December 31, 2014, we had outstanding exercisable options to purchase 185,150 and 219,285 shares, respectively.

In April 2012, our Board of Directors adopted, and in September 2012 our shareholders approved, the Company’s 2012 Stock Incentive Plan (the “2012 Plan”). The 2012 Plan permits the issuance of up to 1,000,000 shares of our common stock, subject to adjustment as provided for in the 2012 Plan, in connection with the grant of a variety of equity incentive awards, such as incentive stock options, non-qualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units, and performance shares. Officers, directors and executive, managerial, administrative and professional employees of the Company and its subsidiaries are eligible to participate in the 2012 Plan. Awards may be granted singly, in combination, or in tandem. The 2012 Plan was amended and restated in March 2013 to clarify the plan administrator’s authority to permit the vesting of unvested restricted shares in the event of the death of the grantee. The 2012 Plan will expire on April 5, 2022.

On March 4, 2013, a total of 100,000 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 25,000 shares were granted to the Company's Chief Executive Officer and President and 15,000 shares were granted to the Company's Chief Financial Officer. An aggregate of 20,000 shares were granted to the Company's directors and the remaining 40,000 shares were granted to other employees of the Company.

On August 5, 2013, a total of 150,000 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 100,000 shares were granted to the Company's Chief Executive Officer and President and 50,000 shares were granted to the Company's Chief Financial Officer.

On March 4, 2014, a total of 88,648 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 43,997 shares were granted to the Company's Chief Executive Officer and President and 16,341 shares were granted to the Company's Chief Financial Officer. An aggregate of 15,710 shares were granted to the Company's directors and the remaining 12,600 shares were granted to other employees of the Company.

On September 9, 2014, a total of 130,000 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 45,000 shares were granted to the Company's Chief Executive Officer and President and 15,000 shares were granted to the Company's Chief Financial Officer. An aggregate of 50,000 shares were granted to the Company's directors and the remaining 20,000 shares were granted to other employees of the Company.

On December 9, 2014, a total of 50,000 restricted shares from the 2012 Plan were granted to the Company’s Chief Executive Officer and President pursuant to the vesting requirements and other terms and conditions set forth in the restricted stock agreement.

On March 10, 2015, a total of 66,140 restricted shares from the 2012 Plan were granted pursuant to the vesting requirements and other terms and conditions set forth in restricted stock agreements. Of the total, 32,997 shares were granted to the Company's Chief Executive Officer and President and 9,551 shares were granted to the Company's Chief Financial Officer. An aggregate of 6,252 shares were granted to the Company's directors and the remaining 17,340 shares were granted to other employees of the Company.

On May 5, 2015, a total of 50,000 restricted shares from the 2012 Plan were granted to the Company’s Chief Executive Officer and President pursuant to the vesting requirements and other terms and conditions set forth in the restricted stock agreement.

Activity in our stock option and incentive plans for the period from January 1, 2013 to September 30, 2015 is as follows.

	1998 Plan					2002 Plan					2012 Plan
	Number of Shares			Weighted Average Option Exercise Price		Number of Shares			Weighted Average Option Exercise Price		Number of Shares			Fair Market Value at Grant
Outstanding at January 1, 2013		78,500		$	12.73		702,597		$	5.17		-		$	-
Granted		-		$	-		-		$	-		250,000		$	5.54
Exercised		(500	)	$	8.67		(165,577	)	$	7.15		-		$	-
Cancelled		(75,000	)	$	12.92		(13,499	)	$	5.41		(500	)	$	5.54
Outstanding at January 1, 2014		3,000		$	8.67		523,521		$	4.54		249,500		$	5.54
Granted		-		$	-		-		$	-		268,648		$	5.54
Exercised		(3,000	)	$	8.67		(299,735	)	$	5.10		(68,988	)	$	-
Cancelled		-		$	-		(4,501	)	$	3.49		(1,359	)	$	5.54
Outstanding at January 1, 2015		-		$	8.67		219,285		$	3.79		447,801		$	5.54
Granted		-		$	-		-		$	-		116,140		$	26.81
Exercised		-		$	-		(34,135	)	$	3.81		(135,134	)	$	16.03
Cancelled		-		$	-		-		$	-		-		$	-
Outstanding at September 30, 2015		-		$	-		185,150		$	3.79		428,807		$	14.57

Options outstanding as of September 30, 2015 are exercisable as follows.

	2002 Plan
Options Exercisable at:	Number of Shares		Weighted Average Option Exercise Price
September 30, 2015		184,150	$	3.79
December 31, 2015		1,000	$	3.79
December 31, 2016		-	$	3.79
December 31, 2017		-	$	3.79
December 31, 2018		-	$	3.79
December 31, 2019		-	$	3.79
Thereafter		-	$	3.79
Total options exercisable		185,150

Upon the exercise of options, the Company issues authorized shares.

Summary information about the Company’s stock option plans at September 30, 2015 is as follows.

	Range of Exercise Price		Outstanding at September 30, 2015		Weighted Average Contractual Periods in Years		Weighted Average Exercise Price		Exercisable at September 30, 2015
2002 Plan	$	2.45 - $4.40		185,150		5.86	$	3.79		184,150

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Investments, Summary of Investments by Type (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Debt securities, at fair value [Abstract]
Debt securities, at fair value	$ 341,915	$ 284,099
Percent of debt securities at fair value to total investments	88.50%	85.90%
Debt securities, at amortized cost [Abstract]
Debt securities, at amortized cost	$ 6,387	$ 7,417
Percent of debt securities at amortized cost to total investments	1.65%	2.24%
Total debt securities	$ 348,302	$ 291,516
Percent of debt securities to total investments	90.15%	88.14%
Equity securities, at fair value	$ 38,086	$ 39,247
Percentage of equity securities to total investments	9.85%	11.86%
Total investments	$ 386,388	$ 330,763
Total investments	100.00%	100.00%
United States Government Obligations and Authorities [Member]
Debt securities, at fair value [Abstract]
Debt securities, at fair value	$ 65,994	$ 62,323
Percent of debt securities at fair value to total investments	17.08%	18.84%
Debt securities, at amortized cost [Abstract]
Debt securities, at amortized cost	$ 4,221	$ 4,490
Percent of debt securities at amortized cost to total investments	1.09%	1.36%
Obligations of States and Political Subdivisions [Member]
Debt securities, at fair value [Abstract]
Debt securities, at fair value	$ 108,597	$ 91,614
Percent of debt securities at fair value to total investments	28.11%	27.70%
Corporate [Member]
Debt securities, at fair value [Abstract]
Debt securities, at fair value	$ 155,324	$ 119,024
Percent of debt securities at fair value to total investments	40.20%	35.99%
Debt securities, at amortized cost [Abstract]
Debt securities, at amortized cost	$ 2,101	$ 2,681
Percent of debt securities at amortized cost to total investments	0.54%	0.81%
International [Member]
Debt securities, at fair value [Abstract]
Debt securities, at fair value	$ 12,000	$ 11,138
Percent of debt securities at fair value to total investments	3.11%	3.37%
Debt securities, at amortized cost [Abstract]
Debt securities, at amortized cost	$ 65	$ 246
Percent of debt securities at amortized cost to total investments	0.02%	0.07%

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Organization and Business (Tables)

9 Months Ended

Sep. 30, 2015

Organization and Business [Abstract]

States and Lines of Business that FNIC Operates in

The table below reflects the states and lines of business that FNIC operates in as of September 30, 2015.

	Fire		Allied Lines	Private Passenger Automobile	Homeowners' Multiperil	Commercial General Liability
Florida (Domestic)	a		a	a	a	a
Alabama	d		d	d	a	c
Georgia	-		-	a	-	c
Louisiana	-		-	-	a	c
South Carolina	-		-	-	b	-
Texas	-		-	a	b	c
	a	Ongoing operations for more than one year
	b	Ongoing operations for less than one year
	c	Working with state to discontinue line of authority
	d	Licensed, but no current operations

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Unpaid losses and LAE (Tables)

9 Months Ended

Sep. 30, 2015

Unpaid losses and LAE [Abstract]

Summary of Activity in Liability for Unpaid Losses and LAE

Activity in the liability for unpaid losses and LAE is summarized as follows.

	Period Ending
	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Balance at January 1	$	78,330		$	61,016
Less reinsurance recoverables		(12,534	)		(2,742	)
Net balance at January 1	$	65,796		$	58,274
Incurred related to
Current year	$	73,895		$	79,932
Prior years		1,615			1,104
Total incurred	$	75,510		$	81,036
Paid related to
Current year	$	30,739		$	42,391
Prior years		27,243			31,123
Total paid	$	57,982		$	73,514
Net balance at period end	$	83,324		$	65,796
Plus reinsurance recoverables		8,349			12,534
Balance as of period end	$	91,673		$	78,330

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Fair Value Disclosure (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Debt securities [Abstract]
Debt securities	$ 341,915	$ 284,099
Equity securities [Abstract]
Equity securities	38,086	39,247
Recurring [Member]
Debt securities [Abstract]
United States government obligations and authorities	65,994	62,323
Obligations of states and political subdivisions	108,597	91,614
Corporate	155,324	119,024
International	12,000	11,138
Debt securities	341,915	284,099
Equity securities [Abstract]
Common stocks	38,086	39,247
Equity securities	38,086	39,247
Total debt and equity securities	380,001	323,346
Level 1 [Member] | Recurring [Member]
Debt securities [Abstract]
United States government obligations and authorities	40,833	46,002
Obligations of states and political subdivisions	0	0
Corporate	0	0
International	0	0
Debt securities	40,833	46,002
Equity securities [Abstract]
Common stocks	38,086	39,247
Equity securities	38,086	39,247
Total debt and equity securities	78,919	85,249
Level 2 [Member] | Recurring [Member]
Debt securities [Abstract]
United States government obligations and authorities	25,161	16,321
Obligations of states and political subdivisions	108,597	91,614
Corporate	155,324	119,024
International	12,000	11,138
Debt securities	301,082	238,097
Equity securities [Abstract]
Common stocks	0	0
Equity securities	0	0
Total debt and equity securities	301,082	238,097
Level 3 [Member] | Recurring [Member]
Debt securities [Abstract]
United States government obligations and authorities	0	0
Obligations of states and political subdivisions	0	0
Corporate	0	0
International	0	0
Debt securities	0	0
Equity securities [Abstract]
Common stocks	0	0
Equity securities	0	0
Total debt and equity securities	$ 0	$ 0

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract]
Income before non-controlling interest	$ 10,571	$ 7,227	$ 31,228	$ 27,204
Change in net unrealized (losses) gains on investments available for sale	(2,671)	(1,883)	(4,681)	359
Comprehensive income before tax	7,900	5,344	26,547	27,563
Income tax benefit (expense) related to items of other comprehensive income	1,083	615	1,734	(229)
Comprehensive income	8,983	5,959	28,281	27,334
Less: Comprehensive income attributable to NCI	(17)	0	(494)	0
Comprehensive income attributable to FNHC	$ 8,966	$ 5,959	$ 27,787	$ 27,334

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(4) Commitments and Contingencies

Management has a responsibility to continually measure and monitor its commitments and its contingencies. The nature of the Company’s commitments and contingencies can be grouped into three major categories: insured claim activity, assessment related activities and operational matters.

(A) Insured Claim Activity

We are involved in claims and legal actions arising in the ordinary course of business. The amount of liability for these claims and lawsuits is uncertain. Revisions to our estimates are based on our analysis of subsequent information that we receive regarding various factors, including: (i) per claim information; (ii) company and industry historical loss experience; (iii) legislative enactments, judicial decisions, legal developments in the awarding of damages; and (iv) trends in general economic conditions, including the effects of inflation. Management revises its estimates based on the results of its analysis. This process assumes that experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for estimating the ultimate settlement of all claims. There is no precise method for subsequently evaluating the impact of any specific factor on the adequacy of the reserves, because the eventual redundancy or deficiency is affected by multiple factors. In the opinion of management, the ultimate disposition of these matters may have a material adverse effect on our consolidated financial position, results of operations, or liquidity.

The Company’s subsidiaries are, from time to time, named as defendants in various lawsuits incidental to their insurance operations. Legal actions relating to claims made in the ordinary course of seeking indemnification for a loss covered by the insurance policy are considered by the Company in establishing loss and LAE reserves.

The Company also faces, in the ordinary course of business, lawsuits that seek damages beyond policy limits. The Company continually evaluates potential liabilities and reserves for litigation of these types. Reserves for a loss are recorded if the likelihood of occurrence is probable and the amount can be reasonably estimated. If a loss, while not probable, is judged to be reasonably possible, management will make an estimate of a possible range of loss or state that an estimate cannot be made. Management considers each legal action using this guidance and records reserves for losses as warranted.

(B) Assessment Related Activity

We operate in a regulatory environment where certain entities and organizations have the authority to require us to participate in assessments. Currently these entities and organizations include, but are not limited to, Florida Insurance Guaranty Association (“FIGA”), Citizens Property Insurance Corporation (“Citizens”), Florida Hurricane Catastrophe Fund (“FHCF”) and Florida Joint Underwriters Insurance Association (“JUA”). As a direct premium writer in the state of Florida, we are required to participate in certain insurer solvency associations under Florida Statutes Section 631.57(3) (a), administered by FIGA.

FNIC is also required to participate in an insurance apportionment plan under Florida Statutes Section 627.351, which is referred to as a JUA Plan. The JUA Plan provides for the equitable apportionment of any profits realized, or losses and expenses incurred, among participating automobile insurers. In the event of an underwriting deficit incurred by the JUA Plan which is not recovered through the policyholders in the JUA Plan, such deficit shall be recovered from the companies participating in the JUA Plan in the proportion that the net direct written premiums of each such member during the preceding calendar year bear to the aggregate net direct premiums written in this state by all members of the JUA Plan. FNIC was not assessed by the JUA Plan during 2015 or 2014. Future assessments by this association are undeterminable at this time.

(C) Operational Matters

The Company files federal income tax returns as well as multiple state and local tax returns.The Company’s consolidated federal and state income tax returns for 2012 - 2014 are open for review by the Internal Revenue Service (“IRS”) and the various state taxing authorities. The Company’s 2011 federal tax return was reviewed by the IRS and a “no change” report was issued indicating that the IRS is in agreement with the tax positions presented on the 2011 return. The 2014 federal and state income tax returns were timely filed by the extended filing deadline of September 15, 2015.The Company does not have any known uncertain tax positions and all tax positions are evaluated in accordance with FIN 48. Any change to or resolution of tax reserves could be material to the Company’s results of operations for any period, but is not expected to be material to the Company’s financial position.

The Company has recorded a net deferred tax liability of $4.8 million as of September 30, 2015 compared with $1.3 million as of December 31, 2014.

The calculation of current and deferred income taxes presents management’s assessment of the amount of current and future taxes to be paid. The calculation of deferred tax assets and liabilities is in accordance with ASC 740. These assets and liabilities may be impacted if new information not previously available is considered in future analysis and calculations. Because of the unpredictability and complexity of these future uncertainties the ultimate resolution of the tax payment may be an amount that is materially different from the current estimate of the tax liabilities. As of September 30, 2015 the Company has recorded a net deferred taxliability of $4.8million. The primary reason for the change in deferred tax liabilities include the tax impact of the appreciation in the market value of the available-for-sale securities.  Any change in circumstances leading to a change in the tax liability would be recorded in the period that the change in circumstances occurs.

The Company is not currently involved in any material legal actions arising from the ordinary course of business that are not related to the insured claims activity.

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Stock Compensation Plans (Tables)

9 Months Ended

Sep. 30, 2015

Stock Compensation Plans [Abstract]

Activity in Stock Option and Incentive Plans

Activity in our stock option and incentive plans for the period from January 1, 2013 to September 30, 2015 is as follows.

	1998 Plan					2002 Plan					2012 Plan
	Number of Shares			Weighted Average Option Exercise Price		Number of Shares			Weighted Average Option Exercise Price		Number of Shares			Fair Market Value at Grant
Outstanding at January 1, 2013		78,500		$	12.73		702,597		$	5.17		-		$	-
Granted		-		$	-		-		$	-		250,000		$	5.54
Exercised		(500	)	$	8.67		(165,577	)	$	7.15		-		$	-
Cancelled		(75,000	)	$	12.92		(13,499	)	$	5.41		(500	)	$	5.54
Outstanding at January 1, 2014		3,000		$	8.67		523,521		$	4.54		249,500		$	5.54
Granted		-		$	-		-		$	-		268,648		$	5.54
Exercised		(3,000	)	$	8.67		(299,735	)	$	5.10		(68,988	)	$	-
Cancelled		-		$	-		(4,501	)	$	3.49		(1,359	)	$	5.54
Outstanding at January 1, 2015		-		$	8.67		219,285		$	3.79		447,801		$	5.54
Granted		-		$	-		-		$	-		116,140		$	26.81
Exercised		-		$	-		(34,135	)	$	3.81		(135,134	)	$	16.03
Cancelled		-		$	-		-		$	-		-		$	-
Outstanding at September 30, 2015		-		$	-		185,150		$	3.79		428,807		$	14.57

Maturity Schedule of Exercisable Options Outstanding

Options outstanding as of September 30, 2015 are exercisable as follows.

	2002 Plan
Options Exercisable at:	Number of Shares		Weighted Average Option Exercise Price
September 30, 2015		184,150	$	3.79
December 31, 2015		1,000	$	3.79
December 31, 2016		-	$	3.79
December 31, 2017		-	$	3.79
December 31, 2018		-	$	3.79
December 31, 2019		-	$	3.79
Thereafter		-	$	3.79
Total options exercisable		185,150

Summary Information about Stock Option Plans

Summary information about the Company’s stock option plans at September 30, 2015 is as follows.

	Range of Exercise Price		Outstanding at September 30, 2015		Weighted Average Contractual Periods in Years		Weighted Average Exercise Price		Exercisable at September 30, 2015
2002 Plan	$	2.45 - $4.40		185,150		5.86	$	3.79		184,150

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Investments, Debt Securities by Contractual or Expected Maturity Periods (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Amortized Cost [Abstract]
Due in one year or less, Amortized Cost	$ 19,635,000	$ 16,777,000
Due after one through five years, Amortized Cost	188,397,000	173,236,000
Due after five through ten years, Amortized Cost	136,989,000	98,404,000
Due after ten years, Amortized Cost	26,000	26,000
Total Amortized Cost	345,047,000	288,443,000
Estimated Fair Value [Abstract]
Due in one year or less, Estimated Fair Value	19,659,000	16,797,000
Due after one through five years, Estimated Fair Value	190,047,000	174,273,000
Due after five through ten years, Estimated Fair Value	138,449,000	100,259,000
Due after ten years, Estimated Fair Value	33,000	33,000
Total Estimated Fair Value	348,188,000	291,362,000
Federated National [Member] | United States Treasury Notes Maturing in 2016 [Member]
Estimated Fair Value [Abstract]
Investment on deposit, as required by law for FNIC and MNIC	$ 60,674	$ 61,465
Investment securities, maturity date	Dec. 31, 2016	Dec. 31, 2016
Federated National [Member] | United States Treasury Notes Maturing in 2022 [Member]
Estimated Fair Value [Abstract]
Investment on deposit, as required by law for FNIC and MNIC	$ 2,204,798	$ 2,208,588
Investment securities, maturity date	Dec. 31, 2022	Dec. 31, 2022
Federated National [Member] | Statutory Deposit Held in Trust [Member]
Estimated Fair Value [Abstract]
Investment on deposit, as required by law for FNIC and MNIC	$ 300,000

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Summary of Significant Accounting Policies and Practices (Policies)

9 Months Ended

Sep. 30, 2015

Summary of Significant Accounting Policies and Practices [Abstract]

Critical Accounting Policies

(A)  Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.

The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with management’s evaluation of the determination of (i) liability for unpaid losses and LAE, (ii) the amount and recoverability of amortization of DPAC, and (iii) estimates for our reserves with respect to finance contracts, premiums receivable and deferred income taxes. Various assumptions and other factors underlie the determination of these significant estimates, which are described in greater detail in Footnote 2 of the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2014, which we included in the Company’s Annual Report on Form 10-K which was filed with the SEC on March 16, 2015.

We believe that there were no significant changes in those critical accounting policies and estimates during the nine months ended September 30, 2015. Senior management has reviewed the development and selection of our critical accounting policies and estimates and their disclosure in this Form 10-Q with the Audit Committee of our Board of Directors.

The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, and in the case of unpaid losses and LAE, an actuarial valuation. Management regularly reevaluates these significant factors and makes adjustments where facts and circumstances dictate. In selecting the best estimate, we utilize various actuarial methodologies. Each of these methodologies is designed to forecast the number of claims we will be called upon to pay and the amounts we will pay on average to settle those claims. In arriving at our best estimate, our actuaries consider the likely predictive value of the various loss development methodologies employed in light of underwriting practices, premium rate changes and claim settlement practices that may have occurred, and weight the credibility of each methodology. Our actuarial methodologies take into account various factors, including, but not limited to, paid losses, liability estimates for reported losses, paid allocated LAE, salvage and other recoveries received, reported claim counts, open claim counts and counts for claims closed with and without payment for loss.

We are required to review the contractual terms of all our reinsurance purchases to ensure compliance with U.S. GAAP, which establishes the conditions required for a contract with a reinsurer to be accounted for as reinsurance and prescribes accounting and reporting standards for those contracts. Contracts that do not result in the reasonable possibility that the reinsurer may realize a significant loss from the insurance risk assumed generally do not meet the conditions for reinsurance accounting and must be accounted for as deposits. The guidance also requires us to disclose the nature, purpose and effect of reinsurance transactions, including the premium amounts associated with reinsurance assumed and ceded. It also requires disclosure of concentrations of credit risk associated with reinsurance receivables and prepaid reinsurance premiums.

Investments classified as held-to-maturity include debt securities wherein the Company’s intent and ability are to hold the investment until maturity and are carried at amortized cost without consideration to unrealized gains or losses. Investments classified as trading securities include debt and equity securities bought and held primarily for sale in the near term and are carried at fair value with unrealized holding gains and losses included in current period operations. Investments classified as available-for-sale include debt and equity securities that are not classified as held-to-maturity or as trading security investments and are carried at fair value with unrealized holding gains and losses excluded from earnings and reported as a separate component of shareholders’ equity, namely “Other Comprehensive Income”.

A decline in the fair value of an available-for-sale security below cost that is deemed other-than-temporary results in a charge to income, resulting in the establishment of a new cost basis for the security. Premiums and discounts are amortized or accreted, respectively, over the life of the related debt security as an adjustment to yield using a method that approximates the effective interest method. Dividends and interest income are recognized when earned. Realized gains and losses are included in earnings and are derived using the specific-identification method for determining the cost of securities sold.

Financial instruments, which potentially expose us to concentrations of credit risk, consist primarily of investments, premiums receivable, amounts due from reinsurers on paid and unpaid losses and finance contracts. We have not experienced significant losses related to premiums receivable from individual policyholders or groups of policyholders in a particular industry or geographic area. We believe no credit risk beyond the amounts provided for collection losses is inherent in our premiums receivable or finance contracts. In order to reduce credit risk for amounts due from reinsurers, we seek to do business with financially sound reinsurance companies and regularly review the financial strength of all reinsurers used. Additionally, our credit risk in connection with our reinsurers is frequently mitigated by the establishment of irrevocable clean letters of credit in favor of FNIC.

The fair value of our investments is estimated based on prices published by financial services or quotations received from securities dealers and is reflective of the interest rate environment that existed as of the close of business on September 30, 2015 and December 31, 2014. Changes in interest rates subsequent to September 30, 2015 and December 31, 2014 may affect the fair value of our investments.

The carrying amounts for the following financial instrument categories approximate their fair values at September 30, 2015 and December 31, 2014 because of their short-term nature: cash and short-term investments, premiums receivable, finance contracts, due from reinsurers, revolving credit outstanding, claims payments outstanding, accounts payable and accrued expenses.

Impact of New Accounting Pronouncements

(B) Impact of New Accounting Pronouncements

In May 2015, the FASB issued Accounting Standard Update (“ASU”) 2015-09, Financial Services – Insurance (Topic 944): Disclosures about Short-Duration-Contracts. The amendments in this ASU apply to all insurance entities that issue short-duration contracts as defined in Topic 944, Financial Services—Insurance. The amendments require insurance entities to disclose for annual reporting periods the following information about the liability for unpaid claims and claim adjustment expenses: (1) Incurred and paid claims development information by accident year, on a net basis after risk mitigation through reinsurance, for the number of years for which claims incurred typically remain outstanding (that need not exceed 10 years, including the most recent reporting period presented in the statement of financial position). Each period presented in the disclosure about claims development that precedes the current reporting period is considered to be supplementary information. (2) A reconciliation of incurred and paid claims development information to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, with separate disclosure of reinsurance recoverable on unpaid claims for each period presented in the statement of financial position. (3) For each accident year presented of incurred claims development information, the total of incurred-but-not-reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses, accompanied by a description of reserving methodologies (as well as any changes to those methodologies). (4) For each accident year presented of incurred claims development information, quantitative information about claim frequency (unless it is impracticable to do so) accompanied by a qualitative description of methodologies used for determining claim frequency information (as well as any changes to these methodologies). (5) For all claims except health insurance claims, the average annual percentage payout of incurred claims by age (that is, history of claims duration) for the same number of accident years as presented in (3) and (4) above. The amendments in this ASU are effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. Because the new guidance does not affect the existing recognition or measurement guidance, the adoption is not expected to have any effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and significantly changes the consolidation analysis required. The amendments in this ASU affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (i) modify the evaluation of whether limited partnership and similar legal entities are VIEs ,(ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (iv) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015, and, earlier adoption is permitted. The adoption of the amendments in this ASU will not have a material impact on our financial position, results of operations or cash flows.

Other recent accounting pronouncements issued by FASB, the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

Stock Options

(C) Stock Options

Pursuant to FASB issued guidance, compensation cost recognized during the nine months ended September 30, 2015 includes compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the guidance.

Earnings per Share

(D) Earnings per Share

Basic earnings per share (“Basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period presented. Diluted earnings per share (“Diluted EPS”) is computed by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding during the period presented.

Adjustments

(E) Adjustments

In conjunction with our third quarter 2015 analysis of actual experience to date under the July 1, 2014 quota share reinsurance contract, we re-evaluated the accounting treatment for quota share reinsurance contracts with retrospective rating provisions.  As a result of this re-evaluation, we have concluded reinsurance contracts which have retrospective rating provisions should be accounted for under Accounting Standards Codification 944, Financial Services — Insurance (“ASC 944”), where amounts due to (from) the assuming companies are accrued based on estimated contract experience to date as though the contracts were terminated.  The adjustment to the accounting treatment related to reinsurance contracts with retrospective rated provisions resulted in the following changes:

(a) We eliminated recording of future estimated quota share profits in one line item, “Quota Share Profit Sharing,” in the financial statements.

(b) Amounts due to (from) the assuming companies have been accrued based on actual contract experience to date as though the contracts were terminated.  These accruals impacted the following income statement line items: gross ceded premiums, loss and loss adjustment expenses, and deferred policy acquisition costs.

The adjustments to our accounting for the July 1, 2014 quota share reinsurance treaty, inclusive of other adjustments, are not material in any prior quarter or annual period based on an analysis of quantitative and qualitative factors in accordance with SEC Guidance.

As a result, we recorded these adjustments during the third quarter of 2015.  These adjustments increased net income by $2.2 million for the three and nine month periods ended on September 30, 2015.

Additionally, the quota share reinsurance accounting adjustments impacted the following income statement line items for the three and nine month periods ended on September 30, 2015:

· Gross ceded premiums decreased by $10.9 million,

· Loss and loss adjustment expenses increased by $4.5 million, and

· Deferred acquisition costs increased by $1.5 million.

Finally, the quota share reinsurance accounting adjustments impacted the following balance sheet line items for the three and nine months periods ended on September 30, 2015:

· Prepaid reinsurance premiums increased by $10.9 million,

· Reinsurance recoverable, net decreased by $4.5 million, and

· Deferred policy acquisition costs decreased by $1.5 million.

· The $14 million balance previously reported under Contingent quota-share profit sharing has been reclassed to the prepaid reinsurance premiums line item

· The $7 million balance previously reported under Deferred quota-share profit sharing has been reclassed to the reinsurance recoverable, net line item