Related Party Transactions

6 Months Ended

Jun. 30, 2012

Related Party Transactions

10. Related Party Transactions

Fox Paine & Company, LLC

As of June 30, 2012, Fox Paine & Company, LLC (“Fox Paine”) beneficially owned shares having approximately 92.8% of the Company’s total outstanding voting power. Fox Paine can nominate a certain number of Directors, dependent on Fox Paine’s percentage ownership of voting shares in the Company, for so long as Fox Paine holds an aggregate of 25% or more of the voting power in the Company. Fox Paine controls the election of all of the Company’s Directors due to its controlling share ownership. The Company’s Chairman is a member of Fox Paine. The Company relies on Fox Paine to provide management services and other services related to the operations of the Company.

As of June 30, 2012 and December 31, 2011, Wind River Reinsurance was a limited partner in Fox Paine Capital Fund, II, which is managed by Fox Paine. This investment was originally made by United National Insurance Company in June, 2000 and pre-dates the September 5, 2003 acquisition by Fox Paine of Wind River Investment Corporation, which was the predecessor holding company for United National Insurance Company. The Company’s investment in this limited partnership was valued at $8.6 million and $6.6 million as of June 30, 2012 and December 31, 2011, respectively. As of June 30, 2012, the Company had an unfunded capital commitment of $2.5 million to the partnership. A distribution of $0.15 million was received from the limited partnership during the second quarter of 2011. There were no distributions received from the limited partnership during the second quarter of 2012.

The Company incurred management fees of $0.4 million in each of the quarters ended June 30, 2012 and 2011 and $0.8 million in each of the six months ended June 30, 2012 and 2011 as part of the annual management fee that is paid to Fox Paine.

Validus Reinsurance, Ltd.

Validus is a participant in a quota share retrocession agreement with Wind River Reinsurance. The Company estimated that the following written premium and losses related to the quota share retrocession agreement have been assumed by Validus from Wind River Reinsurance:

	Quarter Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2012		2011		2012		2011
Ceded written premium	$	—	$	—	$	—	$	(76	)
Ceded paid losses		—		—		—		54

Edward J. Noonan, the chairman and chief executive officer of Validus, was a member of the Company’s Board of Directors until June 1, 2007, when he resigned from the Company’s Board. Validus remains a related party since the current quota share retrocession agreement between Validus and Wind River Reinsurance was put in place during the period when Mr. Noonan was a member of the Company’s Board of Directors.

Frank Crystal & Company

During each of the quarters and six months ended June 30, 2012 and 2011, the Company paid $0.1 million in brokerage fees to Frank Crystal & Company, an insurance broker. James W. Crystal, the chairman and chief executive officer of Frank Crystal & Company, is a member of the Company’s Board of Directors.