Item 3. LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

In

the

ordinary

course

of

business,

the

Company

is

involved

in

lawsuits,

arbitrations

and

other

formal

and

informal

dispute

resolution

procedures,

the

outcomes

of

which

will

determine

the

Company’s

rights

and

obligations

under insurance

and reinsurance

agreements.

In some

disputes,

the Company

seeks

to

enforce

its

rights under an agreement or to

collect funds owing to it.

In other matters, the Company

is resisting attempts by

others

to

collect

funds

or

enforce

alleged

rights.

These

disputes

arise

from

time

to

time

and

are

ultimately

resolved through

both informal

and formal

means, including

negotiated resolution,

arbitration and

litigation.

In

all such matters,

the Company believes

that its positions

are legally and

commercially reasonable.

The Company

considers

the statuses

of these

proceedings

when determining

its reserves

for unpaid

loss and

loss adjustment

expenses.

Aside from litigation and arbitrations

related to these insurance and reinsurance

agreements, the Company is

not a party to any other material litigation

or arbitration.