Item 1.01 Entry into a Material Definitive Agreement

To mitigate our risk of hurricanes and other catastrophes, each year we implement a comprehensive reinsurance program whereby we pay premiums to other entities that agree to reimburse us for loss and loss adjustment expenses associated with certain catastrophic events. We have secured our reinsurance program for the year June 1, 2012 through May 31, 2013 by entering into agreements with multiple private reinsurance companies and with the State Board of Administration of Florida, which administers the Florida Hurricane Catastrophe Fund. The private reinsurance companies include Amlin AG, Aeolus Reinsurance Ltd., Renaissance Reinsurance Ltd., Montpelier Reinsurance Ltd., various Lloyd's syndicates, and National Liability & Fire Insurance Company, which is a subsidiary of Berkshire Hathaway, Inc.

The agreements contain various coverages, limits and retentions. Most of the agreements cover hurricanes, tropical storms, tornados and other catastrophes. The Florida Hurricane Catastrophe Fund and the National Liability & Fire Insurance Company agreements cover storms designated as hurricanes by the National Hurricane Center. We utilized sophisticated models to estimate the probable maximum loss of a 1 in 100 year catastrophic event and purchased protection that exceeds that probable maximum loss. Our reinsurance program provides coverage for events as large as $549 million. The total cost of our reinsurance program is approximately $92 million. The payments are divided into installments throughout the contract year. Our retention is approximately $9 million.

Our private reinsurance program provides approximately $282 million of coverage, excluding $10 million of coverage provided by our own subsidiary company, Claddaugh Casualty Insurance Company Ltd. Under the contracts, we retain approximately $9 million of risk in any one event. The program includes an aggregate layer of $52 million which can be used for any number of events throughout the contract period. All our private reinsurers are AM Best rated "A" or better or have fully collateralized their potential obligations to us. The estimated cost is $73 million.

The Florida Hurricane Catastrophe Fund component is providing protection up to $249.5 million. The total estimated cost is $19 million.

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