IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KOTI MATUA O AOTEAROA
TAMAKI MAKAURAU ROHE
CIV 2018-404-306
Under the Part 4 of the Insurance (Prudential Supervision) Act 2010 and Part 16 of the Companies Act 1993 In the matter of an application to appoint liquidators to the defendant company Between RESERVE BANK OF NEW ZEALAND Plaintiff And CBL INSURANCE LIMITED Defendant FIFTH AFFIDAVIT OF TOBY FIENNES: REPLY EVIDENCE Sworn: 18 October 2018 BUDDLE FINDLAY NEW ZEALAND LAWYERS Barristers and Solicitors Wellington Solicitor Acting: Scott Barker / Bridie McKinnon Email: scott.barker@buddlefindlay.com / bridie.mckinnon@buddlefindlay.com Tel 64 4 499 4242 Fax 64 4 499 4141 PO Box 2694 DX SP20201 Wellington 6140 rfp Counsel Acting: Nathan Gedye QC Tel 64 9 358 3848 PO Box 2097 Shortland Street Auckland 1140

I, TOBY JONATHAN TWISLETON-WYKEHAM-FIENNES (Toby Fiennes), of Wellington, banker, swear:

1. I have knowledge of the facts stated in this affidavit and am duly authorised
   by the plaintiff to make this affidavit on its behalf. I refer to my earlier affidavits in this proceeding.
2. I make this affidavit both in support of the application for liquidation and in
   opposition to the application for the removal of the interim liquidators. I attach marked "TF3" a paginated bundle of documents to which I refer in the course of my affidavit. References to page numbers are references to documents in the bundle of documents. I adopt abbreviations made in my earlier affidavits.
3. I have read the following further affidavits since swearing my fourth affidavit:
   (a) Peter Harris
   (b) Brendon Gibson
   (c) Morgan Evans affirmed 16 October 2018; and (d) Geoff Atkins affirmed 17 October 2018.
4. I make this further affidavit to reply to matters raised by the contradictors and
   to update evidence in relation to matters material to the Bank's liquidation application that have arisen since my last affidavit was sworn in this proceeding on 11 July 2018, including:
   (a) Repeated failures by CBLI management to disclose new ceded insurance business during 2017 and 2018; (b) certain payments made in February 2018 by CBLI that the Bank says were in breach of directions that it had issued to CBLI; (c) The proposal by Korda Mentha for CBLI to be placed into voluntary administration to implement a plan put forward by Messrs Harris and Hutchison; (d) concerns that the Bank has about another substantial financial guarantee entered into by CBLI, shortly after CBLI's Appointed Actuary responded to the Elite Skilled Person Report on 30 June 2017. The bond in question was written shortly before the Bank informed CBLI's rsf BR58225539M 3

board of directors that it considered that CBLI's business was not being carried on in a prudent manner.
5. I also attach:
(a) a copy of CBLI's licence, issued by the Bank on 4 September 2013 subject to the conditions imposed by the Bank (pages 1-5). (b) extracts from the Companies Office in respect of CBLI (pages 6-12), and LBC Holdings New Zealand Ltd (in voluntary administration) (pages 13-14); (c) extracts from the financial statements for CBLI for 2014 and 2016 showing dividends paid (pages 15-21); (d) a copy of an article which appeared in the New Zealand Herald online edition on Saturday, 21 July 2018 by Brian Gaynor entitled "Why shareholders are right to be upsef' (pages 22-28) (e) A copy of the press release published on the NZX website on 13 July 2018 announcing the resignation of three of the directors of CBLI, Sir John Wells, Paul Donaldson and Ian Marsh (page 29). United Specialty
6. In my first affidavit of 23 February 2018, I set out a series of payments to
United Specialty that were among those that the Bank considered were made by CBLI in breach of directions from the Bank. Mr Harris' affidavit of 24 May 2018 acknowledges that the payments were made, but justifies the payments being made because "there were important commercial reasons for the payments" and Mr Harris considers "that it was in the interests of CBLI to make them."
7. In July 2017 and January 2018 the Bank required CBLI to disclose a range
of information to it about business ceded to it and by which insurers. In neither of CBLI's responses to those required disclosures did CBLI disclose that it had ceded business under four different reinsurance contracts with United Specialty. CBLI also appears deliberately to have split a single payment to United Specialty into three separate payments in an unsuccessful attempt to circumvent a direction from the Bank restricting payments over NZD5 million. BR58225539M 3

8. I set out below further details of, and some background to these payments.
   I have not attached every document I refer to.
   Background
9. On 26 July 2017, the Bank issued a notice under section 121 of IPSA
   requiring CBLI to supply the Bank, by a due date of 02 August 2017, with certain information in respect of all ceding insurers for which CBLI is a reinsurer (pages 30-35). The required information included the name, country of domicile and country of reinsured business of all ceding insurers of CBLI.
10. On 2 August 2017 Michael Parrott uploaded CBLI’s response to the Bank.
    United Speciality was not listed as a ceding insurer of CBLI, and the United States was not listed as either a country of domicile or a country of reinsured business for any ceding insurer (page 36).1
11. In a letter dated 25 August 2017, the Bank requested that CBLI provide a
    plan to restore solvency.
12. In October 2017, the Bank learned about a binding commitment to sell
    premium debt to Castlerock, as I discussed in my fourth affidavit between paragraphs 53-61. On 8 November 2017, CBLI advised the Bank by letter that the transaction was in response to the Bank’s 25 July 2017 direction on CBLI to maintain a solvency margin of 170%. The Bank was concerned that instead of providing a plan to restore solvency, CBLI had committed to a large transaction, ostensibly for the purposes of its prudential obligations to the Bank, without first notifying or consulting the Bank, at a time when CBLI was on notice of the Bank's concerns that it was not operating in a prudent manner.
13. Further, on 14 November 2017, Peter Harris notified the Bank by email that
    the CBL group was investigating restructuring options and a potential balance sheet reinsurance protection proposal for CBLI.
14. On 22 November 2017 the Bank issued a direction under section 143 of
    IPSA requiring CBLI to consult with the Bank about the Castlerock transaction and any other actions or proposed actions it intended to take in respect of resolving its financial difficulties, prior to entering any transaction 11 The 26 July 2017 section 121 notice was revoked and replaced by an amended notice on 8 August 2017. However, as the due date for the relevant information referred to in para 1 was 2 August 2017 the revocation had no impact on those requirements. , -rrf BF\58225539\13 Page 4

or series of related transactions involving payment or transfer of assets in excess of NZD5 million (attached at TJF1/35, EB1/69). 16. 17. 18. 19. In a letter addressed to me on 5 December 2017 Peter Harris contested the directions issued on 25 July 2017 and 22 November 2017, and complained that the directions did not state the grounds on which they were issued, as required by section 147(1) of IPSA. Mr Harris requested that the Reserve Bank provide a statement of the grounds (pages 37-38). Rupert Barber (CBLI's nominated supervisor within the Bank) replied on my behalf on 7 December 2017, stating that the grounds for each of the directions were explained in detail in the covering letters accompanying each direction and signed by a Deputy Governor. The covering letters were attached to his email. Mr Barber also highlighted the Bank’s concerns expressed in the 22 November 2017 letter regarding the Castlerock transaction, the quality of the documentation of the transaction, and the rapid business expansion of CBLI (page 39). On 8 December 2017 Peter Harris asked Rupert Barber in an email to clarify that the direction did not apply to insurance “business as usual” transactions including payments of claims or premium bordereaux in the ordinary course of business (page 40). Rupert Barber replied on 11 December 2017 that the direction “does not cover payments CBL is obliged to make under existing contracts that were entered into prior to the date of the direction. It will apply to all new transactions, prior to them being entered that are over the value threshold... We do not expect this to have much impact on the “ordinary course of business". If we find that is the case we can review the direction, but in the meantime we expect to be consulted as outlined." (page 41). Mr Barber’s comments did not amend the direction, as directions can only be amended by a Deputy Governor or the Governor. His comments were explanatory and were made in reliance on CBLI’s response to the 26 July 2017 notice being compliant in all respects. On 25 January 2018, the Bank issued a section 121 notice requiring CBLI to supply to the Bank information in respect of the insurance and insurance￾related business of CBLI, and information in respect of the reinsurance business of CBLI separately for each ceding insurer and in total (including country of domicile) (pages 42-44). The purpose was to receive updated and more detailed information. Michael Parrott responded on 16 February 16. 17. 18. 19. rsk BF\58225539\13

2018, confirming that since the 26 July 2017 notice there had been no new countries of business and no new ceding insurers (pages 45-49). Again, he did not disclose that United Specialty was a ceding insurer of CBLI.
20. On 29 January 2018, the Bank via notice modified the 22 November 2017
direction to define “Consult” as “providing the Reserve Bank with sufficient information for the Reserve Bank to form an informed view on the proposed transaction, receiving feedback from the Reserve Bank, and having regard to that feedback before entering the transaction". (TJF1/40-45, EB1/74-79)
21. At 8:56pm on Sunday 11 February 2018 Michael Parrot informed Rupert
Barber in an email that CBLI had agreed to reduce its reinsurance exposure to the Alpha Insurance A/S (Alpha) book by making a €25 million payment to Alpha, in consideration of receiving a credit reduction of €27 million of current and future claims on this business. He stated that this was due to the Danish regulator threatening to force Alpha to close its business if it could not significantly reduce its reinsurance exposure to CBLI. The payment was expected to go through later that night. While he suggested that the payment did not come under the existing directions “being the payment of BAU claims", he noted CBLI would like to inform the Bank of the payment and discuss it further (pages 50-51). Following a phone call from Rupert Barber, Michael Parrot confirmed in an email on 12 February 2018 to Rupert Barber that CBLI had “effectively put the payment on-hold (by unapproving the transfer)".
22. The Bank did not consider the payment to be “BAU”, because it was to be
made under a new agreement entered by CBLI and Alpha only on 9 February 2018 and was in the nature of a prepayment of insurance liabilities.
23. On 12 February 2018 the Bank issued a direction under section 143 of
IPSA to CBLI not to make payment to Alpha or any related company as proposed by Michael Parrott in his email to the Bank of 8:56pm, Sunday 11 February 2018 (TJF1/62-66, EB1/96-100). On 15 February 2018 Peter Harris by letter (attached to an email from Michael Parrott at 4:56pm) requested the Bank’s permission to make the payment to Alpha (TFJ1/67- 68, EB1/101). I denied this request by email at 5:03pm Friday 16 February 2018 to Peter Harris (TJF1/71, EB1/105). While the Reserve Bank preferred to wait for the investigation findings of McGrathNicol and Finity and Milliman (the draft report from whom was imminent), and confirmation ftff BR58225539M 3

of CBLI’s solvency, we did not want to approve a prepayment of liabilities if it eventuated, on the basis of the investigation, that CBLI was insolvent. My affidavit of 23 February 2018 explains this in some detail at paragraphs 22-22.
24. On Wednesday 21 February 2018 Robert Cole and Rupert Barber received
an email from Lisa O’Mahony at the Central Bank of Ireland. Ms O’Mahony asked if the Bank directions to CBLI were still in place, whether there had been any requests for approval for any large transactions recently, and whether any such transactions were approved by the Bank. This led us to suspect that CBLI may have made a large payment without consulting the Bank. That same day the Bank issued a notice under section 121 of IPSA requiring CBLI to supply the Bank particular information in respect of any payment or transfer of assets made on or after 1 February 2018 for NZD1 million or above by either CBLI or CBL Corporation Limited or any of its subsidiaries. The reporting was due at noon on 21 February 2018, with subsequent reporting in respect of any payments or transfers within scope of the notice that have not previously been reported to the Reserve Bank, or written confirmation of no such payments, due at 5pm on each weekday.
25. In its response dated 21 February 2018, CBLI reported payments of
(among other payments):
(a) NZD4,197,400;
(b) NZD4,508,857; and
(c) NZD4,508,857, to United Specialty on 14 and 15 February 2018 (TJF1/73, EB1/107).
26. The reasons given for these payments were that collateral was due for
Texcaz business in accordance with the reinsurance contract; Texcaz collateral uplift for AM Best downgrade in accordance with the reinsurance contract; and Texcaz collateral uplift for equity decline over 10% in accordance with the reinsurance contract, respectively.
27. On 23 February 2018 Robert Cole and Rupert Barber of the Bank rang
Michael Parrott to discuss United Specialty, among other issues. A file note of the matters discussed during the call was made by Mr Barber (pages 52- 53). Mr Parrott was asked if United Specialty was a new cedant that had tf BR58225539M 3

not been on previous lists of cedants provided by CBLI, including on 16 February 2018. 29. 30. 31. Mr Parrott confirmed that United Specialty was a new cedant, representing new business in 2017. He stated that previous information was from 31 December 2016. This latter statement overlooked that information on all cedants had been required by the s121 Notice dated 25 January 2018. Mr Parrott also specifically asserted that the three payments made earlier in the month were three distinct payments. On 26 April 2018 the Bank received copies of the United Specialty reinsurance documentation (with Texcaz involved as the agent for United Specialty), from the interim liquidators of CBLI. The initial reinsurance agreement with United Specialty had been signed on 2 February 2017, with an effective date of 1 November 2016. Further agreements altering the level of CBLI’s reinsurance obligations were signed 8 December 2017 and 5 January 2018, effective at 1 December 2017 and 1 January 2018 respectively. An addendum was signed 14 May 2017, effective 1 November 2016, and an amendment signed 25 October 2017, effective 1 November 2016. The Bank considers that these payments to United Speciality were made in breach of the 22 November 2017 direction (modified 29 January 2018), as the payments are all related to the Texcaz collateral and collectively are over NZD5 million, although structured as a series of related payments. CBLI did not inform the Bank that it was entering these transactions, nor did it consult with the Bank. On 7 May 2018, the Bank received internal CBLI emails regarding the United Specialty payments from the interim liquidator. The Collateral Request Summary regarding Texcaz (dated 9 February 2018 and attached to Carl Griffith’s email to Peter Harris, Sir John Wells and Michael Parrott at 9:51 am 23 February 2018), requested the lump sum of USD9,760,055 as the “Total Collateral Required as of 2/9/2018” (pages 54-57). An email chain between Henry Ray and Aylene Sy, among others on 14 February 2018 initially requested that the payment to United Specialty be made in a lump sum of USD9,760,055 (pages 58-60). At 12:02 pm that day Mr Ray requested a change to the payment, splitting it into USDS,100,000 for “Collateral Amount Past Due”, “USDS,330,027 for “A.M. Best Rating Downgrade” (both to be paid on 14 February 2018) and 29. 30. 31. -Kf BR58225539M 3

USDS,330,027 for “Surplus/Equity Decline exceeding 10%” (to be paid on 15 February 2018). These documents support the Bank’s conclusion that the payments were related.
33. These were not “business as usual” payments because “business as usual”
transactions involved cedants the Bank had been made aware of, being those cedants identified in response to the section 121 notice of 26 July 2017
34. It was apparent from the 21 February schedule of payments that CBLI had
breached the 26 July 2017 and 25 January 2018 section 121 notices by failing to supply to the Bank the required information in respect of United Specialty as a ceding insurer, for which CBLI was a reinsurer as at 2 August 2017. Another undisclosed liability
35. Included in the recent material supplied by CBLI under a s121 notice, was a
100% reinsurance policy effective January 2018 for Great Eastern General Insurance for cover of USD7.5 million. Great Eastern General Insurance was not listed in the 2 August 2017 information on CBLI’s reinsurance, and Michael Parrott’s 16 February 2018 response to section 121 notice stated there were no new ceding insurers. Therefore it appears this policy was a breach of the 25 July 2017 directions requiring prior written permission from the Bank for new or increased financial support of any insurers not already owned by CBL group (referred to above in relation to United Specialty). Castlerock transaction
36. In Mr Harris' fourth affidavit he discussed the Castlerock transaction. I
make the following further comments in reply to his evidence.
(a) In paragraph 63 he states that “Bancorp had a relationship with Castlerock Receivables Management Ltd’. This is incorrect. Castlerock is part of the wider Bancorp group, but at the time of the proposal to CBLI Castlerock Receivables Management Ltd had not yet been incorporated. (b) Paragraph 64 states “These net premium receivables of €43m owing to CBLI were more than 12 months old and CBLI had written them off for regulatory solvency capital purposes, as required under IPSA.” It was indeed the case that the June 2017 solvency calculations had a 100% BR58225539M3

(d)
(e)
(f)
(g)
(h)
BR58225539M3 risk charge but only in respect of $36m of premium. However, the July 2017 to November 2017 solvency calculations used a 40% risk charge for this (i.e. not written off for solvency purposes) on the basis of the terms sheet for the back-dated agreement with Castlerock. Paragraph 64 also states “The benefit to CBLI was that it obtained certainty of collection over the €43m, removing the credit risk of these net premiums, because Castlerock had agreed to take on the credit risk in the receivables.” Para 66 acknowledges that Castlerock was set up as a SPV for the transaction. Logically it follows that CBLI was still exposed to credit risk through the SPV. If the SPV had failed to collect the premiums in turn it would not have been able to pay CBLI. Paragraphs 67 and 68 refer to discussions with the auditors for year end reporting over the treatment of Castlerock, “... would not result in the accounting outcome that had been envisaged”. This is despite CBLI management having booked that treatment for accounting and solvency purposes from July 2017. Paragraph 70 (b) states “The receivables did not affect CBLTs solvency. They had been written off for solvency purposes as I have addressed above.” See my comments above at (b). Paragraph 70 (c) states “The transaction did not involve a discount to face value of the receivables as I have again addressed above." The terms sheet gave Castlerock rights over the gross amounts including all commissions and fees to SFS (and appeared to include Elite’s share also). The payment by Castlerock was set at the face value in CBLI’s accounts, which is net of commissions & fees and net of Elite’s share, i.e. considerably less. Furthermore, Castlerock only needed to make payments over a period of years. Paragraph 70 (d) states “The transaction was in the best interests of CBLI because the credit risk of €43m of overdue receivables was transferred to Castlerock." See my comments above in (c). Paragraph 70 (d) states ‘We had input from our actuaries regarding the transaction." The s121 notice dated 31 October 2017 required copies of all board papers, and minutes of discussions, relating to Castlerock and premium debt. There was no material, or reference to any material, from the appointed actuary, auditor’s actuary, or any other (d) (e) (f) (g) (h) BR58225539M3

actuary, in the response received 8 November 2017, apart from an item in a presentation to the board labelled “accounting and actuarial risks", which says “Castlerock is happy to work with CBL to assist in ensuring the sale is treated appropriately". The appointed actuary advised the Bank on both 12 October 2017 and 6 December 2017 that he had had no involvement (calculation or review) of the July to November 2017 solvency calculations that incorporated the Castlerock transaction. (i) Paragraph 70 (f) states “Mr Fiennes seeks to suggest that CBLI’s solvency calculations reflected the transaction even though it had not become effective. That is incorrect. The transaction had been implemented and become effective prior to being cancelled.” CBL’s solvency calculations were adjusted for Castlerock from July 2017 to November 2017. The terms sheet was signed in October 2017, and is an agreement to enter an agreement. We asked for the actual agreement (18 October 2017, 19 January 2018, 31 January 2018 & 7 February 2018). Only on 7 February 2018 did CBLI advise the Bank that the Castlerock transaction had been cancelled. Prior to this, for each enquiry by the Bank CBLI had responded along the lines that the actual agreement was not finalised, it was still being worked on, or it was not yet signed. I have since seen a draft agreement that recorded the transaction in much greater detail than the terms sheet (pages GI￾BS). I refer also to an email exchange between Mr Harris and Sir John Wells dated 2 February 2018 in relation to cancellation of the transaction (pages 84-85) (j) On 8 November 2017 in its s121 response, CBLI informed the Bank that some of the premium debt was caused by SFS not passing premiums on. Since SFS is acting as agent for the insurers, it would be usual for CBLI and ceding insurers to remain on risk for any policies for which the premium had been paid to SFS. El Toro gold mine - CDC surety bonds and shareholding
37. I refer to my fourth affidavit in which I referred to information obtained about
the relationship between CBLI and CDC, the owner of the El Toro gold mine and to Mr Honey's draft affidavit. I have recently been provided with a selection of emails and documents obtained by the Reserve Bank from the interim liquidators. These appear in an affidavit of Morgan Evans affirmed 16 October 2018 that I have read. BF\58225539\13

38. This further material reinforces the concerns I expressed in my fourth
    affidavit and the need for investigations of the possible civil and criminal consequences of the transactions and the shareholding that CBLI took in CDC. Independence of administrators of LBC Holdings Ltd (LBC) - standing

39. The Bank's concern with the potential lack of independence and standing of
    the administrators of LBC is not a personal criticism of the current administrators of LBC. Rather, it appears that CBLI has possible claims against LBC, as shareholder, (and the CBLI board members at the relevant times) for distributions totalling $25.5 million that LBC received when CBLI was balance sheet insolvent. LBC became the shareholder of CBLI in December 2013 (pages 86-89).

40. One basis for CBLI being balance sheet insolvent as far back as late 2013
    is found in a retrospective solvency assessment exercise that Finity has carried out on the Bank's instructions. A copy of Finity's report is attached to Mr Atkin's second affidavit dated 17 October 2018, a copy of which I have seen. A conclusion of that exercise is that CBLI was borderline balance sheet insolvent on the basis of PWC's actuarial valuation from at least 2013 through to the latest valuations at the end of 2017, consistently balance sheet solvent on the basis of Finity's valuation, and consistently IPSA insolvent on either valuation. Voluntary administration and the DOCA

41. The Bank's reasons for preferring liquidation, and rejecting the current
    DOCA are summarised in correspondence from the Bank’s solicitors on 1 October 2018 (pages 90-92). The background to this correspondence is set out below. It followed a period of engagement with Brendan Gibson and Neale Jackson that commenced with a meeting in Wellington on 30 August 2018, when for the first time the Bank was presented with the details of a draft DOCA.

42. Following that meeting on 30 August I wrote to Messrs Gibson and Jackson
    by email on 31 August 2018 to ensure they understood what it would take to convince the Bank that the DOCA was a better alternative to liquidation and that the Bank felt there was a long way to go in this regard. On 3 September Buddie Findlay asked Korda Mentha on our behalf that the DOCA be finalised by 14 September 2018. BR58225539M 3

43. By then it had become apparent that the DOCA depended on negotiations
    with the major ceding creditors, including Elite, which were not well￾advanced, were not subject to time frames and had an uncertain (indeed implausible) prospect of success in the terms Korda Mentha was promoting.

44. Members of the Bank's Insurance Oversight group have had discussions
    with the insurance regulators in Gibraltar, Ireland and Denmark, who have regulatory oversight of CBLI's three largest cedants; Elite, CBLIE and Alpha. Neither the Gibraltar nor Irish regulator is supportive of the proposed DOCA that has been suggested by Korda Mentha with Messrs Harris and Hutchison. The Danish regulator had previously noted that the liquidator of Alpha was opposed to it. A file note summarising those discussions appears at (pages 93-96).

45. As well as the implausibility of the DOCA the evidence outlined in this
    affidavit reinforces the Bank’s view of the public interest reasons in favour of the liquidation of CBLI. In that regard, the role that both Korda Mentha and Mr Harris expect Mr Harris and his key staff to play under the draft DOCA is of concern to the Bank. This is because of Mr Harris' management of CBLI until February 2018. Blackrock Trust/Aviron Capital bond

46. One of the Bank's additional concerns with a voluntary administration and
    DOCA arises in the context of information provided to the Bank by the interim liquidators.

47. The Bank has recently been made aware by the interim liquidators of the
    details of a financial surety (insolvency shortfall) agreement that CBLI entered into on 17 July 2017. The existence of this bond, and others the Bank has also recently been made aware of, adds to the Bank's concerns about whether CBLI was carrying on business in a prudent manner.

48. Pursuant to the 17 July 2017 agreement CBLI has guaranteed to the
    beneficiary, Blackrock Multi-Sector Income Trust (Blackrock), the obligations of Aviron Capital, LLC (Aviron) in the aggregate of USD63 million plus any outstanding interest obligations arising in note purchase agreements between Blackrock and Aviron (pages 97-110 extract only). The liability of CBLI expires on the later of either 31 December 2022 and one year and a day following full payment of amounts due by Aviron, notification by Blackrock that the agreement is no longer required, or full BR58225539\13 Page 13

payment by CBLI. The agreement does not appear to be terminable by CBLI other than for non-payment of premiums. On current exchange rates, the full liability under the guarantee would be in excess of NZD97 million.
49. The Bank has concerns about CBLI's decision to enter into this bond. The
bond was written a month after a prudential consultation meeting in which the Bank expressed concerns about CBLI's rapid expansion and reserving strategy. It was written 8 days before the Bank formally wrote to CBLI to state that it had reasonable grounds to conclude that CBLI may not be carrying on business in a prudent manner. The Bank's concerns include:
(a) First, CBLI was aware of concerns about the strength of its covenant as reinsurer to Elite. (b) Secondly, this guarantee has no reinsurance cover, according to the draft 2017 Financial Condition Report. I have not attached this document due to its size but the Bank can provide a copy to other parties on request. The only recourse that CBLI has is to Aviron, whose default would trigger CBLI's liability to Blackrock. (Pages 114-116) (c) Third, there is no security in favour of CBLI to support Aviron's liability under the indemnity to CBLI. (d) Fourth, the amount of the bond is larger than CBLI's solvency margin of NZD72 million as at 31 December 2016, which was the latest margin reported to the Bank at the date that the bond was issued. Therefore the limit of cover for this policy was high relative to CBL’s capital at the time the policy was issued. An early claim at the limit of the cover would, by itself, have caused a breach of CBLI's solvency requirements. (e) Finally, it is a significant, single exposure when considered alongside CBLI's reported capital of $156 million, as at 31 December 2016.
50. On the face of it, the Aviron large bond raises questions of whether CBLI
was acting prudently or recklessly.
Other bonds written by CBLI for which there was inadequate disclosure
51. Two further bonds are of concern to the Bank. One was written in May
2013 and the other January 2014; providing 10-year building defect insurance for apartment complexes in Aarhus, Denmark (pages 117-124). BR58225539M 3 Page 14

53.
54.
CBLI’s share is recorded as NZD66m for the first and NZD34m for the second. One reason for the Bank's concern is that, as at 31 December 2012, CBLI had reported net assets of $39 million. Therefore the limit of cover for both policies was high relative to CBLI’s capital at the time the policies were issued. Under the relevant solvency standard Minimum Solvency Capital is the sum of a range of different charges including the Catastrophe Risk Capital Charge. As explained in the standard:
"The Catastrophe Risk Capital Charge for non-life insurers is intended to protect the licensed insurer’s solvency position from the potential exposure of the licensed insurer to Extreme Events." There are different ways of calculating this charge. Between 31 December 2013 and 31 December 2016 CBLI elected to calculate the charge using the formula of twice maximum net retentions on its single biggest risk. Net retention is the limit of cover less the portion covered by reinsurance. As at 30 June 2013 CBLI reported a solvency margin of $15 million, which incorporated a catastrophe risk charge of $4.7 million. This calculation did not allow for the two AM Trust bonds. On the basis that neither has any reinsurance, then the catastrophe risk charge should have been $132 million and the solvency margin was therefore overstated by $127 million. Correcting for this, the solvency margin at 30 June 2013 would have been negative $112 million. The adverse solvency impact on the catastrophe risk charge exceeds CBLI’s reported solvency margin for all of the period from 30 June 2013 to 31 December 2016, when CBLI changed the method of calculating catastrophe risk charge, CBLI should have recorded a negative solvency margin throughout this period. There may be further impacts through other aspects of solvency calculations. I also note that:
(a) The first of these bonds was written before CBLI was issued its full insurance licence; (b) Solvency reporting between 2013 and 2016 of CBLI’s maximum net retention was considerably lower than these amounts; and 53. 54. BF\58225539\13 "■••''wiw

56.
57.
58.
59.
(c) The Appointed Actuary’s Financial Condition Reports prior to 31 December 2017 had no mention of any financial commitments of such a size. Commitments of these amounts would be expected to be mentioned under the relevant actuarial professional standard. In the Bank's view these two bonds should have resulted in a large negative solvency margin (estimated at 30 June 2013 as negative $112 million, as noted) due to an error in the catastrophe risk charge. This applies through until (at least) 2016. The cover for the 2 large AM Trust bonds was a high proportion of capital at the time so a maximum claim on either or both could, by itself, have resulted in low or negative capital. The second AM Trust bond was also inaccurately recorded in CBLI's bond register as carrying a liability to CBLI of NZD4.789 million, rather than NZD34 million. This is a material discrepancy. On the face of it, the two AM Trust large bonds raise questions of whether CBLI was acting prudently or recklessly. In addition, the failure to take those risks into account in calculating the catastrophe risk charge meant that CBLI's solvency capital was materially overstated from 2013 to 2016. Had CBLI's pre-licence reporting been correct then it would either have required considerably more capital before being given a licence or would have been refused a licence. Had the liability been accurately taken into account for the catastrophe risk charge after the licence was issued then it would either have required considerably more capital, or to have obtained reinsurance for these policies, or would have been forced into run-off. The examples of high value bonds referred to above all have cover extending through to late 2022 or longer, and therefore there remains a risk to CBLI incurring very large claims for several years to come. The Bank is concerned about how these bonds, or others like them, would be dealt with in the context of a voluntary administration and DOCA that involves a plan to pay all creditors in full other than the three major cedants. The contingent claim outcomes in respect of large bond exposures appears to be a substantial risk to the resolution of CBLI. To date, it appears they have not been considered by Mr Harris, Mr Hutchison or KordaMentha. 56. 57. 58. 59.
Page 16wr1
BR58225539\13

Summary of potential impacts on CBLI of retrospective assessment of liabilities and risks
61. With more information emerging there are now multiple factors that when
viewed in isolation would lead to a hindsight view that CBLI has had negative net assets and/or negative solvency margins at various times in the past. While not all impacts are cumulative, most are, and so the combined effect could be very large. (a) Under-reserving (prior to licensing onwards). Finity’s analysis of PwC’s reserve strengthening to 31 December 2017 (exhibit GA2 to Geoff Atkins second affidavit affirmed 17 October 2018) shows that in hindsight, net assets were negative for much of the period 2013 onwards. This would be much worse on Finity valuation figures. Regulatory solvency impact is even larger than net asset impact due to insurance risk charges. (b) Samoa deposit (October 2014 onwards). The solvency treatment for asset risk charges on the deposit reduces solvency margin by about $20 million. Correcting for this alone gives a negative solvency margin for December 2014, June 2015, and December 2015. There may be additional negative solvency impacts under other aspects of the requirements. (c) AM Trust bonds (May 2013 onwards). The solvency treatment for catastrophe risk charge on the bonds reduces solvency margin by at least $100 million before December 2016, and an unknown amount thereafter. Correcting for this alone gives a negative solvency margin for all reported dates before December 2016. There may be additional negative solvency impacts under other aspects of the requirements. (d) Aviron bond (July 2017 onwards). The solvency treatment for this has not been determined. There is currently a nil allowance. There is potential for the impact of a corrected solvency treatment to exceed the reported solvency margin.
62. In addition there are other known material adverse impacts to net asset and
solvency positions. For example:
(a) The SFS premium debt written off at 31 December 2017 (following cancellation of the Castlerock transaction) included material amounts from about 2013 onwards. Some of this premium debt should have BF\58225539\13 Page 1 7

been impaired much earlier, which would have reduced net assets. Had the premiums been correctly aged the reported solvency margins between 2013 and 2016 would have been lower. E.g. the estimated net asset and solvency impacts at December 2016 is an overstatement of at least $30 million, with smaller amounts at older dates.
63. We continue frequently to learn new information that paints CBLI’s position
in a worse light, and therefore cannot be confident that all the material issues have been identified. Claims will develop over time and may materially change CBLI’s position (for better or worse). Conclusion
64. Messrs Harris and Hutchison together with Korda Mentha propose a DOCA
as the alternative to a liquidation. They have not provided to the Bank or other stakeholders any information on the counterfactual position of claims that could be brought against them and others in a liquidation. Based upon the evidence set out above and the separate work that Finity has undertaken in relation to balance sheet insolvency it seems clear that CBLI has operated while balance sheet insolvent and in breach of IPSA solvency requirements since 2013.
65. As regulator, the Bank considers it highly material to the future of CBLI that
there are various claims that could be made in the name of CBLI and its liquidators to recover compensation for the benefit of creditors and possibly the shareholder. On the basis that the company operated whilst balance sheet insolvent, transactions may be set aside, distributions recovered and action taken against the directors and professional advisers of CBLI. These matters require careful and thorough investigation, which would best be conducted by liquidators. Sworn at Wellington this 18th ) day of October 2018 Before me: William McGrath Barrister & Solicitor Wellington A Solicitor of the High Court of New Zealand BR58225539M3 Page 18

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KOTI MATUA O AOTEAROA
TAMAKI MAKAURAU ROHE
CIV 2018-404-306
Under the Part 4 of the Insurance (Prudential Supervision) Act 2010 and Part 16 of the Companies Act 1993 In the matter of an application to appoint liquidators to the defendant company Between RESERVE BANK OF NEW ZEALAND Plaintiff And CBL INSURANCE LIMITED Defendant EXHIBIT TF3 TO FIFTH AFFIDAVIT OF TOBY FIENNES: REPLY EVIDENCE Sworn: 18 October 2018 This is the exhibit marked "TF3" referred to in the affidavit of TOBY FIENNES sworn at Wellington this 18th day of October ?f)18 before me￾Barrister & Solicitor Wellington BUDDLE FINDLAY NEW ZEALAND LAWYERS Barristers and Solicitors Wellington Solicitor Acting: Scott Barker / Bridie McKinnon Email: scott.barker@buddlefindlay.com / bridie.mckinnon@buddlefindlay.com Tel 64 4 499 4242 Fax 64 4 499 4141 PO Box 2694 DX SP20201 Wellington 6140 Counsel Acting: Nathan Gedye QC Tel 64 9 358 3848 PO Box 2097 Shortland Street Auckland 1140

1
RESERVE
BANK
OF NEW ZEALAND
Prudential Supervision Department
4 September 2013
Peter Harris
CBL Insurance Limited
Tower 1, Level 8, 51 Shortland Street
PO Box 3772
Auckland
Dear Mr Harris
Insurance (Prudential Supervision) Act 2010
Issue of licence to carry on insurance business in New Zealand CBL Insurance Limited I refer to your letter of 21 June 2012 applying for a licence, and subsequent related communication. This application has been assessed in accordance with the provisions of the Insurance (Prudential Supervision) Act 2010 (the Act). I enclose the licence issued by the Reserve Bank of New Zealand (the Bank) to CBL Insurance Limited and the conditions to which the licence is subject. Conditions General conditions are applied to all insurers or to a class of insurers. These include a requirement to maintain a solvency margin, a requirement for certification twice a year from directors, and a requirement to notify the Bank if CBL Insurance Limited intends to carry on insurance business of a type not covered by its solvency margin condition. Ongoing requirements Issue of this licence means that CBL Insurance Limited has satisfied the criteria specified in section 19 of the Act. Compliance with the Act is required on an ongoing basis. The KPMG Independent review of CBL Insurance Limited’s ability to carry on business in a prudent manner dated 16 August 2013 has identified insufficient formal processes and documentation with regard to risk management generally and, more particularly, claims reserving and management. This seems to reflect CBL’s business evolution and growth, but the transition to larger, regulated 2 The Terrace, Wellington 6011 PO Box 2498, Wellington 6140, New Zealand Tdqihom' +64 4 472 2029 Fax +64 4 472 3262 Ref#5416322 vl.6

2
2 insurer requires improvements. The Bank requires CBL to address all matters raised in the KPMG report and to prepare a plan to address those matters. This plan must be submitted to the Bank within three months after the date of issuance of this licence. CBL must provide the Bank monthly reports by the last day of each month showing the progress in implementing the plan. If you have any questions concerning this letter or the enclosures please contact Alecia Cole-Bowen on +64 4 471 3919 or at alecia.colebowen@rbnz.govt.nz. Yours sincerely Toby Fiennes Head of Prudential Supervision Ref#5416322 vl.6

3
3
RESERVE
BANK
OF NEW ZEALAND
Insurance (Prudential Supervision) Act 2010
Licence to carry on Insurance business in New Zealand The Reserve Bank of New Zealand, under section 19 of the Insurance (Prudential Supervision) Act 2010, issues a licence to:
CBL Insurance Limited (27582) to carry on insurance business in New Zealand. This licence is subject to the conditions imposed by the Bank. 4 September 2013 Toby Fiennes Head of Prudential Supervision Ref#5416322v 1.6

4
4
RESERVE
BANK
ZEALAND
Insurance (Prudential Supervision) Act 2010
Licence conditions for
CBL Insurance Limited
O F N E W
Note: General Conditions are conditions that the Reserve Bank of New Zealand (the Bank) applies to all insurers or to a class of insurers, as opposed to a Specific Condition, which is particular to an individual insurer. General conditions This Licence is issued with the following conditions imposed under section 21:
Solvency Margin
Effective from Date of full licence, CBL insurance Limited is required to maintain a solvency margin, in accordance with the “Solvency Standard for Non-life Insurance Business” issued October 2011, of at least $0. The minimum amount of capital is $3 million (capital is defined as Actual Solvency Capital). Certification CBL Insurance Limited must (within 5 months and 20 days of the end of its financial year) provide the Bank with a Certification. The Certification must be signed by two directors. It must state that, to the best of their knowledge and belief having made appropriate enquiries:
(a) the insurer has systems in place for the purpose of ensuring compliance with the Act, the Regulations and the Standards, any condition of licence, direction and other requirements imposed by the Bank; (b) the financial information that the insurer has lodged with the Bank has been prepared in accordance with the relevant Solvency Standards and any requirements under the Financial Reporting Act 1993, the Companies Act 1993 (or if this Act does not apply to the insurer, any similar acts that apply); (c) the financial information required to be lodged with the Bank and provided to the appointed actuary and auditor is accurate and complete, consistent with the accounting records of the insurer, and represents a true and fair view of the transactions for the year and the financial position of the insurer. Rer#54l6322 vl.6

5
5
In addition, CBL Insurance Limited must (within 5 months of the end of its financial half-year) provide the Bank with a half-year Certification. The half-year Certification must be signed by two directors. It must state that, to the best of their knowledge, the solvency return that the insurer has lodged with the Bank has been prepared in accordance with the relevant Solvency Standards, is accurate and complete, is consistent with CBL Insurance Limited’s accounting records and is a true and fair representation of CBL Insurance Limited's financial position. Type ofinsurance risk CBL Insurance Limited must notify the Bank if it intends to carry on insurance business of a type not covered by the Solvency Standard specified in the Solvency Margin Condition above. 4 September 2013 Toby Fiennes Head of Prudential Supervision Ref#5416322 vl.6

6
Registered document
27582 CONTRACTORS BONDING LIMITED
Registration Date and Time
Document Type
Presenter
Filing Year
Ultimate holding company
Required addresses
Registered Address:
Address for service:
01 October 2010 00:00:00
File Annual Return
Carden MULHOLLAND
51 Shortland Street
Auckland Central
Auckland 1010
New Zealand
2010
No
Level 8, 51 Shortland Street, Auckland , New
Zealand
Level 8, 51 Shortland Street, Auckland , New
Zealand
Optional addresses
Address for share register:
Directors
Full legal name: Peter Alan HARRIS
Residential Address: 10 Carry Road, Mount Eden, Auckland, 1024 , New Zealand Appointment Date: 13 Dec 2006 Full legal name:
Residential Address:
Appointment Date:
Alistair Leighton HUTCHISON
22 Charles Fox Place, Saint Johns, Auckland, 1072 , New Zealand 24 Dec 2008 Full legal name:
Residential Address:
Appointment Date:
Adam John David MASSINGHAM
22 Well Close, Leigh, KentTn 11 8 Rq, United
Kingdom,
24 Dec 2008

7
Shareholdings
Total Number of Shares: 25000000
Shareholders in Allocation
8000000 Shares FEDERAL PACIFIC GROUP LIMITED
J Khouri Management Accountant, 1 st Floor, 3
Basque Road, Eden Terrace, Auckland ,
7900000 Shares OCEANIC SECURITIES LIMITED
140 Robinson Road #0408, Chow House,
Singapore 068907 ,
5000000 Shares EURASIA INVESTMENT LIMITED
Nair & Associates Chartered Accountants, 280
Great South Road, Greenlane, Auckland ,
2500000 Shares STICHTING LYGON PENSION FUND
Populierenlaan, 1185sz Amstelveen, Netherlands , 1500000 Shares SUNSHINE NOMINEES LIMITED Nair & Associates, 280 Great South Road, Greenlane, Auckland , 100000 Shares ALLIANCE INVESTMENTS LIMITED Nair & Associates Chartered Accountants, 280 Great South Road, Greenlane, Auckland , Annual Return Information Annual meeting and auditor 30 Sep 2010 resolution details:
Annual return filed by: Carden Mulholland
Designation: CFO

8
Registered document
27582 CBL INSURANCE LIMITED
Registration Date and Time 03 October 201 1 00:00:00 Document Type File Annual Return Presenter Carden MULHOLLAND 51 Shortland Street Auckland Central Auckland 1010 New Zealand Filing Year 2011 Ultimate holding company No Required addresses Registered Address: Level 8, 51 Shortland Street, Auckland , New Zealand Address for service: Level 8, 51 Shortland Street, Auckland , New Zealand Optional addresses Address for share register:
Directors
Full legal name:
Residential Address:
Appointment Date:
Full legal name:
Residential Address:
Appointment Date:
Full legal name:
Residential Address:
Appointment Date:
Full legal name:
Anthony Charles Russell HANNON
41 Rock Isle Road, Waiake, North Shore City, 0630 , New Zealand 25 Aug 2011 Peter Alan HARRIS 10 Carry Road, Mount Eden, Auckland, 1024 , New Zealand 13 Dec 2006 Alistair Leighton HUTCHISON 22 Charles Fox Place, Saint Johns, Auckland, 1072 , New Zealand 24 Dec 2008 Adam John David MASSINGHAM

Residential Address:
9
22 Well Close, Leigh, KentTn 11 8 Rq, United
Kingdom ,
Appointment Date: 24 Dec 2008
Shareholdings
Total Number of Shares: 29000000
Shareholders in Allocation
8000000 Shares FEDERAL PACIFIC CROUP LIMITED c/ojohn Khouri, Chart Accountant, Federal Pacific Group Ltd, 1 st Floor,, Bldg 5, 660 To 670 Ct Sth Rd, Ellerslie, Auckland, 1 542 , New Zealand 7900000 Shares OCEANIC SECURITIES LIMITED 140 Robinson Road #0408, Chow House, Singapore 068907 , 5000000 Shares EURASIA INVESTMENT LIMITED Nair & Chen Chartered Accountants Ltd., 280 Great South Road, Greenlane, Auckland, 1051 , New Zealand 2500000 Shares STICHTING LYGON PENSION FUND Populierenlaan, 1185sz Amstelveen, Netherlands , 1 500000 Shares 1040000 Shares 1040000 Shares 1040000 Shares SUNSHINE NOMINEES LIMITED Nair & Chen Chartered Accountants Ltd, 280 Great South Road, Greenlane, Auckland, 1051 , New Zealand Alan David CLARKE 10 Broadwater Down, Turnbridge Wells, TN2 5NG , United Kingdom Michel CORNET Flat 7, Beaumont House, 56 Mount Ephraim, Turnbridge Wells, TN4 8BB , United Kingdom Harvey Edward WETHERILL Chelmarsh Station Road, Crowhurst, Battle, TN33 9DB, United Kingdom 880000 Shares Alain Francois COUARD

100000 Shares
Annual Return Information
Annual meeting and auditor resolution details:
Annual return filed by:
Designation:
10
4 Bis Rue Fabre D'eglantine, Paris, 75012 , France ALLIANCE INVESTMENTS LIMITED Nair & Associates Chartered Accountants, 280 Great South Road, Greenlane, Auckland , 26 Apr 2011 Carden Mulholland CFO

11
Registered document
27582 CBL INSURANCE LIMITED
Registration Date and Time
Document Type
Presenter
Filing Year
Ultimate holding company
Type of entity:
Registration number / ID:
Country of registration:
Registered office address:
Required addresses
Registered Address:
Address for service:
31 October 2017 12:04:27
Annual Return Filed
Carden MULHOLLAND
51 Shortland Street
Auckland Central
Auckland 1010
New Zealand
2017
CBL CORPORATION LIMITED
NZ Limited Company
3888838
NZBN:9429030622128
New Zealand
Level 16, 45 Queen Street, Auckland Central,
Auckland, 1010, New Zealand
Level 8, 51 Shortland Street, Auckland , New
Zealand
Level 8, 51 Shortland Street, Auckland , New
Zealand
Optional addresses
Address for share register:
Directors
Full legal name: Norman Gerald Paul DONALDSON
Residential Address: 4 Carrickmines Avenue, Brennanstown Road, Dublin, D18 , Ireland Appointment Date: 09 Jun 201 5 Full legal name:
Residential Address:
Appointment Date:
Anthony Charles Russell HANNON
41 Rock Isle Road, Torbay, Auckland, 0630 , New Zealand 25 Aug 2011

12
Full legal name: Peter Alan HARRIS
Residential Address: 14a Gibbons Road, Takapuna, Auckland, 0622 , New Zealand Appointment Date: 13 Dec 2006 Full legal name:
Residential Address:
Appointment Date:
Alistair Leighton HUTCHISON
47 Onslow Avenue, Epsom, Auckland, 1023 , New
Zealand
24 Dec 2008
Full legal name:
Residential Address:
Appointment Date:
Ian Kelvin MARSH
11 a, Tower 1, One Silver Sea, 18 Hoi Fai Road, Tai KokTsui , Hong Kong 19 Dec 2012 Full legal name:
Residential Address:
Appointment Date:
Sir John WELLS
173 Victoria Avenue, Remuera, Auckland, 1050 , New Zealand 27 Sep 2012 Shareholdings Total Number of Shares: 38600000 Shareholders in Allocation 38600000 Shares LBC HOLDINGS NEW ZEALAND LIMITED Level 8, 51 Shortland Street, Auckland Central, Auckland, 1010 , New Zealand Annual Return Information Annual return filed by; Carden MULHOLLAND Designation: Authorised Person

@
(TSP^'JEW ZEALAND
COMPANIES OFFICE
COMPANIES
REGISTER
Company Extract
LBC HOLDINGS NEW ZEALAND LIMITED
4772S59
NZBN: 9429040992419
Entity Type:
Incorporated:
Current Status:
Constitution Filed:
Annual Return Filing Month:
NZ Limited Company
12 Nov 2013
Voluntary Administration
No
March
Cl
' i ' .
Ultimate holding company:
Type of entity:
Registration number / ID:
Country of registration:
Registered office address:
CBL CORPORATION LIMITED
NZ Limited Company
3888838
NZBN:9429030622128
New Zealand
Level 16, 45 Queen Street, Auckland
Central, Auckland, 1010, NZ
Company Addresses
Registered Office
Level 1 6, 45 Queen Street, Auckland Central, Auckland, 1 01 0, NZ Address for Service Level 16, 45 Queen Street, Auckland Central, Auckland, 1010, NZ Directors HANNON, Anthony Charles Russell 41 Rock Isle Road, Torbay, Auckland, 0630, NZ MULHOLLAND, Carden James 51 Shortland Street, Auckland Central, Auckland Shareholdings Total Number of Shares:
Extensive Shareholdings:
48,600,000 3888838
CBL CORPORATION LIMITED""" vrAj
No

© pa*|2igJ
Company Extract
LBC HOLDINGS NEW ZEALAND LIMITED
4772359
NZBN: 9429040992419
Level 16, 45 Queen Street, Auckland Central, Auckland, 1 01 0, NZ MEW ZEALAND COMPANIES OFFICE COMPANIES REGISTER For further details relating to this company, check http://app.companiesoffice.govt.nz/co/47723S9 Extract generated 17 October 2018 10:25 AM NZDT

15
Coinsurance
Annual Report
For the Year Ended 31 December 2014

CBL Insurance Group
Contents
31 December 2014
16
Page
Financial Statements
Corporate Directory 1
Introduction 2
Chairman’s Report 3
Managing Director's Report 4
Directors' Report 5
Directors' Declaration 8
Independent Audit Report 9
Statement of Comprehensive income 11
Statement of Financial Position 12
Statement of Changes in Equity f3
Statement of Cash Flows 15
Notes to the Financial Statements 16
Contact Details 77

17
CBL Insurance Group
Corporate Directory
For the year ended 31 December 2014
Date of incorporation
19 April 1973
Director
Sir John Wells KNZM
Tony Hannon
Ian Marsh
Alistair Hutchison
Peter Harris
Position Appointed
Independent Chairman independent Director independent Director 27 September 12 25 August 11 Deputy Chairman, Director Executive Director 19 December 12 24 December 08 13 December 08 Registered office and principal place of business Level 8, Tower 1 Shortland Centre 51 Shortland Street Auckland 1010 New Zealand Solicitors Fortune Manning (New Zealand) | CMS Cameron McKenna (United Kingdom) Rigby Cooke (Australia) Clifford Chance Europe LLP Bankers Bank of New Zealand (New Zealand) Clydesdale Bank (United Kingdom) ANZ (Australia) ANZ (New Zealand) Auditors Crowe Horwath (New Zealand) Creaseys (United Kingdom) Pricewaterhouse Coopers (Ireland) 1

CBL Insurance Group
Notes to the Financial Statements
For the year ended 31 December 2014
23 Commitments
(a) Capital commitments
Capital expenditure contracted for at the end of the reporting period but not yet incurred - the Group has entered in a contract amounting to $0.2 million for the specification stage for enhancing the current insurance system. (b) Operating lease commitments The Group and Parent have entered into commercial office and equipment leases under non-cancellable lease arrangements. These leases have varying terms, escalation clauses and renewal rights. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:_____________ Consolidated Parent 2014 2013 2014 2013 _______________________________________________ $'000________ $'000__________ $'000________ $'000 Due within one year 496 653 319 328 Due between one and five years 1,245 1,330 1,085 1,146 Due afterfive years 185 408 185 408 1,926 2,391 1,589 1,882 24 Contingent liabilities Contingent liabilities are not recognised in the Statement of Financial Position but are disclosed in this note where settlement is less than probable but more than remote. If settlement becomes probable, a provision is recognised. The best estimate of the settlement is used in measuring a contingent liability for disclosure. f | i 25 Dividends Period Q4 2013 Dividend Q1 2014 Dividend Q2 2014 Dividend Q3 2014 Dividend Cents per Total amount share $'000
2.7 698
2.7 698
2.5 698
3.0___________830
2,924
Payment Tax rate for Percentage date imputations imputed 4 March 2014 28% 100% 6 May 2014 28% 100% 26 August 2014 28% 100% 3 December 2014 28% 100% A dividend distribution to the Company’s shareholder is recognised as a liability in the Group’s financial statements in the period in which the dividends are approved by the Company’s Board of Directors. The holder of ordinary shares receives dividends in the percentage ofthe holding, The Company only has ordinary shares on issue. 58

19
' 1 Coinsurance
Financial Statements
For the Year Ended 31 December 2016

20
CBL Insurance Limited
Statement of Changes in Equity
For the year ended 31 December 2016
2016
Share Retained
Capital Earnings Total Equity
___________________________________Note $'000 $'000 S'OOO Balance at 1 January 2016 43,405 81,761 125,166 Comprehensive income Profit for the year - 47,003 47,003 Total comprehensive income - 47,003 47,003 Transactions with shareholders Dividends provided for or paid 4(c) - (16,500) (16,500) 30,503 30,503 Balance at 31 December 2016 43,405 112,264 155,669 2015 Balance at 1 January 2015 Note Share Retained Capital Earnings Total Equity $'000 $’000$'000 23,405 48,856 72,261 Comprehensive income Profit for the year _________ 38,734 38,734 Total comprehensive income - 38,734 38,734 Transactions with shareholders Issue of shares 4(b) 20,000 - 20,000 Dividends provided for or paid 4(c) - (5,829) (5,829) 20,000 32,905 52,905 Balance at 31 December 2015 43,405 81,761 125,166 The above statement should be read in conjunction with the accompanying notes of the financial statements. 6

21
CBL Insurance Limited
Notes to the Financial Statements
For the year ended 31 December 2016
4 Funding
(b) Share capital and reserves
{!) Recognition and measurement
The Company has issued ordinary shares that are classified as equity, (ii) Composition (1) Share capital 2016 2015 Ordinary shares Numberof Numberof 2016 2015 shares in '000 shares in ’000 $'000 $'000 Balance at the start of the financial year 38,600 28,000 43,405 23,405 Shares issued during the year - 10,600 - 20,000 Balance at the end of the financial year 38,600 38,600_______ 43,405______ 43,405 All ordinary shares on issue are fully paid. Ordinary shares entitle the holder to a vote at a general meeting of the Company and to share in the dividends in proportion to the number of the shares held. Dividends, if declared, are subject to there being distributable profits available and their satisfying the solvency test as defined in the Companies Act 1993. CBL Insurance issued 10,600,000 ordinary shares in 2015for a total consideration of $20.0 million, to its parent LBC Holdings New Zealand Limited, paid in cash. (2) Retained earnings The directors have reviewed the total equity of the Company and considered it adequate for the purpose of financial soundness. The directors review this in line with the Company's internal policies around financial soundness and liquidity levels. These policies are reviewed on a half-yearly basis to ensure that adequate equity levels are maintained at all times. {c) Dividends Payment date April 2015 May 2015 April 2016 September 2016 Total amount _______ $'000 829 5,000 10,000 6,500 Tax rate for imputations 28% 28% 28% 28% Percentage imputed 100% 100% 100% 100% Dividend distribution to the Company's shareholders is recognised as a liability in the Company's financial statements in the period in which the dividends are approved by the Company’s Board of Directors. 29

X til nzherald.co.nz NOME i
Wednesday, 2SJuly ?D18
KirstyJohnston voyager M«fl<iAwim!*iat8 '5~s~ I BUSINESS Brian Gaynor: Why shareholders are right tobe upset ! Jui. /{Jl f» *,• dim ■: r-Niil Trending Topics

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23
COMMENT:
Shareholders are entitled to be annoyed when they suffer large losses in a company while major shareholders in the same company seem to do particularly well. This has been the situation at Veritas, where Michael Morton is a 35.5 per cent shareholder, and at CBL Corporation, where Peter Harris owns 22.8 per cent of the company. yo AIR NEWZEALAND \5T The Morton story begins when Sir Peter Leitch establishes his first butcher shop in Mangere in 1971 under the name Rosella Meats. The shop v^/as subsequently renamed the Mad Butcher. iOVT.ftl f$E MicNT Immerse yourself m Asia! Hy to Hong Kong return from $1159*pp Sate ends30 Jut 18 'TtCs apply Sale ends 30Jut 18

• Wsi-ttiSr' vi-fihH/m.
  The brand expanded through Auckland's lower socio-economic areas in the 1980s and 1990s, with the first franchise model in 1998. Moiton, the partner of Sir Peter's daughter Julie, acquired 15 per cent of Mad Butcher Holdings in 2001. He purchased a further 15 percent in 2003 and acquired full ownership from Sir Peter in 2007. Morton's purchase price hasn't been disclosed. In May 2013, the NZX-listed company Veritas investments purchased the Mad Butcher from Morton for $40 million. This comprised $20m cash and $20m worth ofVeritas shares. The share component consisted of 15,384,615 new Veritas shares at $1.30 each, giving Morton a 40.2 per cent stake in the listed compa ny.

24
The Mad Butcher had 36 stores throughout New Zealand at the time, 34 ofwhich were independently owned franchises with the remaining two owned by Mad Butcher Holdings. Mad Butcher Holdings had total assets ofjust$1.9m, total liabilities of $2.6m and negative net assets of $0,7m as at the company's previous balance date. The Grant Samuel IndependentAppraisal Report included Mad Butcher EBITDA (earnings before interest, tax, depreciation and amortisation) forecasts for the June 2013 and June 2014 years of $6.3m and $6.8m respectively. Related articles-. BUSINESS KlwiSavers should surfwaveof cash 14 Jul. 2018 S.OOsm Tmlnutivs torf'S!! BUSINESS Is this aKodak momentforNZ Post? T lUl, ?0I3 5:00am 7 minoV'Stoif'.-id BUSINESS BrianGaynor:Bring greater diversity to theboardroom 10 11111.2018 5:00am ? minutes to road BUSINESS It's timefor a futuristicvision fromregulators 22 Jun,201$$-0Oam 7 iVHnutOS *0 The new acquisition was a major disappointment as carcass sales to franchisees were well below forecasts for the 2012/13 and 2013/14 years. The company's EBITDA was $6,4m for the 2015 year, $4.6m for 2016 and $3.7m for 2017. Meanwhile, Morton, who continued to run the Mad Butcher and was appointed to the Veritas board, received remuneration of $180,000 in the years to 2013 and 2014, $271,961 for the following two years and $420,277 in the 2017 year. At the end of the June 2017 year, the Mad Butcher had 31 stores — 28 franchised and three company owned. Five of the 28 franchised stores were owned by Morton.

Early this year, Veritas shareholders approved the sale of the Mad Butcher back to Morton forjust $8m. The SimmonsAppraisal Report revealed that the Mad Butcher had 30 stores, fourofwhich were company owned, while five of the 26 franchisees were owned by Morton. Simmons also disclosed that the Mad Butcher had a forecast EBITDA of only $2.4m forthe June 2018 year. Veritas chairman Tim Cook wrote: 'The proposed sale of the Mad Butcher franchisor business is the result of a competitive sales process undertaken by Bancorp. Bancorp attracted interest from a number of parties for the Mad Butcher business, and all appropriate steps were taken to exclude Mr Morton from discussions concerning the sale once he declared his interest in acquiring the Mad Butcher. "The independent directors agree with Simmons' opinion that the consideration and the terms and conditions of the Mad Butcher sale are fair to the shareholders. The purchase price offered by Mr Morton was the highest offer received for the business, and Mr Morton's role as the CEO of Mad Butcher has meant that minimal warranties were required to be given for the business under the sale and purchase agreement." Thus, Morton sold the Mad Butcher for $40m and bought it back for $8m, although the $20m worth of shares he received five years ago are now worth only $2.4m. Morton looks like an astute businessman, but this columnist's view is that he was extremely lucky. He sold to Veritas when the investment company was desperate to acquire assets and bought back when Veritas was sinking in a sea of debt and needed to raise funds. Veritas shareholders are furious because Morton was the Mad Butcher's CEO when its value plunged from $40m to $8m while Veritas' share price nosedived from $1.30 tojust 15.5c over the same period.

26
Peter Harris and several other investors gained control of CBL Insurance in 1996. In September 2015, CBL issued a Product Disclosure Statement (PDS) for its initial public offeringof ordinary shares. Unfortunately, these PDSs have far less financial information than prospectuses used to have. Peter Harris realised $16.3m selling CBL shares in 2017, on top of an earlier sale. Photo / Dean Purcell Just before the IPO, CBL had a six-for-one share split with 26 million existing shares converting into 156 million shares. It appears from the financial accounts that the average cost of these shares, post the six-for-one split, was 11.5c. Prior to the IPO, Peter Harris had 66.8 million shares, or 42.8 per cent of the company, at an estimated total cost of $7.7m.

27
As part of the IPO, Harris sold 7.9 million shares for $12.3m at the IPO price of $1.55 a share. This left him with 58.85 million shares, or 26.8 per cent of the company. Harris and the original major shareholders had an embargo from selling any further shares until Februaiy 2017, when CBL would announce its result for the December 2016 year. On February 24,2017, CBL announced a pre-tax profit of $76.2m for the December 2016 year, well ahead of the $63.6m CBL had forecast before its October 2015 listing. Chairman Sir John Wells wrote in the annual report, which was released on March 31, 2017, that CBL had "a commitment to the highest level of corporate governance", with the report also boldly announcing that the company had exceeded its regulatory and solvency requirements. Five days later CBL revealed — under the eye-catching headline "CBL announces sell￾down to increase share market liquidity" — that directors and management had sold 20 million shares at $3.26 each shortly following the end of the embargo period. Harris sold just over 5 million shares to reduce his shareholding from 25.0 percent to 22.8 per cent. He realised $16.3m from this sale plus $12.3m from the IPO. This gave him a total realisation of $28.6m compared with an estimated cost of $7.7m for his total shareholding. Harris was totally entitled to sell these shares. At the May 3 annual meeting, Wells told shareholders he expected to see the company continuing to build momentum across the business. He said he expected this momentum to translate into further profitable growth and add to overall shareholder value. Wells also successfully asked shareholders to approve an increase in directors' fees from $750,000 plus €30,000, to $1,500,000 because "being on the board of CBL requires a significant commitment and an understanding of the many jurisdictions in which the company operates".

28
On August 18, the company issued a profit downgrade for the six months to June 2017 and six days later, on August 24, it released full financial results for this period. The latter announcement was relatively upbeat with the company announcing "CBl expects to be highly cash flow positive in 2H17 and current liquidity levels are expected to continue to rise". The Reseive Bank subsequently revealed that on July 27,2017, it had told CBL Insurance it needed to raise its solvency ratio to 170 per cent. A High Court affidavit by the Reserve Bank's head of supervision revealed: "The bank's own internal review concluded in August 2017... that CBL Insurance had significantly under￾reserved its French business to such an extent that its adjusted capital forsolvency purposes (i.e. excluding inadmissible components) was most likely to be less than zero, and that there was a material likelihood that the wider CBL group had insufficient resources to meet the shortfall. There was also uncertaintyabout the CBL group's ability to raise sufficient further capital". CBL shares last traded on February 2 this year, leaving shareholders with a very uncertain future. But this columnist is clear about one thing: neither Michael Morton nor Peter Harris should ever win the Shareholders' Association Beacon Award for corporate gover nance excellence.

• Brian Gaynor is an executive director of Milford Asset Management.
  Recommended

Statement-Sir John Wells Friday 13July2018
29
Sir John Wells resigns as CBL Director and Chair I am today announcing my decision to step down as Director and Chair of both CBL Corporation Limited ("CBLC") (in Voluntary Administration) and CBL Insurance Limited ("CBLI") (in Interim Liquidation). Two other overseas-based Independent Non-Executive Directors ("INEDs") Paul Donaldson and Ian Marsh are also resigning. In the lead up to the intended announcement of CBLC's Annual Result on the 27th of February the Directors were conscious of the requirement for additional capital which had been set in train. Regrettably, this was abruptly halted by events on the 23rd of February when the Reserve Bank of New Zealand applied to the Court to liquidate CBLI, and voluntary administrators of the CBL Group were appointed. In the months following these appointments the INEDs have endeavoured to support the process to preserve value in the CBL Group whilst at all times recognising the interests of shareholders and other stakeholders. However, the role as an INED in these circumstances has been largely confined to assisting the interim liquidator and voluntary administrator, as and when requested. As Chair I particularly regret we have been unable to communicate directly with shareholders and other parties as I would have wished, given the nature of the administration and interim liquidation processes. We now feel we can simply do no more for shareholders and with little power or authority, our resignation is the appropriate option in these circumstances, and provides clarity and certainty over our position. We are aware that the Deputy Chairman and Managing Director of CBL have been working to develop and present a plan as an alternative to the liquidation process. They have consistently stated their wish is to ensure the best possible outcome for policyholders, creditors and shareholders. We support this objective and wish them well in this endeavour. ENDS Sir John Wells, 13 July 2018

30 rpp®RESERVE
M^BBANK
OF NEW ZEALAND
TE P 0 TEA MATU A
26 July 2017
Mr Peter A Harris
Managing Director
CBL Insurance Limited
PO Box 3772
Auckland 1010
Dear Mr Harris
CBL Insurance Limited
Insurance (Prudential Supervision) Act 2010
In light of the Reserve Bank’s serious concerns in respect of the uncertain financial and solvency position of CBL Insurance Limited (“CBL”), the Reserve Bank has decided to require additional information from CBL Insurance Limited (''CBL”) and amend timeframes for some existing reporting requirements. These actions will improve our ability to effectively supervise CBL. To achieve this we are issuing the attached section 121 notice and also a notice of a proposed variation to CBL’s conditions of licence.
Section 121 notice
The section 121 notice sets out various requirements and is in effect immediately. Note some elements are one-off and others are ongoing reporting requirements, which will apply until the notice is amended or revoked. We have specified the due date(s) for each element separately. Proposed variation to conditions of licence For the reason that the Reserve Bank has serious concerns in respect of the uncertain financial and solvency position of CBL, as expressed, for example, in the direction issued to CBL on 25 July 2017, the Reserve Bank considers it necessary to be informed in a more timely manner for financial and solvency reporting at financial year￾end and financial half-year, and also for notice of resignation of any relevant officer or director. Please find attached a schedule of the proposed licence variation, in accordance with
section 22 of the insurance (Prudential Supervision) Act, the Reserve Bank gives
seven days’ notice of its intention to vary CBL insurance Limited's licence. The Reserve Bank welcomes your submissions on the proposed variation within this timeframe. We will consider ali submissions before varying the licence as proposed. 2 The Terrace, Wellington 60 H PO Box 249S, Wellington 6140, New Zealand Telephone -t 64 A 472 2029 Fax +64 4 473 8554

31
2
If you have any questions concerning this letter or the enclosures please contact Rupert Barber on (04) 471 3862 or by email at Rupert.Barber@rbnz.aovt.nz. Yours sincerely Toby Fiennes Head of Prudential Supervision f I Ref//7102696 vl.6

3
32
OF NEW ZEALAND
T E P 0 T E A M AT U A
Insurance (Prudential Supervision) Act 2010
Section 121 Notice
CBL Insurance Limited
(27582)
The Reserve Bank of New Zealand (the Reserve Bank), under section 121 of the Insurance (Prudential Supervision) Act 2010, requires CBL Insurance Limited to supply the Reserve Bank the information specified by the due dates and in accordance with paragraphs 1 to 9 below.

1. Information is to be provided using the Reserve Bank’s insurer secure
   upload facility at https://securexfr.rbnz.aovt.nz/envelope/insurance-data￾coilection. Reinsurance documents
2. With a due date of 02 August 2017, a copy of all reinsurance policies with
   any of Elite Insurance Limited (a company in Gibraltar), Alpha Insurance Limited (a company in Denmark), or CBL Insurance Europe dac (a company in Ireland) as ceding insurer. Policies means treaties or other policy documents, and all amendments, variations, side letters or agreements that affect financial outcomes).
3. With a due date of three calendar days after signing, a copy of any new or
   amended reinsurance policies with any of Elite Insurance Limited (a company in Gibraltar), Alpha Insurance Limited (a company in Denmark), or CBL Insurance Europe dac (a company in Ireland) as ceding insurer. Policies means treaties or other policy documents, and all amendments, variations, side letters or agreements that affect financial outcomes). Ref//7102696 vl.fi

33
4
Reinsurance business
4. With a due date of 02 August 2017, the following information in respect of
all ceding insurers for which CBL is a reinsurer:
a. Name. b. Country of domicile,
c. Country or countries of reinsured business.
d. Home supervisor name and country. e. Start date of earliest reinsurance provided by CBL. f. End date (if any) of latest reinsurance provided by CBL. g. Effective date for next renewal of reinsurance. h. Amounts in thousands of NZ dollars, for each of the following specified items, separately by class of insurance:
hi. gross written premium for the year ended 31 December 2016 h2. unearned premium reserve as at 31 December 2016 h3. best estimate outstanding claims reserve gross of recoveries and gross of reinsurance as at 31 December 2016 h4. best estimate outstanding claims reserve net of recoveries and gross of reinsurance as at 31 December 2016 Ref#7102696 vl.6

5
34
Financial and solvency
5. With a due date of three months after each financial half year and financial
year date commencing from and including 30 June 2017, the net assets of CBL Corporation Limited, and the net assets and required minimum regulatory capital (if any) for each entity within the whole CBL group.
6. With a due date of 21 calendar days after each month end commencing
from and including 31 July 2017, the solvency position of CBL Insurance Limited based on management accounts. All of the following solvency figures are to be reported - Actual Solvency Capital, Minimum Solvency Capital, Solvency Margin, and Solvency Ratio.
7. With a due date of 21 calendar days after each month end commencing
from and including 31 July 2017, the following balance sheet items gross and net of reinsurance & other recoveries based on management accounts:
a. Unearned premium reserve b. Unexpired risk reserve
c. Outstanding claims reserve
d. Deferred acquisition cost asset
8. Commencing from and including 30 June 2017, the insurer foreign
business return is required for each financial half-year date in addition to the existing requirement applied by section 121 notice dated 13 August 2015 at each financial year-end date. The due date is the same as other financial half-year reporting.
9. Commencing from and including 30 June 2017, the Valuation of the
Insurance Liabilities Report is required for each financial half-year and financial year-end. The due date is the same as other financial half-year and financial year-end reporting. 26 July 2017 Toby Fiennes Head of Prudential Supervision Ref//7102696 v).0

6
35
Schedule of Licence Variations
The new specific conditions:
Reporting
“Effective from [date], CBL Insurance Limited must provide to the Reserve Bank notice of resignation of any relevant officer (as defined by section 6 of the Insurance (Prudential Supervision) Act 2010) or director within three calendar days of notice being given.” “Effective for reporting relating to the 30 June 2017 financial half-year of CBL Insurance Limited, the due date is 30 September 2017, being three months after the financial half-year date instead of the usual four months. This includes financial statements, insurer solvency return and insurer return." “Effective for reporting for each financial half-year or year-end of CBL insurance Limited that is after 30 June 2017, the due date is 10 weeks after the financial half-year or year-end date instead of the usual four months. This includes financial statements, audit reports, section 78 reports, financial condition reports, insurer solvency return, insurer return and insurer foreign business return." Reff/7102696 vl.6

CDL Insurance Limited
31 December 2016
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AFRA CNSF C8K CBK CBI CBI FSC CBI CSI 200G 2010 2om 2012 2013 200<S 2010 :oofl 2000 2000 2011 2013 2012 2000 2010 2011 2013 2013 2014 2014 2005 2015 2014 2010 2014 2016 2010 2016 2010 2016 2016 2010 2016 2016 2010 2316 HA HA Cenfrvjcus CcRbxrsua Centnusus Ccr.Unusua Cortnuous Certnueus Centinucus Ccntnticus Ccrtnucua Ccntnuc-ja Ccnvnucua CsnVnucus Ccr.Crtucus Certinvcu* Centnasus Csr.Vnusu* Ccnbnucus Cfinhnueus Ccnbnvpua CcnUvjcus Ccnlinucuj Ccnkhuc'js Conttoueus CenknucuS Conknusus CeAtfriuau* CenUtuaus Ccftliruou* Cenfcnuous C«ntnuuuj Csribnusua Ccr.bnuaoi Conthuouj Ccntmipus Ccntinvo-js Contnuous Canknusua Ccnkcvucus Cchtftue-js CcnSftwcus Cenfcnuetrs CctMhucus CcnSnucus Cerir.wouj CcnVcuaus CinVtiwcui C-onVr.usus Conimuaus Contnua-js Car.tnuo'ja ConSouaus Conlriucus Continueas ConU'uous Contnusus Ccnbmrout Ccntnusus Gcotr.uouj COAtnusus 7,050 10,275 11.022 18,393 73.944 144 403 14,538 1,222 3.183 3,581 970 150 589 1.991 995 743 1,38? 652 209 3.44S 506 2,232 20,707 724 6,920 165 2,444 1,034 1,047 2.092 4C0 20 173 1.895 7.994 204 2.001 735 1.178 11 735 21 44 165 35 9 226 29 2,579 51 90 35 1.127 8 16 1,%S 2 799 1,324 1.903 7.127 0.184 41.363 136 1,554 121 3,232 1,450 512 346 71S 29-1 143 2,339 391 1,631 14,407 495 2,259 338 1,136 4£0 1.857 2,537 154 672 642 93S 10 57S 19 2,318 43 80 33 1.033 3 30,536 23,731 13,755 12,712 18.345 42.706 375 794 857 242 876 2.047 687 7.452 20 3,716 41 6,600 1 707 I 161 116 1 l (1,176) 4,140 1,748 12.712 18,345 42,706 375 794 857 (1,882) 376 2,047 687 1,048 20 3,716 41 6,600 1 707 1 161 0) 0)

37
(
AUCKLAND

CBLinsurance

5 December 2017
PRIVATE AND CONFIDENTIAL
Attention: Toby Fiennes
Head of Prudential Supervision
Reserve Bank of New Zealand
PO Box 2498
Wellington 6140
Dear Mr Fiennes
I refer to your request to meet with the board of CBL Insurance Limited (CBL) on 12 December 2017. We are in the course of preparing for the meeting and look forward to this opportunity to engage with you face to face. In order to have a productive conversation, it is important that we understand in some detail what the Reserve Bank wishes to discuss. To that end, CBL would be grateful to receive:
(a) an agenda for our meeting, and
(b) a list of questions the Reserve Bank would like us to respond to in our meeting. In that context, we note our concerns regarding the following directions issued by the Reserve Bank to date:
(a) direction given under section 143 of the Insurance (Prudential Supervision) Act 2010 (the Act) to CBL dated 25 July; (b) direction given under section 143 of the Act to CBL dated 22 November; and (c) direction given under section 145 of the Act to CBL Corporation Limited dated 22 November. None of these directions state the grounds on which they are given, as is required by section 147(1) of the Act. We would be grateful if the Reserve Bank would, as a matter of urgency, provide to CBL a statement of those grounds, including:
(a) the factual basis upon which each of the above directions were issued, and (b) an explanation as to why the Reserve Bank considers these factual circumstances provide a reasonable basis for believing that one or more of the grounds in sections 143(1) and 145 of the Act apply.

• SYDNEY • LONDON • COPENHAGEN • DUBLIN • MEXICO CITY
  CBL INSURANCE LIMiTED______________ p: *64 9 303 4770 f: ■i-S-l 9 300 5046 Level S, CBL House, 51 Shortland Street PO Box 3772, Auckland 1010, New Zealand wvAv.cbllnsurance.com

38
The Reserve Bank will appreciate it is difficult for CBL to respond effectively to your concerns without this minimum level of information required by the Act, We are confident that once we understand the Reserve Bank's concerns, we will be able to address them to the Bank's satisfaction. In the meantime, we reserve all our rights Including as to the legitimacy of the directions issued. We look forward to a productive meeting. Yours sincerely CBL Insurance Limited Peter Harris Managing Director i

39
From:
Sent:
To:
Cc:
Subject:
Attachments:
Rupert Barber
Thursday, 7 December 2017 11:11 AM
'Michael Parrott'; Toby Fiennes; Peter Harris
Robert Cole; Fazeena Hussain
RE: Wellington Meeting with CBL Insurance Board on 12 December 2017 2017,11.22 CBL - letter & directions.pdf.pdf; 2017.07.25 CBL - letter & direction (signed).pdf.pdf Hi Peter, Thank you for your letter to Toby Fiennes dated 5 December. Toby has asked me to respond on his behalf. The grounds for each of the directions you have been issued were stated in detail in the covering letters that accompanied each direction. I have attached those letters for your information. In addition, you will be aware that we have provided further information to you that reinforce those grounds. For instance we drew to your attention certain concerns with the Castlerock transaction, including the quality of the documentation, and recently provided you figures (derived from CBL Insurance Ltd itself) highlighting the rapid business expansion of CBL Insurance Limited. These both support the Bank’s belief, outlined formally each time a direction was issued, that CBL Insurance is not carrying on its business in a prudent manner. In the case of CBL Corporation the Bank believes it is conducting its affairs in a manner that is prejudicial to the circumstances of the CBL insurance. Please ensure the directors of CBL Insurance Limited are provided this material prior to our meeting. 1 am just putting together an agenda and confirming attendees which I will send through shortly. We do not have any specific questions prepared for the Board. Regards, Rupert Barber Senior Analyst | Reserve Bank of New Zealand | Te Putea Matua 2 The Terrace, Wellington 6011 | P O Box 2498, Wellington 6140 T +64 4 471 3862 | F. +64 4 471 3995 Email: ruperi.barber@rbnz.QOvt.nz | www.rbnz.QOvt.nz From: Michael Parrott [mailto:MParrott@cblinsurance.com] Sent: Tuesday, 5 December 2017 5:27 p.m. To: Toby Fiennes Cc: Rupert Barber Subject: Wellington Meeting with CBL Insurance Board on 12 December 2017 Dear Toby, Please find attached a letter regarding next weeks meeting with the CBL Insurance Limited Board in Wellington. Regards Michael Michael Parrott [ Group Quality Assurance Manager CBL Insurance Group l

40
From:
Sent:
To:
Subject:
Peter Harris PHarris@cblinsurance.com
Friday, 8 December 2017 3:37 PM
Rupert Barber
Insurance BAU
Dear Rupert,
Could you please clarify that the direction "not to enter into any transaction or series of related transactions involving payment or transfer of assets in excess of NZDSm......and any other actions or proposed actions it intends to take in respect of resolving its difficulties" does not apply to insurance BAU transactions including payment of claims or premium bordereaux in the ordinary course of business. For instance, APRA is concerned that this could affect the payment of claims or quarterly reinsurance premiums to the likes of Swiss Re Hannover etc. Regards Peter A Harris | Managing Director CBL Insurance Group Level 8, CBL House SI Shortland Street Auckland 1010, New Zealand Level 21,45 Clarence Street Sydney 2000, Australia Mob: +64 21 7S 76 78 www.cblinsurance.com 1

41
From:
Sent:
To:
Cc:
Subject:
Rupert Barber
Monday, 11 December 2017 2:23 PM
Peter Harris
Peter Brady; Robert Cole; Fazeena Hussain
RE: Insurance BAD
Hi Peter,
As promised, a response to your email on Friday.
As outlined to you in the letter you received from Mr Bascand dated 22 November 2017 providing grounds for the direction to CBL insurance of the same date, the Bank is concerned with the nature of the Castlerock transaction and how it was documented, and the fact that CBL did not consult the Bank before committing to it, despite the ostensible motivation being to meet the Bank’s direction to maintain solvency at 170%. You indicated CBL would be looking at restructuring options and a "balance sheet reinsurance protection proposal for CBL" in order to respond to a directive from the Central Bank of Ireland. We do not want to see anything occurring similar to how you went about the Castlerock transaction, hence the direction. The effect of the direction is that it requires CBL Insurance before any transaction is entered into that has a value of NZD Smillion or more to consult with the Bank about CBL’s circumstances and about the transaction or any other actions taken or proposed to be taken to resolve its difficulties. This does not cover payments CBL is obliged to make under existing contracts that were entered into prior to the date of the direction. It will apply to all new transactions, prior to them being entered that are over the value threshold. The Bank wants to view those transactions in light of CBL’s circumstances and be consulted before CBL becomes committed. We do not expect this to have much impact on the “ordinary course of business”. If we find that is the case we can review the direction, but in the meantime we expect to be consulted as outlined. Regards, Rupert Barber Senior Analyst | Reserve Bank of New Zealand | Te Putea Matua 2 The Terrace, Wellington 6011 | P O Box 2498, Wellington 6140 T +64 4 471 3862 j F. +64 4 471 3995 Email: rupert,barber@rbnz.aovt.nz | www.rbnz.qovt.nz From: Peter Harris [mailto:PHarris@cblinsurance.com] Sent: Friday, 8 December 2017 3:37 PM To: Rupert Barber Rupert.Barber@rbnz.govt.nz Subject: Insurance BAU Dear Rupert, Could you please clarify that the direction "not to enter into any transaction or series of related transactions involving payment or transfer of assets in excess of NZDSm...... and any other actions or proposed actions it intends to take in respect of resolving its difficulties" does not apply to insurance BAU transactions including payment of claims or premium bordereaux in the ordinary course of business. For instance, APRA is concerned that this could affect the payment of claims or quarterly reinsurance premiums to the likes of Swiss Re Hannover etc. i

42
RESERVE
BANK
OF NEW ZEALAND
TB P OT EA M AT UA
25 January 2018
Mr Peter A Harris
Managing Director
CBL Insurance Limited
PO Box 3772
Auckland 1010
Dear Mr Harris
CBL Insurance Limited
Insurance (Prudential Supervision) Act 2010
The investigation into CBL Insurance Limited is drawing near to the reporting phase. As the home supervisor of CBL Insurance Limited, the Reserve Bank has obligations to other relevant host supervisors under agreements through the International Association of Insurance Supervisors. One of these is to keep host supervisors informed of material developments. In light of this obligation, the Reserve Bank wishes to identify all of the relevant host supervisors and the size and nature of CBL’s business in their countries whether directly or through reinsurance. The information requested is similar to the section 121 notice (on reinsurance business) dated 26 July 2017, but is also to cover insurance business, and to update the data previously provided. The due date is 16 February 2018 which hopefully is late enough for 2017 financial year￾end figures to be used whilst still being sufficiently timely for the Reserve Bank. If 2017 financial year-end figures are not available, then the latest available information can be provided and the Reserve Bank may require a subsequent update using 2017 financial year-end figures once they become available. The attached section 121 notice sets out the requirements in detail. If you have any questions concerning this letter or the enclosures please contact Rupert Barber on (04) 471 3862 or by email at Rupert.Barber@rbnz.qovt.nz. Yours sincerely Toby Fiennes Head of Prudential Supervision 2 The Terrace, Wellington 6011 PO Box 2498, Wellington 6140, New Zealand Telephone +64 4 472 2029 Fax +64 4 473 8554

2
43
RESERVE
BANK
OF NEW ZEALAND
T E P 0 T E A M AT U A
Insurance (Prudential Supervision) Act 2010
Section 121 Notice
CBL Insurance Limited
(27582)
The Resen/e Bank of New Zealand (the Reserve Bank), under section 121 of the Insurance (Prudential Supervision) Act 2010, requires CBL Insurance Limited to supply the Reserve Bank the information specified by the due dates and in accordance with paragraphs 1 to 6 below.
1. Information is to be provided using the Reserve Bank’s insurer secure upload
facility at https://securexfr.rbnz.aovt.nz/envelope/insurance-data-collection.
2. The Due Date is 16 February 2018. The Report Date is 31 December 2017
if 2017 financial year-end figures are available, otherwise the date for the latest available figures.
3. The following information in respect of the insurance and insurance-related
business of CBL Insurance Limited, other than reinsurance:
a. Report Date. b. Amounts in thousands of NZ dollars, for each of the following specified items, separately by combinations of country and class of insurance, in total by class of insurance, and in total by country:
1. gross written premium for the period from 1 January 2017 to
Report Date
2. unearned premium reserve as at Report Date
3. best estimate outstanding claims reserve gross of recoveries and
gross of reinsurance as at Report Date
4. best estimate outstanding claims reserve net of recoveries and
gross of reinsurance as at Report Date
ReF#7365679 vl.3

44
3
4. The following information in respect of the reinsurance business of CBL
Insurance Limited, separately for each ceding insurer and in total:
a. Report Date. b. Name of ceding insurer.
c. Country of domicile.
d. Home supervisor name and country. e. Start date of earliest reinsurance provided by CBL. f. End date (if any) of latest reinsurance provided by CBL. g. Amounts in thousands of NZ dollars, for each of the following specified items, separately by combinations of country and class of insurance, in total by class of insurance, in total by country, and in total by ceding insurer:

1. gross written premium for the period from 1 January 2017 to
   Report Date
2. unearned premium reserve as at Report Date
3. best estimate outstanding claims reserve gross of recoveries and
   gross of reinsurance as at Report Date
4. best estimate outstanding claims reserve net of recoveries and
   gross of reinsurance as at Report Date
5. State any countries in which CBL has insurance or insurance-related
   business that are not included in the information under paragraph 3 (e.g. because the business is too new for there to be any figures), or confirm there are none.
6. State any ceding insurers which CBL reinsures that are not included in the
   information under paragraph 4 (e.g. because the business is too new for there to be any figures), the country of their domicile, and the countries of their business reinsured by CBL; or confirm there are none. 25 January 2018 Toby Fiennes Head of Prudential Supervision Ref#7365679 vl.3

45
From: Michael Parrott <MParrott(a)cblinsurance.com> Sent: Friday, 16 February 2018 4:20 PM To: Robert Cole <Robert.Cole(5)rbnz.govt.r)z>; Rupert Barber <Rupert.Barber(S)rbnz.govt.nz> Cc: Richard Dean <Richard.Dean(5>rbnz.govt.nz>; Fazeena Hussain <F3zeena.Hussain(5)rbnz.govt.n2> Subject: RE: RBNZ letter and sl21 notice - CBL Insurance Limited Hi Robert, Thanks for your clarification. I can confirm that since we last provided this information there have been no new countries of business and no new ceding insurers. The previous analysis provided at the earlier date last year therefore remains accurate and valid. However, I am able to provide the GWP summary splits by country and by product for FY17 that you have requested. Regards Michael From: Robert Cole fmaitonRobert.ColeQrbnz.eovt.nzI Sent: Friday, February 2, 2018 12:06.PM To: Michael Parrott <MParrott^cblinsurance.com>: Rupert Barber <Rupert.Barber(5)rbnz.govt.nz> Cc: Richard Dean <Richard.Deanf5>rbnz.Eovt.nz>; Fazeena Hussain <Fazeena.Hussain(o)rbnz.govt.nz> Subject: RE: RBNZ letter and sl21 notice - CBL Insurance Limited Hi Michael As stated in the letter accompanying the section 121 notice the Reserve Bank has obligations to other supervisors. The information requested will help us to identify other relevant supervisors and the nature and extent of their Interest in CBL. In light of a potential need for urgent communications we cannot agree to an extension of the due date of 16 February 2018. The notice provides for an alternative if the 31 December 2017 valuation information is not available early enough for the due date. CBL can provide information as at an older date together with statements on any new countries of business and new ceding insurers (paragraphs 5 & 6 of the notice). If CBL is unable to provide even this level of detail please answer paragraphs 5 & 6 at a minimum by 16 February 2018, and follow up with the remaining information as soon as possible. This will be a breach of the notice but will at least provide us with some crucial and timely information. Regards Robert Cole Senior Adviser | Reserve Bank of New Zealand J Te Putea Matua 2 The Terrace, Wellington 6011 j P O Box 2498, Wellington 6140 T + 64 4 471 3974 Email: robert.cole@rbnz.qovt.nz j www.rbnz.qovt.nz 1

46
From: Michael Parrott finailto:MParrott@cblinsurance.com1 Sent: Thursday, 1 February 2018 3:33 PM To: Rupert Barber <Rupert.Barber(g)rbnz.govt.nz>: Robert Cole <Robert.Cole(5)rbnz.govt.nz> Subject: FW: RBNZ letter and sl21 notice - CBl Insurance Limited Hi Rupert & Robert, Further to our conference call this afternoon, and as discussed with Rupert in a separate phone call just now, I would like to clarify the reporting date for this S121 Notice information request. I assume you would prefer for the details to be for 31 December 2017 post all of the expected substantial reserving adjustments, in which case we would not be able to commence the analysis until after the results are finalised and announced on 27 February
2018. Alternatively, if you were happy to receive such detailed analysis as at an earlier reporting date, we would still
be unable to commence the collation of this information before 27 February. Also, given other ongoing workloads around this time, it would take us at least a week of elapsed time to complete the exercise, irrespective of the reporting date. I look forward to your clarification. Regards Michael Michael Parrott j Group Quality Assurance Manager CBL Insurance Group DD1 +64 9 353 0734, Mob +64 21 499 245, www.cblinsurance.com New Zealand Office Level 8, CBL House, 51 Shortland Street, Auckland 1010 Australian Office Level 21, 45 Clarence Street, Sydney NSW 2000 From: Robert Cole fmailto:Robert.Cole(5?rbnz.govt.nz1 Sent: Thursday, January 25, 2018 4:08 PM To: Peter Harris PHarris@cbiinsurance.com Cc: Michael Parrott <MParrott(5>cblinsurance.com>; 'paul.m.rhodes@nz.pwc.com' paul.m.rhodes@nz.DWc.com:
Rupert Barber <Rupert,Barber@rbnz.govt.nz>: Fazeena Hussain Fazeena.Hussain@rbnz.govt.nz Subject: RBNZ letter and sl21 notice - CBL Insurance Limited Hi Peter Please find attached a letter and section 121 notice issued today. Regards Robert Cole Senior Adviser | Reserve Bank of New Zealand | Te Putea Matua 2 The Terrace, Wellington 6011 | P O Box 2498, Wellington 6140 T + 64 4 471 3974 Email: robert.cole@rbnz.aovt.nz | www.rbnz.Qovt.nz 2

«•••••«««■•««•«*«4-t«•«•»
47
"This message (and any files transmitted with it) are confidential and may be legally privileged. If you are not the intended recipient please notify the sender immediately and delete this message from your system. This message does not necessarily reflect the views of the Reserve Bank of New Zealand. If the recipient has any concerns about the content of this message they should seek alternative confirmation from the Reserve Bank of New Zealand," l*4«4 This email has been filtered by SMX. For more information visit smxemail.com This email has been filtered by SMX. For more information visit smxemail.com 3

48
CBL Insurance GWP FY17 CRLinsurance
CBL Insurance GWP for FY17 by class:
Clas?
Builders Liability
Builders Warranty
Motor
Other Liability
Other Protection
Surety & Financial Risk
Treaty Reinsurance _
Grand Total
_____ FY17
123,986,288
39,315,264
18,269,816
30,853,352
18,284,191
82,613,735
____ 8,308,223
321,630,868
CBLI GWP FY17
Treaty Reinsurance,
8,308,223,2%
Other Protection,
18,284,191.6=4
Other liability,
30,853,352,10H
Motor, 18,269,816,65S Builders Warranty,
39,315,264,1295
Surety & financial Risk,
82,613,735,26?*
Builders liability,
123,986,288, 3854
CBL INSURANCE LIMITED p: *64 9 303 4770 f: +64 9 300 5045 Tower One, 51 Shortland Street PO Box 3772, Auckland 1010, New Zealand www,cblinsurance.com

49
CBL Insurance GWP FY17 Coinsurance
CBL Insurance GWP for FY17 by group:
Group
French Construction (Long tail)
French Construction other
France Non construction
Sweden
Norway
Denmark
Spain
Italy
United Kingdom
Ireland
United States
Mexico
Australia
New Zealand
Asia
Middle East
Other
Grand Total
:....: FY17
135,494,090
21,148,279
13,870,886
3,390,723
4,544,662
6,905,124
8,198,812
36,284,090
22,907,292
2,699,670
16,803,838
17,173,859
19,600,799
2,688,773
4,533,156
3,111,028
2,275,789
321,630,868 v- si Q ec*.
; -.«. isxjtt
|fiJ.frr.iii s nuurj
'rtv&Ursml-?* fLtfUi} UkiHi-sa
CBL INSURANCE LIMITED_______________ p:+64 9 503 4770 f:+64 9 300 5046 Tower One, SI Shortland Street PO Box 3772, Auckland 1010, New Zealand www.cblinsursnce com

50
From:
Sent:
To:
Subject:
Attachments:
Michael Parrott MParrott@cblinsurance.com
Monday, 12 February 2018 9:59 AM
Rupert Barber
RE: Reduction of Alpha/CBL Exposures
19136044_4.pdf; ISA CBL signed.pdf; 21173068_1 (Letter to Sylvia Cronin of CBI dated 9 February 2018).pdf; 21169275_1 (Appendix 2 - Project Napotean Work Group Programme).pdf; 21169401_1 (Appendix 1 - Memo - Project France and related docs) (2).pdf; 21171268J (Appendix 3 - Payment details confirmation in relation to Loan.._.pdf Hi Rupert, Confirming our telephone conversation, we have effectively put the payment on-hold (by unapproving the transfer). As requested, please find attached the signed agreement. Also as requested, I attach our response letter dated 9 February 2018 in response to the CBI "Minded to" letter dated 7 February 2018 (with appendices), along with a follow-up letter from our Chairman, Sir John Wells, to the CBI dated 11 February 2018. Regards Michael From: Rupert Barber [mailto:Rupert.Barber@rbnz.govt.nz] Sent: Sunday, February 11, 2018 10:05 PM To: Michael Parrott MParrott@cblinsurance.com Subject: RE: Reduction ofAlpha/CBL Exposures Hi Michael Please see my text message which details Toby's message to Sir John. Rupert From: Michael Parrott Sent: Sunday, 11 February 2018 8:56:13 p.m. To: Rupert Barber Subject: Reduction of Alpha/CBL Exposures Dear Rupert, The Danish regulator has called Alpha on Friday last to say that CBL Insurance has been dosed down, and threatened Alpha that it would force it to dose at Friday noon (Denmark time), if it couldn't significantly reduce its reinsurance exposure to CBL. (It appears to have been spooked by the NZX notice of suspension of CBL Corporation shares on the ASX/NZX). It would mean the closure of all Alpha business, whether reinsured to CBL or not. Alpha is a critical business producer in Europe of profitable short term bonding business to CBL, alongside a portfolio of French Construction business, and Alpha closing would be a very serious effect on CBL. Our key relationship is paying our share of claims on the reinsured portfolios we share. To be proactive on this issue, we agreed to reduce our reinsurance exposure to the Alpha book by making a €25m payment to Alpha, in consideration of receiving a credit reduction of €27m current and future claims on this business, (as we have previously done for CBLIE). The €25m payment of the claims liability reduces our obligations under the Reinsurance Agreements by €27m, giving us an additional immediate economic gain (in addition to reducing our claim liability exposures). The transfer of cash will be the sole property and an asset of Alpha, but is required to be held in a separated "Reinsurance Bank l

Account” to be provided by a third-party credit institution in the EU and only used to pay claims payable pursuant to policies insured/reinsured with CBL and Alpha under the Reinsurance Agreements. The proposal was fully discussed on Friday evening after business close and the payment is expected to go through tonight. The payment relates to underlying BAU exposures, and the reduction of same. It does not result in an increase in our exposure to Alpha, quite the reverse, and as noted above it reduces our reinsurance exposures. The claims payment will be a February transaction, and will result in a reduction in liability as at 28 February. That reduction, and the €2m fee will flow through February accounts. The claims settlement agreement was drawn up internally late on Friday evening and signed then (with an effective date of 8 February 2018 and a settlement date of 12th). As such the transaction does not impact on our FY17 Balance Sheet. The Danish regulator met with Alpha on Friday noon (Friday midnight NZtime), and we are advised they were pleased/surprised. It was also clarified with them that it was CBL Corporation who had asked NZX to keep the shares suspended. Apparently, because of what they have been advised by the New Zealand "regulator" (not sure by which one), and as a result of the notice by NZX on Thursday that CBL is going to be closed down, the regulator has now advised that it should calculate it's reserves as if CBL will not pay any dividend or ongoing reinsurance pay-out to Alpha in future. ! realise that this is late in the piece, and does not come under our existing directions, being the payment of BAD claims, but we would like to inform and discuss this with you, notwithstanding. I welcome any comments or questions you may have. Regards Michael | 51 Michael Parrott | Group Quality Assurance Manager CBL Insurance Group DDI +64 9 353 0734, Mob +64 21499 245, www.cblinsurance.com New Zealand Office Level 8, CBL House, 51 Shortland Street, Auckland 1010 Australian Office Level 21,45 Clarence Street, Sydney NSW 2000 'This message (and any tiles transmitted with it) are confidential and may be legally privileged. If you are not the intended recipient please notify the sender immediately and delete this message from your system. f This message does not necessarily reflect the views of the Reserve Bank of New Zealand. If the recipient has any concerns about the content of this message they should seek alternative confirmation from the Reserve Bank of New Zealand.” This email has been filtered by SMX. For more information visit smxemail.com 2

FILE NOTE
AUTHOR
DATE
SUBJECT
Rupert Barber
23 February 2018
Phone call with Michael Parrot, CBL
Phone Cali, Friday, 23 February 2018, 8.50am
Michael Parrott, CBL Quality Assurance Manger
Robert Cole, Senior Advisor, Insurance Oversight, RBNZ Rupert Barber, Senior Analyst, Insurance Oversight, RBNZ RB and RC called MP to discuss several points:
RB: United Specialty Insurance is this a new cedant as has not been on previous lists provided by CBL including on 16 February 2018? MP: Yes, this is a new cedant. New business in 2017. Previous information was from 31 December 2016. The insure Mexican trucks crossing US border. RC: Are they a US insurer and if so what State? MP agreed to find out. RB: There has been a breach of previous directions regarding the payment to Alpha. Peter agreed to make this payment for reasons stated. Putting that to one side, the United Specialty Insurance payments appear to be a series of three payments made over two days for collateral. MP: I queried this when I got the payment information but I understand they are three distinct payments:
1) A reply to the rating downgrade
2) Increased reserving
3) Normal premium
RC: Given the direction we are surprised you didn't check these with us. MP reasserted that they were three distinct payments under CBL’s reinsurance contracts and stated they were BAU and not designed to get around the 5 million direction threshold. RC: what about the payment to AJG FBO International General Insurance Company. MP: This was a return of premium following cancellation of reinsurance. RC: Were they a new a new cedant. MP: Yes new post 2016, but they are not now as the contract has been cancelled. RC: Per 25 January 2018 notice, please provide a full list of ceding insurers and countries. The information provided on 16 February 2018 was clearly incomplete, e.g. missing United Specialty Insurance, and also insufficient detail, e.g. Asia or Other are not countries. Please provide this as soon as possible, even without figures initially. MP undertook to do this. Ref#7414868 vl.l

2
53
RB: Responding to your previous request for the various reports on Elite, the Gibraltar supervisor has asked CBL to sign hold harmless letters. Is CBL prepared to do this? MP said yes, please give us the hold harmless letters to sign. RB undertook to do this. The next discussion was around the new direction issued on 21 February 2018. MP became very animated when we outlined how the direction should apply. MP demanded we have a process in place so that someone at the Bank was available to approve payments within a couple of hours during business hours. RC stated that it is up to CBL to ensure they have our approval before making payments caught by the direction. The onus is on them and Banks staff may not always be available at the time they want. MP queried whether the direction applied to CBL Corporation’s subsidiaries and that was not mentioned in the lower paragraph of the direction which only referred to CBL Corporation Limited. APRA have queried Assetlnsure on this. RC replied his understanding is it includes all subsidiaries per the first paragraph. RB stated his view is the same, and noted this was intentional and conscious choice to include the whole group, MP reiterated CBL doesn’t agree with this. RC offered to check with our legal people but repeated his view that CBL should be treating it as applying to the whole group. MP stated that if it applied to the whole group then we needed someone working all night who spoke French otherwise this is preventing normal BAU payments. RC reasserted that it is CBL's responsibility to ensure that the Bank’s approval is sought in the appropriate manner. This is for CBL to manage not us. RB added that it will slow down payments and that CBL will have to advise its subsidiaries of this. RB further reminded MP that it was stated in the letter our reasons for the direction, there has been a breach of previous directions, RB stated again that the payments to United Specialty Insurance appear to be a series of related payments and offered MP a second opportunity to comment on this again given it appears to be a second breach of directions. MP declined to agree and was frustrated this topic was re-raised. Cali ended. RcfS741486S vi.l

54
From:
Sent:
To:
Cc:
Subject:
Attachments:
Carl Griffiths
Friday, 23 February 2018 9:51 AM
Peter
Sir John Wells KNZM; Michael Parrott
RE: RBNZ
CBl Collateral Reports 2-9-2018.pdf
Dear Peter
Attached is the collateral report from SNIC that outlines the three payments. Regards Carl Griffiths | Corporate Finance Director CBL Corporation Ph +64 9 303 4770 Mob +64 21106 8844 DDI +64 9 353 0733 wwvAcblinsurance.com New Zealand Office CBL Insurance Limited Level 8, CBL House, 51 Shortland Street, Auckland 1010, New Zealand Australian Office Level 21,45 Clarence Street, Sydney NSW 2000, Australia "Ivs email or aUaciw.enth! may contain confidential ot legaliy pf.vlleeed information intended for the sole use of the addrcsreels). Any use, redistribution, disclosure or reproduction of this message except as intended, is prohibited, if you received this email m error, please notify the sender and erase an copses of this message, mcfyding any sttathmems. Ino legal responsibility is accepted for opinions information ar analysis contained v/dfnn. From: Peter Harris Sent: Friday, 23 February 2018 9:49 AM To: Carl Griffiths cgriffiths@cblinsurance.com Cc: Sir John Wells KNZM jwells@bancorp.co.nz; Michael Parrott MParrott@cblinsurance.com Subject: RBNZ Dear Carl, Could you please send me the schedule that State National sent us showing the three completely separate and un￾related transfers required regarding Texcaz. I need them for a conversation I am going to have with RBNZ later today. Regards Peter A Harris I Managing Director CBL Insurance Group Level 8, CBL House, 51 Shortland St Auckland 1010 New Zealand i

CBL INSURANCE LIMITED
COLLATERAL REQUEST SUMMARY
February 9, 2018
Required Balance as of 12/14/2017 USD 17,982,148 Collateral Held ANZ Banking Group Limited ANZ Banking Group Limited ANZ Banking Group Limited ANZ Banking Group Limited Frost Bank NA Total Collateral Collateral Amount Past Due Multiplier Increases A.M. Best Rating Downgrade 25% Increase 13,320,109.65 Base Reserves at 12/14/2017 Surplus/Equity Decline exceeding 10% 25% Increase 13,320,109.65 Base Reserves at 12/14/2017 Increase in Required Balance after Multiplier Increase 30131478200 SOI 31728200 S0134168200 SOI36888200 Funds Withheld 961,138 1,357,539 3,554,558 4,184,115 4,824,798 14,882,148 3,100,000 3,330,027 3,330,027 6,660,055 Total Collateral Required as of 2/9/2018 USD 9,760,055 Ol 01

i
Summary Reinsurer Report
Reinsurer:
Collateral Group(s):
Report Generated On:
Data Source:
CEi. Insurance linvted
CELNZ-001
2/9/2018 9:03 AM
Collateral (Production)
< ’ Allocated NetFunding
HDWritten;', i,Unearned; UD Earned; Ultinutc Loss ’ UEP,' Adjusted ' Collateral , Collateral Allocation; Collateral Required Premium Expected TTP Paid Case Reserve IBNR Base Reserve Multiplier Reserve Group Name Group Total Vo Amount (Excess) CBL'Insurancc limited'; , ; . . ^ 952,498 2,651,403 13^20,110 24,642,203 _______________ 14,882,118 9,760^0551 United Spedalty Insurance Company Texcaz Group Last Actuals 10/31/2017 11/30/2017 12/31/2017 1/31/2018 2/28/2018_____________________ 13/31/2010 Max Period 8,121,710 9,371,024 10,721,204 12.301.172 14,448,672 16.596.172 18,911,252 18,911,252 4,986,254 5,505,485 6,020,592 6,652,953 7,733,171 8,704,179 9,716,208 9.716,203 3,135,457 3,865,538 4,700,692 5,643,220 6,715,501 7,891,994 9,195,044 9,195,044 1,763,933 2,141,515 2,573,233 3,062,833 3.613.653 4.219.654 4,890,827 607,770 694,513 789,209 896,000 1,015,164 1,145.314 1,286,926 4,890,827 1,286,926 373,605 442,033 520,270 609,823 711,859 826,167 952,498 952,498 782,557 1,004,969 1,263,754 1,557,009 1,886,605 2,248,174 2,651,403 2,651,403 6,142,416 6,952.487 7,604,617 8,819,785 10.331,665 11,778,519 13,320,110 13,320,110 185% 11.363,459 185% 12,862,101 185% 14,438,541 185% 16,316,603 185% 19,113,530 185% 21,750,260 185*% 24,642,2031 185% 2-1,6*12,203 CBLNZ-001 10,057,350 100.0% 14,832,148 9,760,055
|US1C Total 18,911,252 9,716,208 9,195,044 4,890,827 1,286,926 952,498 2,651,403 13,320,110 24,642,203 14,882,148 9,760,0SS|
Collateral Account Summary
Statement Collateral
Collateral Group _________ AccountNumber Account Description Date - Amount | Cbl insurance Limited' 14,632,1481 CBLNZ-001 ANZ Banking Group limited ANZ Banking Group Limited ANZ Banking Group Limited ANZ Banking Group Limited Frost Bank NA__________ CDLNZ-001 Total_______ SQ131478200 SOI31728200 50134169200 50136380200 6S0Q30356-5S116 7/5/2017 961,133 7/5/2017 1.357,539 6/30/2017 3,554,558 11/13/2017 4,384,115 1/22/2018 4,824,798 14,882,148 Funding Summary .VV;--., Required: Funding Balance Requirement I 24,642,203 9,760,0551 9,760,055 01 O)

Collateral Analysis
Kclrunrer:
Collateral Group(a):
Report Generated On:
DataSource;
Calculation Date;
G3L Insurance Limited cnU(Z-001
2/9/2010 9:31 AM
Cottatcral (Production)
Custom Dale of 3/31/2010
IID Written
Exhibit Date QS */» Premium'
' . i ^ ITD Earned.. ..- '.Ultlrnate.Loie
' UEP. ’ Premium ' ^ ULR ' Expected ITD Paid Cate Retervo ; Allocated r Net Funding .•Vir/■ 'i'.’-' :;"V; •..,v>'Re»«rvo\c/; Adjmted Collateral Collateral Allocation v Collatcmt Required rve '' :itl»R Date Reserve Multiplier Rexcrve' ' Group Group ToUl ' 1 :^. .'.'Amount (Exce) ICRLlnturance Limited ' 18,911t252"' 9,71G,208:. >9,195,044 ' . v' ^r®90j827- lj286,926 • 9S2#498Vv.a#6Sl>03^;vl3»320'il0 ' 2-l,6iJ,203 i-»>82,148 '9,760,055 United Specialty Insurance Company Texcas Group Tcxcar - OS/01/2017 Comm Auto LOO t<U ___________________________I.Ofl 19.-1 ContraaTotal Tcxcaz * 11/01/201li - Hon Convn Aolo 103 9.0 LOO 17.1 LOO 19.-1 _______ 103 21.2 ContractTout Texcaa- ll/0]/20i6CoriimAuio LOO 19J __________________________LOO Ih.'l Tocaz -12/01/2017 Comm Auto _______________________ ton iQ.-i Pror)ram Hana^er Total ItJSlCTotalT 0.0‘tV 51.5% ICS^i O 185% gtgjjjQG 229,120 26v799 3,520,0'iO 4,314,733 0 229,120 16,915 19,333 0 483,709 5l.S% Sl.5% O.OVi 83.6% 117,997 54,113 10,2‘W 029 0 0

• IOC-190 211,375
  453,415 1,335,405
  49,591
  0,999
  9,821,596
  63,033 105% 118,184
  26,326 105% 43,703
  0 135% 0
  190,094 105% 351.674
  16,915 732,713 532,727 269,333 46,957 216,431 260,30-1 510,562 2,637 7,674,118 0 ,',5,4-l I 2,637 2.6-18,675 51.5% 51.51» 1,350 1,36-1.067 490 283,991 30.0% 2,676,755 25,44-1 2,651,312 326 SO 069 185% 1,607 411,593 663,0711 U05.S20 185% 2,0-15,212 2,WCy019 3/31/701R 100.01'. 10,911.752 9,716,200 9,195,044 4.890,027 1,206,926 957,490 2.651,403 13,320,110 24,642,203 CDLHZ-001 10,057,350 lOO.OVa 14,882,140 9,760,055 10,911.252 9,716,200 9,195,044 4,090,827 1,206,926 952,490 2,651,403 13,320,110 14,882,140 9,760,0551 Collateral Account Summary Statement Collateral Jollateral Group • / ^ • ■■ Account Number -Account Description , Date - Amount |CQL Incurance Limited 14,802,140] COLHZ'001 ANZ OanMng Group LVnHed AIIZ OonUoa Group Limited ANZ Danfcmg Group limited ANZ Banking Group Limited Frost Paid: MA_____________ 50131476200 50131728200 50134163200 $0136300200 650030056*55116 CDLM2-001 Total 7/S/201? 561,133 7/5/2017 1,357,539 C/30/2017 3,554,553 11/13/2017 4,184.115 1/22/2013 4,824,793 14,082,143 Ol >1

58
From:
Sent:
To:
Subject:
Attachments:
From:AyleneSy
Sent: Wednesday, 14 February 2018 2:48 p,m.
To: Henry Ray HR3y@cblinsurance.c0m
Cc: Joel Clements <jClements@cb!insurance.com>; Carl Griffiths cgriffiths@cblinsurance.com Subject: RE: Texcaz collateral - payment today Dear Henry Done, please authorize. Henry Ray Friday, 23 February 2018 9:14 AM Michael FW: Texcaz collateral - payment today CrystaiViewer 20180214 (United Specialty - TexCazJ.I.pdf; CrystalViewer 20180214 {United Specialty - TexCaz).2.pdf; CrystalViewer 20180215 (United Specialty - TexCaz).3.pdf 33129060 3312S773 33128666 33101603 33097845 33077709 33100179 United Specialty Insurance... United Specialty Insurance... United Specialty Insurance. Vistra Corporate Services.. Braithwaite, Steiner Pretty... ALPHA INSURANCE Alpha Insurance U/.m VnjVij'.:
15/02/2018
14/02/2013
12/02/2013
14/02/2013
Awaiting Approval
Awaiting Approval
Awaiting Approval
Awaiting Approval
Awaiting Approval
Awaiting Approval
Awaiting Release
CONBON-USDOl
060197072S44000
060209073072200
CON8OW-EURO0
CONBON-GBPOl
Aside from Alpha Insurance €25m, please check the other 3 that is showing awaiting approval/release. Please find attached copies of the 3 wire transfers. Best regards AYLENE SY /Group Financial and Reporting Accountant Ph +64 9 303 4770 DDI:+64 9 985 5117 www.cblinsurance.com New Zealand Office CBL Insurance Limited Level 8, CBL House, 51 Shortland Street, 1

59
Auckland 1010, New Zealand
Australian Office
Level 21,45 Clarence Street,
Sydney NSW 2000, Australia
From: Henry Ray
Sent: Wednesday, 14 February 2018 12:02 p.m.
To: Aylene Sy ASv@cblinsurance.com
Cc: Joel Clements <JClements(5)cblinsurance.com>; Carl Griffiths <cgriffiths(S)cblinsurance.com> Subject: RE: Texcaz collateral - payment today Dear Aylene, Change to payments:
Today pay 2 payments - separately
1
Collateral Amount Past Due 3,100,000
2 __
AM. Best Rating Downgrade 3,330,027
25% Increase
Tomorrow pay:
3
Surplus/Equity Decline exceeding 10% 3,330,027 25% Increase Regards, Henry Ray Group Financial Controller CBL Insurance Group DDI :+64 (0)9 985 5106 Mobile: +64 (0)2777 555 93 New Zealand Office: Level 8, CBL House, 51 Shortland Street, Auckland 1010, New Zealand Australian Office: Level 21, 45 Clarence Street, Sydney NSW 2000, Australia www.cblcorporation.co.nz From: Henry Ray Sent: Wednesday, 14 February 2018 11:02 a.m. 2

60
To: Aylene Sy <ASv(S>cb]insurance.com>
Cc: Joel Clements <JCIements(g>cblinsurance.com>: Carl Griffiths <cgriffiths{5)cblinsurance.com> Subject: Texcaz collateral - payment today Importance: High Dear Aylene, As discussed please could you arrange forthe payment of the below. o Same details as per the previous US$ 4,824,798 paid in January 2018

• Deadline = today
  Tofal Collateral Required as of 2/9/2018 USD 9,760,055" Regards, Henry Ray Group Financial Controller CBl Insurance Group DDI : +64 (0)9 985 5106 Mobile: +64 (0)2777 555 93 New Zealand Office: Level 8, CBl House, 51 Shortland Street, Auckland 1010, New Zealand Australian Office: Level 21,45 Clarence Street, Sydney NSW 2000, Australia www.cblcorDoration.co.nz
  —Original Message.....
  From: ricoh@cblinsurance.com fmailto:ricoh(5)cblinsurance.coml Sent: Wednesday, 14 February 2018 10:57 a.m. To: Henry Ray HRav@cblin5urance.com Subject: Message from "RNP002673E548D7" This E-mail was sent from "RNP002673E548D71' (MR C6004ex), Scan Date: 02.14.201810:57:20 (+1300) Queries to: ricoh@cblinsurance.com 3

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Dated 20-1 a................ {Deleted: 2017
RECEIVABLES PURCHASE
AGREEMENT relating to outstanding reinsurance premiums CASTLEROCK RECEIVABLES MANAGEMENT LIMITED Castlerock CBL INSURANCE LIMITED C8L Papa I i i t f

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CONTENTS
1. INTERPRETATION 2
2. PURPOSE AND GENERAL EFFECT OF AGREEMENT T
3. PURCHASE 8
4. REPRESENTATIONS AND WARRANTIES 9
5. UNDERTAKINGS 12
5. PAYMENTS 14
T. COSTS AND INDEMNITIES 14
8. ATTORNEY IS
9. DISPUTE RESOLUTION IS
10. EFFECTIVE PERIOD AND TERMINATION IS
11. NOTICES 18
12. GENERAL 17
13. GOVERNING LAW 20
SCHEDULE 1 22
Pagoi

63
RECEIVABLES PURCHASE AGREEMENT
DATED 2017
PARTIES
(1) CASTLEROCK RECEIVABLES MANAGEMENT LIMITED fCasHorack'’) (2) CBL INSURANCE LIMITED (’CBL") ( K BACKGROUND A. CBL has a oories ot re-insurance policies wilh oulolandlng ro-insutance premium liabllios which are due tor collection and which CBL has now agreed to assign and translor to Casltorock absolutely. B. This Agreement sets out the terms on which such sate shall occur. TERMS OF THIS AGREEMENT

1. INTERPRETATION
   1.1 Definitions: Unless the context otherwise requires, the following terms havo the following
   meanings:

• Agreed Schedule’ means the schodulo contained on the USB Stick thot sots out the details of
  Ihe Purchased Receivables, and lha SfS Receivables lo which (hey relate, In the format set out In Schedule 1. ’Business Day' means a day (excluding Saturday, Sunday and any public holiday) on which banks are open for business in Auckland, New Zealand. ’Castlorock Collections Account' has the meaning given lo It in Ihe Servicing Agreement.
• Collections* moans, with respect to any receivable of which a Purchased Receivable forms
  part, all moneys, rights and property which is received or recovered by Casltorock or CBL after
  the Closing Date, including fees and any other recoveries, under or in connection wilh thot receivable.. For the avpjdancq of. doubt, all, prepayments of .any. Purchased,Recolyable, (whether voluntary or mandatory)) shall bo and form a pari of the Collections with respect to that Purchased Receivable. Deleted; sybicciro danse Error! Reference source not found. ’Closing Dato’ shall be doomed lo be 31 July 2017. ’Data Base’ has the moaning given to that term In the Servicing Agreement. f t t ?

64
"Elilo* means Silo Insurance Company Llmilod oi Glbrallor.
'Elite Receivable' moans any insurance premium receivable (or part Ihereoi) payable by SFS to Elilo as sel oul in column 0 of the Agreed Schedule. 'Event of Default' means wilh respect !o either party, any of the following occurring:
(a) failure to pay any amount due under this Agreement or any Transaction Document in the manner and in Iho currency required on its due dole and lhal (allure is nol remedied within two Business Days of its duo date; (b) failure by that party !o comply withany material provision o! thisAgroemenl or oi any Transection Document (other than that referred to In paragraph (a) above) where, wilh ' respect to any such failure to comply, such failure to comply is nol remedied wilhin 10 Business Days oi the earlier of lhal party becoming aware of that failure to comply and that failure to comply being notilied lo lhal parly by the other party; (c) any representation or warraniy made by that party in a Transaction Documeni is or proves to be untrue In any rospecl (other than (hose referred to in clause 3.5)where, with respect to any such untrue representation or warraniy, such untrue representation or warranty is not remedied wilhin 10 Business Days of the earlier of that party becoming aware of that untrue representation or warranty and that untrue representation or warranty being notified to that parly by the other party; (d) on Insolvency Event occurring wilh respect to that party; (e) that party ceases or threatens to cease to carry on all or substantially all of lls business or operations; or (!) it becomes unlawful (or that party to perform iis obligations under the Transaction Documents. ’Information' means, in retation to any Purchased Receivable, Elilo Receivable or SFS Receivable all information of any nature held by Elite, CBL and/or SFS and provided to Castlerock conlaining written documents, correspondence, and other information (including the (. Agreed Schedule) relating to that SFS Receivable, Elilo Receivable or Purchased Receivable (ineluding any Relevant Documeni). 'Insolvency Event' means, in relation to a person, the happening o! any of the following events with respect to that person:
(a) a statutory manager is appointed or any step is taken to appoint, orv/itha viewto appoint, a statutory manager(including a recommendation by the Financial Markets Authority supporting such an appointment) under the Corporations (investigation and Management) Act 19S9 or that person or any associated person (os that term Is defined in that Act)is declared al risk pursuant lo tho provisions of that Act; Pages

65
(b) oxcepl (or the purpose o( a solven! reconstruclion, amalgamation or scheme of arrangomenl, an application or an order Is made, proceedings are commcncod, a resolution is passed or an application to a court is made for the winding up or dissolution of that person; (c) an application is made lo a court for an order appointing a liquidator or provisional liquidator with respect to that person, or ono of (hem is appointed, whether or not under an order; (d) that person is declared or statos that it is insolvent, is unablo lo pay Its debts when they fall due or deemed to be so under any law; (c) except for the purpose ofa solven! reconstruction, amalgamation or scheme of arrangement, that person ceases, suspends or threatens lo ceaso or suspend iho conduct of all or substantially all of Its business; (f) axcept for the purpose of a solvent reconstruction, amalgamation or scheme of arrangement, that person enters into, or resolves to enter into, a scheme of arrangement, administration, compromise or composllion wilh or assignmenifor the benefit o(its creditors or a class of them with a view lo avoiding, or In the expectalbn of, insolvency; (g) that person stops or suspends or threatens to slop or suspend payment of all or a class of its debts; (h) an order is made requiring that person lo pay any debts of another person that is in liquidation; (i) an encumbrancer takes possession of, or a rcooiver or receiver and manager, administrator, controller under any companies or securities legislation, or any similar official, is appointed to that person or, nil or substantially all of the Purchased Receivables; (j) a distress, attachment or other execution Is levied or enforced upon, orcommenoed against all or substantially all of the Purchased Receivables and is not discharged or stayed within 10 Business Days; or (k) anything analogous or having a substantially similar effect to any o[ the events spacltied above occurs with respect to that person under the taws of any applicable jurisdiction. 'Penalty Payment" means:
the amount ol any civil or criminal penally which a party is ordered or required lo pay under any Consumer Credil Legislation; any other money ordered or required to be paid by a party, orlegal costs or other expenses payable or Incurred by a party, in relalion lo such an ordor; and i i Pago d i i j j i ! (i) (m)

66
(n) any losai costs or other coots and expenses payable or incurred by a party in relation to those ptocoedings. ‘Purchase Price' means, subject to any adjustment pursuant to clause 3.4, EUR29,605,342.00 being the aggregate net amount tor the Purchased Receivables as set out In Column E of the Agreed Schedule for the transfer ant) assignment of She Purchased Receivables under this Agreement. ‘Purchased Receivable' moans each reinsurance premium receivable payable by Elite to CBl which is set out In column E of tho Agreed Schedule.

• Rolovant Document’ means, with respect to a purchased Receivable;
  ^ (a) the Roinsurance Contract rotating to that Purchosod ReceK'able to tho extent only that It rotates to such Purchased RecoIvaWe; (b) any written amondment orreplacemonl of any such document or agreement roforrod to in (a) above and any other written document or agreement) vrhlch is entered into by CBL with, or on bohalf of, Castloroci; in connocllon with tho! Purchased Receivable; and (c) all other written documents, Instruments and records (to which CBL is a party) which evidence or relate to that Purchased Receivable.
• Relevant Event- means an Event of Dofaull with respect to CBL which is subsisting or an
  Even! of Default by SFS under tho Servicing Agreement.
• Rc-insuranco Contracts' moans tho ro-lnsuranco contracts between Elite and CBL.
  'Servicing Agroomonf means Ihe receivables servicing agreement between Caslleroci; and SFS dated on or about tho dale of Shis Agreement. ’SFS' means Securities and Financial Solutions Europe SA, 'SFS Receivable” means the gross Insurance premium payable by on Ultimate Obligor to SFS as col oui in column A ofIha Agreed Schedule, i 'Transaction Documents' moans:
  (o) Shis Agroomont;
  (b) tho Servicing Agreement: and
  (c) any other document agrecdtobeaTransoction Document in connection with this Agreement by CBL and Caslleroci;, 'USB Stick’ means Ihe USB stisk, Initialled by both parties and containing the Agreed
  Schedule which the parties agree forms port of lhi$ Agreement

67
"Ultimnto Obligor' means, Ihc person who is obliged lo make payment to SFS in respect of a SFS Receivable, and includes, where the contexbrequires, any other person obligated to make payments with respect lo that SFS Receivable (including any guarantor), tn each case as set out in column F and identified by policy numbers oridentifiers on the Agreed Schedule, “VAT'means value added tax. goods and services tax, sales, consumption or turnover lax, or any imposition or levy of o similar nature, assessad or imposed In New Zealand, France,

• Luxembourg or elsewhere.
  1.2 Interpretation: In this Agreement:
  delegate moans any person from lime to time appointed by CBL as its attorney, agent or contractor to exercise any ot the powers or perform any ol the obligations or (unctions of CBL under IhisAgrecmont, EUR or C means Iho lawful currency of the European Union and Franco from time to time. something having a material adverse effect in relation to a parry, is a reference lo it having, a malarial adverse effect on:
  (a) that party's business, assets or financial or trading condition taken as a whole; (b) the ability ol that party to perform and complywith its material obligalions under the Transaction Documents: or (c) the validity or enforceability of a Transaction Document. notice moans a notice, certificate, request, demand or other communication to be given, served or made under or pursuant to this Agreement. power means, In relation to a Purchased Receivable, any right, power or discretion conferred on Castlerodc or CBL by that Purchased Receivable or by any law in connection with that Purchased Receivable.
  1.3 References to certain general terms; In this AgreemenL unless the contrary Intention
  appears:
  (a) a reference lo an instrument or agreement includes a contract, deed, licence, undertaking, or agreement digilally recorded and olher document (In each case, oral and written) and Includes that agreement or instrument as modified, supplemented, novated or substituted from time to time:
  (b) a reference lo a statute, ordinance, cede or other law includes regulations and other Instruments under It (including codes) and consoiidailcns. amendments, ro-onaclments orreplacements at any ofthem; (o) gender includes each other gender and the singular includes the plural and vice versa;
  Page fi

68
(
1
(d) tho word poreon includes an Individual, firm, body corporals, company, corporallon. an unlncorporaled association or on aulhority (In each case whelhoror not having separate legal personaliSyS; (e) a reference to a person indudes a reference to the person’s executors, administrators, successors, substitutes (Including, without limitation, persons taking by novation) and assigns; (() a reference to any thing Is a reference to Ihe whole and each part oflt and a reference to a group of persons is a reference to ail of them colleciiveiy, to any two or more of them colfectivety and to each of them individually; (g) anything which may be done at any time may also be done from time to time; (h) including and its derivations do not limitwhat else might bo included; (i) a Relevant Event. Event of Default or Insolvency Even! relating to CBL subsists IIII has not boon remedied orwaived (othe satisfaction of Casllorock (Doling reasonably); (J) an Event of Delmil or Insolvency Eventrelating to Castterock subsists it It has not been remedied or waived to tho satisfaction of CBL (acting reasonably); (k) a reterenca to a time of day shall bo roforonces lo Maw Zealand lime unless otherwise slated! and (l) lha Introduction to and headings In this Agroomonl are inserted for convenience only and shall be ignored in construing this Agreement.
1.4 Business Day convention; Where Ihe day on or by which any act, mailer or thing is to be
done is a day other than a Business Day such acl, matter or thing shall be done on the next succeeding Business Day.
2. PURPOSE AND GENERAL EFFECT OP AGREEMENT
2.1 Purpose: Tha purpose ol IhisAgreement Is to record the (arms on which Casllorock will
purchase CBL’s right, lilla and Interest in, the Purchased Receivables under lha terms of this Agreement,
2.2 Without recourse: CBL does not guarantee the payment or performance by:
(a) Elite of Its obligations under orwith respect to any Purchased Receivable: or (b) SFS of ils obligations undor or with respect lo any Elite Receivable; or (c) any Ultimate Obligor o( ils obligations under or wilhrespeclto any SFS Receivable.

69
(
( but CBL does warranl that each Purchased Receivable is an amount owing to it by virtue of CBl’s reinsured portion ofo policy issued in the name of Elite as a reinsurance premium In relation lo each Ullimale Obligor as sot out in the Agreed Schedule.
3. PURCHASE
3.1 Absolute AssIgnmonltThe Purchased Receivables shall be assigned and transferred to
Caslleroclt absolutely and unconditionally with all of CBL's right, tiUe and intoresl In, and lo, that Purchased Receivable Iransferrlng from CBt, lo Castlorock, subject to the terms of that Purchased Receivable. CBL hereby Iransfers and assigns absolutely !o Caslleroo!; and Castlorock accepts the assignment of all of Ihe Purchased Receivables. CBLwarrants that it will lake oh actions (If any) in a flmely manner as are necessary to perfect this assignment os requested by Caslierock (acting reasonably).
3.2 instructions; CBL will instruct Elite to direct any payment relating lo a Purchased Receivable
to be paid to the Castlorock Collections Account; and
3.3 Payment to Collections Account: CBL will roguecl that SFS make any payment duo to CBL
of a Purchase Receivable directly to the Caslierock Collections Account, unless Elilo directs otherwise.
3.4 Payment of the Purchooo Prico:
(a) Caollcrock shall pay the Purchase Price In five (5) instalments as set out in clause 3.3. However. Castlorock may In its sole discretion pay any portion ol the Purchase Price prior to the duo date in which event all future Instalments o) the Purchase Prico will be reduced pro-rata by the amount of Ihe early repayment. (b) The Instalments of the Purchase Prico payable by Caslierock will bo as follows:
(i) 30 September 2013
(ii) SOSaplembor 2019
(ill) 30 September 2020
(Iv) 30 September 2021
(v) 30 September 2022
€5,921,068
€8.881,503
€13,322,404
€740,134
€740.134
20%:
30%:
45%;
2.5%; and
2.5%.
3.5 Breach of Certain Warranties: Notwithstanding any other ptovision ol this Agreement, in the
event that any of the representations end warranties In clauses 2.2,4.2(a), 4.2(b). and 4.2(j) Is or proves to be untrue in any respect in connection with a Purchased Receivable, and Is not remedied within 10 Business Days oi CBL (including as a resul! of notice from Caslierock) becoming aware of that unfnro representation or warranty, CBL will, within 5 Business Days of receiving notice from Caslierock after ihe expiry of any remedy period (providing Ihe spccIScs of tho warranty orrepresentation that has been breached), repay the amount already paid In

70
( relation to the relevant Purchased Receivable and/or reduce the Purchase Price in relation to Ihe relevant Purchased Receivable by any Mure amount Ihat would have been payable by Casllcrock (o CBL in terms ofthis Agreement were it nol for a breach of the relevant warranty by CBL. Any amount payable by C81 to Castlerock under this clause will be payable on or prior to the expiry of the relevant S Business Day period without deduction or sot off and Casllcrock shall re-assign any righb title and interest In that Purchased Receivable that It did receive. The payment and/or reduction In the Purchase Price (as the case may be) under this clause 3.5 shall be the sole and exclusive remedy for the breach ol the warrantee referred to in this clause 3,5.
3.5 Transfer and assignment:
(a) II is acknowledged and agreed that CBL shall deliver and Castlerock wil bo omitted Jo retain copies of the Data Base and Relevant Documents togelhorwilh CBL's related database, to the extent they relate to the Purchased Receivables purchased by Castlerock under this Agreement. (b) Conclusive ovldonco; Signing of this Agreement shall bo conclusive evidence against the parties and for any third parlies of that assignment and transfer and that the right, title and Interest In, and to. each Purchased Receivable has so passed.
3.7 No assumption of any obligations:
(a) With respect to any assignment of Purchased Receivables to Castlerock as contemplated by clause 3.1 Castlerock does not In any circumstance assume any obligation or liability of CBL or any other person In rotation to those Purchased Roceivablos and CBL indemnities Castlerock in rotation to any toss, cost or damage rotating to such liability (other than where such toss, cost, or damage arises as a result ot Castlerock fraud, gross negligence or wilful default), (b) If, after any such assignment, ihe cash flows or Collections with respect to those Purchased Receivables are adjusted or re-ncgotlated in any manner, Castlerock Is the person who is subject to that renegotiation or adjustment and not CBL. (c) Wilhout limiting clauso 3.7(a) or clause 3.7(b), the parties acknowledge and agree that Castlerock is not acquiring any assets (including any of the business, goodwill, product name, business name, trademark or Intellectual property rights of CBL) under this Agreement other than Purchased Receivables) and that no liability in relation to any other assets or business of CBL is being acquired or assumed. d. REPRESENTATIONS AND WARRANTIES d.i General: Each ol CBL and Castlerock represonls and warrants to ihe other that:
(a) Status: itlsdulyincorporatedandvatidlyextstingur.derthetawsof itsjurisdiction of incorporation;

71
(
(
!
(b) Power and authority: ilhoo:
(I) tho power a rrd authority to own assets and carry on business; (ii) (ho power to enter into, and oxerclse its rights and perform and comply with its obligations under, the Transaction Documents to which It is a party; and (fii) taken all necessary corporate action to authorise the entry into, and tho porformanco of ail ils obligations under, tho Trensaclion Documents to which it Is a party; (c) Obligations; ils obligations under the Transaction Documents to which it is a party am legal, valid, binding and enforceable against It, In accordance with Its terms, subject to applicable bankruptcy, re-organisation, insolvency, moraiorium or similar laws affecting creditors' rights generally and subjecl also (as to enforceobilily) to equitable principles of general application regardless of v/hclhor enforcement Is sought In a proceeding in equity or at low; (d) No violation: neither the execution and delivery ol the Transaclion Documents to which it is party nor tho exorcise of any right or the porformanco or observance of any obligation under iho Transaction Documents to which it is party or any iransaclions conlemptaled by K will:
(i) violate or contravene any law to whioh it is subject:
(ii) violate any of the documents constituting It or cause any limitation on any of ils powers or on the right or ability of Its directors to oxerclse those powers, to be exceeded; or (o) Authorisations: all oulhorisatlono required by It or otherwise appropriate for it to obtain in connection with tho entry into, execution and performance by it, and the validity and onforccabitty, of the Transaction Documents have been obtained or effected and are in full force and eifect and there are no qualifications or limllaiions affoclfng those authorisations which have not been notified to tho other parties; (f) Laws: it is complying wilh all laws applicable to II and it has not breached any applicable law binding on it which breach lias had, or wi# have, o material adverse effect In respect of it; and (g) Litigation: lo the best of its knowledge end belief, no litigation, arbitration, dispute or administrative proceeding is current or pending or, lo its knowledge, threatened In relation lo it:
(I) lo restrain its entry into, or the exercise of its righls or tho porformanco of ils obligations under, the Transaclien Documents; or (ii) which is likely to be adversely determined and would, if so determined, have a material adverse effect in respect of It. Pago 10

72
('
(
4.2 Warranties: C8L represents and warrants In relation to the Purchased Receivables:
(a) Title: On the dale of this Agreement it will be. the solo owner of thePurchased________________________________ ReceivablesJreqfrgrn any securitjrjnJprest/pthDr than as a resull of OTs Agreqmonl); , •• (peleted: fa rfcc Purchased RKeivabieAme'jni ] (b) Right to soli: onor prior to the dale of this Agroement, It has all necessary consents required in order for it to assign the Purchased Receivables to Casllerock; (c) Relovant Document: the sale, transfer and assignment of ils infercst fn the Purchased Receivables, will no! constitute a broach of any Relevanl Document ora default by it under any security interest; (d) Enforcement: it holds in Ils possession or control all Relevant Documents (or has othenvise provided the Relevant Documents to Castlerock In accordance with Ihrs Agroement) that are necessary to enforce the Purchased Receivables; (e) No mlcroprosontallon: a!! information provided by ii to CastlorosH In connection with ihe Purchased Receivables was, when given, true and accurate in all material respects and not misleading or deceptive and did not omit to state a material (act necessary in order to mofto the statements therein in light of the circumstances in which they were made not misleading ordecepllve; (f) Material adverse effect: os at the date of this Agroement, it was not aware of any circumstance or event thal may materially and adversely aifeol:
(i) the value or enforceability of any Purchased Receivable; or (S) ils abilllyio perform ils obilgotlons under the Transacllon Documents:
(g) Solocilon process: there is no fraud, dishonesty, materia! misrepresenlation In relation lo the Purchased Receivables; (h) Impairment: it has not done, or omitted to do, anything which would prevent iho Purchased Receivables from being valid, binding and eniorcoabio against Elite in all material respects excepl to the extent (hat it is affected by taws relallng lo creditors righls generally, or doctrinos of equity; (I) Assignment and transfer each Purchased Receivable is assignable and it has (he power to assign ils right, lille and interest In, and lo. ihose Purchased Receivables to Castlorock free from any security interest (olhor than a security Interest in favour of Casllorock); and (j) No sof-off; to the best of Hs knowledge and belief, no right of set-off, combination or counterclaim has been claimed by Elite In respect of the Purchased Receivables that affecls the right of CSLto recover any amount payable by Elite thereunder.
4.3 Time representations and warranties made: The reprosenialions and v/arrantfes In clause
4.1 and 4.2 are mode on the dale ol this Agreement.

73
4.4 No warranties as to creditworthiness of Ullimato Obligors: Castlorock acknowledges and
accepts that CBL makes no warranty or representation In respect of the creditworthiness of on Ullimato Obligor, SFS or Eliio or bul. for the avoidance of doubl, sobjocl lo clause 3.5, ihe obiliiy of an Ullimalo Obligor. SFS or Eliio to most its obSgaiions in respect of a Purchased Receivable. Silo Receivable cr SFS Receivable or Ihe ability of CastlerocK, SFS, Elite or CBL or any ihird party to recover under a Purchased Receivable, Eliio Receivable or SFS Receivable or any part thereof.
4.5 indemnity: CBL indemnifies CasUerock for any VAT payable in reaped of any Purchased
Receivable.
5. UNDERTAKINGS
5.1 General undertakings: CBL shall:
incorrect representation orwarranty: as soon as reasonably possible, nolify Castlorock if any representation or warranty mode by it or on its behalf in conneclion with a Transadlon Documenl is found lo have boon inccrrcct or misleading when made; Compliance: complywith ils obSgaiions under (ho Transadlon Documenis; Pay taxes: pay all taxes and foes lhaf rofafe to the rolevanl Purchased Receivables that arise prior to the Closing Dale and promptly nolify Castlorock if any such laxos and fees are not paid when due or if ii conteste its liability to any taxes and fees:
Security Interests: ensure that no Purchased Receivable is or becomes subject lo a securily interest (other than a security fntorost in favour of Castlerock) other ihan as explicitly contemplated by this Agreement and as soon os reasonably possible notify Castlerock offer it becomes aware of Ihe croafio n or existence of any security Merest In relation to any Purchased Receivable competing with ils interest or the Merest of CBL and Castlerock in any such Purchased Receivable:
Compliance: comply in oil material respects wiih all of its obligations under ail applicable laws with respect to all Purchased Receivables; Further assurances / perfection of iitio: ol any lime whilst on Even! of Defautl subsists with respect to CBL, al Iho request of Castlerock (acting reasonably), execute all documents and perform any acf, mailer or ihlng necessary (subjocl lo ihe terms of this Agrecmonl) to:
(i) confer lha full benefit of the full legal lille assigned in accordance with this Agreement, including, v/ilhoul limilafion, notifying Eiile of ihe sale of a Purchased Receivable (o Castlerock and (hat the Purchased Receivable has been acquired by Castlorock and that Casllerock is entUied to deal with such Purchased Receivable as it, in its discretion, sees frl:
i f
(a)
(b)
(o)
<d)
<e>
(0

74
(II) period, prolecl or ovicicncs more (ully each purchase of a Purchased Rocalvabta by Casllerock: amd (III) protect and enforce {in anyr/aywhatsoever) Castlerock'o inlerosl In all Purchased Receivables and Collodions, in each case lo the futlest extent permitted by the terms of that Purchased Receivable and by Isw and, without limiting [ha assignment and transfer of tile Purchased Roooivabics, should any powers nol have been aifocliveiy iransferred to Castloroclr, hold such powers on bare trust for CasllcrocK and only exercise any such powers on the instructions of Caslleroctc provided thal, for Iho avoidance of doubt, Cocllerock she!! at no time be enlilled to Iho benefit ef any direct dobil authorily or cradit card authority of CBL or any other document under which CBL may apply to become nn Initiator of, or initiate, direct debits or payments on account of an Ultimata Obiigor, SFS or Elite; and (g) Set-off; if any right of set-off, combinab'on or counterclaim is exercised against CBLwith respect to a Purchased Receivable, pay to Castlerock the amount of any benefit accruing !o CBL as a resuli of the exercise of thal right of sot-off, combination or counterclaim or the amcunl of any right of sel-off, combination or counterclaim exorcised against Castlorock, which paymonl will form a Coliccllon for Iho purposes of Ihat Purchased Receivable.
5.2 Negativo covenants: CBL shall not;
No security inforosts: sell, assign or olhanviso dispose of. or create or allow lo exist any securily interest (other than a security inleresl granted In favour of Casiierock) upon or with respect lo, any Purchased Receivable, or any right lo receive Income with respect to lhal Purchased Receivable; No disposal: purport to sell, assign, transfer or otherwise dispose of any Purchased Receivable other iha n under this Agreemenl; No amondmenl to Relevant Documents: other than with Castlcrock’s consent, extend, amend, modify or otherwise vary any Relevant Document with respect to any Purchased Receivable, or permit or procure any other person lo do so; and Waiver: other than with Casttorock's consent, waivo or release anypartyfrom iis obligations under, or consent to any waiver or release of any party from ilc obligalrons under, any Purchased Receivable, Elite Receivable or SFS Receivable.
5.3 Remission of Cotiectlons: If CBL receives or recovers ony Collections In relation to a
Purchased Receivable, CBL shall hold any such Collections on Irucl for and on behalf of Casiierock. CBL agrees lo remit in cleared funds any such Collections to the Casiierock Collections Account or os olhenviso directed by Casiierock within three Business Days of receipt or recovery.
5.4 Castlorock general undertakings: Casiierock shall:
(a)
<b)
(o)

75
(a) Incorrect reprosorUMIon or warranty: as soon as reasonably possible, nolifyCBlif any representation or warranty made by it or on its behatiin connection with a Transaction Oocoment is found to have been incorrect or misleading when made:
(b) Compliance: comply with its obligations undortho Transaction Documents; and {c) Equity UndortaWng: procure on undertaking from a party to subscribe tor Shares in it If al any iime ills unable lo meet an obligation In relation to payment of any portion of the Purchase Price on duo dote in respect of such portion of the Purchase Price that Castlerock would not otherwise be able to meet on duo dale, 6, PAYMENTS ( r
6.1 Payments: Each payment to be made undor this Agreement shall bo made in Euros, In same
day funds, for value on tho due dale to the account specified from time to time by the intended recipient. Payments, other than In relation to the Purchase Price, wit! be due monthly on the test Business Day of each month.
6.2 Payments froo and clear: All amounts payable under this Agreemcn! shall be paid:
(a) free and clear of any restriction or cortdilion: and (b) except to the extent required by lav; or os expressly provided olherv/iso In this Agreemcnl, without any deduction or withholding on account of any lax or any other amount, whether by way of set-off, counterclaim or otherwise.
7. COSTS AND INDEMNITIES
7.1 Costs and expenses: CBt shall pay lo, or reimburse, Castlerock on demand all costs,
expenses, losses and liabilities on a full Indemnity basis incurred or sustained by Castlerock In conneciion with; (a) the exercise, enforcement or preservation, or attempted exorcise, enforcement or preservation, of any right under this Agreement; and (b) the granting of anyv/aiver or consent under, or the giving of any variation or release of, this Agreement. Indemnity: Each parly must Indemnify the other on demand for all direct costs, exponses, looses or liabilities which II may sulfer or incur as a result of:
(a) any fraud or wilful default on the part of that party; or (b) any breach by that party of this Agreement; or (o) any breach by that party of any reprosentalion and warranty contained in this Agreement, 7.2 i
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76
7.3 Legislation: CBL indemnifies Castletock, its respective agonls and directors, officers and
employees (each such person being an Indemraiietf Person) on demand against any Penally Payment suffered or incurred by an Indemnified Person In connection with the Purchased Receivables os a rosull of a breach of any legislative, slolulory or regulatory requirements by that party In respect of a Purchased Receivable.
0. ATTORNEY
8.1 Appointment On the occurrence cf an Event of Default by CBL, CBL Irrevocably appoints, for
valuable consldoralion, Casllerock to bo ils allorney (Attorney), In accordance with Ms clause 8.
8.2 Extent of power The Attorney may, at any time whilst an Event of Default cubsisls:
(a) on behalfof CBL, in ils name (wilh the exception of the right lo sue) or otherwise, and al ils expense do anything which CBL agrees to do under ihe provisions of this Agreement or which, In theAttorney's opinion, is necessary or expedient to give effect lo any right, power or remedy conferred on Casllorock by this Agreement, by law or otherwise (including exocullng deeds and Insliluling, conducting and defending iegal proceedings), including without limitation performing any obligation under clause S.1(f) provided that in no case may an Allorney apply to become an initiator of, or inillalo, direcl debils or payments entered into by an Ulllmale Obligor, SFS or Elite In relalion to a Purchased Receivable; (b) delegate the Atlomey's powers (including ihiq power ol dolegaiion) to any person for any period, and revoke a delegation; and (c) exercise or concur in exercising IheAttorney's powers even ilthe Atlcmey has a condicl of duly in doing so, or has a direct or personal interest In the means or result of that exorcise of such powers.
8.3 Ratification: CBL hereby ratifies anything done by anyAttorneyor delegate in accordance with
this clause 8. g. DISPUTE RESOLUTION
9.1 Dispute resolution: If eilher party believes that (here is a dispute between the parties arising
out of the Agreement that party may give written notice to Ihe other party setting oul the details o! the dispute, if a notice of dispute Is given! (a) each partywill appoint a suiiably qualified person to represent each of iheir inlcrosls under this Agreement (each a Reprasenlaiive); (b) each parly will direcl ils Represenlalive lo use his or herreosonable endeavours (o resolve the dispute within 10 Business Days of Ihe date of Ihe nolfee; (c) il the dispute Is nol resolved under clause 9.1(b). ihe dispute will be referred lo:

77
(i) in the case of Casllorock, {he Managing Director or any person delegalerf to .act in his or her place; and (ii) in the case of CBL, the {Chief Financial Officer] or any person delegated to act In his or her place, who wilt each use their reasonable endeavours to resolve the dispute within tO Business Days from the date the dispute is referred to him or hen and {d} unless either party elects to take immediate steps to seek urgent interbcutcry relief before an appropriate court, the parties agree not to issue proceedings in the courts until after they initially try to achieve resolution pursuant to the dispute resolution procedure outlined above, provided that if the dispute is not resolved under clause 9.1(c) each party shall be free to enforce their rights under this Agreement as they see fit.
10. EFFECTIVE PERIOD AND TERMINATION
10.1 Term: This Agreement shall become effective from the dale of its execution and shat/ continue
in full force and effect until the later of:
(a) the dale on which there ore no Purchased Receivables; and (b) the dote agreed by the parties hereto 10 2 Survival of obllQations; Each of the undertakings of CBL relating to Purchased Receivables shall survive In full force and effect until there are no longer any Purchased Receivables 10 3 Survival of provisions; Clauses?, 9,10.2 and 12.1 ond this clause 10.3 will survive in full force and effect after the termination of this Agreement,
11. NOTICES
11.1 Delivery; All notices and other communications given pursuant to this Agreement shall be in
writing and shall be delivered by hand or sent by email or post, charges pre-paid to the other party at the office address or email address (as appropriate) of that other party shown below or os advised from time lo time by notico:
(a) CBL:
Love! 8
51 Shortland Street
Auckland
New Zealand
Attention; Chief Financial Officer
Email: cnr.ffifhs#cfc?insiifonc^ com
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78
(b) Cosllorock:
Casllofock Receivables Managomcnl Limited c/-11“’Floor, 191 Queen Slreot Auckland 1110 New Zealand Atlenllon: Nigel Sprall Email: nspratl@banccrp.co.n2
11.2 Deemed receipt: Nolicos shall be deemed to have been received by the party to whom the
nollce is addressed:
(a) it delivered by hand, upon delivery,
( (b) if sent by post, Ova Business Days atler, bu! not including, the day of posUng; and (c) it senl by email on completion of transmission to the rclovanl email addresses provided that It such transmission is made or completed at a time outside the ordinary business hours of the addressee, at the opening of business on the noxl Business Day, 12, GENERAL
12.1 Confidentiality: Each party agrees to keep confidential and not disclose to any person any
Transaction Document, Relevant Document, Information or other informallon which, when provided, Is specifically Idenlifiod to be confidential by the parly providing the Information except whore such disclosure Is:
(a) made with the consent ol that other party:
(b) necessary for the performance of the Transaction Documonis:
(c) required by any law or regulation or directive or the rules of any stock exchange; or (d) to its legal advisors, auditors, shareholders or financiers. and in each case (other than in the case of shareholders and financiers of CBL and the . shareholders and financiers of Castlerock) on the basts that any such recipient thoroot is only ’ provided so much information as they neod lo know and on ihe basis thal such recipient keeps such information confidential on the terms hereof; or (e) required in connection with the enforcement of the Transaclion Documents or in a proceeding arising out of or In connection with (ho Transaction Documents: or (f) in the event of a Relevant Event, by Castlerock lo a replacement servicer to bo appointed to service the Purchased Receivables: or (g) ol information which Is in or has come into Ihe public domain olher than through a breach by any party of its obligations under this clause 12.1.

79
12.2 Amondmonts: Any airtcndmenl lo this Asrecmcnt shall be in writing signed by all parties lo
(his Agreement.
12.3 Acknowledgement of security:
CBL acknovrledges and agrees that Castlerock may grant a security interest over its right, title and Interesi In and lo this Agreement and the otherTransaction Documents to which ii is a parly and (hal, as a consequence, the secured party thereunder shall, In the ovent it enforces such security interesi, be enlilled lo exercise any of Casilerock's powers, authorities, discretions, rights or privileges under this Agreement and the Transaclion Documonls,
12.4 Subsequent assignment ortransfer of Purchased Rocotvabtes: Castlerock may (and may
only), In addition to the rights provided for under clause 12.3; (a) at anytime other than while an Event of Dofautl is subsisting vrith respect lo CBL, with (ho prior wrillen consent of CBL (not to bo unreasonably withheld or delayed); (b) at any time while an Event of Default Is subsisting with rasped lo CBL, without the prior written consent of CBL. subsequently assign all or any part of Its righis with respect lo a Purchased Recoivabto to a bank or other similar Snonclal institution (which shall not include a hodga fund, vulture fund or acquiror ol distressed receivables). provided that:
(o) at any lime other than while an Event of Default is subsisting with respect to CBL, prior lo any such assignment, CBL Is given no less than 10 Business Days' notice of the proposed assignment (including details of the proposed purchase dale and the proposed purchaser) togolhor with an unconditional and irrevocable wrillen olfer (Right of First Refusal) ftom Castlerock to assign to CBL those Purchased Receivables (or the relevant
part thcreol) for a price equal to the fair market value (or such lesser amount as
Cactiarock may determine) of those Purchased Receivables (or tire relevant part tiicreof), which. If ftiat Right of First Refusal is accepted by CBL In wiling by no later than five Business Days' prior lo the proposed assignment daio shall fce settled by CBL and Castlerock on the terms of this Agreement (but otherwise free of any terms and oondillans even if purported lo bo imposed in the above mentioned notice) where payment In full is due for the purposes of that clause on the original proposed assignment dale: and in any evenL any such assignment shall not release Castlerock from any obligation under any of the Transaction Documents with respect to such Purchased Receivables, including the obligation to pay tho Purchase Price (on the basts that such subsequent assignment had not occurred) and that each subsequent assignment shall bind iho assignee lo the terms and conditions of Ihis Agreemenl vrith respect to such Purchased Receivables as if itwere named as Castlerock herein.
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80
12.5 Assignment and transfer:
(a) CBL cannot, without the prior written consent of Castlerock, assign, novalo, transfer, sub-partlcipote or othenvisc dispose ofor deal with all or any pari of its rights or obligations under any Transaction Document. (b) Castlerock cannot, without the prior written consent of CBl, novate, transfer or otherwise dispose ol all or any part ot its rights or obligations under any Transaction Document without the consent ol CBL except to the extent provided for under clause 12.3 and 12,<t.
12.5 Indemnities: Each indemnity in this Agreement is a continuing obligation, separate and
Independent from other obligations ot the party giving Iho indemnity and survives termination of Ms Agreement,
12.7 Mitigation: Each party shalt bo under an obligation to lake reasonable steps to mitigate its
losses asa resull of a breach by the other party of anyTransaction Document,
12.8 Portia! Invalidity: If at any Umo any provision of this Agreement Is or becomes Illegal, invalid
or unenforceable in any respect under the lav/of any relevant Jurisdiction, lhat Illegality, invalidity or unontorcoability shall not alfect tire enforceability of the provisions, or (as lbs cose may be) the remaining provisions, of this Agreement, nor shall the legality, validity or enforceabitly of any of those provisions under the law of any otherjurisdiction ba in any way alfecled or Impaired (hereby,
12.9 No Implied waivers: Time shall be of Ihe essence ol Ihis Agreement bul no failure on the part
of any parly to oxerdso, and no delay on Its part in exercising, any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exorcise of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
12.10 Romodlos cumulative: The rights, powers and remedies provided in this Agreement are
cumulative and not exclusive of any rights, powers or remedies provided by law.
12.11 Entire agreement: The Transaction Documents constlluto the entire understanding and
agreement of the parties relating to the sate and purchase ot the Purchased Receivables.
12.12 Hon merger; The obligations, warranties, undertakings and indemnities undertaken or given
pursuant to this Agreement, to the extent not already performed at any Closing Dale are not lo merge on seiliomont on that Closing Date, or on the execution or delivery of any document, pursuant to this Agreement, bulwiil remain cnfoiceable lo the fullest extent and notwithstanding any ruia of law lo the contrary.
12.13 Counterparts: This Agreement may be signed in any number of counterparts, all ofwhich
together shall constitute one and the same instrument. Any party may enter Into this Agreement by signing any ouch counterpart.

81
13, GOVERNING LAW
13,1 This Agreement shall bo governed by and conslrved in occordanco with (ho laws of Nov? Zealand, and the parties submit to the exclusive jurisdiction of the courts of Nov/ Zealand. ( i j

82
EXECUTED AS AN AGREEMENT
SIGNED for and on behalf of )
CASTLEROCK RECEIVABLES }
MANAGEMENT LIMITED by in Ihe presence of )
Wtncssiisrrolvrc nams
AOdicss
(, =
OCCUDStlift
Molts Tlip i'zc-'Juio r.i^ fca W.if^ssieity tfti«st?e«Sa'i! f.estcn SIGNED for and on behalf of ) CBL INSURANCE LIMITED by ) in Ihe presence of ) wjrnc! paturo FuE nomo Adiftctt Oscu?5hon HoJt: Thtibns’wt rr^jt bo v.trcsiri by fiJ.-vJ«;»r4en; r«Kn (, Stgiaiuro SfQnaly/o

83
SCHEDULE 1
Exsmplo of information to bo indudod in Agraod Schedule whlcli will bo actual amounts duo and owing and ultimato obligors' Idontlfior doialls Gross Receivable Premium SFS Commission Rato Quota Share Rato Elite. Rccolvablo Purchased Rocoivablo Policy numbers or Identifiers for each Ulllmato Obligor Inception date A B c D E F G (' ( 1 Pago 22

t r 84
I
Sent: 2 February 2018 1:03 a.m.
To: Sir John Wells KNZM
Subject: Re: Call from Tony....CONFIDENTIAL
Categories: Hot
Hi John.
I think the Castlerock transaction was somewhat circular and a "smoke and mirrors" transaction, it was always predicated on Deloitte accepting it, and rather have not. RBNZ very sceptical on the transaction. They will see themselves vindicated and wiil get some comfort from it being reversed. ( ' A number of us have tried to bat Deloitte back, by reasoned memo or face to face meetings, it got rather heated when we visited with. We presented some very robust and reasoned arguments with Deloitte technical expert. RBNZ very sceptical on the transaction, I think they will get some comfort by it being reversed, and possibly get back some credibility with them. Deloitte is very concerned about the FMA, and what they would think about Deloitte agreeing to the transaction. We face this more and more where personal interests / conflicts either exist or potentially exist with Tony. He has every ability to argue the case with Deloitte, either together with us or separately. He has not shown any inclination to do this to date. Alternatively any of us would be happy to go with him if he prefers. (' Peter A Harris I Managing Director CBL insurance Group Level 8, CBL House, 51 Shortland St Auckland 1010 New Zealand Level 21,45 Clarence St Sydney 2000 Australia Mobile+64 2175 76 78 www.cblinsurance.com Original Message Show Deiaiis Dear Peter,

85
Referenced in earlier email...
Tony not at all happy about dropping Castlerock Transaction and says this is potentially a breech ofContract and our credibility is at stake given how we have portrayed this to RBNZ in our various returns. Believes FMA will be all over this ! He maintains Deloitte haven't finally landed on how they would treat this in signing offthe Accounts.. I did say he had the opportunity to say this last night and his view is everyone knows where he is coming from and it would be a waste oftime Regards John ( { 2

86
Registered document
27582 CBL INSURANCE LIMITED
Registration Date and Time 24 December 2013 11:02:29 Document Type Particulars of Shareholding Presenter Carden MULHOLLAND SI Shortland Street Auckland Central Auckland 1010 New Zealand Sharehoiders New Shareholder LBC HOLDINGS NEW ZEALAND UUmD!‘I772SS9 ) Level 8, 51 Shortland Street, Auckland Central, Auckland, 1010 , New Zealand Removed Shareholder OCEANIC SECURITIES LIMITED 140 Robinson Road #0408, Chow House, Singapore 068907 , Removed Shareholder STICHTING IYGON PENSION FUND Populierenlaan, 11 85sz Amstelveen, Netherlands , Removed Shareholder Alan David CLARKE 10 Broadwater Down, Turnbridge Wells, TN2 5NG , United Kingdom Removed Shareholder Michel CORNET Flat 7, Beaumont House, 56 Mount Ephraim, Turnbridge Wells, TN4 8BB , United Kingdom Removed Shareholder Alain Francois COUARD 4 Bis Rue Fabre D'eglantine, Paris, 75012 , France Removed Shareholder Harvey Edward WETHERILL Chelmarsh Station Road, Crowhurst, Battle, TN33 9DB , United Kingdom

87
Removed Shareholder
EURASIA INVESTMENT .\WXtO{2t 78746)
Nair & Chen Chartered Accountants Ltd., 2S0 Great South Road, Creenlane, Auckland, 1051, New Zealand Removed Shareholder SUNSHINE NOMINEES LIMITEDr 1S073S6) Nair & Chen Chartered Accountants Ltd, 280 Great South Road, Creenlane, Auckland, 1051 , New Zealand Removed Shareholder FEDERAL PACIFIC CROUP LIMITEDf 593943) c/o John Khouri, Chart Accountant, Federal Pacific Group Ltd, 1 st Floor,, Bldg 5, 660 To 670 Gt Sth Rd, Eilerslie, Auckland, 1 542 , New Zealand Removed Shareholder JMAC HOLDINGS UtmtOC323070S, 51 Shortland Street, Auckland Central, Auckland, 1010, New Zealand Removed Shareholder CCEJ HOLDINGS LIMITEDF3229190) Level 8, 51 Shortland Street, Auckland City, 1010 , New Zealand Removed Shareholder ALLIANCE INVESTMENTS l\U\UO<2178743) Nair & Chen Chartered Accountants Ltd, 280 Great South Road, Creenlane, Auckland, 1051 , New Zealand Removed Shareholder VCP INTERNATIONAL LIMITEDF 1510912) 4 Kitchener Road, Takapuna, Auckland, 0622 , New Zealand Removed Shareholder Todd CAMPBELL 3224 North Wood Valley Road, Atlanta, Georgia, 30327 , United States of America Removed Shareholder LARKSPUR GROUP INC. 3224 North Wood Valley Road, Atlanta, Georgia, 30327 , United States of America Country of United States ofAmerica Origin:
Share allocations
New Share Allocation
26000000 Shares

LBC HOLDINGS NEW ZEALAND LIMITED
Level 8, 51 Shortland Street, Auckland Centra!, Auckland, 1010 , New Zealand 88 Removed Share Allocation 8000000 Shares FEDERAL PACIFIC GROUP LIMITED c/ojohn Khouri, Chart Accountant, Federal Pacific Croup Ltd, 1st Floor,, Bldg 5, 660 To 670 Gt Sth Rd, Ellerslie, Auckland, 1 542 , New Zealand Removed Share Allocation 1 500000 Shares SUNSHINE NOMINEES LIMITED Nair & Chen Chartered Accountants Ltd, 280 Great South Road, Greenlane, Auckland, 1051 , New Zealand Removed Share Allocation 2500000 Shares STICHTINC LYGON PENSION FUND Populierenlaan, 1185sz Amstelveen, Netherlands, Removed Share Allocation 100000 Shares JMAC HOLDINGS LIMITED 51 Shortland Street, Auckland Central, Auckland, 1010 , New Zealand Removed Share Allocation 150000 Shares Todd CAMPBELL 3224 North Wood Valley Road, Atlanta, Georgia, 30327 , United States of America Removed Share Allocation 4 950000 Shares EURASIA INVESTMENT LIMITED Nair & Chen Chartered Accountants Ltd., 280 Great South Road, Greenlane, Auckland, 1051 , New Zealand Removed Share Allocation 25000 Shares ALLIANCE INVESTMENTS LIMITED Nair & Chen Chartered Accountants Ltd, 280 Great South Road, Greenlane, Auckland, 1051 , New Zealand Removed Share Allocation 5835000 Shares OCEANIC SECURITIES LIMITED

140 Robinson Road #0408, Chow House, Singapore 068907 , 89 Removed Share Allocation ‘iSSOOOO Shares CCEJ HOLDINGS LIMITED Level 8, 51 Shortland Street, Auckland City, 1010 , New Zealand Removed Share Allocation 1100000 Shares VC? INTERNATIONAL LIMITED 4 Kitchener Road, Takapuna, Auckland, 0622 , New Zealand Removed Share Allocation 50000 Shares LARKSPUR GROUP INC. 3224 North Wood Valley Road, Atlanta, Georgia, 30327 , United States of America Removed Share Allocation 36400 Shares Alan David CLARKE 10 Broadwater Down, Turnbridge Wells, TN2 5NG , United Kingdom Removed Share Allocation 36400 Shares Michel CORNET Flat 7, Beaumont House, 56 Mount Ephraim, Turnbridge Weils, TN4 8BB , United Kingdom Removed Share Allocation 30800 Shares Alain Francois COUARD 4 Bis Rue Fabre D’eglantine, Paris, 75012 , France Removed Share Allocation 36400 Sliaras Harvey Edward WETHEMU Chelmarsh Station Road, Crowhurst, Battle, TN33 9DB , United Kingdom

90
BUDDLE FINDLAY
Nf W ZIM.A M D l.A W V£ !i $
1 October 2018
To
Davey Salmon / Jack Cundy
LeeSalmonLong
Auckland
And to
Matt Kersey/Alex Nelder
Russell McVeagh
Auckland
From
Scott Barker
Bridie McKinnon
By Email
Dear Partners
CIV 2018-404-306 Reserve Bank of New Zealand v CBL Insurance Limited

1. We refer to the judgment in proceeding CIV2018-1667 of 28 September 2018 and also to the
   liquidation application hearing scheduled to commence on 12 November 2018. We note that no evidence was served on behalf of contradictors by the ordered due date of 28 September.
2. We thought that it would be timely to explain the Reserve Bank’s position in the context not only of
   the liquidation application but also the discussions of a DOCA, a Part 15 scheme of arrangement and possible commutation agreements with the other major cedants.
3. The Bank remains fully committed to proceeding on 12 November 2018. It considers that
   liquidation is the appropriate outcome for CBLI, for the reasons set out already in our submissions served in July 2018 and also because no other viable option has been put forward. The Bank has already made clear that it does not support the proposed DOCA that has been promoted by the administrators of LBC Holdings Ltd in conjunction with Messrs Harris and Hutchison. That remains the position. The directors' conflict of interest in proposing a compromise to avoid liquidation has not been addressed either by them or by LBC Holdings. Nor has there been any disclosure of possible tax benefits that might accrue to South British Capital, arising from its proposed acquisition of the shares in CBLI. The volunteering by the DOCA proponents of value of some $20 million from Alpha, Elite and CBLIE may have had more credibility, had they been approached to agree to contribute that value to the director/sharehoider DOCA, and had that agreement been secured. This was not the case. Analysis of possible litigation claims in liquidation
4. The Bank has been reviewing possible legal actions that could be instituted by the company in
   liquidation or by its liquidators. What is clear is that the historical under-reserving by CBLI's board of directors, even on PwC’s numbers, has led to the current position of balance sheet insolvency. It H| AWKWNOtaaeCoopwTonw,'.S3Out-/ srreet, fO ikss uij.Auatartf mo, he) DstCfr.taM /< P. »s» ssSsiSj//. fii 935S 055. 98 WSUJNGTONIIStatumuManc t Street, «3 See 694, 6US>. Kew2eaia»<l. OX sfrotot//f>. 6s 4 499 l!r. 6444994»V HI! CHMSICKtftteH//jvsetwieStreet. KO fc 3».CH<t«hwt»i$4«>, nmltstMii, SWWXWIS^I. 64J«9»Wtf. ‘M 3 3?a BFiMS3157613! Pass 1

91
BUDDLE FINDLAY
HEW it: A l A h!i> lAWVERS appears highly likely that CBLI was balance sheet insolvent for several years before the appointment of the interim liquidators. Added to this, there are serious potential consequences for CBLI and CBL Corporation board members arising from the fact that CBLI continued to write business from 2015 onwards, when the revised solvency returns demonstrate that CBLI was in breach of its insurance licence for the return periods ending 31 December 2014 and 30 June 2015. These breaches arose from the solvency capital being below 100% on both return dates. There is also a possible claim for misrepresentation and deceit against certain directors, the former CFO of CBLI, the National Bank of Samoa and its CEO, arising from the subterfuge over the nature of the term deposit of €12.5 million. This subterfuge is well-documented in the affidavits filed in CIV306, evidence that has not been answered by those involved.
5. There is a range of claims for breaches of directors' duties that could be made against the then
CBLI directors, as well as possible claims against its various professional advisers, arising from the way in which CBLI's business was managed more generally from 2014 at latest, and possibly as far back as the limitation period permits.
6. There are likely to be other possible claims arising from historical insolvency of CBLI. Among these
are claims for recovery of distributions by CBLI. At present, it appears that dividends of $22.5 million paid by CBLI to its shareholder LBC in 2015 and 2016 are vulnerable to recovery. Earlier dividend payments may also be susceptible of recovery.
7. The conduct on which all such claims is based supports the public interest grounds that are
included in the grounds for liquidation. Investigations and accountability are important public interest considerations, but the matters above may well result in substantial recoveries for the insolvent estate in a liquidation. This is a material consideration for the Bank.
8. Yet, if the proponents of the DOCA have given any consideration to these possible recoveries, such
details have not been shared with other stakeholders.
Creditors’ scheme of arrangement
9. The Bank remains open to a scheme being proposed, albeit that it seems unlikely that such could
be achieved in the six weeks before the liquidation hearing. Given that a scheme can be effective within a liquidation, this seems a more suitable process for any compromise with creditors, than the DOCA suggested by the shareholder and directors,
10. Furthermore, it seems uncontroversiai that liquidators would have the power to enter into binding
commutation agreements with major cedants, such as the CA already agreed with Elite. Such would have the additional benefit of giving comfort to counterparties that pre-liquidation agreements, such as the liability settlement agreements, the CBLIE reinsurance trust and associated payments were not going to be attacked by permanent liquidators. Any commutation could be entered into as a part of, or separate to, any creditors' scheme. Negotiations for further commutations and a scheme can be advanced by the interim liquidators in the next six weeks and the period pending judgment. 8n5«4315?»3|Pa5l>2 H'unnMiJJ/r/im/toiuwH

92
BUDDLE FIND LAYe
11. Any proposed compromise (whether proposed under Part 14,15 or 15A) will need to address the
issue raised in The Mayor Councillors and Burgesses of the Borough of Mount Albert v The Australasian Temperance and General Mutual Life Assurance Society Limited (New Zealand) [1937] UKPC 86 (18 October 1937). Conclusion
12. The Bank is proceeding with its liquidation application on 12 November 2018. The time for any
further opposing evidence has now passed. It considers that the IPSA and public interest grounds strongly support, and the best interests of creditors would be served by, a liquidation order. It expressly does not support the DOCA put forward by LBC Holdings in conjunction with Messrs Harris and Hutchison, for reasons already provided. It remains open to a creditors' scheme being proposed on the understanding that such would operate within a liquidation.
13. This letter is written on an open basis.
Yours faithfully
B ’ " "
Scott Barker
Partner
Direct: 64 4 498 7349
Mobile: 64 21 822 929
Email: scott.barker@buddlefindlav.com
Copy to: counsel for other parties to proceeding eFWMtOrfiWIPsao

93
FILE NOTE
AUTHOR Robert Cole
DATE 18 October 2018
SUBJECT Extracts of file notes of 9 October 2018 and 11 October 2018 phone calls with Central Bank of Ireland, Gibraltar Financial Services Commission, and Denmark Financial Supervisory Authority regarding CBL and the Korda Mentha proposal We have full file notes of the three calls. The portion of the calls discussing the Korda Mentha proposal are included in this file note, with other portions of the calls excluded from this file note. Ref#7761565 vl.l

2 94
RBNZ Participants:
Robert Cole
Central Bank of Ireland Participants:
Lisa O’Mahony
Robert had a prepared script:

• RBNZ provided a link to our 28 September 2018 press release following judgement on the
  Elite commutation deal. The press release reiterated RBNZ’s view that liquidation is important.
• You may or may not be aware that RBNZ wrote via lawyers to Mr Harris & Mr Hutchison
  on 01 October 2018, that we do not support the deed of company arrangement proposal of Korda Mentha (administrators of CBL Corporation). Further the public interest is best served by CBL’s liquidation. The letter sets out some reasons for our view.
• The letter also notes a scheme of arrangement could be a viable option either before or
  after liquidation.
  » Other parties to the liquidation were copied into the letter.
• Korda Mentha has said that it has received negative feedback and comments to our 01
  October 2018 letter from the supervisors of the main ceding insurers. e RBNZ has not received any such feedback directly, and so wants to check the veracity of this. « Robert asked if CBI has seen a copy of this letter or had it described to them?
• Lisa replied that CBI has not seen the letter, but is aware KPMG as administrator of CBLIE
  has a copy provided by Mark Christen Mark Christer also mentioned the letter in discussion with CBI.
• Robert noted that Mark Christer has been working for Korda Mentha, and is or soon will
  be working for Mr Harris & Mr Hutchison through South British Capital. « Lisa said she was aware RBNZ didn’t support the Korda Mentha proposal due to the continued involvement of Mr Harris. e Robert replied yes, plus a liquidator could have grounds to recover some funds from directors, dividends paid while insolvent, etc. The analysis by Korda Mentha putting their proposal as an alternative to liquidation ignores this aspect.
• Lisa said the CBI is not in favour of the Korda Mentha proposal, and nor is KPMG as
  CBLIE’s administrator. e Lisa said after the meeting CBI discussed with Gibraltar Financial Services Commission to check they are on the same page. They are.
  1) Central Bank of Ireland phone call
  Tuesday 09 October 2018 - 7am
  Ref#7761565v 1.1

3 95
RBNZ Participants:
Richard Dean
Robert Cole
Gibraltar FSC Participants:
Dominic Sharp
Robert had a prepared script:
« RBNZ provided a link to our 28 September 2018 press release following judgement on the Elite commutation deal. The press release reiterated RBNZ’s view that liquidation is important. ® You may or may not be aware that RBNZ wrote via lawyers to Mr Harris & Mr Hutchison on 01 October 2018, that we do not support the deed of company arrangement proposal of Korda Mentha (administrators of CBL Corporation). Further the public interest is best served by CBL’s liquidation. The letter sets out some reasons for our view.

• The letter also notes a scheme of arrangement could be a viable option either before or
  after liquidation.
  « Other parties to the liquidation were copied into the letter.
  9 Korda Mentha has said that it has received negative feedback and comments to our 01 October 2018 letter from the supervisors of the main ceding insurers. 9 RBNZ has not received any such feedback directly, and so wants to check the veracity of this. 9 Robert asked if GFSC has seen a copy of this letter or had it described to them?
• Dominic replied that GFSC has not seen the letter and had not been made aware of its
  existence by Elite either.
  9 Richard said we suspected this was the case, because we expected if GFSC had feedback it would have given it to RBNZ directly which it hasn’t. 9 Dominic added that GFSC is not in favour of the Korda Mentha proposal and understands the public interest reasons RBNZ is pursuing liquidation. 9 Dominic asked if GFSC can get a copy of the 01 October 2018 letter? « Robert replied well need to check this in case it is legally privileged. » Dominic said he wouldn’t expect Elite to either support the Korda Mentha proposal or comment negatively to Korda Mentha on the RBNZ letter.

2. Gibraltar Financial Services Commission phone call
   Tuesday 09 October 2018 - Sam
   Ref#7761565 vl.l

4 96
RBNZ Participants:
Richard Dean
Robert Cole
Denmark FSA Participants:
Carsten Brogaard
Robert had a prepared script:

• RBNZ provided a link to our 28 September 2018 press release following judgement on the
  Elite commutation deal. The press release reiterated RBNZ’s view that liquidation is important.
• You may or may not be aware that RBNZ wrote via lawyers to Mr Harris & Mr Hutchison
  on 01 October 2018, that we do not support the deed of company arrangement proposal of Korda Mentha (administrators of CBL Corporation). Further the public interest is best served by CBL's liquidation. The letter sets out some reasons for our view.
• The letter also notes a scheme of arrangement could be a viable option either before or
  after liquidation.
• Other parties to the liquidation were copied into the letter.
• Korda Mentha has said that it has received negative feedback and comments to our 01
  October 2018 letter from the supervisors of the main ceding insurers.
• RBNZ has not received any such feedback directly, and so wants to check the veracity of
  this.
• Robert asked if DFSA has seen a copy of this letter or had it described to them?
• Carsten replied that DFSA has not seen the letter and was not aware of it. Carsten will
  check with Birgitta in case she is aware of it, but doesn’t think so.
• Carsten did not seem to know of the Korda Mentha proposal.
• Robert continued. The Korda Mentha proposal has Alpha, Elite and CBL Europe all
  commuting their business with CBL for in aggregate the level of the CBL PWC valuation less $20 million.
• Carsten said he wouldn’t expect Alpha’s curator would accept a commutation for lower
  than their valuation and asked how Korda Mentha expects anyone to agree to this?
• Robert replied that Korda Mentha and Mr Harris are telling the ceding insurers their plan
  is the only way to avoid lengthy litigation and a risk of voided transactions by a CBL liquidator, and therefore it is worth it for them to accept a lower payment.
• Robert said from Carsten’s comments he assumes Carsten was unaware of the Korda
  Mentha proposal.
• Carsten said no, but Alpha’s curator probably knows of it.
• Carsten asked if there was pressure to do a quick deal?
• Richard replied that Mr Harris and Korda Mentha are applying pressure to do a quick deal
  as a means to avoid liquidation. However RBNZ is convinced there is a strong public interest in CBL being put into liquidation.
• Robert added that one of the issues with the Korda Mentha proposal is that Mr Harris will
  retain control of CBL.
• Carsten said DFSA will discuss with Alpha's curator to see if they object to the Korda
  Mentha proposal.
• Robert stated that RBNZ wishes to understand DFSA’s stance on it. RBNZ will send
  through the 1 October 2018 letter, and see if we can also send an outline of the Korda Mentha proposal.
• Robert requested DFSA reasonably quickly provide its views on the Korda Mentha
  proposal. This could be by phone or email.

3. Denmark Financial Supervisory Authority phone call
   Thursday 11 October 2018 - Sam
   Ref#7761565 vl.l

97
Execulion Version
Dated July 17.2017
BLACKROCK MULTI-SECTOR INCOME TRUST,
AVIRON CAPITAL, LLC and
CBL INSURANCE LIMITED
FINANCIAL SURETY AGREEMENT i
ACTIVE 223DS718I

FINANCIAL SURETY AGREEMENT
THIS AGREEMENT is made on July 17, 2017
AMONG:
(1) BLACKROCK MULTI-SECTOR INCOME TRUST whose principal office is at c/o BlackRock Advisors, LLC, 55 East 52ni1 Street, New York, New York 10055 (the "Beneficiary"); (2) AYIRO.N CAPITAL, LLC, a limited liability company organized under the laws of Delaware whose principal office is at 9100 Wilshire Blvd., Suite S00E, Los Angeles, California 90212 (the “Obligor"); and (3) CBL INSURANCE LIMITED, registered in New Zealand as a domestic insurance company whose registered office is at Level S, CBL House, 51-53 Shortland St, Auckland 1010, New Zealand (the "Guarantor") (each a “Party” and together the “Parties”) WHEREAS:
(A) The Parties are entering into this Agreement to record the terms and conditions pursuant to which the Guarantor as surety unconditionally and irrevocably guarantees the non-payment of amounts due under a certain note issued by the Obligor under a certain note purchase agreement to be entered into by the Beneficiary and the Obligor. (B) Unless defined elsewhere in this Agreement, defined terms used in this Agreement shall have their respective meanings set out in Clause 20. IT IS AGREED as follows:

1. GUARANTEED NOTE PURCHASE AGREEMENT
   1.1 On the date hereof, the Beneficiary will purchase (he Note issued by the Obligor pursuant to a Note
   Purchase and Security Agreement, a true and correct copy of which has been provided by the Beneficiary to the Guarantor (the "Note Purchase Agreement") and is attached hereto as Exhibit A. The Obligor and the Beneficiary agree that no amendments, modifications or other changes to the Note Purchase Agreement which would reasonably be expected, directly or indirectly, to increase or otherwise expand the obligations of the Guarantor hereunder shall be effective unless consented to in writing by the Guarantor.
   1.2 In consideration of the payment by the Obligor to the Guarantor of the Guarantee Fee, die Guarantor
   as surety will during the Effective Period unconditionally and irrevocably guarantee the repayment of the Obligor’s Note Payment obligations on the terms and conditions provided for in (his Agreement.
2. NOTICES AND PAYMENT
   2.1 Notice
   If all or part of a Note Payment falls due to the Beneficiary from the Obligor at any time during the Effective Period, where the Note Payment so owed is Due for Payment, the Beneficiary may serve a Notice on the Guarantor.
   2.2 Payment following Notice
   Subject to the limit in Clause 2.4, if the Beneficiary serves a Notice on the Guarantor in connection with a Note Payment that is Due for Payment, the Guarantor must, within thirty (30) days of its first

reccipl (hereof and without requiring (lie Beneficiary to have recourse first against the Obligor, pay to the Beneficiary an amount (being a "Guarantee Payment") equal to such Note Payment that is Due for Payment identified in that Notice, as if it were the principal obligor in respect of that amount, subject to the terms and conditions of this Agreement, including, without limitation, Clauses 2.3, 2.4 and 3.5.
2.3 Right to Cure Default
The Guarantor shall have the right to cure any conditions giving rise to a Note Payment becoming Due for Payment prior to the date the Guarantee Payment with respect to such Note Payment is payable hereunder.
2.4 Limit of Liability
The maximum aggregate liability of the Guarantor to the Beneficiary under this Agreement shall be $63,318,012,98 plus all Note Payments that are Due for Payment on account of interest under the Note; provided, however, that the maximum aggregate liability of Guarantor to the Beneficiary hereunder shall be increased by the principal amount of any additional loans made by Beneficiary to Obligor by amendment of the Note Purchase Agreement, up to a maximum amount of principal of $75,000,000, plus all Note Payments that are Due for Payment on account of interest on such additional amounts of principal under the Note. The Beneficiary shall deliver a copy of each such amendment to the Guarantor within five (5) days after the date thereof.
3. RECOVERIES
3.1 Recoveries by Beneficiary
Following payment by the Guarantor of any Guarantee Payment in respect of any Note Payment that was Due for Payment, in the event any sum is received or recovered by Beneficiary from or in respect of the Obligor which is attributable to that Note Payment that was Due for Payment, the Beneficiary shall promptly pay to the Guarantor an amount equal to such sum, together with an amount equal to any default interest paid by (he Obligor in respect of any such Note Payment that was Due forPayment.
3.2 Recoveries (o be held on trust
Without prejudice to the obligations under Clause 3.1, any and all sums that are recovered by the Beneficiary from the Obligor in respect of the Note Purchase Agreement shall be held by the Beneficiary in trust for the sole benefit of the Guarantor to the extent of any obligation to pay such sum to the Guarantor as set out above in Clause 3.1.
3.3 Claw Back
In the event that the Beneficiary is required, pursuant to the insolvency, bankruptcy or reorganisation of the Obligor (a “Bankruptcy Event”), to repay any amount received by the Beneficiary from or for the benefit of the Obligor as payment on account of a Note Payment ofprincipal or interest, the Parties agree to recalculate such payment made by or for (lie benefit of the Obligor as if Ihe relevant amount had not been received by the Beneficiary and the Guarantor shall pay to the Beneficiary the Guarantee Payments for such amount accordingly.
3.4 Subrogation
In the event of any payment by the Guarantor of a Guarantee Payment:
(a) the Guarantor shall be fully subrogated to all of the Beneficiary's remedies and rights of recovery, against any person or organisation, in respect of the Note Payment Due for Payment corresponding to the relevant Guarantee Payment and, it is agreed and acknowledged that
section 5 of the Mercantile Law Amendment Act 1856 shall apply. Upon the request of the
3

100
Guaranlor, the Beneficiary agrees to execute and deliver all instruments and papers, and do whatever else is reasonably necessary, to secure such remedies and rights in favour of the Guarantor; (b) any rights of subrogation acquired by the Guarantor as a result of any Guarantee Payment made by the Guarantor under this Agreement shall, in all respects, be subordinate and junior in rigid of payment to the prior indefeasible payment in full to the Beneficiary of ail amounts due to the Beneficiary on account of (lie Note Payments; (c) the Beneficiary shall:
(i) hold a corresponding part of its rights, titles and interests in the Note and Note Purchase Agreement in respect of and to the extent of that payment in trust for the sole benefit of the Guarantor; and (ii) if requested by the Guarantor in writing and to the extent the Beneficiary is legally able to do so, transfer or assign a corresponding part of such rights, titles and interests to the Guarantor (by way of assignment agreement or such other manner customary for transferring the Beneficiary’s rights, titles and interests under the Note and Note Purchase Agreement concerned); (d) the Beneficiary shall continue to provide reasonable assistance to the Guarantor by way of providing such testimonies, documents or information relating to (he Note Purchase Agreement, or provide any other support as is reasonably requested by the Guarantor, for the purpose of enabling the Guarantor to substantiate its rights of subrogation as provided for in this Clause 3.4; and (e) unless and until an assignment from the Beneficiary to the Guarantor has been effected under (c) in respect of all the Beneficiary’s rights, titles and interests in the Note and Note Purchase Agreement or unless the Guarantor otherwise directs in writing, the Beneficiary shall be responsible for the day to day administration of claims and actions for the purpose of recovering amounts due from the Obligor under the Note Purchase Agreement, provided, however, if the Guarantor has made all Guarantee Payments and no additional Note Payments will become Due for Payment, the Beneficiary will assign all of its rights, titles and interests in the Note and Note Purchase Agreement to the Guaranlor and the Beneficiary shall have no further responsibilities for the administration of claims and actions against the Obligor.
3.5 Defences
In no circumstances shall the obligations and liabilities of the Guarantor under this Agreement exceed the obligations and liabilities of the Obligor under the Note Purchase Agreement and the Note and the Guarantor shall benefit from any rights and remedies and defences that are available to the Obligor.
4. PAYMENTS ADMINISTRATION
4.1 Place
(a) All payments by either the Beneficiary or the Guarantor to the other under this Agreement must be made to the Receiving Account of the other Party. (a) The Beneficiary and the Guarantor may designate a different account as its Receiving Account by giving the other not less than ten (10) Business Days' notice of such designation. 4

101
4.2 Currency
All payments under this Agreement in respect of the Note Payments and this Agreement must be made in United States Dollars.
4.3 Withholding
(a) Each payment under this Agreement shall be made without any deduction or withholding, unless the deduction or withholding is required by applicable law, If any deduction or withholding is made or is required to be made under applicable law, the amount ofthe payment due from the paying parly will be increased to an amount which (after malting the deduction or withholding) leaves an amount equal to the payment which would have been due if no deduction or withholding had been required. (b) Both the Beneficiary and the Guarantor must use their reasonable endeavours to avoid any obligation to make any deduction or withholding referred to in Clause 4.3(a).
5. STATUS OF AGREEMENT
5.1 Subject to the express terms and conditions of this Agreement, the Guarantor undertakes its obligations
under this Agreement as surety and the Beneficiary and the Guarantor agree and intend that the Guarantor's obligations in respect of the non-repayment of each Note Payment shall take effect as a guarantee ofthe relevant amounts due in respect of each such Note Payment.
5.2 Nothing in this Agreement constitutes the Beneficiary as agent, fiduciary or trustee for the Guarantor
or constitutes the Guarantor as agent, fiduciary or trustee for the Beneficiary.
5.3 No partnership exists between or among any of the Beneficiary, the Guarantor and/or the Obligor by
virtue of this Agreement or otherwise.
5.4 Notwithstanding that this Agreement is a guarantee and not a contract of insurance, the Parlies
acknowledge and agree for the avoidance of any doubt that neither the Insurance Act 2015 nor the duty of utmost good faith shall apply to this Agreement.
5.5 The Guarantor acknowledges that it has, independently and without reliance upon the Beneficiary or
any of its affiliates and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into tins Agreement.
6. PRESERVATION OF AGREEMENT
6.1 Obligations Continuing
The obligations of the Guarantor in respect of the Note Purchase Agreement are continuing until the earliest of (the period from the dale hereof to such earliest dale being the "Effective Period"):
(a) the later of (i) the 31st December 2022, and (ii) one year and one day after the Note Payments have been paid in full by the Obligor to the Beneficiary, provided, that if a Bankruptcy Event shall occur during such period this Agreement shall continue until such Bankruptcy Event is dismissed, or (b) the Beneficiary notifies the Guarantor that this Agreement is no longer required by the Guarantor, or (c) the Guarantor pays the full amount of the outstanding Note Payments (or sucli lesser sum as is then outstanding under the Note) to the Beneficiary (whether or not a demand for payment has been made). This Agreement shall not be subject to early cancellation or termination for any reason other than the non-payment of Guarantee Fees payable to the Guarantor by the Obligor, provided, that the Guarantor 5

102 shall give the Beneficiary written notice of any such non-payment and the Beneficiary shall have thirty (30) days to cure such non-payment on behalf ofthe Obligor.
6.2 Waiver of defences
Without prejudice to any express provision ofthis Agreement, the obligations ofthe Guarantor under this Agreement will not be affected by any act, omission, or thing (whether or not known to it or the Beneficiary) which, but for this provision, would reduce, release or prejudice any ofits obligations as surety under this Agreement, except as provided in Clause 3.5. No defences and counterclaims of any kind available to the Guarantor so as to deny payment of any Note Payment will be valid and the Guarantor hereby waives and agrees not to assert any and all such defences and counterclaims, except as provided in Clause 3.5.
7. SET-OFF
No Party may set-off any amount due and payable by it to another Party under this Agreement. S. EXPENSES Each Party must pay its own costs and expenses incurred in connection with the preparation, negotiation, entry into and performance of this Agreement.
9. INSPECTION OF RECORDS
9.1 Upon reasonable notice to the Obligor, the Guarantor may, at any time during normal working hours,
and at its own expense, examine or copy any records in the possession or control of the Obligor, the Beneficiary or any of their respective affiliates relating to or connected with the Note Purchase Agreement or the Note to the extent the Obligor or Beneficiary, as applicable, is not legally prevented from disclosing or making accessible such records to the Guarantor. The Obligor and the Beneficiary shall maintain all such records in accordance with their respective normal document retention policies until one year after the end of the Effective Period.
9.2 The Guarantor acknowledges that from time to time, the Beneficiary or the Obligor may request the
Guarantor to execute a confidentiality agreement in a form reasonably acceptable to the Beneficiary or the Obligor (as appropriate) and the Guarantor prior to disclosure by the Beneficiary or the Obligor (as appropriate).
10. CHANGES TO THE PARTIES
No Parly may assign, transfer, novate, encumber or dispose of any ofits interest in,its rights, remedies and/or obligations under (his Agreement without the prior written consent ofthe other Parties.
11. FURTHER ASSURANCES
Each Party will lake any action necessary to give effect to this Agreement, including the execution of any further documents and the giving of any notice and the making of any registration which may be required by any other Party.
12. WAIVERS AND REMEDIES CUMULATIVE
The rights of each Party under this Agreement:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive ofits rights under the general law; and (c) may be waived only in writing and specifically. 6

103
Delay in exercising or non-exercise of any right is not a waiver of that right or any other right. ‘ 13. SEVERABILITY If a term of this Agreement is or becomes illegal, invalid or unenforceable in any respect under any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in thatjurisdiction of any other term ofthis Agreement; or (b) the legality, validity or enforceability in other jurisdictions of that or any other term of this Agreement.
14. COUNTERPARTS
This Agreement may be executed in any number of counterparts. This has the same effect as ifthe signatures on the counterparts were on a single copy ofthis Agreement.
15. NOTICES
15.1 Giving of notices
Any communication required or permitted to be given by a Party in connection with this Agreement must be in writingand, unless otherwise staled, may be given in person, by post, by e-mail or, ifagreed by the Parties, other form of electronic communication.
15.2 Addresses
(a) The contact details of each Parly for all communications in connection with this Agreement arc:
(i) in relation to the Beneficiary:
BLACKROCK MULTI-SECTOR INCOME TRUST c/o BlackRock Advisors, LLC 55 East 52nd Street New York, New York 10055 Attention: Randy Robertson and Mark Volosov Email: rnndv.robcrlsonfmblackrock.coni and mark.volosovta bladcrock.com (ii) in relation to she Obligor:
AVI RON CAPITAL, LLC
9100 Wilshire Blvd., Suite SOOE
Los Angeles, California 90212
Attention: William Sadlier
Email: wsadlcirtrfavironpiclures.com
(iii) in relation to the Guarantor:
CBL INSURANCE LIMITED
Level 8, CBL House
51-53 Shortland St
Aucldand 1010, New Zealand
7

104
Attention: Carden Mulholiand
Email: cmuHioiiandfa'chlinsurance.eom
Any Party may change its contact details by giving not less than five Business Days' notice of such change to the other Parties. (b) Where a Parly nominates a particular department to receive a communication, a communication will not be effective ifit fails to specify that department.
15.3 Effectiveness
(a) Excepl as provided below, any notice In connection with this Agreement vvili be deemed to be received by a Parly as follows:
(i) ifdelivered to such Party in person, at the time of delivery; (ii) if posted to such Party, five Business Days after being deposited in the post, postage prepaid, in a correctly addressed envelope; and (iii) if by e-mail or agreed by (he Parties pursuant to Clause 15.1 any other form of electronic communication, to such Party, when received by such Party in legible form. (b) A communication given under paragraph (a) above but received by a Party on a non-working day or after business hours in the place of receipt will only be deemed to be given on the next working day in that place.
16. THIRD PARTIES CLAUSE
A person who is not a party to this Agreement may not enforce any ofits terms or the rights or remedies created under this Agreement under the provisions ofthe Contracts (Rights ofTliird Parlies) Act 1999 (the Act) and the provisions ofthe Act do not apply to this Agreement.
17. SUBMISSION TO JURISDICTION
EACH OF THE PARTIES HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND IRREVOCABLY AGREES THATALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
18. WHOLE AGREEMENT
This Agreement (including the Exhibits and Schedule hereto) constitutes the entire agreement and undertaking of the Parties with respect to its subject matter and supersedes ail word communications and prior meetings with respect hereto.
19. GOVERNING LAW
19.1 This Agreement and any non-contractual obligations arising out of or in connection with it are
governed solely by the laws of England and Wales.
19.2 The Guarantor lias issued this Agreement for delivery to the Beneficiary in London, England.
8

105
19.3 This Agreement has been entered into on the date stated at the beginningofthis Agreement.
20. INTERPRETATION
20.1 Definitions
In this Agreement:
Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in New York, New York. Due Date means, in respect of any Note Payment, the date on which sucii Note Payment first fell due for payment by or on behalf ofthe Obligor to the Beneficiary in accordance with the terms ofthe Note Purchase Agreement. Due for Payment means a Note Payment that is required to be paid by the Obligor to the Beneficiary under the Note Purchase Agreement and at least thirty (30) days have elapsed since the Due Date for such Note Payment. Effective Period has the meaning given in Clause 6.1. Guarantee Fee means the fee paid by the Obligor to (he Guarantor prior to the dale hereof as consideration for the Guarantor entering into this Agreement. Guarantee Payment has the meaning given in Clause 2.2. Note means the Note executed by the Obligor in favour of the Beneficiary pursuant to the Note Purchase Agreement. Note Purchase Agreement has the meaning given in Clause 1.1. Note Payment means, in respect ofthe Note Purchase Agreement, any amount on account ofprincipal or interest owed to the Beneficiary from the Obligor on each regularly scheduled Payment Date which occurs during the Effective Period, all in accordance with the terms of the Note Purchase Agreement. Notice means a written notice in the form set out as Exhibit B hereto. Party means a party to (his Agreement. Payment Date means each date on which a payment is due from the Obligor to the Beneficiary under the Note Purchase Agreement, as such dates are specified in the Note Purchase Agreement. Receiving Account means, in respect of she Guarantor and Beneficiary, unless changed under this Agreement, the account designated as its Receiving Account in Schedule A.
20.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference to:
(i) an amendment includes a supplement, novation, extension (whether of maturity or otherwise), restatement, re-enactment or replacement (however fundamental and whether or not more onerous) and amended will be construed accordingly; (ii) a person includes any individual, company, corporation, unincorporated association or body (including a partnership, (rust, fund, joint venture or consortium), government, state, agency, organisation or other entity whether or not having separate legal personality; 9

106
(iii) a provision of law is a reference (o that provision as extended, applied, amended or re-enacted and includes any subordinate legislation; (iv) a Clause, a Subclause, an Exhibit or a Schedule is a reference (o a clause or subclause of, or an exhibit or a schedule to, this Agreement; (v) a Party or other person includes its successors in title, permitted assigns and permitted transferees; (vi) a document or security includes (without prejudice to any prohibition on amendments) any amendment to that document, including any change in the purpose of, any extension of or any increase in the amount of a facility or any additional facility; and (vii) a time of day is a reference to New York time. (b) The headings in this Agreement do not affect its interpretation. [Remainder of page intentionally blank] 10 4

107
Executed as a deed, : AVIRON CAPITAL, LLC (as Obligor) for and on behalf of The Parties hereto have executed this Agreement as a deed and delivered it on the date first set forth above. SIGNATORIES Name : ...William.K.-Sadleir. Title : .Manager Executed as a deed, : BLACKROCK MULTI-SECTOR INCOME TRUST (as Beneficiary) and delivery received in London, England By: BlackRock Advisors, LLC, as Investment Advisor for and on behalf of By :
Name :
Title :
Executed as a deed, : CBL INSURANCE LIMITED (as Guarantor) for and on behalf of By :
Name :
Title :
Signature Page to Financial Surety Agreement

108
Executed as a deed, : AVERON CAPITAL, LLC (as Obligor) for and on behalfof The Parties hereto have executed this Agreement as a deed and delivered it on the date first set forth above. SIGNATORIES By :
Name :
Title :
Executed as a deed, and delivery received in London, England BLACKROCK MULTI-SECTOR INCOME TRUST (as Beneficiaiy) By: BlackRock Advisors, LLC, as Investment Advisor Title . ..Managing Director. Executed as a deed, : CBL INSURANCE LIMITED (as Guarantor) for and on behalf of
By : ..............................................................
Name : ...............................................................
Title : ...............................................................
Signature Page lo FinancialSuretyAgreement

The Parties hereto have executed this Agreement as a deed and delivered il on the date first set forth above. SIGNATORIES 109 Executed as a deed, : AVIRON CAPITAL, LLC (as Obligor) for and on behalf of
By : .........................................................
Name : .........................................................
Title : .........................................................
Executed as a deed, : BLACKROCK MULTI-SECTOR INCOME TRUST (as Beneficiary) and delivery received inLondon, England By: BlackRock Advisors, LLC, as Investment Advisor for and on behalf of By :
Name :
Title :
Executed as a deed, for and on behalf of
By
Name
Title
: CBL INSURANCE LIMITED (as Guarantor) ti

EXHIBIT A
110
Note Purchase Agreement
(Attached)
12

111
Execution Copy
NOTE PURCHASE AND SECURITY AGREEMENT
Dated as ofJuly 17,2017 among
AVIRON CAPITAL, LLC, as Issuer and
BLACKROCK MULTI-SECTOR INCOME TRUST, as Noteholder 3222M742V.11

112
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS I
SECTION l .01 Defined Terms.......................................................................................................... 1
SECTION 1.02 Computation ofTime Periods................................................................................13
SECTION 1.03 Accounting Terms......... ........................................................................................ 13
SECTION 1.04 Rules ofConstruction............................................................................................. 13
ARTICLE II NOTE H
SECTION 2.01 Purchase and Sale ofthe Note....... ........................................................................14
SECTION 2.02 Use ofProceeds; Interest and Guarantee Fee Reserve Account.......................... 14
SECTION 2.03 Evidence ofDebt.................................................................................................... 15
SECTION 2.04 Interest.....................................................................................................................15
SECTION 2.05 Commitment Fee.................................................................................................... 16
SECTION 2.06 Repayment ofNote: Payments and Computations: Extension ofMaturity........ 16
SECTION 2.07 Taxes.-................................................................................................................. 16
ARTICLE III ACCOUNTING 20
SECTION 3.01 Payments Under CAMAs.......................................................................................20
SECTION 3.02 Payment Rescission................................................................................................21
ARTICLE IV GRANT OF SECURITY INTEREST 21
SECTION 4.01 Grant...................................................................................................................... 21
SECTION 4.02 Pledged Collateral.................................................................................................. 22
SECTION 4.03 Power ofAllomev..................................................................................................23
SECTION 4.04 Secured Obligations: Remedies Upon Default.....................................................23
SECTION 4.05 Issuer Liable...........................................................................................................24
SECTION 4.06 Further Assurances.................................................................................................24
ARTICLE V CONDITIONS PRECEDENT 25
SECTION 5.01 Conditions Precedentto Funding ofthe Purchase on the Closing Date..............25
ARTICLE VI REPRESENTATIONS AND WARRANTIES 28
SECTION 6.01 Representations and Warranties ofthe Issuer.......................................................28
ARTICLE VII COVENANTS OF THE ISSUER 32
SECTION 7.01 Affirmative Covenants...........................................................................................32
SECTION 7.02 Reporting Requirements..........................................................................'•............35
SECTION 7.03 Negative Covenants...............................................................................................36
ARTICLE VIII EVENTS OF DEFAULT 3 8
SECTION 8.01 Events ofDefault...................................................................................................38
SECTION 8.02 Application ofFunds..............................................................................................40

113
TABLE OF CONTENTS fconU
ARTICLE IX MISCELLANEOUS 41
SECTION 9.01 Amendments. Etc.. Integration............................................................................. 41
SECTION 9.02 Notices. Etc............................................................................................................41
SECTION 9.03 No Waiver: Remedies................................. 42
SECTION 9.04 Binding Effect........................................................................................................42
SECTION 9.05 Costs and Expenses............................................................................................... 43
SECTION 9.06 Indemnities / Release............................................................................................ 43
SECTION 9.07 Successors and Assigns......................................................................................... 44
SECTION 9.08 GOVERNING LAW............................................................................................. 46
SECTION 9.09 Execution in Counteroarts: Severability...............................................................47
SECTION 9.10 Damages................................................................................................................. 47
SECTION 9.11 Headings.................................................................................................................48
SECTION 9.12 Further Assurances................................................................................................ 48
SECTION 9.13 WAIVER OF JURY TRIAL................................................................................. 48
SECTION 9.14 California Judicial Reference..................................................... .....48
SECTION 9.15 Right ofSetoff........................................................................................................48
Schedules
Schedule A Credit Party Infonnation / Tax I.D.
Exhibits
Exhibit A Form ofAccommodation Security Agreement Exhibit B Form ofAssignment of Short-Fonn Copyright Security Agreement Exhibit C Fonn ofAviron Releasing License Agreement Exhibit D Fonn ofCAMA Exhibit E Fonn ofCAMA Collection Account DACA Exhibit F [Reserved] Exhibit G Fonn ofFunding Agreement Exhibit H Form ofNotice ofAssignment Exhibit I P&A Financing Criteria Exhibit! Fonn ofNote iii

114
Deed of Indemnity
This Deed of Indemnity is made the 17lh day of July 2017.
Parties
1. Aviron Capital, LLC of USA [herein called the Applicant]
2. CBL Insurance Limited of Auckland, New Zealand [herein called the Insurer]
Notice
1. This deed imposes obligations on the parties signing it as the Applicant. In particular, the Insurer
will be entitled to seek compensation from the Applicant for any claim or claims which are paid by the Insurer under any obligation imposed on the Insurer by a Financial Surety Agreement [herein called the Surety Agreement] to be issued by the Insurer.
2. This Deed does not give the Applicant any automatic right to the issue of this Surety Agreement
or any future Surety Agreements.
Background
A. The Applicant has requested that the Insurer issues the Surety Agreement. B. The Insurer has agreed to issue the Surety Agreement on the condition that the Applicant provides this Deed of Indemnity.
C. The parties have agreed that this Deed of Indemnity covers the Surety Agreement requested by
the Applicant and first issued by the Insurer after execution of this Deed of Indemnity to BlackRock Multi-Sector Income Trust (“BIT”) or one or more of its affiliates together with its successors and assigns (BIT and such parties individually and collectively, the "Beneficiary") and also any further or replacement Surety Agreement requested by the Applicant and issued by the Insurer to the Beneficiary. Operative Clauses
1. Meanings
In this deed, except where the context otherwise requires:
"Surety Agreement" means any financial surety agreement or indemnity issued by CBL in the form agreed between the Insurer and BIT and approved in writing by the Applicant. "Costs” includes all legal costs and expenses (including experts and consultants fees) incurred by the insurer and payable:
[a] pursuant to the terms of a Surety Agreement and/or a re-insurance agreement; and/or [b] pursuant to a court or tribunal order or pursuant to terms of settlement of a court or tribunal proceeding in connection with a Surety Agreement; and/or [c] incurred by the Insurer in handling a claim by the Beneficiary under a Surety Agreement or defending a court or tribunal proceeding brought by the Beneficiary to enforce a Surety Agreement. "Insurer" means CBL Insurance Limited (CBL) in this deed:
(a) words in the singular include the plural and words in the plural include the singular; and (b) a reference to a person includes a reference to that person's successors and permitted assigns. I3467123.7 225726-] 0007

115
2. Indemnity
In consideration of the Insurer issuing or agreeing to issue the Surety Agreement, the Applicant hereby agrees to indemnify and to hold the Insurer harmless against all claims, demands and payments, costs, expenses, losses and damages (excluding any costs payable by the Insurer as a result of the Insurer’s breach of its obligations to the Beneficiary pursuant to any Surety Agreement) that the Insurer shall sustain, suffer or incur as a result of any claim made by the Beneficiary against the Insurer under any Surety Agreement now or hereafter issued by the Insurer on for or on behalf of theApplicant.
3. Payment on Demand
The Applicant will pay to the Insurer within 14 days of receipt of a written demand for payment any amount for which the Applicant has agreed to indemnify the Insurer under Clause 2 without any set off or counterclaim. The written demand for payment must specify the amount of the claim that is payable, the Surety Agreement to which it relates and details indicating how the costs expenses and losses were sustained, incurred and paid to the Beneficiary.
4. Interest
The Applicant will pay interest at a daily rate equal to the Bank of New Zealand 90 bank bill rate applying at the date of demand made under clause 3 plus 5%, on all payments due under any demand and unpaid 14 days after demand, such interest to be calculated from the date of demand until the date of payment.
5. Premium
The Applicant acknowledges and agrees that all payments and/or premiums paid by the Applicant to the Insurer for a Surety Agreement or Surety Agreements are fully earned as at the date the Surety Agreements is/are issued.
6. Claims
[aj The Applicant has no right to direct the Insurer how to deal with any claim made under any Surety Agreement. [b] The Insurer and the Applicant must inform the each other immediately of:
(i) any claim under the Surety Agreement; and
(ii) any proposed settlement of any such claim.
7. Reduction
To the extent that the Applicant pays to the Insurer any amount pursuant to the terms hereof, then such amount shall reduce by the same amount the amount of the indebtedness of the Applicant to the Beneficiary and, in the event that the Insurer is subrogated to the rights of the Beneficiary, the amount of the indebtedness of the Applicant to the Insurer pursuant to such subrogated rights.
8. Notices
Notices from the Insurer to the Applicant must be in writing and either personally delivered to the Applicant, faxed to the Applicant at the Applicants last known fax number, emailed to the Applicant at the Applicant's last known email address, or mailed to the Applicant by prepaid post to the Applicant’s last known place of business,
9. Law
This Deed of Indemnity is subject to the lav/s, and jurisdiction of the courts, of the State of New York. 13407123.7 225726-10007

116
Executed and delivered as a Deed by Aviron Capital, LLC on the day above written by being signed by those persons who are authorized to sign for the company; Manager's Signature Manager's Name William K. Sadleir I3467123.7 225726-10007

117
CAPJ-LOYD
INGURANCB AOEWCY
COINSURANCE SUP
BUILDING LATENT DEFECTS INSURANCE
SUP NO:
TYPE:
INTEREST:
POLICY ISSUING COINSURER:
ORIGINAL INSURED:
NEW BUILDING PROJECT:
BUIIDINGTYPE:
FINAL INSPECTION DATE:
PERIOD:
No Claims Declaration:
TERRITORIAL SCOPE:
LIMIT OF LIABILITY:
PML:
ORIGINAL PREMIUM
ORIGINAL DEDUCTIBLE:
525-30725
Proportional Colnsuronco
Btlldine Latent Defects Insurance for Residential Bulldlncs AmTrust International Underwriters ltd c/o Caplloyd Insurance AgencyA/S (Ltd.) - as reRlstered Coverholders fora 355$ share PenslonDanmark PenslonforsIkrlnBsaktieselskab, Copenhagen ICE BERG -Aarhus -Mariana Thomsens Gade 13 - 0000 Aarhus C d Ncv/Apartment buildings each on own foundation -21GG0M2 - up to 10 Floors - 208 Apartments
2. May 2013
01.05.2013-30.04.2023
No known or reported losses hereon prior to this date (5.09.2013).
Denmark
Project Value -4 buildings: DKK 425 000 000 (EURO 56 700 000) - 208 Apartments Bldg. 1: DKK212 000 000 (EURO 28 26666S) -104 Apartments Bldg. 2: DKK 169 500 000 (EURO 22 600 000)- S3 Apartments Bldg. 3: DKK 30 500 000 (EURO 4 066 666) - 15 Apartments Bldg. 4: DKK 13000 000 (EURO 1733 333)- 6Apartments DKK 53 000 000 - being 255$ of full value Bldg. 1, DKK 1521500 fortheperiodhereon DKK 11000 e.e.c, / DKK 21000 agg. for period hereon/ each apartment and DKK 2 288 000 e.e.c./DKK 4 368 000 agg.for period hereon In respect of any claim relating to building envelope (i.e, roof, outer walls, foundation works), mutual plumbing systems, mutual electrical Installations and any other building parts mutually shared by apartment owners, (mandatory by law) 1/2 CAPLLOYO INSURANCE AGENCY A/S - STRANDVEJEN 203 - OK-2900 HELLERUP - COPENHAGEN REG. NO. 2G097108 - TEH45 70 2S 15 SO - CAPI.LOyOimCAPUOVD.COM

118
Cpr, CAPLLOYD
WSURANCE AOEHCY
COINSURANCE SLIP
BUILDING LATENT DEFECTS INSURANCE
WARRANTY PERIOD: 5 years Builders anti Contractors warranty period for latent defects Builder: PensIonDonmarl: A/S Turnkey Contractor: KCC Construction Denmark A/S CONDITIONS: 52S-75.2011BSK Gonernl Conditions- Building Latent Defects Insurance COMMISSION HEREON: 20'« BROKERAGE HEREON: 2,5% ACCEPTED SHARE:
BY COINSURER::
6S% of IQflSinf limits hereon
CAPLLOYD INSURANCE AGENCY A/S - STRAMDVEJEIJ 203 - DK-2900 HELLERUP - COPENHAGEN REG. NO. 25097100 - TEL+45 70 20 15 50 - CAPI L OVDaCAPI.lOYO.COM 2/2

119
1
CapLIoyd : Endorsement No 3 :
Attaching to and forming part of the Binding Authority Agreement Nos. 17003, 17007 and 17011 for Latent Defects Insurance in Sweden and Denmark and Contractors Performance Guarantees for Smaller Houses in Sweden agreed between CapLloyd A /S (the Coverholder) and AmTrust International Underwriters, Ltd. (the Underwriters) and signed on the 2"d January 2013. It is hereby agreed that with effect from l51 October 2013 the following amendment is made to thisBinding Authority Agreement:
Schedule - the Underwriters :
1) AmTrust International Underwriters, Ltd.
Company Registration No. 169384.
Address:
40 Westland Row',
Dublin 2.
Republic of Ireland.
Percentage share written hereon: 80%.
2) CBL Insurance Limited.
Company Registration No. 27582
Address:
Tower 1,
Shortland Centre,
51 Shortland Street,
PO Box 3772
Aukland 1010,
O i
{ i
New Zealand.

120
2
Percentage share written hereon: 20%.
All other Terms, Conditions, Definitions, Exclusions and Limits to remain unchanged and in force. IN WITNESS WHEREOF, the parties hereto have caused this Endorsement No. 3 to be executed by their duly authorised representatives as of the following dates:
In Copenhagen, Denmark this day of September 2013 Signed on Behalf of:
CapLloyd A / S (the Coverholder). and in London, England this day of September 2013 Signed on Behalf of:
AmTrust International Underwriters, Ltd. (the Underwriters).
Simon Pallister Underwriter. and in Aukland, New Zealand tliisj^ciay of September 2013 Signed on Behalf of:
CBL Insurance Limited. (the Underwriters).

Coinsurance
121
Tel:
PO Box 3772
Auckland, New Zealand
Tower One, 51 Shortland Street
64 9 303 4770 Fax: 64 9 300 5046 www.cblinsurance.com Invoice To:
AmTrust Internaitonal Underwriters Ltd
C/O Caplloyd Insurance Agency
Bill-to Customer No. C003551
Tax Invoice
GST Reg No. 22 505 254
Policy No.
Pay Terms
CBL008029
90 Days from Invoice
Invoice Date
Invoice No.
01/12/2013
CBL110688
Description Qty Unit Price GST Amount
BOND NUMBER: CBL008029
BONDEE: AmTrust Internailonal Underwriters Ltd OBLIGEE: PensionDanmark A/S, Copenhagen BOND TYPE: Building Latent Defects START DATE: 1/05/2013 EXPIRY DATE: 30/04/2023 BOND VALUE: DKK 276,250,000.00 CONTRACT: ICE BERG - Aarhus (4 New Apartment Buildings) CBL Share 65% (of 100%), reinsure 50% (of 65%) to Elite, Limit of Liability DKK425,000,000 (100%) Building Latent Defects Building Latent Defects 988,975.00 222,519.38 988,975.00 -222,519,38 Please Note: Our Bond does not take effect until payment of the premium has been received and until the Bond has been formally executed and delivered. Please also note our premiums are non-refundable. Total DKK Excl. GST 766,455.62 GST Amount 0.00 Total DKK Incl. GST 766,455.62 Remittance Advice CBL Insurance Ltd PO Box 3772 Auckland, New Zealand Credit Card Due Date 01/03/2014 Name on Card Invoice No. CBL110688 Policy No. CBL008029 Credit Card No. Customer AmTrust Internaitonal Underwriters Ltd Expiry Date Card Tvoe C/O Caplloyd InsuranceAgency Signature/ Date Cheque No. Amount Payable 766,455.62 Amount Paid Date Paid

ARB INTERNATIONAL LIMITED AIN 424
122
RISK DETAILS
UNIQUE MARKET
REFERENCE:
TYPE:
INSURED:
POLICY ISSUING
COINSURER:
NEW BUILDING
PROJECT:
PERIOD:
BUILDING TYPE:
TERRITORIAL
SCOPE:
100% LIMIT OF
LIABILITY:
POSSIBLE
MAXIMUM
LOSS:
ORDER
HEREON:
DEDUCTIBLE:
CONDITIONS:
B042414INT03117
Proportional Coinsurance - Building Latent Defects Insurance for Residential Buildings. Aktieselskabet Havnelnvest - Helbergsgade 36 st. th. - 8000 Aarhus C, Denmark AmTrust International Underwriters Ltd c/o Caplloyd Insurance Agency A/S (Ltd.) - as registered Coverhoiders for a 50% share LIGHTHOUSE BUILDING L - Helga Pedersens Gads - 8000 Aarhus C, Denmark From: 00.01 (a.m.) 31sl January 2014 To: 24.00 (p.m.) 30lh January 2024 Local Standard Time in the Country of Origin of the Assured. 1 New Apartment building on own foundation - 13 330 M2 - up to 10 Floors - 122 Apartments Denmark Project Value -1 building: DKK283,7501000 (EURO 37,833,333.) - 122 Apartments. DKK42,562,500- being 15% of full value 50% of 100% of limits hereon DKK 11 000 e.e.c. / DKK 21 000 agg. for period hereon/ each apartment and DKK 1 342 000 e,e.c./DKK 2 562 000 agg.for period hereon in respect of any claim relating to building envelope (i.e. roof, outer walls, foundation works), mutual plumbing systems, mutual electrical installations and any other building parts mutually shared by apartment owners, (mandatory by law) 2011 BSK General Conditions- Building Latent Defects Insurance (ex2010 BSK). i i I i I i i
Page 1 of2 POLICY: 14INT03117

123
ARB INTERNATIONAL LIMITED AIN 424
WARRANTY
PERIOD: 5 years Builders and Contractors warranty period for latent defects Builder: Aktieselskabet Havnelnvest Main Contractor. MT Hoejgaard A/S 100% PREMIUM FOR PERIOD: DKK1,287,090 for the period hereon COMMISSION HEREON: 15% BROKERAGE HEREON: 10% INFORMATION GIVEN TO UNDERWRITERS Metre Carre Full Survey Report dated 29.06.2013 seen and noted by UWRS hereon. Signed by CBL Insurance Limited Financial Sinsnglh Rating of B+ (Good) byMl Best inV'f \<a~l |i<23T)0'io T n ILb, UL >0
Page 2 of2 POLICY; 14INT03117

Coinsurance
124
Invoice To:
PO Box 3772
Auckland, New Zealand
Tower One, 51 Shortland Street
Tel: 64 9 303 4770 Fax: 64 9 300 5046 www.cbiinsurance.com j i j AmTrust International Undewriters Ltd -pa-^ Invoice C/O Caplioyd Insurance Agency GST Reg No. 22 505 254 Bill-to Customer No. C003551 Policy No. CBL008156 Invoice Date 01/05/2014 Pay Terms 90 Days from invoice Invoice No. CBL111155 Description Qty Unit Price GST Amount BOND NUMBER: CBL008156 BONDEE: AmTrust International Underwriters Ltd OBLIGEE: LIGHTHOUSE BUILDING BOND TYPE: Building Latent Defects START DATE: 31/01/2014 EXPIRY DATE: 30/01/2024 BOND VALUE: DKK 21,281,250.00 Building Latent Defects Building Latent Defects 1 -1 643,545.00 160,886.25 0 0 643,545.00 -160,886.25 Please Nole: Our Bond does not lake etfec! until payment ot the premium has been received and until the Bond has been formally executed and delivered. Please also nole our premiums are non-refundable. Total DKK Excl. GST 482,658.75 GST Amount 0.00 Total DKK incl. GST 482,658.75 Due Date 30/07/2014 Invoice No. CBL111155 Policy No. CBL008156 Customer AmTrust Internallonai Underwriters Ltd C/O Caplioyd Insurance Agency Amount Payable 482,658.75 Amount Paid Date Paid Remittance Advice CBL Insurance Ltd PO Box 3772 Auckland, New Zealand Credit Card Name on Card _______________ Credit Card No. _______________ Expiry Date _________ Card Type Signature/ Date _______________ Cheque No.