ACCIDENT AND HEALTH COINSURANCE AGREEMENT

Exhibit 10.1

Form of Accident and Health Coinsurance Agreement

ACCIDENT AND HEALTH COINSURANCE AGREEMENT

BY AND BETWEEN

THE HANOVER INSURANCE COMPANY

AND

FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY

DATED

[              , 2008]

TABLE OF CONTENTS

SCHEDULES

EXHIBITS

ACCIDENT AND HEALTH COINSURANCE AGREEMENT

THIS ACCIDENT AND HEALTH COINSURANCE AGREEMENT (this “ Agreement ”), dated as of [              , 2008] (the “ Effective Date ”), is made by and between FIRST ALLMERICA FINANCIAL LIFE INSURANCE COMPANY, a Massachusetts stock insurance company (the “ Company ”), and THE HANOVER INSURANCE COMPANY, a New Hampshire stock insurance company (the “ Reinsurer ”).

RECITALS :

WHEREAS , The Hanover Insurance Group, Inc., a Delaware corporation and the ultimate parent of the Reinsurer (the “ Seller ”), and Commonwealth Annuity and Life Insurance Company, a Massachusetts stock insurance company (the “ Buyer ”), have entered into that certain Stock Purchase Agreement, dated as of [              , 2008] (the “ SPA ”), which agreement calls for, among other things the acquisition of all of the shares of stock of the Company by the Buyer and the reinsurance of the Company’s Accident and Health Business by the Company to the Reinsurer subject to the terms, conditions and limitations of this Agreement;

WHEREAS , subject to satisfaction of the conditions set forth in Section 4.01, and upon the terms and conditions set forth herein, the Company desires to cede or retrocede, on an indemnity reinsurance basis, to the Reinsurer all of the Company’s net retained liabilities in respect of the Accident and Health Insurance Contracts and related liabilities as specified herein;

WHEREAS , the Company has reinsured specified liabilities under the Accident and Health Insurance Contracts to third party reinsurers and desires the Reinsurer to indemnify the Company for liabilities related to such business to the extent the third party reinsurer fails to pay the Company in respect of such liabilities; and

WHEREAS , subject to satisfaction of the conditions set forth in Section 4.01, and upon the terms and conditions set forth herein (including the limitations set forth in Section 2.02), the Reinsurer desires to reinsure on an indemnity reinsurance basis all of the Company’s net retained liabilities in respect of the Accident and Health Insurance Contracts and related liabilities as specified herein.

NOW, THEREFORE , in consideration of the mutual covenants and promises, and upon the terms and conditions, hereinafter set forth, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.01 Definitions . Unless otherwise defined herein, capitalized terms used herein shall have the meanings given them in Exhibit A hereto.

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ARTICLE II

BUSINESS REINSURED

2.01 General .

(a) On the Effective Date, subject to Section 2.01(b) and the other provisions of this Agreement, the Company hereby cedes or retrocedes to and reinsures with the Reinsurer all of the Company’s rights, interests, duties, obligations, and liabilities with respect to, related to or arising from the Accident and Health Insurance Contracts, and the Reinsurer hereby assumes and reinsures from the Company, on an indemnity reinsurance basis, 100% of the liabilities with respect to any and all Accident and Health Insurance Contracts. In addition to the Reinsurer’s coinsurance of such liabilities, the Reinsurer hereby accepts and agrees to discharge 100% of all Extra Contractual Obligations. Except as explicitly set forth herein, the Reinsurer does not reinsure or assume hereunder any other liabilities of any kind or description.

(b) Notwithstanding anything contained in Section 2.01(a), the Reinsurer’s obligation to reinsure shall in all events be net of any collateral security to which the Company has recourse and that is valid and collectible and any reinsurance recoverable that is paid to the Company (including any statutory successor thereof) under any Company Reinsurance Agreement (regardless of how such payment is subsequently used by the Company or such successor). For the avoidance of doubt, the Reinsurer acknowledges its assumption of any risk as to which reinsurance recoverables which are due and owing under any Company Reinsurance Agreement are determined to be uncollectible in accordance with SAP.

2.02 Liability .

(a) From and including the Effective Date and thereafter, as between the parties hereto, to the extent set forth herein, the Reinsurer shall bear and shall have responsibility for paying all liabilities with respect to, related to or arising from the Accident and Health Insurance Contracts, including, without limitation, Extra Contractual Obligations and claims for benefits on or after the Effective Date. The Reinsurer hereby agrees to pay, to the extent set forth herein or under the Accident and Health Administrative Services Agreement, any liabilities with respect to, related to or arising from the Accident and Health Insurance Contracts on behalf of, and in the name of, the Company; provided, however, that the Reinsurer shall have no direct or indirect obligation itself to insureds, claimants, or beneficiaries under such Accident and Health Insurance Contracts.

(b) Should a lapsed or terminated Accident and Health Insurance Contract be reinstated in accordance with its terms on or after the Effective Date, the insurance under such Accident and Health Insurance Contract shall be reinsured herein automatically and such reinstated insurance under such Accident and Health Insurance Contract shall be included in Accident and Health Insurance Contracts. Premiums and interest on such reinstated and reinsured Accident and Health Insurance Contracts shall be payable to the Reinsurer for the period on and after the Effective Date and the Company shall pay such amount to Reinsurer to the extent the Company receives premiums and interest on such insurance from Accident and Health Insurance Contract holders. In addition, any policy or coverage issued as a result of the exercise of conversion rights which are required under the terms of any Accident and Health Insurance Contract shall be reinsured herein automatically and shall be included in Accident and Health Insurance Contracts for all purposes of this Agreement. The Reinsurer may issue such

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policy or coverage in the name of the Company provided that the Reinsurer shall give notice thereof to the Company (which notice shall include a form number or other identifying information) as promptly as reasonably practicable after such policy or coverage is issued.

(c) Notwithstanding the foregoing, nothing herein shall affect the rights and obligations of the parties thereto under Article 10 of the SPA.

2.03 Defenses . The Reinsurer accepts, reinsures, and assumes, as applicable and to the extent set forth herein, the liabilities with respect to the Accident and Health Insurance Contracts and Extra Contractual Obligations subject to any and all defenses, setoffs, and counterclaims to which the Company would be entitled with respect to the liabilities under or relating to the Accident and Health Insurance Contracts and Extra Contractual Obligations, it being expressly understood and agreed by the parties hereto that no such defenses, setoffs, or counterclaims are or shall be waived by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby and that the Reinsurer is and shall be fully subrogated in and to all such defenses, setoffs, and counterclaims.

2.04 Establishment of Rates . To the extent permitted or required by Applicable Law, during the Reinsurance Period the Reinsurer shall, subject to the terms and conditions of the Accident and Health Administrative Services Agreement, (i) set or modify premium rates and other charges applicable to the Accident and Health Insurance Contracts and the effective dates thereof, on the Company’s behalf, subject to the prior consent of the Company which shall not be unreasonably withheld, delayed or conditioned, and (ii) take all actions necessary to implement the setting or modification of such rates in accordance with Applicable Law, including providing notice to policyholders and cedents of such changes and the effective dates thereof.

2.05 Contract Changes . The Company agrees that it shall not make any changes after the Effective Date in the provisions and conditions of an Accident and Health Insurance Contract except (i) with Reinsurer’s prior written consent or (ii) to the extent that any change to the terms of any Accident and Health Insurance Contract is required under Applicable Law (it being understood that the Company has no obligation to monitor changes in Applicable Law that may affect the Accident and Health Insurance Contracts). The Company shall promptly notify the Reinsurer in writing of any such change to the terms of any Accident and Health Insurance Contract made pursuant to clause (ii) of the previous sentence, provided that prior to effectuating any such change the Company shall promptly notify the Reinsurer of such proposed change and afford the Reinsurer the opportunity, to the extent practical under Applicable Law, to object to such change under applicable administrative procedures (both formal and informal).

2.06 Replacement . The Company shall not initiate any general offer of conversion or replacement under which it would offer to Accident and Health Insurance Contract holders any inducement to surrender or terminate their Accident and Health Insurance Contracts or offer them replacement policies without the prior written approval of the Reinsurer.

ARTICLE III

TERRITORY; TERM

3.01 Territory . This Agreement shall apply to Accident and Health Insurance Contracts covering risks wherever resident or situated.

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3.02 Term . This Agreement shall remain in full force and effect until the expiration or termination of all liabilities in respect of the Accident and Health Insurance Contracts and until all obligations of both parties hereunder have been discharged in full.

ARTICLE IV

EFFECTIVENESS; LICENSES AND REINSURANCE CREDITS

4.01 Effectiveness . It shall be a condition to the effectiveness of this Agreement that the Company and the Reinsurer shall have obtained prior approval (or non-disapproval, as applicable under Applicable Law) of this Agreement from those Insurance Regulators as set forth on Schedule 4.01.

4.02 Licenses and Reinsurance Credits .

(a) At all times during the term of this Agreement, the Reinsurer and the Company each shall hold and maintain all licenses and authorities required under Applicable Laws to perform its respective obligations hereunder unless mutually agreed by the parties (which agreement shall not be unreasonably withheld by either party).

(b) At all times during the term of this Agreement, the Reinsurer shall hold and maintain all licenses and authorizations required under Applicable Law or otherwise take all action that may be necessary so that the Company shall receive full reserve credits for reinsurance ceded and retroceded under this Agreement in the statutory financial statements filed with the DOI and in statutory financial statements required to be filed with Insurance Regulators in such other jurisdictions in which the Company must file such statements.

(c) During the Reinsurance Period, in the event that a reinsurer under any of the Company Reinsurance Agreements is or becomes an unauthorized reinsurer, the effect of which causes the Company not to receive full reserve credits for reinsurance ceded or retroceded to such unauthorized reinsurer in its statutory financial statements filed with the DOI, the Reinsurer shall enter into a trust agreement, deliver a letter of credit, provide any other form of security acceptable to the DOI or take any other action the effect of which would enable the Company to receive full reserve credits for reinsurance ceded or retroceded to such unauthorized reinsurer. Subject to the foregoing, the Reinsurer may, in its sole discretion, elect the form of security or other action provided to or for the benefit of the Company.

ARTICLE V

RESERVES

5.01 Establishment of Statutory Reserves . The Reinsurer shall be responsible for establishing and maintaining appropriate statutory reserves for the liabilities under the Accident and Health Insurance Contracts reinsured pursuant to this Agreement, computed in accordance with the statutory accounting principles and practices prescribed or permitted by the DOI.

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5.02 Reserve Reports . Reserve reports for all of the Accident and Health Insurance Contracts shall be provided by the Reinsurer pursuant to the terms and subject to the conditions set forth in the Accident and Health Administrative Services Agreement.

5.03 Reports . The Reinsurer shall provide the Company with its annual and quarterly statutory financial statements filed with the New Hampshire Insurance Department and a copy of its audited statutory financial statements along with the audit report thereon.

5.04 Trust Account . In the event that during the Reinsurance Period the Reinsurer attains, as of any one date, at least two of the following financial strength ratings: B++ or below by A.M. Best, BBB+ or below by Standard & Poor’s, or Baa1 or below by Moody’s (such condition, an “ Adverse Rating Condition ”), the Reinsurer shall promptly enter into a trust agreement in a form to be mutually agreed upon by the Reinsurer and the Company, provided that such agreement shall be compliant in all material respects with laws and regulations of the Commonwealth of Massachusetts that govern reinsurance credit (the “ Trust Agreement ”). The Reinsurer shall establish a trust account (the “ Trust Account ”) as security for the payment of the Reinsurer’s obligations to the Company under this Agreement with the bank (the “ Trustee ”) named in the Trust Agreement. The assets held in the Trust Account shall equal the total amount of net statutory liabilities that are required to be maintained by the Reinsurer in respect of the Accident and Health Insurance Contracts and shall be held in trust for the benefit of the Company subject to the terms hereof. Following the establishment of such Trust Account, in the event that the Reinsurer attains, as of any one date, a financial strength rating such that an Adverse Rating Condition is no longer in effect, the Reinsurer shall no longer be obligated to maintain such Trust Account, and all assets held in (and not subject to any pending withdrawal from) such Trust Account at such time shall promptly be distributed to the Reinsurer; it being understood that upon the occurrence of any subsequent Adverse Rating Condition, the Reinsurer shall promptly establish a new Trust Account as set forth above.

(b) The Reinsurer agrees that the assets deposited into the Trust Account shall consist only of assets of the types permitted by the laws and regulations of the Commonwealth of Massachusetts that govern reinsurance credit.

(c) The Reinsurer, prior to depositing assets with the Trustee, shall execute all assignments and endorsements in blank, or transfer legal title to the Trustee of all shares, obligations or any other assets requiring assignments, in order that the Company, or the Trustee upon direction of the Company, may whenever necessary negotiate any such assets without consent or signature from the Reinsurer or any other entity for the purpose of applying such assets as provided in Section 5.04(e) below.

(d) All settlements of account under the Trust Agreement between the Company and the Reinsurer shall be made in cash or its equivalent.

(e) The Reinsurer and the Company agree that the assets in the Trust Account may be withdrawn by the Company provided that such assets are applied and utilized by the Company (or any successor of the Company by operation of law, including, without limitation, any liquidator, rehabilitator, receiver, or conservator of the Company), without diminution because of the insolvency of the Company or the Reinsurer, only for the specific enumerated purposes

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permitted by the laws and regulations of the Commonwealth of Massachusetts that govern reinsurance credit.

(f) In the event that assets from the Trust Account are withdrawn on behalf of the Company for the purpose set forth in subsection (e) above in excess of actual amounts required to meet the Reinsurer’s obligations to the Company under this Agreement, the Company will return such excess to the Trust Account, plus interest at the average 90-Day Treasury Rate applicable to the period during which the amounts were held on behalf of the Company. “ 90-Day Treasury Rate ” means the annual yield rate, on the date to which such 90-Day Treasury Rate relates, of actively traded U.S. Treasury securities having a remaining duration to maturity of three months, as such rate is published under “Treasury Constant Maturities” in Federal Reserve Statistical Release H.15(519).

(g) If a Trust Account is required to be established under Section 5.04(a), the initial deposit of assets to the Trust Account shall equal the amount of net statutory liabilities that are required to be maintained by the Reinsurer in respect of the Accident and Health Insurance Contracts as of the end of the calendar quarter immediately preceding the date of the establishment of the Trust Account. So long as an Adverse Rating Condition is in effect, the Reinsurer shall cause assets to be deposited in the Trust Account following each calendar quarter as necessary such that the total amount of assets on deposit as of the end of such calendar quarter equals the required level specified in Section 5.04(a). The Company may make payments to the Reinsurer from amounts withdrawn from the Trust Account that exceed 100% of such required level.

(h) The Reinsurer shall be liable for all reasonable and customary bank charges actually incurred by the Reinsurer with respect to the Trust Account.

(i) The Company and the Reinsurer shall cooperate in good faith for purposes of effecting the transactions contemplated by this Section 5.04.

ARTICLE VI

ACCOUNTING AND SETTLEMENT

6.01 Benefit Payments . Subject to the provisions of the Accident and Health Administrative Services Agreement, the Reinsurer shall have responsibility and authority for all benefit and claim payment determinations or settlements, and shall be solely responsible for all expenses associated with benefit and claim payment determinations or settlements pursuant to and in accordance with the Accident and Health Administrative Services Agreement.

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6.02 Cash Settlement and Accounting; Monthly Report . Cash settlements, accounting and monthly reports of all of the Accident and Health Insurance Contracts (each, a “ Monthly Report ”) shall be conducted by the Reinsurer pursuant to the terms and subject to the conditions set forth in the Accident and Health Administrative Services Agreement.

ARTICLE VII

ADMINISTRATION; RECORDS; NOTICES

7.01 Administration . Administration and servicing of all of the Accident and Health Insurance Contracts, Company Reinsurance Agreements, Accident and Health Business Agreements or other agreements, rights or obligations relating to the Accident and Health Business shall be conducted by the Reinsurer pursuant to the terms and subject to the conditions set forth in the Accident and Health Administrative Services Agreement. Reports, files, and other records and information relating to the Accident and Health Insurance Contracts, the Company Reinsurance Agreements, Accident and Health Business Agreements or other agreements, rights or obligations relating to the Accident and Health Business shall be transferred and maintained pursuant to the terms and subject to the conditions set forth in the Accident and Health Administrative Services Agreement. Notwithstanding any provision in this Agreement or the Accident and Health Administrative Services Agreement to the contrary, to the extent the Reinsurer has not received any necessary information from any counterparty to the Company Reinsurance Agreements or any administrator or other Person in a similar position with respect to any of the Accident and Health Insurance Contracts or Accident and Health Business Agreements, any report to be provided on a specified time basis hereunder may be based on reasonable approximations determined in good faith. The Reinsurer shall be solely responsible for any additional costs, charges or expenses, both one-time and recurring or ongoing, resulting from any change in Applicable Law affecting the Company as an insurer licensed to write Accident and Health Insurance Contracts.

ARTICLE VIII

CEDING COMMISSION; TRANSFER OF ASSETS; POST-EFFECTIVE DATE

ACCOUNTING

8.01 Ceding Commission . In accordance with this Agreement and the SPA, concurrently with the execution of this Agreement, there will be no ceding commission paid by the Reinsurer to the Company.

8.02 Transfer .

(a) The Company shall be required to pay the Reinsurer a reinsurance premium in the amount of the aggregate statutory value of the A&H Net Liabilities Amount reflected on the Final Closing Date Purchase Price Statement. The reinsurance premium shall be paid to the Reinsurer as follows:

i) On the Effective Date, the Company shall transfer to the Reinsurer all rights to assets referred to in rows 7 and 13 through 23 of Column F of the assets section of the Preliminary Purchase Price Statement (the “ Other A&H Assets ”).

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ii) In addition, on the Effective Date, the Company shall transfer the A&H Investment Assets, as adjusted for any sales of such A&H Investment Assets and any purchases of replacement securities with the proceeds of such sales, occurring between and including April 1, 2008 and the Business Day immediately prior to the Effective Date (provided that such sales and purchases were in compliance with the standards of the investment guidelines described in Schedule 8.02 of this Agreement during such period).

iii) To the extent that the aggregate of the statutory book value of the A&H Assets to be reflected on the Preliminary Purchase Price Statement would exceed the A&H Net Liabilities Amount to be reflected on the Preliminary Purchase Price Statement, the Reinsurer shall agree to pay the Company in cash, within ten (10) days after the Final Closing Date Purchase Price Statement is determined, such difference, and the Preliminary Purchase Price Statement shall reflect, as an asset of the Company, a receivable obligation in the amount of such difference from the Reinsurer. To the extent that the A&H Net Liabilities Amount to be reflected on the Preliminary Purchase Price Statement (prior to giving effect to this clause (ii)) exceeds the aggregate of the statutory book value of the A&H Assets to be reflected on the Preliminary Purchase Price Statement, the Company shall agree to pay to the Reinsurer in cash, within ten (10) days after the Final Closing Date Purchase Price Statement is determined, the amount of such shortfall difference, and the Preliminary Purchase Price Statement shall reflect such Company payment obligation as a liability of the Company.

iv) In addition, to the extent that the A&H Net Liabilities, less the A&H Assets (and taking into account any payment obligation of the Company to the Reinsurer under clause (iii) above), to be reflected on the Final Closing Date Purchase Price Statement exceeds the A&H Net Liabilities less the A&H Assets reflected on the Preliminary Purchase Price Statement, the Company shall pay to the Reinsurer in cash, within ten (10) days after the Final Closing Date Purchase Price Statement is determined, such difference. To the extent that the A&H Net Liabilities, less the A&H Assets, reflected on the Preliminary Purchase Price Statement exceeds the A&H Net Liabilities, less the A&H Assets to be reflected on the Final Closing Date Purchase Price Statement, the Reinsurer shall pay to the Company in cash, within ten (10) days after the Final Closing Date Pur