Exhibit 10(dddd.1)

ATTORNEY-IN-FACT AGREEMENT

This Attorney-in-Fact Agreement (this “Agreement”) is made and entered into by
and between Pennsylvania Physicians Reciprocal Insurers (the “Exchange”), a
reciprocal insurance exchange organized under Article X of the Insurance Company
Law of the Commonwealth of Pennsylvania with its principal office located at 2
North Second Street, 7th Floor, Harrisburg, PA, and Physicians Reciprocal
Managers, Inc. (the “Company”), a Pennsylvania corporation with its principal
office located at 2 North Second Street, 7th Floor, Harrisburg, PA.

WITNESSETH:

WHEREAS, the subscribers will, pursuant to subscriber agreements, appoint the
Company to act as their Attorney-in-Fact with power to exchange reciprocal
insurance contracts among the subscribers to the Exchange and to manage and
conduct the business of the Exchange; and

WHEREAS, the Company and the Exchange desire to set forth the terms and
conditions upon which the Company will accept its appointment as
Attorney-in-Fact for the subscribers to exchange their reciprocal insurance
contracts and to manage and conduct the business of the Exchange;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound hereby, the Company and the Exchange agree as
follows:

1.   Acceptance of Appointment as Attorney-in-Fact. The Company hereby accepts
its appointment as Attorney-in-Fact in subscriber agreements to be executed by
subscribers to the Exchange and agrees, as Attorney-in-Fact, to exchange
reciprocal insurance contracts among the subscribers as provided in the
subscriber agreements.

2.   Management Services. The Company agrees to provide sufficient personnel and
supplies so that it can perform or provide for the performance of all necessary
and appropriate management services to the Exchange. It is understood that all
such management services shall be performed in accordance with such policies and
standards as may be established from time to time by the Attorney-in-Fact, as
well as in accordance with sound insurance and actuarial practices and
procedures and any applicable laws. Those management services include, without
limitation by reason of specification, the following functions:

2.1    The administration and management of the day-to-day insurance business of
the Exchange including, without limitation, underwriting and the administration
of claims;

2.2    The underwriting of applications for insurance, including passing upon
the desirability of risks, the issuance of premium quotes and policies or
binders, all in accordance with sound insurance underwriting guidelines and
practices established by the Company;

 

--------------------------------------------------------------------------------

2.3    The establishment and maintenance for the Exchange of complete and
accurate records of all reciprocal insurance contracts exchanged by the
Exchange, as well as all financial and business records, consistent with sound
business practices and in compliance with regulatory requirements; the
supervision of outside consultants and professionals retained at the expense of
the Exchange to provide all accounting, actuarial and auditing services,
including, but not limited to the establishment and monitoring of loss reserves,
compiling financial statements and the preparation of all reports required by
governmental and nongovernmental regulatory and supervisory authorities;

2.4    The collection, receipt and processing of all funds received as payments
of insurance premiums, contributions to surplus and other receipts of the
Exchange, and the timely deposit of all such funds in a bank or banks in the
name of the Exchange; the maintenance of all funds of the Exchange and the
investment of the Exchange’s investable assets in accordance with the advice or
instructions of any investment advisors retained by the Attorney-in-Fact on
behalf of the Exchange;

2.5    The placement of reinsurance, the payment of reinsurance premiums at the
expense of the Exchange, the maintenance of all records in connection with such
reinsurance, and the taking of all actions or the making of any claims required
or permitted by such reinsurance;

2.6    The provision and maintenance, including through a third party claims
administrator, of claims supervision and facilities for the timely processing of
all claims, notices and proofs of loss against the Exchange and for the timely
payment of claims on behalf of and at the expense of the Exchange, including the
employment of personnel to handle claims on behalf of the Exchange, it being
understood that all unallocated claims expenses shall be borne by the
Attorney-in-Fact and all allocated claims expenses shall be borne by the
Exchange. Allocated and unallocated claims expenses shall have the meanings
assigned thereto in the National Association of Insurance Commissioners’
Accounting Practices and Procedures Manual;

2.7    The retention of investment advisors for and on behalf of the Exchange at
the expense of the Exchange;

2.8    The preparation of promotional material for and on behalf of the
Exchange;

2.9    The monitoring of the legal affairs of the Exchange, including the making
of required filings with the Insurance Department of the Commonwealth of
Pennsylvania and all other governmental authorities having jurisdiction over the
Exchange;

2.10   The appointment, supervision and termination of agents on behalf of the
Exchange, and the payment to them of commissions at the expense of the Exchange,
for insurance coverages placed with the Exchange in such amounts as shall be
determined by the Attorney-in-Fact;

2

--------------------------------------------------------------------------------

2.11   The commencement and defense, at the expense of the Exchange, of legal
and administrative proceedings brought by or against the Exchange including
acceptance of service of process on behalf of the Exchange, entering legal
appearances on behalf of the Exchange and the compromise, prosecution, defense
and settlement of losses and claims; and

2.12   The taking of all such other actions and things as the Attorney-in-Fact
shall determine to be necessary, convenient, advisable, or proper in order to
discharge properly and in good faith the responsibilities and duties of the
Attorney-in-Fact under the Declaration of Organization of the Exchange and this
Attorney-in-Fact Agreement.

3.   Management Fee. As compensation for the management services to be performed
by the Company as Attorney-in-Fact on behalf of the Exchange as set forth in
Section 2 hereof, the Exchange agrees that the Company shall retain a percentage
of the Exchange’s gross direct written premiums, less return premiums, not to
exceed 21% (the “Retention Percentage”), and that, in consideration thereof, the
Company shall pay all costs of providing such management services including,
without limitation by reason of specification, the salaries and benefit expenses
of the Company’s employees, rent and other occupancy expenses, supplies and data
processing.

4.   Payment of Expenses of Exchange. The Company, on behalf of the Exchange,
shall utilize the funds of the Exchange to pay all of the expenses of the
Exchange including, without limitation by reason of specification, losses,
allocated loss adjustment expenses, commissions to producers, investment
expenses, damages, legal expenses, court costs, taxes, assessments, license
fees, the fees of attorneys, actuaries, accountants and investment and other
advisors, governmental fines and penalties, the establishment and maintenance of
loss and unearned premium reserves and surplus, reinsurance premiums and costs,
audit fees, and guaranty fund assessments.

5.   Records; Right to Audit. The Company shall keep sufficient records for the
express purpose of recording therein the nature and details of the management
services and financial transactions undertaken for the Exchange pursuant to this
Attorney-in-Fact Agreement. All books and records maintained by the Company that
pertain to the management services performed by the Company as Attorney-in-Fact
for the subscribers to the Exchange pursuant to this Agreement shall be owned by
the Company, but such books and records shall be maintained in a fiduciary
capacity for the Exchange. The Exchange, and any regulatory authority having
jurisdiction over the Exchange, shall have the right to examine and audit, at
the offices of the Company, at all reasonable times, all books and records of
the Company that pertain to the management services performed by the Company as
Attorney-in-Fact for the subscribers to the Exchange pursuant to this Agreement.
This right of examination and audit shall survive the termination of this
Agreement and shall remain in effect for so long as either the Company or the
Exchange has any rights or obligations under this Agreement.

6.   Term and Termination. This Agreement shall become effective as of the
effective date of the approval of the Declaration of Organization of the
Exchange and shall continue in effect for an indefinite term thereafter, subject
only to the right of the Exchange and the Company to terminate this Agreement by
mutual agreement.

3

--------------------------------------------------------------------------------

7.   Arbitration. In the event of any dispute or difference of opinion hereafter
arising with respect to this Agreement, the Company and the Exchange agree that
any dispute or difference of opinion shall be submitted to arbitration before a
panel of three arbitrators, each of whom shall be an active or retired
disinterested officer of a property and casualty insurance company. One such
arbitrator shall be chosen by the Company, one such arbitrator shall be chosen
by the Exchange and the third arbitrator shall be chosen by the other two
arbitrators. In the event any party hereto refuses or neglects to appoint an
arbitrator within 60 days after the other party requests it to do so, or if the
two arbitrators selected by the Company and the Exchange fail to agree upon a
third arbitrator within 30 days of the appointment of the second arbitrator to
be appointed, such arbitrator or arbitrators, as the case may be, shall, upon
the application of any party, be appointed by the Philadelphia office of the
American Arbitration Association and the arbitrators shall thereupon proceed.
The arbitrators shall consider this Agreement as an honorable engagement rather
than merely as a legal obligation and they are relieved of all judicial
formalities and may abstain from following the strict rules of law. The decision
of the majority of the arbitrators shall be final and binding on all parties.
Each party shall bear the expense of its own arbitrator and shall bear one-half
of the expenses of the third arbitrator and of the arbitration. Any such
arbitration shall take place in Philadelphia, Pennsylvania unless otherwise
agreed by the parties hereto.

8.   Indemnification.

(a)    The Exchange shall indemnify, defend and hold harmless the Company and
each director, officer, employee, member of an advisory committee, if any and
agent thereof (each an “Indemnified Party”), from and against all claims,
losses, damages, liabilities and expenses (including, without limitation,
settlement costs and any reasonable legal fees and expenses or other expenses
for investigation and defending any actions or threatened actions) incurred by
such Indemnified Party as a result of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Exchange, relating
to or arising out of the services provided by the Company hereunder, except to
the extent the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted the willful
misconduct or recklessness of the Indemnified Party. The foregoing
indemnification right shall be in addition to the indemnification provided for
in the Exchange’s Declaration of Organization (the “Declaration”) as filed with
the Pennsylvania Insurance Department and such indemnification provision is
hereby made a part of and incorporated into this Agreement and can be enforced
hereunder.

(b)    The Exchange shall pay expenses incurred by an Indemnified Party in
defending any action or proceeding referred to in this Section 8 in advance of
the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Exchange.

4

--------------------------------------------------------------------------------

(c)    As soon as practicable after receipt by any Indemnified Party of notice
of the commencement of any action, suit or proceeding specified in Section 8(a),
such person shall, if a claim with respect thereto may be made against the
Exchange under this Section 8, notify the Exchange in writing of the
commencement or the threat thereof; however, the omission to so notify the
Exchange shall not relieve the Exchange of any liability under this Section 8
unless the Exchange shall have been prejudiced thereby or from any other
liability which it may have to such person other than under this Section 8. With
respect to any such action as to which such person notifies the Exchange of the
commencement or threat thereof, the Exchange may participate therein at its own
expense and, except as otherwise provided herein to the extent that it desires,
the Exchange, jointly with any other indemnifying party similarly notified,
shall be entitled to assume the defense thereof, with counsel selected by the
Exchange to the reasonable satisfaction of such person. After notice from the
Exchange to such person of its election to assume the defense, the Exchange
shall not be liable to such person under this Section 8 for any legal or other
expenses subsequently incurred by such person in connection with the defense
thereof otherwise than as provided herein. Such person shall have the right to
employ his own counsel in such action, but the fees and expenses of such counsel
incurred after notice from the Exchange of its assumption of the defense thereof
shall be at the expense of such person unless: (i) the employment of counsel by
such person shall have been authorized by the Exchange, (ii) such person shall
have reasonably concluded that there may be a conflict of interest between the
Exchange and such person in the conduct of the defense of such proceeding or
(iii) the Exchange shall not in fact have employed counsel to assume the defense
of any proceeding brought by or on behalf of the Exchange or as to which such
person shall have reasonably concluded that there may be a conflict of interest.
If indemnification under this Section 8 is not paid or made by the Exchange, or
on its behalf, within 90 days after a written claim for indemnification has been
received by the Exchange, such person may, at any time thereafter, bring suit
against the Exchange to recover the unpaid amount of the claim. The right to
indemnification and the right to advancement of expenses provided hereunder
shall be enforceable by such person in any court of competent jurisdiction. The
burden of proving that indemnification is not appropriate shall be on the
Exchange. Expenses reasonably incurred by such person in connection with
successfully establishing the right to indemnification or advancement of
expenses, in whole or in part, shall also be indemnified by the Exchange.
 

(d)    Additional Rights. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 8 shall not be deemed
exclusive of any other rights to which an Indemnified Party may be entitled
under any bylaw, agreement, contract or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. It is the policy of the Exchange that indemnification of, and
advancement of expenses to, an Indemnified Party shall be made to the fullest
extent permitted by law. To this end, the provisions of this Section 8 shall be
deemed to have been amended for the benefit of an Indemnified Party effective
immediately upon any modification of the BCL or the Pennsylvania Insurance
Company Law or any modifications or adoption of any other law that expands or
enlarges the power or obligation of companies governed by the BCL to indemnify
or advance expenses to any Indemnified Party, including directors and officers
of the Attorney-in-Fact.

5

--------------------------------------------------------------------------------

9.   Miscellaneous.

(a)    This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania, without regard to its conflicts of law
principles.

(b)    The Company is authorized, at the Company’s expense, from time to time in
its discretion to contract with others for the performance of the management
services the Company has agreed to provide to the Exchange under this Agreement,
provided, however, that the Company shall remain responsible to the Exchange for
the proper and timely performance of all management services contemplated by
this Agreement.

(c)    The headings in this Agreement are for convenience of reference only, and
should not be referred to in connection with the interpretation of this
Agreement.

(d)    This Agreement may not be amended or supplemented except by means of a
written agreement executed on behalf of each of the parties to this Agreement.

(e)    Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any one
or more of the provisions or a portion of any of the provisions of this
Agreement shall be deemed to be contrary to law, invalid, illegal, unenforceable
or unreasonable in any respect by any governmental authority, court of law or
arbitrator having competent jurisdiction over the subject matter of and over the
parties to this Agreement, the remaining provisions, portions of such provisions
or reasonable scope of such provisions shall be severable and enforceable in
accordance with their terms.

(f)    No failure on the part of any party to this Agreement to exercise any
right or remedy under this Agreement, and no delay on the part of any party to
this Agreement in exercising any right or remedy under this Agreement, shall
constitute a wavier of such right or remedy, and no single or partial exercise
of any such right or remedy shall preclude any other or further exercise of such
right or remedy or of any other right or remedy.

(g)    No party to this Agreement may assign any of its rights or delegate any
of its obligations under this agreement by contract, operation of law or
otherwise without the prior written consent of the other party. This Agreement
shall be binding upon and except as otherwise provided in this Agreement, shall
inure to the benefit of the parties to this Agreement and their respective
permitted successors and assigns, if any.

(h)    This Agreement may be executed in counterparts, including by means of
telefaxed signatures, each of which shall constitute an original and all of
which, when taken together, shall constitute the Agreement.

(i)    In the event that any provision of this Agreement is inconsistent with
any provision of the Declaration, the Declaration’s subject provision shall
prevail.

6

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have executed this Attorney-in-Fact
Agreement on the day and year first above written by the undersigned thereunto
duly authorized.
 

        PHYSICIANS RECIPROCAL MANAGERS, INC.  
   
   
  By:   /s/ Anthony J. Bonomo  

--------------------------------------------------------------------------------

     

 

       
PENNSYLVANIA PHYSICIANS RECIPROCAL
INSURERS
 
 
 
BY IT'S ATTORNEY-IN-FACT,
PHYSICIANS RECIPROCAL MANAGERS, INC.
  
 
By:   /s/ Gerald Dolman  

--------------------------------------------------------------------------------

 

 
 
 

7

--------------------------------------------------------------------------------