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                                                                   Exhibit 10.39

                            EXCESS CESSION AND EVENT
                              REINSURANCE CONTRACT
                           EFFECTIVE: JANUARY 1, 1999

                                     BETWEEN

                 MEDICAL INTER-INSURANCE EXCHANGE OF NEW JERSEY
                            LAWRENCEVILLE, NEW JERSEY
                   (HEREINAFTER REFERRED TO AS THE "COMPANY")


                                       AND

                    THE REINSURERS SUBSCRIBING THE RESPECTIVE
                   INTERESTS AND LIABILITIES AGREEMENTS HERETO
                  (HEREINAFTER REFERRED TO AS THE "REINSURERS")




                          ARTICLE I: BUSINESS REINSURED

     A.   By this Contract, the Reinsurers agree to reinsure the liability which
          may accrue to the Company under all of its original policies,
          contracts, binders and certificates of insurance or reinsurance
          (hereinafter collectively referred to as "original policies")
          classified by the Company as:

     All business underwritten by New Jersey State Medical Underwriters, Inc.
     and classified by the Company as Medical and Dental Practitioner
     Professional Liability, Umbrella Liability, Hospital and Other Health Care
     Institution Professional Liability and Commercial General Liability
     Business, Directors and Officers Liability, Fiduciary Liability, Managed
     Care Errors and Omissions Liability, Employment Practice Liability,
     Miscellaneous Professional Indemnity (including but not limited to, Lawyers
     Professional, Notary Public and Electronic Data Processors - coverage
     subject to agreement by Reinsurers) unless otherwise excluded under Article
     III: Exclusions, issued or renewed on or after the effective date, subject
     to the terms, conditions and limitations hereinafter set forth.

     Retroactive dates hereon shall be the same as any retroactive dates
     contained in the original policies.


     B.   It is understood that this Contract applies to losses first occurring
          during the original policy period under occurrence policies and Claims
          First Made during the original period for claims made policies in
          respect of risks attaching during the term of the Contract all
          following the underlying terms and conditions.

     Permanent Protection Plan policies underwritten by the Company shall in all
     cases be deemed to be original policies covering on a losses occurring
     during basis. Reinsurers shall be subject to all of the conditions of the
     Permanent Protection Plan original policies and all other original policies
     including policy limits and aggregate limit formulas under any extended
     reporting coverage therein.
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C.   It is understood that this contract applies only to original policies with
     limits in excess of the company's retention.
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                    ARTICLE II: COMMENCEMENT AND TERMINATION

         A.       This Contract shall become effective on January 1, 1999 and
                  shall continue in force thereafter until terminated.

         B.       Either party may terminate this Contract on any December 31 by
                  giving the other party not less than 90 days prior written
                  notice.

C.      Reinsurers shall remain liable in respect to original policies issued or
        renewed during the term their contract is in force on the basis of the
        original coverage. Reinsurers shall receive their share of premiums for
        such respective original policies and there shall be no return of
        unearned premiums in respect thereto.

D      This Contract shall apply to original policies underwritten by the
       Company and incepting during the term of this Contract subject to a
       maximum period any one policy not to exceed 36 months plus odd time.

E.     In respect of multi-year original policies attaching to this Contract
       then reinsurance coverage for the full policy period shall be provided by
       those Reinsurers to whom the original net ceded premium has been
       allocated to regardless of any termination of the Contract.



                             ARTICLE III: EXCLUSIONS

This Contract does not apply to and specifically excludes the following:

1.   Reinsurance assumed, except reinsurance assumed from American Medical
     Mutual, Inc., A Risk Retention Group, Lawrenceville Property and Casualty
     Co., Inc., Lawrenceville Re. Ltd., and MIIX Insurance Company of New York,
     where the underwriting is through New Jersey State Medical Underwriters,
     Inc.

In addition this exclusion shall not apply to assumed reinsurance underwritten
by the Company for captives or other insurance facilities of hospitals and all
other health care institutions where the Underwriting is through New Jersey
State Medical Underwriters, Inc.

2.   Claims emanating from policies issued by the Company with effective dates
     after the termination date of this Contract.

3.       Financial Guaranty and Insolvency Business.

4.   All liability of the Company arising by contract, operation of law, or
     otherwise, from its participation or membership, whether voluntary or
     involuntary, in any insolvency fund. "Insolvency Fund" includes any
     guaranty fund, insolvency fund, plan, pool, association, fund or other
     arrangement, however denominated, established or governed, which provides
     for any assessment of or payment or assumption by the Company of part or
     all of any claim, debt, charge, fee or other obligation or an insurer, or
     its successors or assigns, which has been declared by any competent
     authority to be insolvent, or which is otherwise deemed unable to meet any
     claim, debt, charge, fee or other obligation in whole or in part.

5.   Nuclear risks as defined in the "Nuclear Incident Exclusion Clause -
     Liability. Reinsurance U.S.A. and Canada" except for incidents arising from
     nuclear medicine, attached to and
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 forming part of this Contract.

6. Any business derived from participation in any Pool, Association or
Syndicate.
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                        ARTICLE IV: RETENTION AND LIMITS

A.       Retention:

         The Company shall retain and be liable for the first $10,000,000 of
         Ultimate Net Loss as respects:

         i)       each original policy; or, where applicable

         ii)      each and every Event.

B.       Limit Excess of Retention:

         i)       In respect of Medical and Dental Practitioner Liability,
                  Umbrella Liability, Hospital and other Healthcare Institution
                  Professional Liability and Commercial Liability Business:

                  Reinsurers shall be liable for 92% of $65,000,000 of Ultimate
                  Net Loss as respects each original policy, or, where
                  applicable, each and every Event, plus Pro rata Loss
                  Adjustment Expenses.

         ii)      In respect of Directors and Officers Liability, Fiduciary
                  Liability, Managed Care Errors and Omissions Liability,
                  Employment Practice Liability, and Miscellaneous Professional
                  Indemnity (including but not limited to Lawyers Professional,
                  Notary Public and Electronic Data Processors Business
                  --coverage subject to agreement by Reinsurers):

                  Reinsurers shall be liable for 92% of $15,000,000 of Ultimate
                  Net Loss as respects each original policy, or, where
                  applicable, each and every Event, plus Pro rata Loss
                  Adjustment Expenses.

                             ARTICLE V: DEFINITIONS

A.       "Ultimate Net Loss" as used herein is defined as the sum or sums
         (including Loss in Excess of Policy Limits, Extra Contractual
         Obligations, as hereinafter defined) paid or payable by the Company in
         settlement of claims including any and all vicarious liability arising
         from BUSINESS REINSURED and in satisfaction of judgments rendered on
         account of such claims, after deduction of all salvage, all recoveries,
         including the Pennsylvania catastrophe fund, if applicable, and all
         claims in inuring insurance or reinsurance, whether collectible or not.
         Ultimate Net Loss shall not include any Loss Adjustment Expense.
         Nothing herein shall be construed to mean that losses under this
         Contract are not recoverable until the Company's Ultimate Net Loss has
         been ascertained. Ultimate Net Loss shall be calculated on a per claim,
         per policy per insured basis or, where applicable, on a per Event
         basis. If the Company issues multiple policies to an insured, the
         policies will be deemed to be one original policy for purposes of
         coverage under this Reinsurance Contract.

B.     "Loss in Excess of Policy Limits" and "Extra Contractual Obligations" as
       used herein shall be defined as follows:

         1.       "Loss in Excess of Policy Limits" as used herein shall mean
                  any amount paid or payable by the Company in excess of its
                  policy limits, but otherwise within the terms of its policy,
                  as a result of a settlement by the Company or an action
                  against it by its insured or its insured's assignee to recover
                  damages the insured is legally obligated to pay to a third
                  party claimant because of the Company's alleged or actual
                  negligence, breach of contract or bad faith in rejecting a
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                  settlement within policy limits, or in discharging its duty to
                  defend or prepare the defense in the trial of an action
                  against its insured, or in discharging its duty to prepare or
                  prosecute an appeal consequent upon such an action. A Loss in
                  Excess of Policy Limits shall be deemed to have occurred on
                  the same date as the loss covered or alleged to be covered
                  under the policy.

         2.       "Extra Contractual Obligations" as used herein shall mean any
                  punitive, exemplary, compensatory, multiplied or consequential
                  damages, other than Loss in Excess of Policy Limits paid or
                  payable by the Company as a result of an action against it by
                  its insured, its insured's assignee or a third party claimant,
                  which action alleges negligence, breach of contract or bad
                  faith on the part of the Company in handling a claim under a
                  policy subject to this Contract. An Extra Contractual
                  Obligation shall be deemed to have occurred on the same date
                  as the loss covered or alleged to be covered under the policy.

         Notwithstanding anything stated herein, this Contract shall not apply
         to any Loss in Excess of Policy Limits or Extra Contractual Obligation
         incurred by the Company as a result of any fraudulent and/or criminal
         act or any officer or director of the Company acting individually or
         collectively or in collusion with any individual or corporation or any
         other organization or party involved in the presentation, defense or
         settlement if any claim covered hereunder.

C.     "Incident" as used herein shall mean a single loss occurrence, or
       otherwise a series of accidents, acts, errors or omissions including
       continuous or repeated exposure to substantially the same general harmful
       conditions giving rise to coverage, all as defined and provided within
       the original policies underwritten by the Company.

D.     "Claims First Made" as used herein shall mean claims reported under
       claims made original policies on the earlier date of (1) or (2) below:

         1.       When the insured first gives notice to the Company that a
                  claim has been made against the insured; or

         2.       When the insured first gives notice to the Company of an
                  Incident involving a particular person which may result in a
                  claim against the original insured.

Notwithstanding the above, and in all cases, the Claims First Made date shall be
as defined and provided within the underlying policies underwritten by the
Company.

E.       1.       "Loss Adjustment Expense" as used herein shall mean expenses
                  allocable to the investigation defense and/or settlement of
                  specific claims, including litigation expenses and
                  postjudgment interest and legal expenses and costs incurred in
                  connection with coverage questions and legal actions connected
                  thereto, but not including office expenses or salaries of the
                  Company's regular employees.

         2.       "Pro rata Loss Adjustment Expenses" as used herein shall mean
                  the result obtained by multiplying the covered indemnity
                  percentage, as calculated below by the Company's "Loss
                  Adjustment Expense" for a given claim. The percentage shall be
                  determined by dividing the amount of Ultimate Net Loss
                  indemnity for a coverage section by the Company's total
                  Ultimate Net Loss for a given claim.

F.       "Net Ceded Premium" as used herein shall mean Gross Allocated Premium
         to this Contract less 25%.
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G.       "Gross Allocated Premium" as used herein shall mean the written premium
         by the Company allocated to this Contract in annual policies or
         instalments on multi-year policies.

H.       "Event" as used herein shall mean all original claims arising from an
         Incident involving more than one insured under original policies An
         Event will be deemed to have occurred at the date of the first
         occurrence for original occurrence policies and the Claims First Made
         date if the original policy is on a "claims made" basis (for claims
         made original policies.


             ARTICLE VI: CLAIMS REPORTING AND CLAIMS LOSS SETTLEMENT

         A.       Within 60 days after the end of each calendar quarter, the
                  Company shall provide the Reinsurers with a claims bordereau
                  outlining any claim on which the Company has placed a reserve
                  value of $3,000,000 or more each loss or event. At each
                  anniversary the Company shall provide a bordereau outlining
                  all claims and reserves excess of $250,000 each loss or
                  $2,000,000 each event. Losses and adjustment expenses
                  recoverable by the Company are payable immediately after
                  receipt of proof of loss subject to the retention.

B.       The Company shall include with each claim bordereau, the following
         information as respects new claims, pending claims and closed claims
         during the quarter:

         1.       Claim number or reference number;

         2.       Name of Insured;

         3.       Name of Claimant;

         4.       Subject policy limit;

         5.       Claims Made date;

         6.       Loss Occurrence date;

         7.       Indemnity (paid and outstanding);

         8.       Expenses (paid and outstanding);

         9.       Indemnity recovery; if any;

         10.      Expense recovery; if any;

         11.      Status

         12.      Narrative Loss Description of claims of $3,000,000 or more
                  each loss or Event as respects new claims and closed claims
                  during the quarter or as otherwise upon request of Reinsurers.


C.       The Reinsurers shall have the right, at its own expense, to be
         associated in the defense of any claim, suit or proceeding involving
         this reinsurance.

D.       The Company shall, at its full discretion, adjust and settle all claims
         and losses. All such adjustments and settlements shall be binding on
         the Reinsurers and the Reinsurers agree to pay all amounts for which
         they may be liable immediately after receipt of reasonable evidence of
         the amount paid by the Company.
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                      ARTICLE VII: SALVAGE AND SUBROGATION

The Reinsurers shall be credited with salvage (i.e., reimbursement obtained or
recovery made by the Company, less the actual cost, excluding salaries of
officials and employees of the Company and sums paid to attorneys as retainer,
of obtaining such reimbursement or making such recovery) on account of claims
and settlements involving reinsurance hereunder. Salvage thereon shall always be
used to reimburse the excess carriers in the reverse order of their priority
according to their participation before being used in any way to reimburse the
Company for its primary loss. The Company hereby agrees to enforce its rights to
salvage or subrogation relating to any loss, a part of which loss was sustained
by the Reinsurers, and to prosecute all claims arising out of such rights.


                              ARTICLE VIII: PREMIUM

The Company shall pay the Reinsurers a Minimum and Deposit Premium of $750,000
annually which shall be payable quarterly as follows:-

31st March, 30th June, 30th September and 31st December.

The Minimum Premium shall be adjusted upwards at 92% of the net ceded premium
within 45 days of 31st December.


                         ARTICLE IX: OFFSET AND SECURITY

(a)    Each party hereto has the right, which may be exercised at any time, to
       offset any amounts, whether on account of premiums or losses or
       otherwise, due from such party to another party under this Agreement or
       any other reinsurance agreement heretofore or hereafter entered into
       between them, against any amounts, whether on account of premiums or
       losses or otherwise due from the latter party to the former party. The
       party asserting the right of offset may exercise this right, whether as
       assuming or ceding insurer or in both roles in the relevant agreement or
       agreements.

(b)    Each party hereby assigns and pledges to the other party (or to each
       other party, if more than one) all of its rights under this Agreement to
       receive premium or loss payments at any time from such other party
       ("Collateral"), to secure its premium or loss obligations to such other
       party at any time under this Agreement and any other reinsurance
       agreement heretofore or hereinafter entered into by and between them
       ("Secured Obligations"). If at any time a party is in default under any
       Secured Obligation or shall be subject to any liquidation,
       rehabilitation, reorganization or conservation proceeding, each other
       party shall be entitled in its discretion, to apply, or to withhold for
       the purpose of applying in due course, any Collateral assigned and
       pledged to it by the former party and otherwise to realize upon such
       Collateral as security for such Secured Obligations.

(c)    The security interest described herein, and the term "Collateral," shall
       apply to all payments and other proceeds in respect of the rights
       assigned and pledged. A party's security interest in Collateral shall be
       deemed evidenced only by the counterpart of this Agreement delivered to
       such party.

(d)    Each right under this Article is a separate and independent right,
       exercisable, without notice or demand, alone or together with other
       rights, in the sole election of the party entitled
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       thereto, and no waiver, delay, or failure to exercise, in respect of any
       right, shall constitute a waiver of any other right. The provisions of
       this Article shall survive any cancellation or other termination of this
       Agreement.

(e)    In the event of the insolvency of a party hereto, offsets shall only be
       allowed in accordance with The laws of the insolvent party's state of
       domicile.

                          ARTICLE X: ACCESS TO RECORDS

       A.     The Company shall place at the disposal of the Reinsurers at all
              reasonable time, and the Reinsurers shall have the right to
              inspect, through authorized representatives, all books, records,
              policies, endorsements and papers of the Company in connection
              with any reinsurance hereunder, or claims in connection herewith.

B.     The Reinsurers agree that they will not disclose any confidential
       information obtained by them hereunder to parties not subject to this
       Contract except under the following circumstances and then only when
       necessary:

       1.     When disclosure of such information is required in the normal
              course of the Reinsurers' business; or

       2.     With the prior written consent of the Company; or

       3.     When the Reinsurers are required by a subpoena or court order to
              disclose such information. The Reinsurers shall promptly notify
              the Company of any attempt by a third party to obtain from them
              any such confidential information.

C.     The Reinsurers will provide the Company or its designated representative
       with such information as the Reinsurers and Company may agree is
       necessary to the Company's handling of the business reinsured herein.

D.     The obligations contained in this Article shall survive termination of
       this Contract.


                     ARTICLE XI: LIABILITY OF THE REINSURER

A.     The liability of the Reinsurers shall follow that of the Company in every
       case and be subject in all respects to all the general and specific
       stipulations, clauses, waivers and modifications of the Company's
       policies and any endorsements thereon. However, in no event shall this be
       construed in any way to provide coverage outside the terms and conditions
       set forth in this Contract.

B.     Nothing herein shall in any manner create any obligation or establish any
       rights against the Reinsurers in favor of any third party or any persons
       not parties to this Contract.


                       ARTICLE XII: NET RETAINED LIABILITY

A.     This Contract applies only to that portion of any insurance or
       reinsurance which the Company retains net for its own account (prior to
       deduction of any underlying reinsurance), and in calculating the amount
       of any loss hereunder and also in computing the amount or amounts in
       excess of which this Contract attaches only loss or losses in respect of
       that portion of any
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       policy which the Company retains net for its own account shall be
       included.

B.     The amount of the Reinsurers' liability hereunder in respect of any loss
       or losses shall not be increased by reason of the inability of the
       Company to collect from any other reinsurer(s), whether specific or
       general, any amounts which may have become due from such reinsurer(s),
       whether such inability arises from the insolvency of such other
       reinsurer(s) or otherwise.
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                    ARTICLE XIII: DELAYS, ERRORS OR OMISSIONS

Inadvertent delays, errors or omissions made in connections with this Contract
or any transaction hereunder shall not relieve either party from any liability
which would have attached had such delay, error or omission not occurred,
provided always that such error or omission will be rectified as soon as
possible after discovery. In no event shall later notification of any claim by
the Company constitute a ground upon which the Reinsurers have been prejudiced
by such late notice. As used in this Article, the term "prejudiced" shall mean
that a different outcome in the handling of any claim would have resulted but
for the untimely notice to Reinsurers.


                              ARTICLE XIV: CURRENCY

Whenever the word "Dollars" or the "$" appears in this Contract, they shall be
construed to mean United States Dollars and all transactions under this Contract
shall be in United States Dollars.


                         ARTICLE XV: FEDERAL EXCISE TAX

If the Reinsurers are subject to the Federal Excise Tax, the Reinsurers agree to
allow, for the purpose of paying Tax, up to 1% of the premium payable hereon to
the extent such premium is subject to the Tax. In the event of any return
premium becoming due hereunder, the Reinsurers will deduct from the amount of
the return premium the same percentage as it allowed, and the Company or its
agents should take steps to recover the Tax from the U.S.
Government.




                      ARTICLE XVI: UNAUTHORIZED REINSURERS

A.     If the Reinsurers are unauthorized in any state of the United States of
       America or the District of Columbia, the Reinsurers agree to fund their
       share of the Company's outstanding portion of Ultimate Net Loss and Pro
       rata Loss Adjustment Expense reserves as determined by the Company,
       respectively by:

       1.     Clean, irrevocable and unconditional letters of credit issued and
              confirmed, if confirmation is required by the insurance regulatory
              authorities involved, by a bank or banks meeting the NAIC
              Securities Valuation Office credit standards for issuers of
              letters of credit and acceptable to said insurance regulatory
              authorities; and/or

       2.     Trust accounts in conformity with New York Regulation 114 for the
              benefit of the Company and as may be required by any other
              insurance regulatory authority; and/or

       3.     Cash advances;

       if, without such funding, a penalty would accrue to the Company on any
       financial statement it is required to file with the insurance regulatory
       authorities involved. The Reinsurers, at their sole option, may fund in
       other than cash if their method and form of funding are acceptable to the
       insurance regulatory authorities involved and the Company.

B.     With regard to funding in whole or in part by letters of credit, it is
       agreed that each letter of credit will be in a form acceptable to
       insurance regulatory authorities involved, will be issued
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       for a term of at least one year and will include an "evergreen clause"
       which automatically extends the term for at least one additional year at
       each expiration date unless written notice of non-renewal is given to the
       Company not less than 30 days prior to said expiration date. The Company
       and the Reinsurers further agree, notwithstanding anything to the
       contrary in this Contract, that said letters of credit may be drawn upon
       by the Company or its successors in interest at any time, without
       diminution because of the insolvency of the Company or the Reinsurers,
       but only for one or more of the following purposes:

       1.     To reimburse itself for the Reinsurers' share of the paid portion
              of Ultimate Net Loss and/or Pro rata Loss Adjustment Expenses paid
              under the terms of policies reinsured hereunder, unless paid in
              cash by the Reinsurers;

       2.     To fund a cash account in an amount equal to the Reinsurers' share
              of any outstanding portion of Ultimate Net Loss and Pro rata Loss
              Adjustment Expense reserves funded by means of a letter of credit
              which (a) is under non-renewal notice, if said letter of credit
              has not been renewed or replaced by the Reinsurers 10 days prior
              to its expiration date, or (b) the Reinsurers have failed to
              increase to the amount requested by the Company, it being
              understood and nothing in this Contract in any way shall restrict
              or limit the rights of the Company under the terms of the letter
              of credit;

       3.     To refund to the Reinsurers any sum in excess of the actual amount
              required to fund the Reinsurers' share of the Company's
              outstanding portion of Ultimate Net Loss and Pro rata Loss
              Adjustment Expense reserves if so requested by the Reinsurers.

       4.     In the event the amount drawn by the Company on any letter of
              credit is in excess of the actual amount required then the Company
              shall promptly return to the Reinsurers the excess amount so
              drawn.


                            ARTICLE XVII: INSOLVENCY

A.     In the event of the Insolvency of the Company, this reinsurance shall be
       payable directly to the Company or to its liquidator, receiver,
       conservator or statutory successor immediately upon demand, with
       reasonable provision for verification, on the basis of the liability of
       the Company without diminution because of the Insolvency of the Company
       or because the liquidator, receiver, conservator or statutory successor
       of the Company has failed to pay all or a portion of any claim. It is
       agreed, however, that the liquidator, receiver, conservator or statutory
       successor of the Company shall give written notice to the Reinsurers of
       the pendency of a claim against the Company indicating the policy or bond
       reinsured which claim would involve a possible liability on the part of
       the Reinsurers within a reasonable time after such claim is filed in the
       conservation or liquidation proceeding or in the receivership, and that
       during the pendency of such claim, the Reinsurers may investigate such
       claim and interpose, at its own expense, in the proceeding where such
       claim is to be adjudicated, any defense or defenses that it may deem
       available to the Company or its liquidator, receiver, conservator, or
       statutory successor. Accidental failure to give such notice shall not
       excuse the obligation unless Reinsurers are substantially prejudiced by
       the failure to give such notice. The expense thus incurred by the
       Reinsurers shall be chargeable, subject to the approval of the Court,
       against the Company as part of the expense of conservation or liquidation
       to the extent of a pro rata share of the benefit which may accrue to the
       Company solely as a result of the defense undertaken by the Reinsurers.

B.     Where two or more of the Reinsurers are involved in the same claim and a
       majority in interest elect to interpose defense to such claim, the
       expense shall be apportioned in accordance with the terms of this
       Contract as though such expense had been incurred by the Company.
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C.     It is further understood and agreed that, in the event of the Insolvency
       of the Company, the reinsurance under this Contract shall be payable
       directly by the Reinsurers to the Company or to its liquidator, receiver
       or statutory successor.


                           ARTICLE XVIII: ARBITRATION

A.     As a condition precedent to any right of action hereunder, in the event
       of any dispute or difference of opinion hereafter arising with respect to
       this Contract, it is hereby mutually agreed that such dispute or
       difference of opinion shall be submitted to Arbitration. One Arbiter
       shall be chosen by the Company, the other by the Reinsurers, and an
       Umpire shall be chosen by the two Arbiters before they enter upon
       Arbitration, all of whom shall be active or retired disinterested
       executive officers of insurance or reinsurance companies. In the event
       that either party should fail to choose an Arbiter within 30 days
       following a written request by the other party to do so, the requesting
       party may choose two Arbiters who shall in turn choose an Umpire before
       entering upon Arbitration. If the two Arbiters fail to agree upon the
       selection of an Umpire within 30 days following their appointment, each
       Arbiter shall nominate three candidates within 10 days thereafter, two of
       whom the other shall decline, and the decision shall be made by drawing
       lots. Nothing herein shall prevent either party from commencing a
       proceeding in the United States District Court having jurisdiction over
       the dispute for the purposes of having said court select an Umpire
       pursuant to the Federal Arbitration Act 9 USC 1 (er seq).

B.     Each party shall present its case to the Arbiters within 30 days
       following the date of appointment of the Umpire. The Arbiters shall
       consider this Contract as an honourable 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
       Arbiters shall be final and binding on both parties; but failing to
       agree, they shall call in the Umpire and the decision of the majority
       shall be final and binding upon both parties. Judgment upon the final
       written decision of the Arbiters may be entered in any court of competent
       jurisdiction.

C.     If more than one of the Reinsurers is involved in the same dispute, all
       such Reinsurers shall constitute and act as one party for purposes of
       this Article and communications shall be made by the Company to each of
       the reinsurers constituting one party, provided, however, that nothing
       herein shall impair the rights of such Reinsurers to assert several,
       rather than joint, defenses or claims, nor be construed as changing the
       liability of the Reinsurers participating under the terms of this
       Contract from several to joint.

D.     Each party shall bear the expense of its own Arbiter, and shall jointly
       and equally bear with the other the expense of the Umpire and of the
       Arbitration. In the event that the two Arbiters are chosen by one party,
       as above provided, the expense of the Arbiters, the Umpire and the
       Arbitration shall be equally divided between the two parties.

E.     Any Arbitration proceedings shall take place at a location in
       Lawrenceville, New Jersey. All proceedings pursuant hereto shall be
       governed by the law of the State of New Jersey.


                         ARTICLE XVIIII: SERVICE OF SUIT

(Applicable if the Reinsurer is not domiciled in the United States of America
and/or is not authorized in any State, Territory or District of the United
States where authorization is required by insurance regulatory authorities)
<PAGE>   14
A.     It is agreed that in the event of the failure of the Reinsurers hereon to
       pay any amount claimed to be due hereunder, the Reinsurers hereon, at the
       request of the Company, will submit to the jurisdiction of a court of
       competent jurisdiction within the United States. The foregoing shall not
       constitute a waiver of the right of the Reinsurers to commence any suit
       in, or to remove, remand or transfer any suit to any other court of
       competent jurisdiction in accordance with the applicable statutes of the
       state or United States pertinent thereto.

B.     It is further agreed that service of process in such suit may be made
       upon Saiber Schlesinger Satz & Goldstein, One Gateway Center, Newark, NJ
       07102-5311, United States of America, and that in any suit instituted
       against any one of them upon this Contract, the Reinsurers will abide by
       the final decision of such Court or of any Appellate Court in the event
       of an appeal.

C.     The above named are authorized and directed to accept service of process
       on behalf of the Reinsurers in any suit and/or upon the request of the
       Company to give a written undertaking to the Company that they will enter
       a general appearance upon the Reinsurers behalf in the event such suit
       shall be instituted.

D.     Further, pursuant to any statute of any state, territory or District of
       the United States which makes provision therefor, the Reinsurers hereon
       hereby designate the Superintendent, Commissioner or Director of
       Insurance or other officer specified for that purposes in the statute, or
       his successor or successors in office, as their true and lawful attorney
       upon whom may be served any lawful proceeding in any action, suit or
       proceeding instituted by or on behalf of the Company or any beneficiary
       hereunder arising out of this Contract, and hereby designate the above
       named as the person to whom said officer is authorized to mail such
       process or a true copy thereof.


                           ARTICLE XX: INTERMEDIARIES

Medical Brokers, Inc and JLT Risk Solutions are hereby recognized as the
Intermediaries negotiating this Contract for all business hereunder. All
communications (including but not limited to notices of: statements, premium,
return premium, commissions, taxes, losses, Loss Adjustment Expense, salvage and
loss settlements) relating thereto shall be transmitted to the Company or the
Reinsurers through JLT Risk Solutions. Payments by the Company to the
Intermediaries shall be deemed to constitute payment to the Reinsurers. Payments
by the Reinsurers to the Intermediaries shall be deemed to constitute payment to
the Company only to the extent that such payments are actually received by the
Company.

Notwithstanding the above, the Company and Reinsurers hereby agree that all
payments will be direct from the Reinsurers to the Company, or from the Company
to the Reinsurers, as appropriate.


                         ARTICLE XXI: PROPERTY COVERAGE

The Company may incept at any time during the Contract Period, Property coverage
including Fire, Allied Lines and Extended Coverages, Inland Marine and
Commercial Multi-Peril coverages all when written in conjunction with other
coverages specified elsewhere within the Contract for limits for:-

$14,500,000       Ultimate Net loss plus pro-rata loss adjustment expenses as
                  respects each and every loss, each original policy
<PAGE>   15
Excess of:-

$    500,000      Ultimate Net loss plus pro-rata loss adjustment expenses as
                  respect each and every loss, each original policy

Coverage shall be subject to the following exclusions and conditions:-

1)       Earthquake coverages

2)       Seepage and Pollution

3)        Within 60 days after the end of each quarter the Company shall provide
          Reinsurers with a claims bordereaux outlining any claim on which the
          Company has placed a reserve value of more than $300,000.

          Losses and adjustment expenses are recoverable by the Company
          immediately after receipt of proof of loss subject to the retention
          applicable herein.

4)        Within 60 days after the end of the quarter that any coverage attaches
          the Company shall provide the Reinsurers with a Premium bordereaux
          outlining the premium applicable to the original policy and also the
          premium applicable to reinsurance.


                        NUCLEAR INCIDENT EXCLUSION CLAUSE
                         LIABILITY - REINSURANCE - U.S.A

1.     This Agreement does not cover any loss or liability accruing to the
       Cedent as a member of, or subscriber to, any association of insurers or
       reinsurers formed for the purpose of covering nuclear energy risks or as
       a direct or indirect reinsurer of any such member, subscriber or
       association.

2.     Without in any way restricting the operation of paragraph (1) of this
       Clause it is understood and agreed that all purposes of this Agreement
       all the original policies of the Cedent (new, renewal and replacement) of
       the classes specified in Clause II of this paragraph (2) from the time
       specified in Clause III of this paragraph (2) shall be deemed to include
       the following provision (specified as the Limited Exclusion Provision):

Limited Exclusion Provision

       I.     It is agreed that the policy does not apply under any liability
              coverage, to (injury, sickness, disease, death or destruction
              (bodily injury or property damage with respect to which an insured
              under the policy is also an insured under a nuclear energy
              liability policy issued by Nuclear Energy Liability Insurance
              Association, Mutual Atomic Energy Liability Underwriters or
              Nuclear Insurance Association of Canada, or would be an insured
              under any such policy but for its termination upon exhaustion of
              its limit of liability.

       II.    Family Automobile Policies (liability only), Special Automobile
              Policies (private passenger automobiles, liability only), Farmers
              Comprehensive Personal Liability Policies (liability only),
              Comprehensive Personal Liability Policies (liability only) or
              policies of a similar nature; and the liability portion of
              combination forms related to the four classes of policies stated
              above, such as the Comprehensive Dwelling Policy and the
              applicable types of Homeowners Policies.
<PAGE>   16
       III.   The inception dates and thereafter of all original policies as
              described in II above, whether new, renewal or replacement, being
              policies which either

              (a)    become effective on or after 1st May, 1960, or

              (b)    become effective before that date and contain the Limited
                     Exclusion Provision set out above; provided this paragraph
                     (2) shall not be applicable to Family Automobile Policies,
                     Special Automobile Policies or policies or combination
                     policies of a similar nature, issued by the Cedent on New
                     York risks, until 90 days following approval of the Limited
                     Exclusion Provision by the Governmental Authority having
                     jurisdiction thereof.

3.     Except for those classes of policies specified in Clause II of paragraph
       (2) and without in any way restricting the operation of paragraph (1) of
       this Clause, it is understood and agreed that for all purposes of this
       Agreement the original liability policies of the Cedent (new, renewal and
       replacement) affording the following coverages: Owners, Landlords and
       Tenants Liability, Contractual Liability, Elevator Liability, Owners or
       Contractors (including railroad), Protective Liability, Manufacturers and
       Contractors Liability, Product Liability, Professional and Malpractice
       Liability, Storekeepers Liability, Garage Liability, Automobile Liability
       (including Massachusetts Motor Vehicle or Garage Liability)

shall be deemed to include, with respect to such coverages, from the time
specified in Clause V of this paragraph (3), the following provision (specified
as the Broad Exclusion Provision):

Broad Exclusion Provision

It is agreed that the policy does not apply:

       I.     Under an Liability Coverage, to (injury, sickness, disease, death
              or destruction (bodily injury or property damage

              (a)    with respect to which an insured under the policy is also
                     an insured under a nuclear energy liability policy issued
                     by Nuclear Energy Liability Insurance Association, Mutual
                     Atomic Energy Liability Underwriters or Nuclear Insurance
                     Association of Canada, or would be an insured under any
                     such policy but for its termination upon exhaustion of its
                     limit of liability; or

              (b)    resulting from the hazardous properties of nuclear material
                     and with respect to which (1) any person or organization is
                     required to maintain financial protection pursuant to the
                     Atomic Energy Act of 1954, or any law amendatory thereof,
                     or (2) the insured is, or had this policy not been issued
                     would be, entitled to indemnity from the United States of
                     America, or any agency thereof, under any agreement entered
                     into by the United States of America, or any agency
                     thereof, with any person or organization.

       II.    Under any Medical Payments Coverage, or under any Supplementary
              Payment Provision relating to (immediate medical or surgical
              relief, (first aid, to expenses incurred with respect to
<PAGE>   17
              (bodily injury, sickness, disease or death (bodily injury
              resulting from the hazardous properties of nuclear material and
              arising out of the operation of a nuclear facility by any person
              or organization.

       III.   Under any liability Coverage, to (injury, sickness, disease, death
              or destruction (bodily injury or property damage resulting from
              the hazardous properties or nuclear material if

              (a)    the nuclear material (1) is at any nuclear facility owned
                     by, or operated by or on behalf of, an insured or (2) has
                     been discharged or dispersed therefrom;

              (b)    the nuclear material is contained in spent fuel or waste at
                     any time possessed, handled, used, processed, stored,
                     transported or disposed or by or on behalf of an insured;
                     or

              (c)    (the injury, sickness, disease, death or destruction (the
                     bodily injury or property damage arises out of the
                     furnishing by an insured of services, materials, parts or
                     equipment in connection with the planning, construction,
                     maintenance, operation or use of any nuclear facility, but
                     if such facility is located within the United States of
                     America, its territories, or possessions or Canada, this
                     exclusion (c) applies only to (injury to or destruction of
                     property at such nuclear facility. (property damage to such
                     nuclear facility and any property thereat.

       IV.    As used in this endorsement: "hazardous properties" include
              radioactive, toxic or explosive properties; "nuclear material"
              means source material, special nuclear material or by-product
              material; "source material", "special nuclear material" and
              by-product material" have the meanings given to them in the Atomic
              Energy Act of 1954 or in any law amendatory thereof; "spent fuel"
              means any fuel element or fuel component, solid or liquid, which
              has been used or exposed to radiation in a nuclear reactor;
              "waste" means any waste material (1) containing by-product
              material and (2) resulting from the operation by any person or
              organization of any nuclear facility included within the
              definition of nuclear facility under paragraph (a) or (b) thereof;
              "nuclear facility" means

              (a)    any nuclear reactor,

              (b)    any equipment or device designed or used for (1) separating
                     the isotopes of uranium or plutonium, (2) processing or
                     utilizing spent fuel, or (3) handling, processing or
                     packaging waste,

              (c)    any equipment or device used for the processing,
                     fabricating or alloying of special nuclear material if at
                     any time the total amount of such material in the custody
                     of the Insured at the premises where such equipment or
                     device is located consists of or contains more than 25
                     grams of plutonium or uranium 233 or any combination
                     thereof, or more than 250 grams of uranium 235,

              (d)    any structure, basin, excavation, premises or place
                     prepared or used for the storage or disposal of waste,
<PAGE>   18
              and includes the site on which any of the foregoing is located,
              all operations conducted on such site and all premises used for
              such operations; "nuclear reactor" means any apparatus designed or
              used to sustain nuclear fission in a self-supporting chain
              reaction or to contain a critical mass of fissionable material;
              (with respect to injury to or destruction of property, the word
              "injury" or "destruction" (property damage" includes all forms of
              radioactive contamination of property. (includes all forms of
              radioactive contamination of property.

       V.     The inception dates and thereafter of all original policies
              affording coverages specified in this paragraph (3), whether new,
              renewal or replacement, being policies which become effective on
              or after 1st May, 1960, provided this paragraph (3) shall not be
              applicable to

              (i)    Garage and Automobile Policies issued by the Cedent on New
                     York risks, or

              (ii)   Statutory liability insurance required under Chapter 90,
                     General Laws of Massachusetts, until 90 days following
                     approval of the Broad Exclusion Provision by the
                     Governmental Authority having jurisdiction thereof.

4.     Without in anyway restricting the operation of paragraph (1) of this
       Clause, it is understood and agreed that paragraphs (2) and (3) above are
       not applicable to original liability policies of the Cedent in Canada and
       that with respect of such policies this Clause shall be deemed to include
       the Nuclear Energy Liability Exclusion Provisions adopted by the Canadian
       Underwriters' Association or the Independent Insurance Conference of
       Canada.

Note:  The words printed in italics in the Limited Exclusion provision and in
       the Broad Exclusion provision apply only in relation to original
       liability policies which include a Limited Exclusion provision or a Broad
       Exclusion Provision containing these words.


                        NUCLEAR INCIDENT EXCLUSION CLAUSE
                        LIABILITY - REINSURANCE - CANADA

1.     This Contract does not cover any loss or liability accruing to the
       Company as a member of, or subscriber to, any association of insurers or
       reinsurers formed for the purpose of covering nuclear energy risks or as
       a direct or indirect reinsurer of any such member, subscriber, or
       association.

2.     Without in any was restricting the operation of paragraph 1 of this
       Clause it is agreed that for all purposes of this Contract all the
       original liability contracts of the Company, whether new, renewal or
       replacement, of the following classes, namely,

       Personal Liability,
       Farmers Liability,
       Storekeepers Liability,

Which become effective on or after 31st December 1984, shall be deemed to
include, from their inception dates and thereafter, the following provision:

       Limited Exclusion Provision

       This Policy does not apply to bodily injury or property damage with
       respect to which the Insured is also insured under a contract of nuclear
       energy liability insurance (whether the
<PAGE>   19
       insured is named in such contract or not and whether or not it is legally
       enforceable by the Insured) issued by the Nuclear Insurance Association
       of Canada or any other group or pool of insurers or would be an Insured
       under any such policy but for its termination upon exhaustion of its
       limit of liability.

       With respect to property, loss of use of such property shall be deemed to
       be property damage.

3.     Without in any way restricting the operation of paragraph 1 of this
       Clause it is agreed that for all purposes of this Contract all the
       original liability contracts of the Company, whether new, renewal or
       replacement, of any class whatsoever (other than Personal Liability,
       Farmers Liability, Storekeepers Liability or Automobile Liability
       contracts), which become effective on or after 31st December 1984, shall
       be deemed to include, from their inception dates and thereafter, the
       following provision:-

       Broad Exclusion Provision

       It is agreed that this Policy does not apply:

       (a)    to liability imposed by or arising under the Nuclear Liability
              Act; or
<PAGE>   20
       (b)    to bodily injury or property damage with respect to which an
              Insured under this Policy is also insured under a contract of
              nuclear energy liability insurance (whether the Insured is named
              in such contract or not and whether or not it is legally
              enforceable by the Insured) issued by the Nuclear Insurance
              Association of Canada or any other insurer or group or pool of
              insurers or would be an Insured under any such policy but for its
              termination upon exhaustion of its limit of liability; or

       (c)    to bodily injury or property damage resulting directly or
              indirectly from the nuclear energy hazard arising from:

              (1)    the ownership, maintenance, operation or use of a nuclear
                     facility by or on behalf if an Insured;

              (2)    the furnishing by an Insured of services, materials, parts
                     or equipment in connection with the planning, construction,
                     maintenance, operation or use of any nuclear facility; and

              (3)    the possession, consumption, use, handling, disposal or
                     transportation of fissionable substances or of other
                     radioactive material (except radioactive isotopes away from
                     a nuclear facility, which have reached the final stage of
                     fabrication so as to be usable for any scientific, medical,
                     agricultural, commercial or industrial purpose) used,
                     distributed, handled or sold by an Insured.

As used in this Policy:

       (I)    the term "nuclear energy hazard" means the radioactive, toxic,
              explosive or other hazardous properties of radioactive material;

       (II)   the term "radioactive material" means uranium, thorium, plutonium,
              neptunium, their respective derivatives and compounds, radioactive
              isotopes of other element and any other substances that the Atomic
              Energy Control Board may, by regulation, designate as being
              prescribed substances capable of releasing atomic energy, or as
              being requisite for the production, use or application of atomic
              energy;

       (III)  The term "nuclear facility" means:

              (a)    any apparatus designed or used to sustain nuclear fission
                     in a self-supporting chain reaction or to contain a
                     critical mass of plutonium, thorium and uranium or any one
                     or more of them;

              (b)    any equipment or device designed or used for (i) separating
                     the isotopes of plutonium, thorium and uranium or any one
                     or more of them, (ii) processing or utilizing spent fuel,
                     or (iii) handling, processing or packaging waste;

              (c)    any equipment or device used for the processing,
                     fabricating or alloying of plutonium, thorium or uranium
                     enriched in the isotope uranium 233 or in the isotope
                     uranium 235, or any one or more of them if at any time the
                     total amount of such material in the custody of the Insured
                     at the premises where such equipment or device is located
                     consists of or contains more than 25 grams of plutonium or
                     uranium 233 or any combination thereof, or more than 250
                     grams of uranium 235;
<PAGE>   21
              (d)    any structure, basin, excavation, premises or place
                     prepared or used for the storage or disposal of waste
                     radioactive material; and includes the site on which any of
                     the foregoing is located, together with all operations
                     conducted thereon and all premises used for such
                     operations,

       (IV)   the term "fissionable substance" means any prescribed substance
              that is, or from which can be obtained, a substance capable of
              releasing atomic energy by nuclear fission.

       (V)    With respect to property, loss of use of such property shall be
              deemed to be property damage.
<PAGE>   22
                       IN ALL COMMUNICATIONS PLEASE QUOTE
                             THE FOLLOWING REFERENCE




                                  901/LK9905081















                                   REINSURANCE
                                    AGREEMENT












           THE COMPANY IS REQUESTED TO READ THIS AGREEMENT CAREFULLY.
            IF IT IS BELIEVED TO BE INCORRECT THE AGREEMENT SHOULD BE
                  IMMEDIATELY RETURNED, WITH AN EXPLANATION TO:

                           JLT Risk Solutions Limited
                               6 Crutched Friars,
                                     London,
                                    EC3N 2PH.
<PAGE>   23
--------------------------------------------------------------------------------

                          AMERICAN RE-INSURANCE COMPANY


THIS AGREEMENT made and entered into by and between the MEDICAL INTER-INSURANCE
EXCHANGE OF NEW JERSEY (hereinafter referred to as the "Company") and the
AMERICAN RE-INSURANCE COMPANY, a Delaware Corporation with Administrative
Offices in Princeton, New Jersey (hereinafter referred to as "Reinsurers")


THE COMPANY IS REQUESTED TO READ THIS AGREEMENT CAREFULLY. IF IT IS BELIEVED TO
BE INCORRECT THE AGREEMENT SHOULD BE IMMEDIATELY RETURNED, WITH AN EXPLANATION,
TO THE PERSON OR ENTITY DESIGNATED ON THE BACK PAGE OF THIS AGREEMENT.

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

IN CONSIDERATION of the Company having paid the premium specified in the
Schedule to Reinsurers, whose duly authorised representative has hereunto
subscribed his name.


REINSURERS HEREBY AGREE to reinsure the Company against loss as more fully set
forth in this Agreement and the attachments hereto during the Period of
Reinsurance stated in the said Schedule, or during any subsequent period as may
be mutually agreed upon between the Company and Reinsurers.


PROVIDED that the liability of Reinsurers subscribing to this Agreement shall
not exceed their proportion of the limits of liability expressed in the said
Schedule or such other limits of liability as may be substituted therefor by
Addendum hereon or attached hereto signed by or on behalf of Reinsurers.


If the Company shall make any claim under this Agreement with knowledge that the
same is false or fraudulent as regards amount or otherwise, this Agreement shall
become null and void forthwith and any and all claims hereunder shall be
forfeited and of no force and effect.


IN WITNESS HEREOF the parties hereto have caused this Agreement to be executed
in duplicate this 28th day of September, One Thousand Nine Hundred and
Ninety-Nine.

ACCEPTED BY:

AMERICAN RE-INSURANCE COMPANY                MEDICAL INTER-INSURANCE EXCHANGE OF
                                             NEW JERSEY



     /s/ John S. Chace                             /s/ Thomas M. Redman
-----------------------------                -----------------------------------
<PAGE>   24
Contract Number: 901/LK9905081                             Reinsurers reference:


                                  THE SCHEDULE




COMPANY:                 MEDICAL INTER-INSURANCE EXCHANGE OF NEW JERSEY

ADDRESS:                 Two Princess Road, Lawrenceville, New Jersey,
                         United States of America.


PERIOD OF REINSURANCE:   Effective 1st January, 1999 covering on a risks
                         attaching basis for Business Covered and
                         continuous thereafter unless terminated.


LIMIT OF LIABILITY:      All as more fully set forth in the attached wording


This Contract reinsures 28% part of the 92% of the Limit of Liability expressed
in the attached wording.


INTEREST:                 All as more fully set forth in the attached wording


PREMIUM:                  US$210,000 (being 28% of Minimum and Deposit Premium
                          of US$750,000) annual, payable quarterly on 31st
                          March, 30th June, 30th September and 31st December.
--------------------------------------------------------------------------------
<PAGE>   25
                            SEVERAL LIABILITY NOTICE

The subscribing Reinsurers' obligations under this contract of reinsurance are
several and not joint and are limited solely to the extent of their individual
subscriptions. The subscribing Reinsurers are not responsible for the
subscription of any co-subscribing reinsurer who for any reason does not satisfy
all or part of its obligations.