FACULTATIVE REINSURANCE AGREEMENT

                                     between

            NATIONAL UNION FIRE INSURANCE COMPANY OF PlTTSBURGH, PA.
                       (hereinafter called the "Company")

                                       and

              CONSOLIDATED AMERICAN RENTAL INSURANCE COMPANY, LTD.
                      (hereinafter called "the Reinsurer")



                                   WITNESSETH:


         WHEREAS,  the  Company  is  willing  to cede to the  Reinsurer  certain
insurance under the terms and conditions hereinafter set forth; and

         WHEREAS,  the Reinsurer is willing to reinsure  such  insurance on said
terms and conditions:

         NOW, THEREFORE, in consideration of the premiums Schedule(s) and of the
mutual  covenants and  agreements  herein set forth,  the parties  hereto hereby
covenant and agree as follows:

                                    ARTICLE I

POLICY(IES) REINSURED:
----------------------

         As  per   Schedule(s)   attached   hereto  and  made  a  part   hereof.
[Confidential Treatment sought for Schedule I]

                                   ARTICLE II

TERM:
-----

         This  Agreement is effective at 12:01 A.M.  Eastern  Standard Time, the
1st day of March, 1997.

         This Agreement shall continue in effect until terminated.
<PAGE>
                                   ARTICLE III

TERRITORY:
----------

         This  Agreement  shall cover Losses  occurring  within the  territorial
limits provided by the Policies reinsured hereunder and listed in Schedule(s).

                                   ARTICLE IV

DEFINITIONS:
------------

A.       The term  "Policies" as used in this  Agreement  shall mean any and all
         binders, certificates, policies and contracts of insurance, accepted or
         held covered provisionally or otherwise and issued to the Insured named
         in Schedule(s) hereof.

B.       The term "Ultimate Net Loss" as used in this  Agreement  shall mean the
         actual  Loss  sustained  by the  Company,  but  salvages  and all other
         recoveries,  including  recoveries under all other  reinsurance  except
         catastrophe excess  reinsurance of the Company,  shall be deducted from
         such Loss to  arrive  at the  amount  of  liability,  if any,  attached
         hereunder. All salvages,  recoveries, or payments recovered or received
         subsequent  to  loss  settlement  hereunder,  shall  be  applied  as if
         recovered  or  received  prior  to the  aforesaid  settlement,  and all
         necessary  adjustments shall be made by the parties hereto.  Nothing in
         this clause shall be construed to mean that Losses are not  recoverable
         hereunder, until the Company's Ultimate Net Loss has been ascertained.

C.       The term "Gross Premiums  Written" as used in this Agreement shall mean
         Direct  Written  Premiums for Policies  covered  hereunder,  adding all
         other Additional Premiums and subtracting all other Return Premiums and
         cancellations;  however, Direct Premiums written on installment premium
         payment  policies  shall be  deemed  to be the  installment  due in the
         period  for which the  account  is  rendered,  in  accordance  with the
         Reports and Remittances article contained in this Agreement.

D.       The term "Unearned  Premiums  Reserve" as used in this Agreement  shall
         mean the premium  represented by the unexpired portion of the policy in
         force as of any specified date.
<PAGE>
E.       The term "Losses Paid" as used in this Agreement shall mean Losses Paid
         less Recoveries for Salvage and Subrogation.

F.       The term "Allocated Loss Expenses" as used in this Agreement shall mean
         all court costs and court  expenses;  pre- and  postjudgment  interest;
         fees for  service  of  process;  attorneys'  fees;  cost of  undercover
         operative and detective services; costs of employing experts; costs for
         legal  transcripts;  costs for copies of any public  records;  costs of
         depositions  and  court-reported  or  recorded  statements;  costs  and
         expenses of subrogation and any similar fee, cost or expense reasonably
         chargeable to the investigation,  negotiation, settlement or defense of
         a claim or loss or to the protection and perfection of the  subrogation
         rights of the Company and/or of the Client.  "Allocated  Loss Expenses"
         shall not mean fees for  attorneys  who are employees of the Company or
         on permanent retainer.

G.       The term  "Unallocated  Loss Expense" as used in this  Agreement  shall
         mean the Claims  Service  Fees  charged  hereunder  as per  Schedule(s)
         hereof.

H.       The term  "AIGRM  Supervision  Fee"  shall  mean  the fee for  services
         provided  in serving as liaison  between the  Reinsurer  and the Claims
         Administrator,  reviewing claims in accordance with the Claims Handling
         Guidelines  issued by AIG Risk Management,  Inc. (AIGRM) and monitoring
         and evaluating  performance of the Claims  Administrator,  and shall be
         adjusted as shown in the Schedule(s).

I.       The term  "Outstanding  Loss Reserves" as used in this Agreement  shall
         mean losses reported to the Company which have been reserved but unpaid
         at any specified date.

J.       The term  "Losses"  as used in this  Agreement  shall mean  payments to
         claimants under Policies reinsured hereunder.

K.       The term  "Loss  Escrow  Fund" as used in this  Agreement  shall mean a
         non-interest bearing escrow fund established in the amount shown in the
         Schedule(s) and adjusted in accordance with Article VII.

L.       The term "IBNR"  (Incurred But Not Reported) as used in this  Agreement
         shall mean a reserve for liability  for future  payment on Losses which
         have already occurred but have not 
<PAGE>
         yet been reported to the Company and shall also include expected future
         development on Outstanding Loss Reserves.

M.       The term "Obligations" as used in this Agreement shall mean: 

         (a)      Losses and Allocated Loss Expenses paid by the Company but not
                  recovered from the Reinsurer;

         (b)      Outstanding Loss Reserves;

         (c)      Reserves for Losses Incurred But Not Reported;

         (d)      Reserves for Allocated Loss Expenses; and

         (e)      Reserves for Unearned Premium.

         (f)      Plus the  difference  between  (a)  through  (e) above and the
                  amount of Security set by the Company.

N.       Deductible  Loss(es) as used in this Agreement  shall mean those Losses
         paid by the original insured under the Policy(ies) reinsured hereunder.

                                    ARTICLE V

REINSURING CLAUSE:  As per Schedule(s).
-----------------

                                   ARTICLE VI

PREMIUM AND COMMISSION:
-----------------------

         The Premiums due the Reinsurer for the  Reinsurance  hereunder shall be
calculated in accordance with the Schedule(s).

                                   ARTICLE VII

CLAIMS:
-------

         The Reinsurer  agrees to abide by the loss  settlements of the Company,
it being understood,  however,  that when so requested,  the Company will afford
the Reinsurer an opportunity to be associated  with the Company,  at the expense
of the  Reinsurer,  in the defense of any claim or suit or proceeding  involving
this  reinsurance,  and that the Reinsurer may cooperate in every respect in the
defense or control of such claim, suit or proceeding.
<PAGE>
         For the payment of Losses and Loss Expenses the  Reinsurer  will fund a
Loss Escrow Fund in the amount shown in the  Schedule(s)  or two and one half (2
1/2)  months  estimated  Ultimate  Net Loss  which  will be  replenished  by the
Reinsurer at the same time as the account current shown in Schedule(s).

         The Company may deduct paid loss and loss expenses paid as provided for
in the REPORTS AND REMITTANCES  ARTICLE, and the Company shall record and advise
the  Reinsurer of these  deductions  as provided in the REPORTS AND  REMITTANCES
ARTICLE. The Company may, at its option, demand prompt payment of any loss where
the  Reinsurer's  share  exceeds the amount shown in the  Schedule(s)  where the
Reinsurer will promptly pay such amounts.

                                  ARTICLE VIII

CLAIMS SERVICE FEES:  Adjustable as per Schedule(s).
-------------------

                                   ARTICLE IX

REPORTS AND REMITTANCES:
-----------------------

         Within the time shown in the Schedule(s)  while this Agreement  remains
in effect,  the Company shall render to the Reinsurer an account current and the
balance due shall be paid by the debtor party to the other within the time shown
in the  Schedule(s)  after  the  close  of the  month  or as soon as  reasonably
practicable thereafter.

                                    ARTICLE X

RESERVE DEPOSIT (NON-ADMITTED REINSURER):
-----------------------------------------

         With respect to the premium  derived from any  jurisdiction in which an
insured risk is located and in which the Reinsurer is not admitted,  the Company
shall be entitled to require from the Reinsurer any one or a combination  of the
following;  (1) a Letter of Credit complying with 11 NYCRR 79 (Regulation  133),
(2) A Security  Trust  complying with 11 NYCRR 126  (Regulation  114) and/or (3)
Cash as security for the payment of the latter's Obligations hereunder.
<PAGE>
         The amount  required  shall  initially  equal the  amount  shown in the
Schedule(s). The amount shall be adjusted to equal the Reinsurer's Obligations.

         Upon default by the Reinsurer of sums due and owing to the Company, the
Company may  appropriate as much of the Letter of Credit,  Security Trust and/or
Cash as necessary to eliminate  the default.  The Company may,  however,  at its
discretion, require payment of any sum in default, and it shall be no defense to
any such claim that the Company might have had recourse to the Letter of Credit,
Security Trust and/or Cash.

         The Company and the  Reinsurer  hereby agree that the Letter of Credit,
Security  Trust and/or Cash,  provided  pursuant to this  Agreement may be drawn
upon at any time,  notwithstanding  any other provisions herein  contained.  The
Letter of Credit,  Security  Trust and/or Cash may be utilized by Company or any
successor by operation of law, including,  without  limitation,  any liquidator,
rehabilitator,  receiver or  conservator of the Company for any of the following
reasons:

         (i)      To reimburse the Company for the Reinsurer's share of premiums
                  returned to the owners of the Policy(ies)  reinsured hereunder
                  due to cancellations of said Policy(ies);

         (ii)     To  reimburse  the  Company  for  the  Reinsurer's   share  of
                  surrenders  and  benefits or losses paid by the Company  under
                  the  terms  and  provisions  of  the   Policy(ies)   reinsured
                  hereunder;

         (iii)    To fund an  account  with the  Company  in an  amount at least
                  equal  to the  deduction,  for  reinsurance  ceded,  from  the
                  Company's  liabilities for Policy(ies)  ceded hereunder.  Such
                  amount  shall  include,  but not be limited  to,  amounts  for
                  policy  reserves,  reserves  for claims  and  losses  incurred
                  (including   IBNR,   Allocated   Loss  Expenses  and  Unearned
                  Premiums); and

         (iv)     To  pay  any  other  amounts  due to the  Company  under  this
                  Agreement.

         All of the foregoing apply without diminution because of the insolvency
of the Company or the Reinsurer.
<PAGE>
                                   ARTICLE Xl

INDEMNIFICATION AND ERRORS AND OMISSIONS:
-----------------------------------------

         Any  recitals  in this  Agreement  of the terms and  provisions  of the
original  policy  or  policies  are  merely  descriptive  and the  Reinsurer  is
reinsuring,  to the amount herein provided, the obligations of the Company under
the original policy or policies.  The Company shall be the sole judge as to what
shall constitute a claim or loss covered under the Company's  original policy or
policies  and as to the  Company's  liability  thereunder  and as to  amount  or
amounts  which it shall be proper  for the  Company  to pay  thereunder  and the
Reinsurer shall be bound by the judgement of the Company as to the liability and
obligation of the Company under its policy or policies.

         Any inadvertent  delay,  omission or error shall not be held to relieve
either  party  hereto from any  liability  which would attach to it hereunder if
such delay,  omission, or error had not been made, provided such delay, omission
or error is rectified as soon as possible.

                                   ARTICLE XII

TAXES:
------

         The Company  will be liable for taxes  (except  Federal  Excise Tax) on
premiums reported to the Reinsurer hereunder.

         Federal  Excise  Tax  applies  only to those  reinsurers  which are not
exempt from Federal Excise Tax.

         The Reinsurer has agreed to allow for the purpose of paying the Federal
Excise Tax one percent (1%) of the subject premium shown in Schedule(s), or such
other rate that may be in effect from time to time,  to the extent such  premium
is subject to Federal Excise Tax.
<PAGE>
                                  ARTICLE XIII

INSPECTION:
-----------

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

                                   ARTICLE XIV

FOLLOW THE FORTUNES CLAUSE:
---------------------------

         The Reinsurer's  liability shall attach simultaneously with that of the
Company and all reinsurance for which the Reinsurer shall be liable by virtue of
this Agreement shall be subject in all respects to the same risks, terms, rates,
conditions,   interpretations,   assessments,   waivers,   and   to   the   same
modifications,  alterations and cancellations,  as the respective insurances (or
reinsurances) of the Company to which such reinsurances  relate.  This Agreement
shall  further  protect  the Company in  connection  with any loss for which the
Company may be legally liable to pay in excess of the limit having been incurred
because  of failure  by it to settle  within  the  policy  limit or by reason of
alleged  or  actual  negligence,  fraud or bad  faith in  rejecting  an offer of
settlement  or in the  preparation  of the defense or in the trial of any action
against  their  Insured  or in  the  preparation  or  prosecution  of an  appeal
consequent upon such action.

         The true intent of the  Agreement  being that the Reinsurer  shall,  in
every case to which this  Agreement  applies  and in the  Proportions  specified
herein, follow the fortunes of the Company.

         This  Article  shall  not  apply  insofar  as it can be shown  that the
Company has been  negligent  or guilty of bad faith in handling a claim which is
the subject matter of this Agreement.
<PAGE>
                                   ARTICLE XV

INSOLVENCY:
-----------

         In the event of the insolvency of the Company,  reinsurance  under this
Agreement  shall be payable by the  Reinsurer  (on the basis of the liability of
the Company under contract or contracts  reinsured without diminution because of
the insolvency of the Company) to the Company or to its liquidator, receiver, or
statutory  successor,  except  as  provided  by  Section  4118 of the  New  York
Insurance Law or except:

         (1)      where the  Agreement  specifically  provides  another payee of
                  such  reinsurance  in  the  event  of  the  insolvency  of the
                  Company, and

         (2)      where the Reinsurer, with the consent of the direct insured or
                  insureds,  has assumed such policy  obligations of the Company
                  as direct  obligations,  of the  Reinsurer to the payees under
                  such policies and in  substitution  for the obligations of the
                  Company to such payees.

         It is agreed,  however,  that the  liquidator  or receiver or statutory
successor of the insolvent Company shall give written notice to the Reinsurer of
the  pendency  of a claim  against  the  insolvent  Company on the  contract  or
contracts  reinsured  within a reasonable  time after such claim is filed in the
insolvency  proceeding and that, during the pendency of such claim the Reinsurer
may investigate  such claim and interpose at their own expense in the proceeding
where such claim is to be  adjudicated,  any defense or defenses  which they may
deem  available  to the  Company or its  liquidator  or  receiver  or  statutory
successor.  The expense  thus  incurred by the  Reinsurer  shall be  chargeable,
subject to court approval  against the insolvent  Company as part of the expense
of liquidation to the extent of a  proportionate  share of the benefit which may
accrue  to the  Company  solely  as a result of the  defense  undertaken  by the
Reinsurer.

                                   ARTICLE XVI

ARBITRATION CLAUSE:
-------------------

         All disputes or differences  arising out of the  interpretation of this
Agreement shall be submitted to the decision of two (2)  Arbitrators,  one to be
chosen by each party,  and in the event 
<PAGE>
the Arbitrators  fail to agree, to the decision of an Umpire to be chosen by the
Arbitrators. The Arbitrators and Umpire shall be executive officials of Fire and
Casualty Insurance or Reinsurance  Companies.  If either of the parties fails to
appoint an  Arbitrator  within one (1) month after  being  required by the other
party in  writing  to do so, or if the  Arbitrators  fail to  appoint an Umpire,
within one (1) month of a request  in  writing by either of them to do so,  such
Arbitrator  or Umpire,  as the case may be, shall at the request of either party
be appointed by a Justice of the Supreme Court of the State of New York.

         The Arbitration proceedings shall take place in New York, New York. The
applicant  shall submit its case within one (1) month after the  appointment  of
the Court of Arbitration,  and the respondent  shall submit his reply within one
(1) month after receipt of a claim. The Arbitrators and Umpire are relieved from
all Judicial  formality and may abstain from  following the strict rules of law.
They shall  settle any dispute  under this  Agreement  according to an equitable
rather  than a strictly  legal  interpretation  of its terms and their  decision
shall be final and not subject to appeal.

         Each party shall bear the expenses of its  Arbitrator and shall jointly
and  equally  share  with  the  other  the  expenses  of the  Umpire  and of the
Arbitration.

         This Article shall survive the termination of this Agreement.

                                  ARTICLE XVII

RESERVES:
---------

         The Reinsurer  will maintain legal reserves with respect to Outstanding
Losses and Loss Expenses and Unearned Premium Reserves.

                                  ARTICLE XVIII

TERMINATION:
------------

A.       Neither the Company nor the  Reinsurer  may  terminate  this  Agreement
         while the Policy(ies)  listed in the Schedule(s),  Item B are in force;
         however, if the policy(ies)
<PAGE>
         listed in the  Schedule(s),  item B are in fact terminated then in that
         event  and  that  event   only  this   Agreement   may  be   terminated
         simultaneously therewith.

B.       However,  the Company shall have the right to terminate  this Agreement
         immediately by giving the Reinsurer notice:

                  (1)      If the  performance  of the whole or any part of this
                           Agreement be  prohibited  or rendered  impossible  de
                           jure or defacto in particular  and without  prejudice
                           to  the   generality  of  the   preceding   words  in
                           consequence  of any  law or  regulation  which  is or
                           shall be in force in any state or territory or if any
                           law  or   regulation   shall   prevent   directly  or
                           indirectly  the  remittance of any or all or any part
                           of  the  balance  or  payments  due  to or  from  the
                           Reinsurer.

                  (2)      If the reinsurer at any time shall:

                           (a)      Become insolvent, or

                           (b)      Suffer any impairment of capital, or

                           (c)      File a Petition in bankruptcy, or

                           (d)      Go into liquidation or rehabilitation, or

                           (e)      Have a receiver appointed, or

                           (f)      Be  acquired  or  controlled  by  any  other
                                    insurance company or organization.

                  (3)      In the event of the severance or  obstruction of free
                           and unfettered communication and/or normal commercial
                           and/or  financial   intercourse  between  the  United
                           States  of  America  and the  country  in  which  the
                           Reinsurer is incorporated or has its principal office
                           as a  result  of war,  currency  regulations,  or any
                           circumstances arising out of political,  financial or
                           economic emergency.

         All notices of termination in accordance  with any of the provisions of
         this  paragraph  may be by Telex or Telegram  and shall be deemed to be
         served upon dispatch,  or where communications  between the parties are
         interrupted, upon attempt dispatch.
<PAGE>
C.       All  notices  of  termination  served  in  accordance  with  any of the
         provisions of this Article shall be addressed to the party concerned at
         its head office or at any other address  previously  designated by that
         party herein.

D.       In the  event  of  this  Agreement  being  terminated  the  rights  and
         obligations  of both  parties to this  Agreement  shall  remain in full
         force until the effective date of termination.

E.       As respects coverage  hereunder,  it is understood and agreed that upon
         termination of this Agreement,  coverage will continue hereunder beyond
         such   termination   date  until  the  natural   expiration  date,  the
         cancellation  date, or the date which the Company,  as a matter of law,
         may  terminate  coverage  under the  Policy(ies)  listed  in  Article I
         hereof.

F.       Should this Agreement terminate while a loss occurrence is in progress,
         the Reinsurer shall be liable to the extent of their interest,  subject
         to the other conditions of this contract, for all losses resulting from
         such loss  occurrence  whether  such losses  arise before or after such
         termination.

                                   ARTICLE XIX

SERVICE OF SUIT:
----------------

         It is agreed that in the event of the failure of the  Reinsurer  hereon
to pay any amount  claimed to be due  hereunder,  the Reinsurer  hereon,  at the
request  of the  Company,  will  submit  to the  jurisdiction  of any  court  of
competent  jurisdiction  within  the  United  States  and will  comply  with all
requirements  necessary to give such court  jurisdiction  and all matter arising
hereunder  shall be determined  in accordance  with the law and practice of such
court.

         It is further  agreed that  service of process in such suit may be made
upon the parties  indicated in the  Schedule(s)  and that in any suit instituted
against any of them upon this  contract,  the Reinsurer  will abide by the final
decision of such court or appellate court in the event of an appeal.

         The Reinsurer  will abide by the final decision of such court or of any
appellate court in the event of an appeal.
<PAGE>
         The party(ies) listed in the Schedule(s) are authorized and directed to
accept  service of process on behalf of the  Reinsurer  in any such 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  Reinsurer's  behalf in the
event such a suit shall be instituted.

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

                                   ARTICLE XX

FOREIGN EXCHANGE:
-----------------

         All  premium  and loss  payments  hereunder  shall be in United  States
Currency.

         Premiums due  hereunder in other than United States  Currency  shall be
paid by the Company in United  States  Dollars at the rates of exchange at which
the original  accounts were settled.  Failing this the rate of exchange  applied
shall be that used by the Company in their own books of account or in accordance
with any subsequent adjustments thereto.

         The amounts recoverable for losses in other than United Stales Currency
shall be converted  into United States  Dollars at the same rates of exchange as
were applied in the settlement of the original losses.  Failing this the rate of
exchange  applied shall be that used by the Company in their own books either at
the time of the  settlement  or in  accordance  with any  subsequent  adjustment
thereto.
<PAGE>
                                   ARTICLE XXI

OFFSET CLAUSE:
--------------

         The  Company  and the  Reinsurer  shall  have the right to  offset  any
balance(s) due from one to the other under this  Agreement.  The party asserting
the right of offset may exercise  such right at any time whether the  balance(s)
due are on account of premiums or losses or otherwise.

         In the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance  with the  provisions of Section 7427 of the Insurance Law
of the State of New York.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives in New York, New York this 5th
day of May, 1998.

                                       NATIONAL UNION FIRE INSURANCE COMPANY OF
                                       PITTSBURGH, PA.


                                       BY: /s/ Jeff Engelbrecht
                                          -----------------------------------
                                       TITLE: Attorney in Fact
                                             --------------------------------
                                       ADDRESS: 70 Pine Street
                                                New York, NY 10270

and in Bermuda this 30 day of April, 1998

                                       CONSOLIDATED AMERICAN RENTAL INSURANCE
                                       CO., LTD.
                                       --------------------------------------
                                       BY: /s/ [Illegible]
                                          -----------------------------------
                                       TITLE: DIRECTOR
                                             --------------------------------
                                       ADDRESS: 40 CHURCH STREET
                                               ------------------------------
                                                HAMILTON, BERMUDA
                                               ------------------------------