<PAGE>

                                                                    Exhibit 10.1

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

                         US $100,000,000 CREDIT FACILITY

                             CREDIT AGREEMENT AMONG

                        KINGSWAY FINANCIAL SERVICES INC.
                      AND KINGSWAY U.S. FINANCE PARTNERSHIP
                                  As Borrowers

                                       AND

                       The Lenders named herein as Lenders

                                       AND

                            THE BANK OF NOVA SCOTIA,
                As Administrative Agent and Co-Syndications Agent

                                       AND

                       CANADIAN IMPERIAL BANK OF COMMERCE,
                As Co-Syndications Agent and Documentation Agent

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

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section                                                                     Page
<S>                                                                         <C>
ARTICLE ONE
              INTERPRETATION.................................................. 1

Section 1.01  Definitions..................................................... 1

(1)           "Additional Compensation"....................................... 1
              (2)   "Affiliate"............................................... 1
              (3)   "Agents".................................................. 2
              (4)   "Agreement"............................................... 2
              (5)   "Applicable Law".......................................... 2
              (6)   "Borrowers"............................................... 2
              (7)   "Borrowing"............................................... 2
              (8)   "Borrowing Date".......................................... 2
              (9)   "Branch of Account"....................................... 2
              (10)  "Business Day"............................................ 2
              (11)  "Canadian Dollars" and "Cdn$"............................. 2

(12)          "Capital Expenditures".......................................... 2

(13)          "Capital Lease"................................................. 2
              (14)  "Capitalized Lease Obligations"........................... 3
              (15)  "Capital Surplus Ratio"................................... 3
              (16)  "Claims Incurred"......................................... 3
              (17)  "Claims Ratio"............................................ 3
              (18)  "Closing Date"............................................ 3
              (19)  "COBRA"................................................... 3
              (20)  "Code".................................................... 3
              (21)  "Combined Ratio".......................................... 3
              (22)  "Commitment".............................................. 3
              (23)  "Commonly Controlled Entity".............................. 3
              (24)  "Consolidated"............................................ 3
              (25)  "Contractual Currency".................................... 3
              (26)  "Controlled Group"........................................ 3
              (27)  "Conversion".............................................. 3
              (28)  "Conversion Date"......................................... 3
              (29)  "Conversion Notice"....................................... 3
              (30)  "Credit Facilities"....................................... 3
              (31)  "Default"................................................. 3
              (32)  "Demand".................................................. 4
              (33)  "EBITDA".................................................. 4
              (34)  "ERISA"................................................... 4
              (35)  "Event of Default"........................................ 4
              (36)  "Expense Ratio"........................................... 4
              (37)  "Financial Year".......................................... 4
              (38)  "F.R.S. Board"............................................ 4
              (39)  "Funded Debt"............................................. 4
              (40)  "GAAP".................................................... 4
</TABLE>

<PAGE>

Section                                                                     Page

                  (41)  "Governmental Authority"...........................   4
                  (42)  "Guarantee"........................................   4
                  (43)  "Guaranteed Pension Plan"..........................   5
                  (44)  "Guarantor"........................................   5
                  (45)  "Guarantor's Guarantee"............................   5
                  (46)  "Indebtedness".....................................   5
                  (47)  "Interest Coverage Ratio"..........................   5
                  (48)  "Interest Expense".................................   5
                  (49)  "Interest Payment Date"............................   5
                  (50)  "Kingsway Facility"................................   5
                  (51)  "Lenders"..........................................   5
                  (52)  "LIBO Rate"........................................   5
                  (53)  "LIBO Rate (Reserve Adjusted)".....................   6
                  (54)  "LIBOR Banking Day"................................   6
                  (55)  "LIBOR Loan".......................................   6
                  (56)  "LIBOR Loan Notice"................................   6
                  (57)  "LIBOR Loan Rollover"..............................   6
                  (58)  "LIBOR Loan Rollover Date".........................   6
                  (59)  "LIBOR Period".....................................   6
                  (60)  "LIBOR Reserve Percentage".........................   6
                  (61)  "Loan Documents"...................................   6
                  (62)  "Majority of the Lenders"..........................   6
                  (63)  "Material Adverse Effect"..........................   7
                  (64)  "Maturity Date"....................................   7
                  (65)  "Multiemployer Plan"...............................   7
                  (67)  "Outstanding Borrowings"...........................   7
                  (68)  "Outstanding Obligations"..........................   7
                  (69)  "Outstanding Kingsway Loans".......................   7
                  (70)  "Outstanding Partnership Loans"....................   7
                  (71)  "Participants".....................................   7
                  (72)  "Partnership Facility".............................   7
                  (73)  "PBGC".............................................   7
                  (74)  "Permitted Acquisition"............................   7
                  (75)  "Permitted Encumbrances"...........................   7
                  (76)  "Permitted Indebtedness"...........................   8
                  (77)  "Person"...........................................   8
                  (78)  "Plan".............................................   8
                  (79)  "Purchase Money Obligations".......................   8
                  (80)  "Quarterly Certificate"............................   9
                  (81)  "Rateable Portion".................................   9
                  (82)  "Reorganization"...................................   9
                  (83)  "Reportable Event".................................   9
                  (84)  "Security Interest"................................   9
                  (85)  "Senior Debt"......................................   9
                  (86)  "Single Employer Plan".............................   9
                  (87)  "Subordinated Debt"................................   9
                  (88)  "Subsidiaries".....................................   9

<PAGE>

Section                                                                     Page

                  (89)  "Tangible Net Worth"...............................  10
                  (90)  "Tax" and "Taxes"..................................  10
                  (91)  "Tax Returns"......................................  10
                  (92)  "Total Capitalization".............................  10
                  (93)  "Total Commitment".................................  10
                  (94)  "US Base Rate".....................................  10
                  (95)  "US Base Rate Loans"...............................  11
                  (96)  "US Base Rate Loan Notice".........................  11
                  (97)  "US Dollars" and "US $"............................  11
                  (98)  "Voting Control"...................................  11
                  (99)  "written" and "in writing".........................  11
                  (100) "Year 2000 Compliant"..............................  11

Section 1.02      Audited Financial Statements.............................  11

Section 1.03      US Currency..............................................  12

Section 1.04      Interest Act.............................................  12

Section 1.05      Change in Rates..........................................  12

Section 1.06      Headings and Table of Contents...........................  12

Section 1.07      References...............................................  12

Section 1.08      Number and Gender........................................  12

Section 1.09      Copies...................................................  12

Section 1.10      Maximum Interest Rate....................................  12

Section 1.11      Schedules................................................  13

ARTICLE TWO
                  CREDIT FACILITIES........................................  13

Section 2.01      Credit Facilities........................................  13

Section 2.02      Maximum Borrowings.......................................  13

Section 2.03      Lenders' Commitments.....................................  14

Section 2.04      Purposes of Credit Facilities............................  14

Section 2.05      Restrictions on Borrowing................................  14

Section 2.06      Evidence of Indebtedness.................................  14

Section 2.07      Illegality...............................................  14

<PAGE>


Section                                                                     Page
ARTICLE THREE
                  PROCEDURES APPLICABLE TO BORROWINGS........................ 14

Section 3.01      Notices of Borrowing....................................... 14

Section 3.02      Conversions................................................ 15

Section 3.03      Provisions relating to LIBOR Loans......................... 15

Section 3.04      Reliance on Oral Instructions.............................. 16

ARTICLE FOUR
                  PAYMENTS................................................... 16

Section 4.01      Repayment.................................................. 16

Section 4.02      Mandatory Prepayment....................................... 17

Section 4.03      Voluntary Prepayment....................................... 17

Section 4.04      Payments Generally......................................... 17

Section 4.05      No Credit for Trust Funds.................................. 17

Section 4.06      No Withholding............................................. 17

ARTICLE FIVE
                  INTEREST, FEES AND EXPENSES................................ 17

Section 5.01      Interest Rates and Calculation............................. 17
                        (1) Rate............................................. 17
                        (2) Calculation - US Base Rate Loans................. 18
                        (3) Calculation - LIBOR Loans........................ 18

Section 5.02      Interest on Overdue Amounts................................ 18

Section 5.03      Fees....................................................... 18

Section 5.04      Change in Circumstances.................................... 18
                  (1) Reduction in Rate of Return............................ 18
                  (2) Taxes, Reserves, Capital Adequacy, etc................. 18

Section 5.05      Reimbursement of Expenses.................................. 19

Section 5.06      Determination Conclusive................................... 19

ARTICLE SIX
                  CONDITIONS PRECEDENT....................................... 19

Section 6.01      Conditions - Initial Borrowing............................. 19

<PAGE>


Section                                                                     Page
                (1)      Representations and Warranties True................. 20
                (2)      Resolutions and Certificates........................ 20
                (3)      Delivery of Guarantee............................... 20
                (4)      Indebtedness........................................ 20
                (5)      Corporate Management................................ 20
                (6)      Legal Opinions...................................... 20
                (7)      Notice of Borrowing................................. 21
                (8)      No Default.......................................... 21
                (9)      Due Diligence....................................... 21
                (10)     Tax Effect and Comfort Letter....................... 21
                (11)     Intercreditor Agreements............................ 21
                (12)     Organization and Capital Structure.................. 21
                (13)     Material Adverse Effect............................. 21
                (14)     Material Adverse Change............................. 21
                (15)     Fees and Disbursements.............................. 21
                (16)     Material Contracts.................................. 21
                (17)     .................................................... 21
                (18)     .................................................... 21
                (19)     .................................................... 21
                (20)     .................................................... 21

Section 6.02    Conditions - Subsequent Borrowing............................ 22
                (1)      Representations and Warranties True................. 22
                (2)      Indebtedness........................................ 22
                (3)      Notice of Borrowing................................. 22
                (4)      No Default.......................................... 22

ARTICLE SEVEN
                REPRESENTATIONS AND WARRANTIES............................... 22

Section 7.01    Representation and Warranties................................ 22
                (1)      Due Incorporation of Kingsway and Subsidiaries...... 22
                (2)      Partnership......................................... 22
                (3)      Power............................................... 22
                (4)      Due Authorization and No Conflict - Kingsway........ 22
                (5)      Due Authorization and No Conflict - Partnership..... 23
                (6)      Government Approval, Regulation, etc................ 23
                (7)      Business of the Borrowers........................... 23
                (8)      Valid and Enforceable Obligations................... 23
                (9)      Title............................................... 23
                (10)     No Actions.......................................... 23
                (11)     Financial Information............................... 24
                (12)     No Defaults or Events of Default.................... 24
                (13)     Compliance with Law................................. 24
                (14)     Reporting Issuer.................................... 24
                (15)     Compliance with Securities Laws..................... 24
                (16)     Capital............................................. 24
                (17)     Non-Dilution........................................ 24
                (18)     No Foreign Business................................. 24
                (19)     Subsidiaries........................................ 25
                (20)     Taxes............................................... 25
                (21)     Labour Matters...................................... 25

<PAGE>

Section                                                                     Page

                  (22)  Pensions...........................................  25
                  (23)  ERISA..............................................  27
                  (24)  Accuracy of Information............................  27
                  (25)  Solvency...........................................  27
                  (26)  Shell Status; Liabilities, etc.....................  28
                  (27)  Financial Year End.................................  28
                  (28)  Guarantees.........................................  28
                  (29)  Margin Stock.......................................  28
                  (30)  Disclosure.........................................  29

Section 7.02      Survival of Representations and Warranties...............  29

ARTICLE EIGHT
                  COVENANTS................................................  29

Section 8.01      Positive Covenants.......................................  29
                  (1)   Existence - Corporate..............................  29
                  (2)   Existence - Partnership............................  29
                  (3)   Conduct of Business................................  29
                  (4)   Payment of Principal, Interest and Expenses........  29
                  (5)   Payment of Taxes and Claims........................  30
                  (6)   Cooperate With Agent and Lenders...................  30
                  (7)   Annual Financial Information.......................  30
                  (8)   Quarterly Financial Information....................  30
                  (9)   Annual Projections.................................  30
                  (10)  Use of Proceeds....................................  30
                  (11)  Currency and Interest Rate Speculation.............  30
                  (12)  Reserves...........................................  31
                  (13)  Shareholder Information............................  31
                  (14)  Securities Regulatory Filings; Certain Other
                        Notices............................................  31
                  (15)  Report to Other Creditors..........................  31
                  (16)  Other Information..................................  31
                  (17)  Insurance..........................................  31
                  (18)  Books and Records..................................  31
                  (19)  Access.............................................  31
                  (20)  Notice of Adverse Change...........................  32
                  (21)  Notice of Litigation...............................  32
                  (22)  Notice of Breach...................................  32
                  (23)  Material Contracts.................................  32
                  (24)  Compliance with Laws...............................  32
                  (25)  Year 2000 Compliance...............................  32
                  (26)  Notice.............................................  32
                  (27)  Investments........................................  32
                  (28)  Parity of Debt.....................................  32
                  (29)  Ownership of Subsidiaries..........................  32
                  (30)  Consistent Loan Documentation......................  32

Section 8.02      Financial Covenants......................................  33
                  (1)   Funded Debt to Total Capitalization................  33
                  (2)   Net Premiums Written to Capital Surplus Ratio......  33
                  (3)   Minimum Tangible Net Worth.........................  33

<PAGE>

Section                                                                     Page

                  (4)   Combined Ratio ....................................  33
                  (5)   Interest Coverage .................................  33

Section 8.03      Restrictive Covenants ...................................  33
                  (1)   Not to Amalgamate, etc ............................  33
                  (2)   Indebtedness ......................................  33
                  (3)   Negative Pledge ...................................  33
                  (4)   No Impairment of Upstreaming ......................  33
                  (5)   No Guarantees .....................................  34
                  (6)   Restrictions on Subsidiaries and Investments ......  34
                  (7)   Material Contracts ................................  34
                  (8)   No Speculative Transactions .......................  34
                  (9)   Margin Stock ......................................  35
                  (10)  Carry on Business .................................  35
                  (12)  Announcements .....................................  35
                  (13)  Transactions with Affiliates ......................  35
                  (14)  Restricted Payments, etc ..........................  35
                  (15)  Disposition of Assets .............................  36
                  (16)  Capital Expenditures ..............................  36

ARTICLE NINE
                  EVENTS OF DEFAULT .......................................  36

Section 9.01      Events of Default .......................................  36
                  (1)   Failure to Pay Principal or Interest ..............  36
                  (3)   False Representations, Etc ........................  37
                  (4)   Cross-Default .....................................  37
                  (5)   Default in Certain Covenants ......................  37
                  (6)   Default in Other Covenants ........................  37
                  (7)   Change in Ownership or Control ....................  37
                  (8)   Insolvency ........................................  37
                  (9)   ERISA Prohibited Transactions .....................  37
                  (10)  Pension Liability .................................  37
                  (11)  Voluntary Proceedings .............................  38
                  (12)  Involuntary Proceedings ...........................  38
                  (13)  Adverse Judgments .................................  38
                  (14)  Receiver, etc .....................................  38
                  (15)  Execution, Distress ...............................  38
                  (16)  Suspension of Business ............................  38
                  (17)  Sale ..............................................  38
                  (18)  Regulatory Action .................................  38

Section 9.02      Impairment of Guarantor's Guarantee, etc.................  39

Section 9.03      Lenders May Waive........................................  39

Section 9.04      Remedies are Cumulative..................................  39

Section 9.05      Set-Off..................................................  39

<PAGE>

Section                                                                     Page

Section 9.06      Cash Collateral Accounts.................................  39

ARTICLE TEN
                  GENERAL..................................................  39

Section 10.01     No Independent Legal Action by Lenders...................  39

Section 10.02     Redistribution of Payments...............................  39

Section 10.03     Enforcement..............................................  40

Section 10.04     Readjustment of Obligations Among Lenders................  40

Section 10.05     Notices..................................................  40

Section 10.06     Performance of Covenants by the Lenders..................  41

Section 10.07     Indemnity................................................  41

Section 10.08     No Set-Off or Counterclaim...............................  41

Section 10.09     Severability.............................................  41

Section 10.10     Time of Essence..........................................  41

Section 10.11     Assignment...............................................  41

Section 10.12     Entire Agreement.........................................  41

Section 10.13     Amendments...............................................  41

Section 10.14     Law Governing............................................  42

Section 10.15     Forum Selection and Consent to Jurisdiction..............  42

Section 10.16     Waiver of Jury Trial, etc................................  42

Section 10.17     Conflict.................................................  42

Section 10.18     Loan Syndication.........................................  42

Section 10.19     Notice of Assignment and Undertaking.....................  43

Section 10.20     Judgment Currency........................................  43

Section 10.21     Successors and Assigns...................................  43

ARTICLE ELEVEN
                  THE AGENT................................................  43

Section 11.01     Appointment and Authorization............................  43

<PAGE>

Section                                                                     Page

Section 11.02     Interest Holders.........................................  44

Section 11.03     Documents................................................  44

Section 11.04     Agent and Affiliates.....................................  44

Section 11.05     Responsibility of Agent..................................  44

Section 11.06     Action by Agent..........................................  44

Section 11.07     Notice of Events of Default..............................  45

Section 11.08     Responsibility Disclaimed................................  45

Section 11.09     Indemnification..........................................  45

Section 11.10     Credit Decision..........................................  45

Section 11.11     Successor Agent..........................................  46

Section 11.12     Delegation by Agent......................................  46

Section 11.13     Determinations by Agent..................................  46

Section 11.14     Reliance Upon Agent......................................  47

Section 11.15     Payment Protection.......................................  47

Section 11.16     Remittance of Payments...................................  47

Section 11.17     Prompt Notice to the Lenders.............................  47

Section 11.18     Counterparts.............................................  47

                  Schedule "A" - Commitments
                  Schedule "B" - Conversion Notice
                  Schedule "C" - LIBOR Loan Notice
                  Schedule "D" - Security Interests
                  Schedule "E" - Quarterly Certificate
                  Schedule "F" - US Base Rate Loan Notice
                  Schedule "G" - Form of Opinion
                  Schedule "H" - Litigation
                  Schedule "I" - Interest Rates and Fees
                  Schedule "J" - Taxes
                  Schedule "K" - Labour Disputes
                  Schedule "L" - Pension Plans
                  Schedule "M" - Notice of Participation and Undertaking

<PAGE>

                                CREDIT AGREEMENT

            This Agreement dated as of the 23rd day of February, 1999

AMONG:

        KINGSWAY FINANCIAL SERVICES INC. ("Kingsway")
        and KINGSWAY U.S. FINANCE PARTNERSHIP ("Partnership"),

        (collectively referred to herein as "Borrowers" and individually as
        "Borrower")

                                    - and -

        CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"),
        THE BANK OF NOVA SCOTIA ("Scotiabank"),
        LASALLE NATIONAL BANK ("LaSalle"),
        and FIRST UNION NATIONAL BANK ("First Union")

        (collectively referred to herein as "Lenders" and individually as
        "Lender")

                                    - and -

        THE BANK OF NOVA SCOTIA,
        As Administrative Agent and Co-Syndications Agent

        (the "Administrative Agent")

                                    - and -

        CANADIAN IMPERIAL BANK OF COMMERCE,
        As Co-Syndications Agent and Documentation Agent

        (the "Documentation Agent")

                                    - and -

        CANADIAN IMPERIAL BANK OF COMMERCE NEW YORK AGENCY

        WITNESSES THAT for valuable consideration the parties agree as
        follows:

                                   ARTICLE ONE

                                 INTERPRETATION

Section 1.01 Definitions. For the purposes of this Agreement and where the
context does not otherwise require, the following terms shall have the following
meanings:

(1)  "Additional Compensation" has the meaning given to that term in Section
     5.04(2).

<PAGE>

                                                                          Page 2

(2)  "Affiliate" of a Person means any other Person which, directly or
     indirectly, controls or is controlled by or is under common control with
     the first Person (excluding any trustee under, or any committee with
     responsibility for administering, any Plan), and for purposes of this
     definition, "control" (including with correlative meanings the terms
     "controlled by" and "under common control with") means if such other Person
     possesses, directly or indirectly,

     (a)  power to vote 10% or more of the securities (on a fully diluted basis)
          or other equity or membership interests of such Person having ordinary
          voting power for the election of directors or managing general
          partners or members;

     (b)  power to direct or cause the direction of the management and policies
          of such Person whether by contract or otherwise; or

     (c)  beneficial ownership of 10% or more of any class of voting stock of
          such Person or 10% or more of all outstanding equity interests or
          other interests of such Person.

(3)  "Agents" means collectively the Administrative Agent and the Documentation
     Agent and "Agent" means either one of them.

(4)  "Agreement" means this agreement and the schedules hereto and any
     amendments or supplements to this agreement or the schedules at any time
     and from time to time.

(5)  "Annual Statement" shall mean, with respect to any Insurance Subsidiary for
     any Financial Year, the annual financial statements of such Insurance
     Subsidiary as required to be filed with the Insurance Regulatory Authority
     of its jurisdiction of domicile and in accordance with the laws of such
     jurisdiction, together with all exhibits, schedules, certificates and
     actuarial opinions required to be filed or delivered therewith.

(6)  "Applicable Law" means, at any time, with respect to any Person, property,
     transaction or event, all present and future applicable laws, statutes,
     regulations, treaties, judgments and decrees and (whether or not having the
     force of law) all applicable official directives, rules, consents,
     approvals, by-laws, permits, authorizations, guidelines, orders and
     policies of any governmental or regulatory body or Persons having authority
     over any of the parties hereto including, without limitation, applicable
     regulatory financial ratio guidelines.

(7)  "Borrowers" means, collectively, Kingsway and Partnership.

(8)  "Borrowing" means a use of the Credit Facilities.

(9)  "Borrowing Date" means a Business Day on which a Borrowing is made.

(10) "Branch of Account" means The Bank of Nova Scotia New York Agency, 1
     Liberty Plaza, Floors 22-26, New York, N.Y. 10006.

(11) "Business Day" means a day on which banks are open for business in Toronto,
     Ontario other than a Saturday, Sunday or legal holiday; and in the case of
     a payment to a Lender resident in the United States or a Borrowing advanced
     by a Lender resident in the United States means a day on which banks are
     open for business in New York, New York other than a Saturday, Sunday or
     legal holiday.

(12) "Canadian Dollars" and "Cdn$" each means lawful money of Canada.

(13) "Canadian Property and Casualty Industry Average Combined Ratio" means such
     ratio as established on a quarterly and annual basis by the Insurance
     Bureau of Canada.

<PAGE>
                                                                          Page 3

(14) "Capital Expenditures" means expenditures made for the purchase, lease or
     acquisition of assets required to be capitalized in accordance with GAAP,
     including, without limiting the generality of the foregoing, fixed assets
     and real property but excluding Permitted Acquisitions.

(15) "Capital Lease" means any lease of any property (whether real, personal or
     mixed) by any Person as lessee that, in accordance with GAAP, either would
     be required to be classified and accounted for as a capital lease on a
     balance sheet of such Person or otherwise be disclosed as such in a note to
     such balance sheet.

(16) "Capitalized Lease Obligations" means monetary obligations under agreements
     for the lease or rental of real or personal property that in accordance
     with GAAP are required to be classified and accounted for as Capital
     Leases, and, for purposes of this Agreement and each other Loan Document,
     the amount of such obligations shall be the capitalized amount thereof,
     determined in accordance with GAAP, and the stated maturity thereof shall
     be the date of the last payment of rent or any other amount due under such
     lease prior to the first date upon which such lease may be terminated by
     the lessee without payment of a penalty.

(17) "Capital Surplus Ratio" means the aggregate of Net Written Premiums as a
     percentage of Statutory Capital and Surplus.

(18) "Claims Incurred" means the aggregate of all claims paid during an
     accounting period adjusted by the change in claims reserved for that
     accounting period together with (i) the related loss adjustment expense,
     and (ii) expenses of claims handling customarily recognized by Kingsway in
     its calculation of Claims Ratio in its quarterly reporting.

(19) "Claims Ratio" or "Loss Ratio" means Claims Incurred, net of reinsurance,
     expressed as a percentage of net earned premiums.

(20) "Closing Date" means February 26, 1999.

(21) "COBRA" means continuation coverage described in Part 6 of Title 1 of
     ERISA.

(22) "Code" means the Internal Revenue Code of 1986, as amended, reformed or
     otherwise modified from time to time.

(23) "Combined Ratio" means the sum of the Claims Ratio plus the Expense Ratio.

(24) "Commitment" means the commitment of each Lender to permit Borrowings by
     the Borrowers in the aggregate amount of US Dollars set forth opposite such
     Lender's name on Schedule "A" as such Schedule may be amended from time to
     time in accordance with this Agreement.

(25) "Commonly Controlled Entity" means an entity whether or not incorporated
     which is under common control with a Borrower within the meaning of Section
     4001 of ERISA or is part of a group which includes a Borrower and which is
     treated as a single employer under Section 414 of the Code.

(26) "Consolidated" means when used to describe the calculation of any amount
     relating to Kingsway, the Guarantor and the Subsidiaries, consolidated in
     accordance with GAAP.

(27) "Contractual Currency" has the meaning set out in Section 10.20.

(28) "Controlled Group" means all members of a controlled group of corporations
     and all members of a controlled group of trades or businesses (whether or
     not incorporated) under common control which, together with the Borrower,
     are treated as a single employer under Section 414(b) or 414(c) of the
     Code.

(29) "Conversion" means the conversion of one manner of Borrowing permitted
     hereunder into another manner of Borrowing permitted hereunder.

(30) "Conversion Date" means the date upon which a Conversion is effected.

<PAGE>
                                                                          Page 4

(31) "Conversion Notice" means a notice requesting a Conversion substantially in
     the form of Schedule "B" annexed hereto.

(32) "Credit Facilities" means the credit facilities made available by the
     Lenders to the Borrowers under Article Two being the Kingsway Facility and
     the Partnership Facility.

(33) "Default" means any of the events described in Sections 9.01(1)-(18)
     regardless of whether any requirement in connection with such event for the
     giving of notice, the lapse of time, or both, has been satisfied or met.

(34) "Demand" means any communication of demand for payment of all or any
     portion of the Outstanding Obligations, whether made in writing or
     otherwise, by the Administrative Agent or any Lender.

(35) "EBITDA" means in respect of any period, net income for such period adding
     back amounts deducted in such period for interest, income taxes (whether
     paid or deferred), depreciation, amortization, and extraordinary losses (or
     deducting amounts included for extraordinary gains) all of which shall be
     determined in accordance with GAAP.

(36) "ERISA" means the Employee Retirement Income Security Act of 1974, as
     amended, together with the regulations thereunder having the force of law,
     in each case as in effect from time to time. References to sections of
     ERISA also refer to any successor sections.

(37) "Event of Default" means any of the events specified in Sections
     9.01(1)-(18), provided that any requirement in connection with such event
     for the giving of notice, the lapse of time or both, has been satisfied or
     met.

(38) "Expense Ratio" means the commission expense, premium tax expense and all
     general and administrative expenses (other than amounts included in general
     and administrative expenses on account of the amortization of goodwill)
     incurred during an accounting period expressed as a percentage of net
     earned premiums.

(39) "Financial Year" of an entity means the 12 month period ending on the
     fiscal-year end of that entity in each year.

(40) "F.R.S. Board" means the Board of Governors of the U.S. Federal Reserve
     System or any successor thereto.

(41) "Funded Debt" means Indebtedness for borrowed money including, without
     limitation, Capitalized Lease Obligations, Purchase Money Obligations,
     contingent liabilities under outstanding letters of credit (excluding
     letters of credit the beneficiary of which is a Borrower, the Guarantor or
     any Subsidiary) and all principal and interest and all fees incurred in
     respect of such Indebtedness.

(42) "GAAP" means generally accepted accounting principles which are in effect
     in Canada from time to time applied in a consistent manner from period to
     period.

(43) "Governmental Authority" means any nation or government, any province,
     state, municipality, local or other political subdivision thereof and any
     agency, instrumentality or other entity thereof exercising executive,
     legislative, judicial, regulatory or administrative functions of or
     pertaining to government.

(44) "Guarantee" means, with respect to a Person, any absolute or contingent
     liability of that Person under any guarantee, agreement, endorsement (other
     than for collection or deposit in the ordinary course of business),
     discount with recourse or other obligation to pay, purchase, repurchase or
     otherwise be or become liable or obligated upon or in respect of any
     Indebtedness of any other Person and including any absolute or contingent
     obligations to:

     (i)   advance or supply funds for the payment or purchase of any
           Indebtedness of any other Person,

<PAGE>
                                                                          Page 5

     (ii)  purchase, sell or lease (as lessee or lessor) any property, assets,
           goods, services, materials or supplies primarily for the purpose of
           enabling any other Person to make payment of Indebtedness or to
           assure the holder thereof against loss, or

     (iii) indemnify or hold harmless any other Person from or against any
           losses, liabilities or damages, in circumstances intended to enable
           such other Person to incur or pay any Indebtedness or to comply with
           any agreement relating thereto or otherwise to assure or protect
           creditors against loss in respect of such Indebtedness,

     but shall not include any contract of reinsurance entered into by any
     Subsidiary with any other Subsidiary.

     Each Guarantee shall be deemed to be in an amount equal to the amount of
     the Indebtedness in respect of which the Guarantee is given, unless the
     Guarantee is limited to a determinable amount in which case the amount of
     the Guarantee shall be deemed to be the lesser of the amount of the
     Indebtedness in respect of which the Guarantee is given and such
     determinable amount.

(45) "Guaranteed Pension Plan" means any pension plan maintained by a Borrower
     or any Guarantor, or to a Borrower or any Guarantor contributes, some or
     all of the benefits under which are guaranteed by the PBGC.

(46) "Guarantor" means Kingsway America Inc., a Delaware corporation.

(47) "Guarantor's Guarantee" means the unlimited and unconditional guarantee
     issued by the Guarantor in favour of the Agents and Lenders in respect of
     the Outstanding Obligations in form and content satisfactory to the
     Documentation Agent.

(48) "Indebtedness" of a Person means, without duplication,

     (i)  all debts, liabilities and obligations, direct, indirect, liquidated,
          unliquidated, contingent and other, including principal, interest,
          charges and fees, which in accordance with GAAP would be classified
          upon the Person's balance sheet as liabilities including, without
          limitation, liabilities under currency and interest rate hedging
          agreements and similar agreements, all Capitalized Lease Obligations,
          Purchase Money Obligations and all Guarantees of such debts,
          liabilities and obligations, and

     (ii) all obligations secured by any Security Interest, including principal,
          interest, charges and fees, existing on property owned or acquired by
          the Person subject to such Security Interest whether or not the Person
          has assumed or otherwise become liable for the payment of such
          obligations.

(49) "Insurance Regulatory Authority" shall mean, with respect to any Insurance
     Subsidiary, the insurance department or similar governmental authority
     charged with regulating insurance companies or insurance holding companies,
     in its jurisdiction of domicile and, to the extent that it has regulatory
     authority over such Insurance Subsidiary, in each other jurisdiction in
     which such Insurance Subsidiary conducts business or is licensed to conduct
     business.

(50) "Insurance Subsidiary" shall mean any Subsidiary of the Borrower the
     ability of which to pay dividends is regulated by an Insurance Regulatory
     Authority or that is otherwise required to be regulated thereby in
     accordance with the Applicable Law of its jurisdiction of domicile.

(51) "Intercreditor Agreement" means collectively an intercreditor agreement
     between CIBC and the Agents and the Lenders and an intercreditor agreement
     between Scotiabank and the Agents and the Lenders substantially in the form
     of Schedule "C".

<PAGE>
                                                                          Page 6

(52) "Interest Coverage Ratio" means the ratio of EBITDA to Interest Expense.

(53) "Interest Expense" means for any Person and for any period the aggregate
     amount determined in accordance with GAAP of interest expenses in respect
     of Indebtedness (other than intercompany indebtedness) including, without
     limitation, all but the principal component of expenses in respect of
     Capitalized Lease Obligations paid, accrued or scheduled to be paid or
     accrued by such Person during such period. For the purposes of this
     definition, interest expense on Capitalized Lease Obligations shall be
     calculated at the interest rate specified in the relevant leases, or if no
     such rate is specified therein, an interest rate reasonably determined in
     accordance with GAAP.

(54) "Interest Payment Date" means, in respect of US Base Rate Loans, the last
     Business Day of each month and in respect of a LIBOR Loan, means the last
     day of the applicable LIBOR Period, save in respect of LIBOR Loans with
     LIBOR Periods of 180 days, "Interest Payment Date" means the 90th day of
     such LIBOR Period and the last day of such LIBOR Period.

(55) "Kingsway Facility" means the non-revolving term credit facility in the
     maximum principal amount of $10,000,000 US made available by the Agents and
     the Lenders to Kingsway under Section 2.01(a).

(56) "Lenders" means, on the Closing Date, CIBC, Scotiabank, LaSalle and First
     Union, and thereafter all financial institutions then currently
     participating in the Credit Facilities.

(57) "LIBO Rate" means, relative to any LIBOR Loan:

     (a)  the rate of interest per annum of the offered quotations for deposits
          in US Dollars for a period equal or comparable to the LIBOR Period in
          an amount comparable to the Borrowing as such rate is reported on the
          display designated as "page 3750" or "page 3740", as applicable (or
          any replacement pages) by "Telerate - The Financial Information
          Network" published by Telerate Systems, Inc. at or about 10:00 a.m.
          (London, England time) on the applicable Rate Fixing Day; or

     (b)  if a rate cannot be determined under paragraph (a) above, the rate
          determined by the Administrative Agent to be the arithmetic average
          (rounded up if necessary, to the nearest 1/16 of 1%) of such rates as
          reported on the display page designated as the page (or any
          replacement page) for the offering of deposits in US Dollars (for
          example, the LIBO page in the case of United States Dollars) by
          Reuters Money Market Service (or its successor) for a period equal to
          or comparable to the Interest Period and in an amount comparable to
          the Advance at or about 10:00 a.m. (London, England time) on the
          applicable Rate Fixing Day provided that at least two such rates are
          reported on such page; or

     (c)  if a rate cannot be determined under either of paragraphs (a) or (b)
          above, the rate determined by the Administrative Agent for a
          particular LIBOR Period to be the arithmetic average of the rates per
          annum at which deposits in the currency in which the LIBOR Loan is
          requested in immediately available funds are offered to the Lenders in
          the London interbank market for a period equal to or comparable to the
          LIBOR Period and an amount comparable to the Borrowing at or about
          10:00 a.m. (London, England time) on the applicable Rate Fixing Day;

     For the purposes of this definition, "Rate Fixing Day" means in respect of
     each LIBOR Period, the second Business Day before the first day of such
     LIBOR Period.

(58) "LIBO Rate (Reserve Adjusted)" means, relative to any US Dollar loan to be
     made, continued or maintained as, or converted into, a LIBOR Loan for any
     LIBOR Period, a rate per annum (rounded upwards, if necessary, to the
     nearest 1/16 of 1%) determined pursuant to the following formula:

          LIBO Rate          =                    LIBO Rate
                                ------------------------------------------------

<PAGE>
                                                                          Page 7

    (Reserve Adjusted)              1.00 - LIBOR Reserve Percentage

     The LIBO Rate (Reserve Adjusted) for any LIBOR Period will be determined by
     the Administrative Agent on the basis of the LIBOR Reserve Percentage in
     effect on, and the applicable rates furnished to and received by the
     Administrative Agent two Business Days before the first day of such LIBOR
     Period.

(59) "LIBOR Banking Day" means any Business Day which is also a day on which US
     Dollar transactions can be conducted by and between the Administrative
     Agent and leading banks in Toronto, Ontario and the interbank eurocurrency
     markets in London, England and New York, New York, U.S.A.

(60) "LIBOR Loan" means a US Dollar loan made by a Lender to a Borrower on which
     the interest rate is calculated with reference to the LIBO Rate (Reserve
     Adjusted).

(61) "LIBOR Loan Notice" means a Notice requesting a Borrowing by way of a LIBOR
     Loan to be given to the Administrative Agent in writing, substantially in
     the form annexed hereto as Schedule "D".

(62) "LIBOR Loan Rollover" means the replacement in whole or in part of a
     maturing LIBOR Loan with another LIBOR Loan of an identical principal
     amount.

(63) "LIBOR Loan Rollover Date" means the date upon which a LIBOR Loan Rollover
     occurs.

(64) "LIBOR Period" means the period for computing interest from time to time on
     a LIBOR Loan as stated herein.

(65) "LIBOR Reserve Percentage" means, relative to any LIBOR Period, the reserve
     percentage, if any (expressed as a decimal) equal to the maximum aggregate
     reserve requirements (including all basic, emergency, supplemental,
     marginal and other reserves and taking into account any transitional
     adjustments or other scheduled changes in reserve requirements) specified
     under regulations issued from time to time by the F.R.S. Board and then
     applicable to assets or liabilities consisting of and including
     "Eurocurrency Liabilities", as currently defined in Regulation D of the
     F.R.S. Board, having a term approximately equal or comparable to such LIBOR
     Period.

(66) "Lines of Business" means the following lines of business: any property and
     casualty insurance, property and casualty reinsurance, premium financing,
     claims adjusting, insurance agency, and any ancillary business in which the
     Guarantor and its Subsidiaries are engaged in as of the date hereof or any
     other business substantially similar to such lines of business.

(67) "Loan Documents" means this Agreement, the Guarantor's Guarantee and any
     other document, agreement or certificate executed in connection herewith,
     including, without limitation, any currency or interest rate hedging
     agreements or any agreements of similar effect.

(68) "Majority of the Lenders" means Lenders with Commitments hereunder of not
     less than 66 2/3% of the Total Commitment, provided that the "Majority of
     the Lenders" means 100% of the Lenders for the purpose of voting in respect
     of any of the following matters:

     (i)   any increase in the Total Commitment or any Commitment or the amount
           of Borrowings permitted to be outstanding hereunder;

     (ii)  any decrease in any interest or other rate payable hereunder or in
           any fee payable hereunder;

     (iii) any extension of the Maturity Date or any reduction or forgiveness of
           principal of, or interest on, any Borrowing;

<PAGE>
                                                                          Page 8

     (iv)   any amendment to this definition or to Section 10.13;

     (v)    the release of the Guarantor's Guarantee;

     (vi)   any change to the types of Borrowing other than as contemplated
            hereunder;

     (vii)  any postponement of any Interest Payment Date; and

     (viii) any waiver of any Event of Default under Subsections 9.01(8)(11)(12)
            or (14).

(69) "Material Adverse Effect" means a material adverse effect on (i) the
     business, assets, prospects, or financial or other condition of a Borrower
     or the Guarantor, (ii) the Borrowers' ability to pay or perform the
     Outstanding Obligations in whole or in part in accordance with the terms
     hereof, (iii) the rights and remedies of an Agent or a Lender under the
     Loan Documents, or (iv) the business, assets, prospects of financing or
     other condition of a Subsidiary which result in a material adverse effect
     on a Borrower or the Guarantor.

(70) "Material Subsidiary" means all those Subsidiaries marked as a Material
     Subsidiary on Schedule "G" and any other Subsidiary which beneficially own
     assets of more than $5,000,000 in the aggregate.

(71) "Maturity Date" means the day which is five years plus one day from the
     date of the initial Borrowing hereunder. The date of initial Borrowing
     hereunder shall be no later than March 5, 1999.

(72) "Multiemployer Plan" means a Plan which is a multiemployer plan as defined
     in Section 4001(a)(3) of ERISA.

(73) "Net Income" means earnings of the Borrowers after deducting all expenses
     and taxes in accordance with GAAP, calculated on a Consolidated basis.

(74) "Net Written Premiums" shall mean, with respect to any Insurance Subsidiary
     at any time, the amount of premiums written (after deducting or adding
     premiums on business ceded to or assumed from others) as shown in the case
     of an Insurance Subsidiary domiciled in the United States on line 32, page
     9, Part 2B, column 4 of the Annual Statement of such Insurance Subsidiary
     or on the equivalent line of the Annual Statement in respect of Insurance
     Subsidiaries not domiciled in the United States, or the amount determined
     in a consistent manner for any date other than a date as of which an Annual
     Statement of such Insurance Subsidiary is prepared.

(75) "Outstanding Borrowings" means the aggregate of the principal amount of all
     Outstanding Kingsway Loans and the principal amount of all Outstanding
     Partnership Loans.

(76) "Outstanding Obligations" means without duplication the aggregate of (i)
     Outstanding Borrowings, (ii) all unpaid interest and fees thereon as herein
     provided, and (iii) all other indebtedness, liabilities and obligations
     (including without limitation under any indemnities) herein and under the
     Loan Documents and (iv) all other fees, charges and expenses required to be
     paid by a Borrower to the Agents or the Lenders or any of them, hereunder
     or under any of the Loan Documents.

(77) "Outstanding Kingsway Loans" means the aggregate of the principal amount of
     all US Base Rate Loans and LIBOR Loans outstanding under the Kingsway
     Facility.

(78) "Outstanding Partnership Loans" means the aggregate of the principal amount
     of all US Base Rate Loans and LIBOR Loans outstanding under the Partnership
     Facility.

(79) "Participants" has the meaning set out in Section 10.18.

<PAGE>
                                                                          Page 9

(80) "Partnership Facility" means the non-revolving term credit facility in the
     maximum principal amount of $90,000,000 US made available by the Agents and
     the Lenders to Partnership under Section 2.01(b).

(81) "PBGC" means the United States Pension Benefit Guarantee Corporation and
     any entity succeeding to any or all of its functions under ERISA.

(82) "Permitted Acquisition" shall mean (a) any acquisition with respect to
     which all of the following conditions are satisfied: (i) each business
     acquired shall be within the Lines of Business, (ii) any capital stock
     given as consideration in connection therewith shall be capital stock of
     Kingsway, (iii) in the case of an acquisition involving the acquisition of
     control of capital stock of any Person, immediately after giving effect to
     such acquisition such Person (or the surviving Person, if the acquisition
     is effected through a merger or consolidation) shall be Kingsway or a
     wholly owned subsidiary of Kingsway, and (iv) all of the conditions and
     requirements of Section 8.03(6) applicable to such acquisition are
     satisfied; or (b) any other acquisition to which the Majority of the
     Lenders (or the Administrative Agent on their behalf) shall have given
     their prior written consent (which consent may be in their sole discretion
     and may be given subject to such additional terms and conditions as the
     Majority of the Lenders shall establish) and with respect to which all of
     the conditions and requirements set forth in this definition and in Section
     8.03(6), and in or pursuant to any such consent, have been satisfied or
     waived in writing by the Majority of the Lenders (or the Agent on their
     behalf).

(83) "Permitted Encumbrances" means:

     (i)   inchoate or statutory liens or trust claims for taxes, assessments
           and other governmental charges or levies which are not delinquent or
           the validity of which are currently being contested in good faith by
           appropriate proceedings provided that there shall have been set aside
           a reserve to the extent required by GAAP in an amount which is
           reasonably adequate with respect thereto;

     (ii)  Security Interests securing Purchase Money Obligations or Capitalized
           Lease Obligations provided the Security Interest charges only the
           asset subject of the Purchase Money Obligations or Capitalized Lease
           Obligations and no other asset;

     (iii) Security Interests, other than those described in this Section
           1.01(83), the existence of which have been disclosed in writing to
           the Administrative Agent and consented to by the Administrative Agent
           and a Majority of the Lenders in writing; and

     (iv)  Security Interests securing indebtedness of Subsidiaries which are
           premium finance companies not exceeding US $10,000,000 in the
           aggregate;

     (v)   Security Interests described in Schedule "E"; and

     (vi)  a mortgage in the principal amount of US $698,987 issued by Auto Body
           Tech Inc. in favour of Republic National Bank bearing interest at 10%
           per year maturing July 2017.

(84) "Permitted Indebtedness" means the following Indebtedness of Kingsway, the
     Subsidiaries or the Guarantor:

     (i)   the Outstanding Obligations;

     (ii)  current accounts payable arising in the ordinary course of business
           from the purchase of goods and services;

     (iii) any other Indebtedness specifically permitted hereunder;

<PAGE>
                                                                         Page 10

     (iv)   Capitalized Lease Obligations and Purchase Money Obligations,
            including, without limitation, Indebtedness to non-vendor third
            parties incurred to finance the acquisition of new assets;

     (v)    Indebtedness in respect of which a Majority of the Lenders have
            given their prior written consent as to existence and ranking;

     (vi)   any other Indebtedness for borrowed money not otherwise permitted
            hereunder incurred by any Subsidiary that is a premium finance
            company not exceeding $10,000,000 US Dollars in the aggregate or
            with the consent of a Majority of the Lenders a greater amount;

     (vii)  Indebtedness in favour of CIBC in respect of a 364 day committed
            credit facility (currently in the maximum principal amount of
            $25,000,000 Cdn. Dollars);

     (viii) Indebtedness in favour of Scotiabank under a 364 day committed
            credit facility (currently in the maximum principal amount of
            $25,000,000 US Dollars);

     (ix)   Indebtedness in favour of any other lender in respect of 364 day
            committed credit facilities provided such facilities are on
            substantially the same terms and conditions as those credit
            facilities described in Subsection 1.01(84)(vii) and (viii) and
            provided the lenders under such credit facilities enter into
            intercreditor agreements substantially in the form of the
            Intercreditor Agreements;

     (x)    intercompany indebtedness, provided such indebtedness is unsecured
            and subordinated in right of collection and payment to the
            Outstanding Obligations pursuant to subordination agreements in form
            and content satisfactory to the Agents and the Lenders. In
            limitation of the foregoing, Subsidiaries of Kingsway domiciled in
            the U.S. are permitted to make intercompany loans to Subsidiaries of
            Kingsway domiciled outside of the U.S. only to the extent that all
            such intercompany loans do not exceed $10,000,000 in the aggregate
            from the date hereof until December 31, 1999, and do not exceed
            $5,000,000 in the aggregate thereafter until the termination of the
            Outstanding Obligations;

     (xi)   Indebtedness under currency hedging agreements entered into in the
            normal course of business;

     (xii)  Indebtedness under interest rate hedging agreements entered into in
            conjunction with this Agreement; and

     (xiii) Indebtedness under the mortgage described in Subsection 1.01(83)(vi)
            not to exceed US $698,987.00.

(85) "Person" includes an individual, a partnership, a joint venture, a trust,
     an unincorporated organization, a company, a corporation, an association, a
     government or any department or agency thereof and any other incorporated
     or unincorporated entity.

(86) "Plan" means a "pension plan", as such term is defined in Section 3(2) of
     ERISA, which is subject to Title IV of ERISA (other than a Multiemployer
     Plan), and to which either Borrower or any of such Borrower's Subsidiaries
     or any corporation, trade or business that is, along with such Borrower, a
     member of a Controlled Group, may have liability.

(87) "Purchase Money Obligations" means the outstanding balance of the purchase
     price of real and/or personal property (including shares), title to which
     has been acquired or will be acquired upon payment of such purchase price,
     or Indebtedness to non-vendor third parties incurred to finance the
     acquisition of such new and not replacement real and/or personal property
     or any refinancing of such Indebtedness or outstanding balance.

<PAGE>

                                                                         Page 11

(88) "Quarterly Certificate" means a completed certificate in the form of
     Schedule "F" signed by a senior officer of Kingsway without personal
     liability, as such form may be amended from time to time by mutual
     agreement of the Borrowers and the Administrative Agent, which shall
     include, among other things, confirmation that the Borrowers are operating
     in accordance with applicable regulatory financial ratio guidelines and a
     summary of invested assets of Kingsway on a Consolidated basis, including
     the status of margin positions.

(89) "Rateable Portion" of a Lender means the quotient obtained by dividing that
     Lender's Commitment by the Total Commitment, all as set forth in Schedule
     "A", as Schedule "A" may be amended from time to time in accordance with
     the provisions of this Agreement.

(90) "Reorganization" means a corporate reorganization, amalgamation and/or
     series of asset or share transfers or other similar transactions.

(91) "Reportable Event" means any of the events set forth in Section 4043(b) of
     ERISA other than those events as to which the thirty day notice period is
     waived under Subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. 2615.

(92) "SAP" means for each Subsidiary the accounting principles to be applied by
     the applicable Insurance Regulatory Authority in effect from time to time.

(93) "Security Interest" includes a mortgage, charge, floating charge, pledge,
     hypothec, assignment, lien (statutory or otherwise), encumbrance,
     conditional sale agreement or other title retention agreement,
     subordination trust or other security interest or arrangement of any kind
     or character intended to create a security interest in substance regardless
     of whether the person creating the interest retains an equity of
     redemption, and any agreement to provide or enter into at any time or on
     the happening of any event such a security interest or arrangement.

(94) "Senior Debt" means the aggregate of (i) all indebtedness of the Borrowers,
     the Guarantor and the Subsidiaries for Funded Debt other than Subordinated
     Debt, (ii) indebtedness under Capitalized Lease Obligations, and (iii)
     indebtedness pursuant to Guarantees other than such indebtedness incurred
     under surety or similar bonds issued by insurance company subsidiaries in
     the ordinary course of business.

(95) "Senior Funded Debt" means indebtedness of the Borrowers, the Guarantor and
     the Subsidiaries for Funded Debt other than Subordinated Debt.

(96) "Single Employer Plan" means any Plan which is covered by Title IV of
     ERISA, but which is not a Multiemployer Plan.

(97) "Statutory Capital and Surplus" shall mean, as to any Insurance Subsidiary,
     as of any date, the sum (without duplication) of the total amounts shown
     (i) with respect to an Insurance Subsidiary not legally domiciled in the
     United States, the shareholders' equity of such Insurance Subsidiary as
     determined in accordance with GAAP, and (ii) with respect to any other
     Insurance Subsidiary domiciled in the United States, on line 27, column 1,
     page 3 of the Annual Statement of such Insurance Subsidiary, or the sum of
     amounts determined in a consistent manner for any date other than one as of
     which an Annual Statement is prepared.

(98) "Subordinated Debt" means Indebtedness which has been validly and
     absolutely postponed and subordinated in right of payment and collection to
     the repayment in full of the Outstanding Obligations pursuant to
     subordination agreements in form and content satisfactory to the Agents and
     the Lenders.

(99) "Subsidiaries" means, on the Closing Date, those entities listed in
     Schedule "G", and, following the Closing Date, as to any Person, any
     corporation, partnership, joint venture, limited liability company,

<PAGE>

                                                                         Page 12

      trust or estate of which (or in which) more than 50% of (a) the issued and
      outstanding capital stock having ordinary voting power to elect a majority
      of the board of directors of such corporation (irrespective of whether at
      the time capital stock of any other class or classes of such corporation
      will or might have voting power upon the occurrence of any contingency),
      (b) the interest in the capital or profits of such limited liability
      company, partnership or joint venture or (c) the beneficial interest in
      such trust or estate is at the time directly or indirectly owned or
      controlled by such Person, by such Person and one or more of its other
      Subsidiaries or by one or more of such Person's other Subsidiaries.

(100) "Tangible Net Worth" at any time means the shareholders' equity less
      goodwill less other assets normally regarded as intangible under GAAP.

(101) "Tax" and "Taxes" include all present and future income, corporation,
      capital gains, capital, value-added, goods and services taxes and other
      taxes, levies, imposts, stamp taxes, duties, charges to tax, fees,
      deductions, withholdings and any restrictions or conditions resulting in a
      charge to tax and all penalties, interest and other payments on or in
      respect thereof.

(102) "Tax Returns" means all reports, estimates, information statements and
      returns relating to, or required to be filed in connection with, any Taxes
      pursuant to the statutes, laws, rules and regulations of any federal,
      provincial, municipal, city or foreign governmental taxing authority and
      "Tax Return" shall mean any one thereof.

(103) "Total Capitalization" means without duplication the aggregate of (i)
      Funded Debt plus (ii) shareholders equity all of which shall be calculated
      on a Consolidated basis and in accordance with GAAP.

(104) "Total Commitment" means the aggregate of the Commitments of the Lenders.

(105) "US Base Rate" means in respect of US Dollar loans made to a Borrower in
      the United States of America for any day, a fluctuating rate of interest
      per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
      the greater of:

      (a)  the U.S. Prime Rate in effect on such day; and

      (b)  the Federal Funds Effective Rate in effect on such day plus 1/2 of
           1%.

      For purposes of this definition:

      "Federal Funds Effective Rate" shall mean, for any day, the weighted
      average of the rates on overnight Federal funds transactions with members
      of the Federal Reserve System arranged by Federal funds brokers, as
      published on the next succeeding Business Day by the Federal Reserve Bank
      of New York, or, if such rate is not so published for any day that is a
      Business Day, the average quotations, for the day, of such transactions
      received by the Administrative Agent from three Federal funds brokers of
      recognized standing selected by it.

      "U.S. Prime Rate" means the rate of interest per annum publicly announced
      from time to time by the Administrative Agent as its prime rate in effect
      at its principal office in New York City. The U.S. Prime Rate is not
      intended to be the lowest rate of interest charged by the Administrative
      Agent in connection with extensions of credit to debtors.

      If for any reason the Administrative Agent shall have determined (which
      determination shall be conclusive absent clearly demonstrable error) that
      it is unable to ascertain the Federal Funds Effective Rate for any reason,
      including the inability or failure to obtain sufficient quotations in
      accordance with the terms thereof, the US Base Rate shall be determined
      without regard to clause (b) until the

<PAGE>

                                                                         Page 13

       circumstances giving rise to such inability no longer exist. Any change
       in the US Base Rate due to a change in the U.S. Prime Rate or the
       Federal Funds Effective Rate shall be effective as of the opening of
       business on the date of such change.

(106)  "US Base Rate Loans" means a loan in US Dollars by a Lender to a Borrower
       on which interest is calculated with reference to the US Base Rate.

(107)  "US Base Rate Loan Notice" means a notice requesting a US Base Rate Loan
       to be given to the Administrative Agent in writing, substantially in the
       form annexed as Schedule "H".

(108)  "US Dollars" and "US $" means lawful money of the United States of
       America.

(109)  "US GAAP" means generally accepted accounting principles which are in
       effect in the United States of America from time to time applied in a
       consistent manner from period to period.

(110)  "Voting Control" means any Person or group of Persons acting in concert
       as a partnership or other group other than the Borrower or a group
       comprised solely of such Persons, that, as a result of a tender or
       exchange offer, open market purchases, privately negotiated purchases or
       otherwise, becomes the "beneficial owner" (within the meaning of such
       term under Rule 13d-3 under the Exchange Act) of securities of the
       Borrower representing 20% or more of the combined voting power of the
       then outstanding securities of the Borrower ordinarily (and apart from
       rights accruing under special circumstances) having the right to vote in
       the election of directors.

(111)  "written" and "in writing" shall include printing, typewriting or any
       electronic means of communication capable of being visibly reproduced at
       the point of reception including telex, telegraph or telecopy.

(112)  "Year 2000 Compliant" means that (a) the services, products or other
       item(s) at issue accurately process, provide and/or receive all
       date/time data (including calculating, comparing, sequencing, processing
       and outputting) within, from, into and between centuries (including the
       twentieth and twenty-first centuries and the years 1999 and 2000),
       including leap year calculations, and (b) neither the performance nor
       the functionality nor the business' provision of the services, products
       and other item(s) at issue will be materially affected by any
       dates/times prior to, on, after or spanning January 1, 2000. The design
       of the services, products and other item(s) at issue to ensure
       compliance with the representations and warranties contained in this
       Agreement includes proper date/time data century recognition and
       recognition of 1999 and 2000, calculations that accommodate single
       century and multi-century formulae and date/time values before, on,
       after and spanning January 1, 2000, and date/time data interface values
       that reflect the century, 1999 and 2000. In particular, but without
       limitation, (i) no value for current date/time will cause any material
       error, interruption or decreased performance in or for such services,
       products and other item(s), (ii) all manipulations of date and time
       related data (including calculating, comparing, sequencing, processing
       and outputting) will produce correct results for all valid dates and
       times when used independently or in combination with other services,
       products and/or items, (iii) date/time elements in interfaces and data
       storage will specify the century to eliminate date ambiguity without
       human intervention, including leap year calculations, (iv) where any
       date/time element is represented without a century, the correct century
       will be unambiguous for all manipulations involving that element, (v)
       authorization codes, passwords and zaps (purge functions) will function
       normally and in the same manner during, prior to, on and after January
       1, 2000, including the manner in which they function with respect to
       expiration dates and CPU serial numbers, and (vi) the business' supply
       of the services, products and other item(s) will not be materially
       interrupted, delayed, decreased or otherwise affected by the advent of
       the year 2000.

Section 1.02 Audited Financial Statements. All references in this Agreement to
audited financial statements of a corporation, including the balance sheet and
related statements of income, retained earnings and changes in financial
position, mean Consolidated financial statements prepared by the corporation in
accordance with GAAP or US GAAP, as applicable, together with an auditor's
opinion that the statements fairly

<PAGE>

                                                                         Page 14

present the financial position of the corporation and the results of its
operations for the Financial Year reported on in accordance with GAAP or US
GAAP, as applicable. For greater certainty, financial statements prepared in
respect of Kingsway and Subsidiaries domiciled in Canada shall be prepared in
accordance with GAAP, and financial statements of Partnership, the Guarantor and
Subsidiaries domiciled in the United States shall be prepared in accordance with
US GAAP.

Section 1.03 US Currency. Unless otherwise specified herein, all amounts and
values referred to in this Agreement shall be calculated in lawful money of the
United States of America.

Section 1.04 Interest Act. Unless otherwise specified, all annual rates of
interest referred to herein are based on a calendar year of 360 days.

Section 1.05 Change in Rates. Any change in the US Base Rate is to be effective
on the date such change is established whether or not the Borrowers receive
notice thereof.

Section 1.06 Headings and Table of Contents. The division of this Agreement into
Articles and Sections and the provision of a Table of Contents and the insertion
of headings are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.

Section 1.07 References. All references to Sections, Articles and Schedules are
to Sections and Articles of and Schedules to this Agreement. The words "hereto",
"herein", "hereof", "hereunder", "this Agreement" and similar expressions mean
and refer to this Agreement.

Section 1.08 Number and Gender. Where the context so requires, words importing
the singular include the plural and vice versa, and words importing gender
include the masculine, feminine and neuter genders.

Section 1.09 Copies. Whenever a Borrower is required by this Agreement to
deliver documentation to the Administrative Agent for distribution to the
Lenders, such Borrower shall deliver to the Administrative Agent a sufficient
number of copies of the relevant document so that each Lender is provided with
at least one copy.

Section 1.10    Maximum Interest Rate.

        (a)     In the event that any provision of this Agreement would oblige a
                Borrower to make any payment of interest or any other payment
                which is construed by a court of competent jurisdiction to be
                interest in an amount or calculated at a rate which would be
                prohibited by applicable law, regulation, order, rule or
                direction (a "Usury Restraint") which prohibits or restricts the
                charging, receipt or retention of interest or other amounts at
                the rates and amounts set forth herein (the "Stated Rate") in
                excess (the "Excess") of the maximum rates or amount (the
                "Maximum Rate") stipulated in the Usury Restraint, then
                notwithstanding such provision, such amount or rate shall be
                deemed to have been adjusted nunc pro tunc to the Maximum Rate,
                such adjustment to be effected, to the extent necessary, as
                follows:

                (i)  firstly, by reducing the amount or rate of interest
                     required to be paid under Section 5.01 of this
                     Agreement; and

                (ii) thereafter, by reducing any fees, commissions, premiums and
                     other amounts which would constitute interest for the
                     purposes of such Usury Restraint;

        (b)     If, notwithstanding the provisions of clause (a) of this Section
                and after giving effect to all adjustments contemplated thereby,
                the Agents, the Lenders, or any of them, shall have received an
                amount in excess of the Maximum Rate, then such Excess shall be
                applied by the Administrative Agent (on behalf of the Lenders)
                rateably in accordance with the Lenders' respective Commitments,
                to the reduction of the principal balance of the Outstanding

<PAGE>

                                                                         Page 15

          Borrowings and not to the payment of interest or if such excessive
          interest exceeds such principal balance, such Excess shall be refunded
          to the Borrowers; and

     (c)  Any amount or rate of interest referred to in this Section shall be
          determined in accordance with generally accepted actuarial practices
          and principles at an effective annual rate of interest over the term
          of this Agreement on the assumption that any charges, fees or expenses
          that fall within the meaning of "interest" (as defined in Usury
          Restraint) shall, if they relate to a specific period of time, be
          prorated over that period of time and otherwise be prorated over the
          terms of this Agreement and, in the event of dispute, a certificate of
          a Fellow of the Canadian Institute of Actuaries appointed by the
          Administrative Agent (on behalf of the Lenders) shall be conclusive
          for the purposes of such determination.

Section 1.11 Schedules. The Schedules forming part of this Agreement are as
follows:

          Schedule "A" -     Commitments
          Schedule "B" -     Conversion Notice
          Schedule "C" -     Intercreditor Agreement
          Schedule "D" -     LIBOR Loan Notice
          Schedule "E" -     Security Interests
          Schedule "F" -     Quarterly Certificate
          Schedule "G" -     Subsidiaries
          Schedule "H" -     US Base Rate Loan Notice
          Schedule "I" -     Form of Opinion
          Schedule "J" -     Litigation
          Schedule "K" -     Interest Rates and Fees
          Schedule "K1" -    Directors' Qualifying Shares
          Schedule "L" -     Taxes
          Schedule "M" -     Labour Disputes
          Schedule "N" -     Pension Plans
          Schedule "O" -     Consents
          Schedule "P" -     Jurisdictions
          Schedule "Q" -     Notice of Participation and Undertaking

                                   ARTICLE TWO

                                CREDIT FACILITIES

Section 2.01 Credit Facilities.

     (a)  Kingsway Facility. Subject to the provisions of this Agreement, each
          of the Lenders severally agrees to make available to Kingsway such
          Lender's Commitment in respect of the Kingsway Facility by way of US
          Base Rate Loans and LIBOR Loans.

     (b)  Partnership Facility. Subject to the provisions of this Agreement,
          each of the Lenders severally agrees to make available to Partnership
          such Lender's Commitment in respect of the Partnership Facility by way
          of US Base Rate Loans and LIBOR Loans.

The obligations of the Lenders hereunder with respect to the Credit Facilities
are several and not joint and, accordingly, no Lender shall be liable to either
Borrower or any other Person for any failure or delay in performance by any
other Lender hereunder, or under any other document, instrument or agreement
contemplated hereunder. In the event any Lender shall fail to perform any of its
obligations hereunder at any time, the remaining Lenders, or any one or more of
them, shall have the option, but shall be under no

<PAGE>

                                                                         Page 16

obligation, to assume the obligations hereunder of such defaulting Lender, and
if the remaining Lenders, or any one or more of them, shall elect to assume such
defaulted obligations, appropriate amendments, if necessary, shall be made to
this Agreement to reflect such assumption.

Section 2.02 Maximum Borrowings.

     (a)  Outstanding Borrowings shall at no time exceed US $100,000,000.

     (b)  Outstanding Kingsway Loans shall at no time exceed US $10,000,000.

     (c)  Outstanding Partnership Loans shall at no time exceed US $90,000,000.

Section 2.03 Lenders' Commitments. As nearly as may be practicable in the
circumstances, the portion of the Outstanding Borrowings at any time provided by
each Lender shall be approximately equal to each such Lender's Rateable Portion.

Section 2.04 Purposes of Credit Facilities. Kingsway shall use all the proceeds
of loans advanced under the Kingsway Facility to make a capital contribution to
Partnership in the amount of US $10,000,000. Partnership shall use the proceeds
of loans advanced under the Partnership Facility to make a capital contribution
to Kingsway US Tier II Finance Partnership which in turn will make a capital
contribution to Kingsway Finance Nova Scotia ULC which in turn will make a
capital contribution to the Guarantor (in each case in the amount of
$100,000,000) for general corporate purposes, including the financing of working
capital and Permitted Acquisitions and the repayment or reduction of existing
credit facilities.

Section 2.05 Restrictions on Borrowing. A Borrower shall not request a Borrowing
if the result thereof would create or cause a breach of any term,
representation, warranty or covenant hereof.

Section 2.06 Evidence of Indebtedness.

(a) Each Lender shall maintain accounts and records evidencing the obligations
of the Borrowers to such Lender hereunder. The Lender's accounts and records
shall constitute prima facie evidence of the indebtedness of the Borrowers to
such Lender hereunder in the absence of manifest error.

(b) The Administrative Agent shall open and maintain on its books control
accounts evidencing Borrowings made by the Lenders hereunder and all other
amounts owed by the Borrowers to the Lenders hereunder.

Section 2.07 Illegality. If the introduction of or any change in any Applicable
Law or in the interpretation or application thereof by any court or by any
governmental authority charged with the administration thereof, makes it
unlawful or prohibited for a Lender to make, to fund or to maintain its
Commitment or any portion thereof or to perform any of its obligations under
this Agreement, such Lender may, by ten days written notice to the
Administrative Agent and the Borrowers (unless the provision of the Applicable
Law requires earlier prepayment in which case the notice period shall be such
shorter period as required to comply with the Applicable Law), terminate its
obligations under this Agreement and in such event, subject to the right of any
Lender to assume the obligations of the terminating Lender, the affected
Borrowers shall prepay the affected Borrowings forthwith (or at the end of such
period as the terminating Lender in its discretion agrees), without notice or
penalty (other than breakage costs), together with all accrued but unpaid
interest and fees as may be applicable to the date of payment, or such Lender
may, by written notice to the Borrowers, convert such Borrowings forthwith into
another basis of Borrowing available under this Agreement.

                                  ARTICLE THREE

                       PROCEDURES APPLICABLE TO BORROWINGS

<PAGE>
                                                                         Page 17

Section 3.01 Notices of Borrowing. Subject to the terms and conditions hereof, a
Borrower may obtain a Borrowing or a Conversion by giving the Administrative
Agent prior written notice on any Business Day prior to the Maturity Date no
later than 11:00 a.m. (Toronto time) on the date of issuance of such notice in
the form of a US Base Rate Loan Notice or a LIBOR Loan Notice, as appropriate,
as set out below:

          Type                                          Prior Notice

     (i)  US Base Rate Loans (including
          Conversions into US Base Rate Loans)          1 Business Day

     (ii) LIBOR Loans (including conversions
          into LIBOR Loans)                             3 Business Days

Section 3.02 Conversions. Subject to Section 3.01, a Borrower may convert US
Base Rate Loans into LIBOR Loans at any time. Subject to Section 3.01, a
Borrower may convert LIBOR Loans into US Base Rate Loans on the maturity date of
the applicable LIBOR Loan.

Section 3.03 Provisions relating to LIBOR Loans.

(1)  Subject to availability, each LIBOR Loan shall have a LIBOR Period of one
     month, two months, three months or six months at the option of the
     Borrower. A Borrower shall not be entitled to obtain a LIBOR Loan which
     matures after the Maturity Date.

(2)  The principal amount of LIBOR Loans outstanding at any time shall be not
     less than US $1,000,000 and are available in whole multiples of US
     $100,000.

(3)  If the Administrative Agent shall have determined in good faith that (a) US
     Dollar deposits in the relevant amount and for the relevant LIBOR Period
     are not available to the Administrative Agent in the London interbank
     eurocurrency market or (b) by reason of circumstances affecting the London
     interbank eurocurrency market, adequate means do not exist for ascertaining
     the interest rate applicable hereunder to LIBOR Loans, then, upon notice
     from the Administrative Agent to the Borrowers and the Lenders, the
     obligations of all Lenders hereunder to make or continue any Borrowings as,
     or to convert any Borrowings into, LIBOR Loans shall forthwith be suspended
     until the Administrative Agent shall notify the Borrowers and the Lenders
     that the circumstances causing such suspension no longer exist and the
     Administrative Agent and the Lenders shall be entitled to convert the
     contemplated LIBOR Loan into a US Base Rate Loan.

(4)  In the event any Lender shall incur any loss or expense (including any loss
     or expense incurred by reason of the liquidation or reemployment of
     deposits or other funds acquired by such Lender to make, continue or
     maintain any portion of the principal amount of any Borrowing as, or to
     convert any portion of the principal amount of any Borrowing into, a LIBOR
     Loan) as a result of

     (a)  any conversion or repayment or prepayment of the principal amount of
          any LIBOR Loans on a date other than the scheduled last day of the
          LIBOR Period applicable thereto;

     (b)  any Borrowings not being made as LIBOR Loans in accordance with the
          LIBOR Loan Notice therefor; or

     (c)  any Borrowings not being converted into LIBOR Loans in accordance with
          the Conversion Notice therefor,

     then, upon the written notice of such Lender to the Borrowers (with a copy
     to the Administrative Agent), the Borrowers shall promptly (and, in any
     event, within three Business Days of receipt of such notice)

<PAGE>
                                                                         Page 18

     pay directly to such Lender such amount as will (in the reasonable
     determination of such Lender) reimburse such Lender for such loss or
     expense. Such written notice (which shall include calculations in
     reasonable detail) shall, in the absence of manifest error, be conclusive
     and binding on the Borrowers.

(5)  Overdue amounts in respect of a LIBOR Loan (including overdue interest) may
     at the option of the Administrative Agent be either converted into a US
     Base Rate Loan or considered to be a LIBOR Loan for one or more LIBOR
     Periods or durations as the Administrative Agent may determine, and bearing
     interest at the applicable interest rate both before and after default,
     Demand and judgment.

(6)  The Borrowers shall repay the principal amount of each LIBOR Loan on the
     LIBOR Loan Rollover Date unless:

     (a)  the maturing LIBOR Loan is renewed pursuant to a LIBOR Loan Rollover
          or converted into a US Base Rate Loan pursuant to a Conversion; or

     (b)  repayment of the Outstanding Obligations shall have been accelerated
          or otherwise required to be paid at an earlier date pursuant to the
          terms hereof, in which case LIBOR Loans shall be repaid on the date
          such repayment is due.

(7)  If on the applicable LIBOR Loan Rollover Date a LIBOR Loan is not repaid on
     its renewal pursuant to a LIBOR Loan Rollover or converted pursuant to a
     Conversion, the Lenders may, at the option of the Majority of the Lenders,
     convert the maturing LIBOR Loan into a US Base Rate Loan or renew the
     maturing LIBOR Loan by way of a further LIBOR Loan for such LIBOR Period as
     the Administrative Agent may determine in its sole discretion.

(8)  Each Lender may, if it so elects, fulfill its obligation to make, continue
     or convert a LIBOR Loan hereunder by causing one of its foreign branches or
     Affiliates (or an international banking facility created by such Lender) to
     make or maintain such LIBOR Loan; provided, however, that such LIBOR Loan
     shall nonetheless be deemed to have been made and to be held by such
     Lender, and the obligation of a Borrower to repay such LIBOR Loan shall
     nevertheless be to such Lender for the account of such foreign branch,
     Affiliate or international banking facility. In addition, each Borrower
     hereby consents and agrees that, for purposes of any determination to be
     made for purposes of Sections 2.07, 3.03(3), 3.03(4) and 5.04, it shall be
     conclusively assumed that each Lender elected to fund all LIBOR Loans by
     purchasing U.S. Dollar deposits in its Branch of Account's interbank
     eurodollar market.

Section 3.04 Reliance on Oral Instructions. The Lenders and the Agents shall be
entitled to act upon the oral instructions of any Person whom the Lenders or the
Agents believe is a Person a Borrower has identified as being a Person
authorized to give instructions regarding matters contemplated by this
Agreement, including, without limiting the generality of the foregoing, the
Credit Facilities. Neither the Lenders nor the Agents shall be responsible for
any error or omission relating to such instructions. Oral instructions shall at
the request of the Agents or the Lenders be immediately confirmed in writing by
the Borrowers. The Borrowers may revoke the authority of any authorized Person
by notifying the Administrative Agent in writing, which notice shall be
effective on the Business Day immediately following the date of its actual
receipt by the Administrative Agent.

                                  ARTICLE FOUR

                                    PAYMENTS

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                                                                         Page 19

Section 4.01 Repayment. Unless Outstanding Obligations shall be required to be
paid at an earlier date pursuant to the terms hereof, the Borrowers shall repay
the Outstanding Obligations in full on the Maturity Date.

Section 4.02 Mandatory Prepayment. If for any reason, Outstanding Borrowings
exceed the maximum principal amount permitted hereunder, the Borrowers shall
forthwith pay to the Administrative Agent for distribution to the Lenders
rateably, an amount sufficient to reduce the Outstanding Borrowings to the
maximum levels permitted hereunder.

Section 4.03 Voluntary Prepayment. The Borrowers shall have the right at any
time or from time to time to prepay Outstanding Borrowings without fee or
penalty provided that the amount of any such prepayment shall be not less than
$5,000,000 US by providing the Administrative Agent with not less than 2
Business Days prior written notice of their intention to do so. Amounts prepaid
may not be reborrowed. The Borrowers agree to pay customary breakage costs on
the prepayment of any LIBOR Loan.

Section 4.04 Payments Generally. Each payment under this Agreement shall be made
for value at or before 1:00 p.m. (Toronto time) on the day such payment is due,
provided that, if any such day is not a Business Day, such payment shall be
deemed for all purposes of this Agreement to be due on the Business Day next
following such day (and any such extension shall be taken into account for
purposes of the computation of interest and fees payable under this Agreement).
All payments shall be made to the Branch of Account.

Section 4.05 No Credit for Trust Funds. For greater certainty, payments of any
nature whatsoever made by a Borrower or the Guarantor to an Agent or any Lender
which the recipient is required to pay to any Person by reason of any trust
imposed by law or by any Person upon amounts received by the recipient from a
Borrower or such Guarantor, shall not be credited against, or deemed to be
payment on account of, all or any portion of the Outstanding Obligations. All
costs and expenses incurred by any Agent or any Lender, their agents,
representatives and solicitors in connection with the repayment of such monies
to any Person shall be for the account of the Borrower and payable on Demand.
Interest shall accrue on these costs and expenses, until paid, at the US Base
Rate plus .5% per annum.

Section 4.06 No Withholding. Each interest, fee or similar payment under this
Agreement, including any penalties affected thereto, shall be made without set
off or counterclaim and without withholding for or on account of any present
future taxes or duties imposed by any federal, state, provincial or other taxing
authority. In the event a Borrower is required to deduct or withhold any amount
for or on account of any such taxes or duties, such Borrower shall pay to the
Lenders such additional amounts as may be necessary to ensure that the Lenders
receive a net amount equal to the face amount which they would have received had
such interest, fee or similar payment been made without such deduction or
withholding.

                                  ARTICLE FIVE

                           INTEREST, FEES AND EXPENSES

Section 5.01 Interest Rates and Calculation.

     (1) Rate. The interest rate payable on Outstanding Borrowings shall vary
based upon the senior unsecured debt rating of Kingsway and the ratio of Funded
Debt to Total Capitalization as such ratio is calculated in accordance with
Section 8.02(1) and as such rating and such ratio are disclosed in each
Quarterly Certificate. Any change in interest rate resulting from a change in
such rating or ratio shall be effective upon the fifth Business Day immediately
following receipt by the Administrative Agent of the Quarterly Certificate. If
the Borrowers fail to deliver a Quarterly Certificate when due the Lenders shall
in their discretion be entitled to charge interest on Outstanding Borrowings at
the highest rate payable hereunder until such

<PAGE>

                                                                         Page 20

Quarterly Certificate is delivered. The Borrowers shall pay interest on
Outstanding Borrowings at the rates set out in the grid annexed as Schedule "K".

     (2) Calculation - US Base Rate Loans. Interest on US Base Rate Loans shall
be calculated daily and payable monthly in arrears on each Interest Payment Date
for the period commencing on the first day of the previous month and terminating
on the last day of such month, both inclusive, and shall accrue on a daily basis
on the principal amount remaining unpaid from time to time and on the basis of
the actual number of days elapsed and on a year of 360 days. Interest on US Base
Rate Loans shall be paid in US Dollars.

     (3) Calculation - LIBOR Loans. Interest on LIBOR Loans based on the
principal amount of each LIBOR Loan and on the number of days in the LIBOR
Period shall be paid in US Dollars to the Administrative Agent (on behalf of the
Lenders) on the Interest Payment Date applicable to LIBOR Loans.

Section 5.02 Default Interest. Upon the occurrence of an Event of Default under
this Agreement, the Borrowers shall pay interest on Outstanding Borrowings both
before and after judgment at a rate per annum equal to the US Base Rate plus
2.5%, calculated on a daily basis and on the basis of the actual number of days
elapsed, computed from the date of occurrence of the Event of Default for so
long as such Event of Default continues. Such interest shall be payable upon
Demand by the Administrative Agent or any Lender and shall be compounded on each
Interest Payment Date.

Section 5.03 Fees. The Borrowers shall pay such arrangement fees and
administration fees as provided in the fee agreement made between the Borrowers,
the Agents and the Lenders dated on or about the date of this Agreement.

Section 5.04 Change in Circumstances.

     (1) Reduction in Rate of Return. If at any time, and from time to time, the
Administrative Agent or a Lender determines, acting reasonably, that (a) any
change in any Applicable Law or any interpretation thereof after the date of
execution hereof, or (b) compliance by a Lender with any direction, requirement
or request from any regulatory authority given after the date of execution
hereof, whether or not having the force of law, has or would have, as a
consequence of such Lender's obligation under this Agreement and taking into
consideration such Lender's policies with respect to capital adequacy, the
effect of reducing the rate of return on such Lender's capital to a level below
that which such Lender could have achieved but for such change or compliance,
then from time to time, upon demand by the Administrative Agent (on behalf) of
such Lender, the Borrowers shall pay such Lender such additional amounts as will
compensate such Lender for such reduction.

     (2) Taxes, Reserves, Capital Adequacy, etc. If after the date of execution
hereof, any introduction of any Applicable Law or any change or introduction of
a change in any Applicable Law (whether or not having the force of law) or in
the interpretation or application thereof by any court or by any governmental
agency, central bank or other authority or entity charged with the
administration thereof or any change in the compliance of any Lender therewith
now or hereafter:

     (a)  subjects such Lender to, or causes the withdrawal or termination of a
          previously granted exemption with respect to, any Tax or changes the
          basis of taxation, or increases any existing Tax, on payments of
          principal, interest, fees or other amounts payable by the Borrowers to
          such Lender under this Agreement (except for taxes on the overall net
          income of such Lender),

     (b)  imposes, modifies or deems applicable any reserve, special deposit,
          deposit insurance or similar requirement against assets held by, or
          deposits in or for the account of or loans by or any other acquisition
          of funds by, an office of such Lender,

<PAGE>

                                                                         Page 21

     (c)  imposes on such Lender or expects there to be maintained by such
          Lender any capital adequacy or additional capital requirement in
          respect of any Borrowing or its Commitment hereunder or any other
          condition with respect to this Agreement, or

     (d)  imposes any Tax on reserves or deemed reserves with respect to the
          undrawn portion of the Credit Facilities,

and the result of any of the foregoing, in the sole determination of such Lender
acting reasonably, shall be to increase the cost to, or reduce the amount of
principal, interest or other amount received or receivable by such Lender
hereunder or its effective return hereunder in respect of making, maintaining or
funding a Borrowing under this Agreement such Lender shall, acting reasonably,
determine that amount of money which shall compensate such Lender for such
increase in cost or reduction in income (herein referred to as "Additional
Compensation"). Upon such Lender having determined that it is entitled to
Additional Compensation in accordance with the provisions of this Section 5.04,
such Lender shall promptly so notify the Borrowers through the Administrative
Agent, and shall provide to the Borrowers, through the Administrative Agent, a
photocopy of the relevant law, rule, guideline, regulation, treaty or official
directive and a certificate of a duly authorized officer of such Lender setting
forth the Additional Compensation and the basis of calculation thereof, which
shall be prima facie evidence of such Additional Compensation. The affected
Lender shall promptly notify the Borrowers, through the Administrative Agent,
and the Borrowers shall pay such Lender within ten Business Days of the giving
of such notice, the Additional Compensation calculated to the date of such
notification. An affected Lender shall be entitled to be paid such Additional
Compensation from time to time to the extent that the provisions of this Section
5.04 are then applicable notwithstanding that a Lender has previously been paid
Additional Compensation. If it is commercially reasonable, the affected Lender
shall make reasonable efforts to limit the incidents of any such Additional
Compensation.

Section 5.05 Reimbursement of Expenses. All statements, reports, certificates,
opinions and other documents or information required to be furnished to the
Agents or the Lenders by a Borrower or any Subsidiary under this Agreement shall
be supplied without cost to the Agents or the Lenders. The Borrowers, jointly
and severally, agree to pay promptly on demand all of the Agents' and the
Lenders' reasonable legal fees and disbursements, documentation costs and other
reasonable expenses incurred in connection with the preparation, negotiation,
documentation and operation of this Agreement and any amendment of or
supplement, waiver or modification to this Agreement or any other Loan Document,
and any other document prepared in connection herewith or therewith, whether or
not any amounts are advanced under this Agreement. In addition, the Borrowers
agree to pay the reasonable legal fees and disbursements and other expenses
incurred by the Agents and the Lenders in the enforcement or preservation of any
rights under this Agreement or any other Loan Document and all documents
delivered in connection herewith or therewith (including pursuant to a work-out
or restructuring).

Section 5.06 Determination Conclusive. Each determination by the Administrative
Agent or the Lenders, as applicable, of any rate or fee shall, in the absence of
manifest error, be final, conclusive and binding on the Borrowers.

                                   ARTICLE SIX

                              CONDITIONS PRECEDENT

Section 6.01 Conditions - Initial Borrowing. The obligation of the Lenders to
make available the initial Borrowing under this Agreement is subject to the
terms and conditions of this Agreement and is conditional upon satisfactory
evidence being given to the Administrative Agent, the Lenders and their counsel
as to compliance with the following conditions:

<PAGE>

                                                                         Page 22

     (1) Representations and Warranties True. The representations and warranties
contained in Section 7.01 and in the Guarantor's Guarantee are and shall
continue to be true and correct in every material respect as if made by the
Borrowers or the Guarantor, as applicable, contemporaneously with the initial
Borrowing.

     (2) Resolutions and Certificates. The Documentation Agent shall have
received, duly executed and in form and substance satisfactory to it:

     (a)  a certified or notarial copy of the constating documents and by-laws
          of Kingsway, the Guarantor, Kingsway US Tier II Finance Partnership
          and Kingsway Finance Nova Scotia ULC together with all amendments
          thereto and a certificate of good standing for each such Person (other
          than Partnership), each case certified as of a recent date by the
          appropriate governmental officer in its jurisdiction of organization
          and a copy of the resolutions of the board of directors of Kingsway
          and the Guarantor authorizing the execution, delivery and performance
          of this Agreement (in the case of Kingsway) and any other instruments
          contemplated hereunder, certified by an appropriate officer of
          Kingsway and the Guarantor, as applicable;

     (b)  a certificate of incumbency for Kingsway and the Guarantor showing the
          names, offices and specimen signatures of the officers who will
          execute this Agreement (in the case of Kingsway) and any other
          instruments contemplated hereunder and thereunder;

     (c)  a copy of the partnership agreement constituting the Partnership;

     (d)  a copy of the constating documents and by-laws of each partner of
          Partnership (collectively the "Partners" and each a "Partner") and a
          copy of the resolutions of the board of directors of each Partner
          authorizing the execution, delivery and performance of this Agreement
          and any other instruments contemplated hereunder;

     (e)  a certificate of incumbency of each Partner showing the names, offices
          and specimen signatures of the officers who will execute this
          Agreement and any other instruments contemplated hereunder and
          thereunder;

     (f)  such additional supporting documents as the Documentation Agent or its
          counsel may reasonably request.

     (3) Delivery of Guarantee. The Documentation Agent and the Lenders shall
have received the Guarantor's Guarantee duly executed by the Guarantor and in
form and substance satisfactory to the Documentation Agent, the Lenders and
their counsel.

     (4) Indebtedness. Except for the Permitted Indebtedness following repayment
of the existing credit facilities in accordance with Subsection 6.01(19),
neither Borrower, nor the Guarantor nor any of the Subsidiaries shall have any
other Indebtedness.

     (5) Corporate Management. The Lenders shall be satisfied with the
corporate, tax, legal and management structure and cash management systems of
the Borrowers, the Guarantor and the Subsidiaries, and shall be satisfied with
the nature and status of all material contractual obligations, securities,
labour, tax, employee benefit (including pension plan), environmental, health
and safety matters, involving or affecting a Borrower, the Guarantor or any
Subsidiary.

     (6) Legal Opinions. The Documentation Agent and the Lenders shall have
received from counsel to the Borrowers and the Guarantor, favourable legal
opinions in connection with this Agreement and the Guarantor's Guarantee, as
applicable, substantially in the form of opinion annexed as Schedule "J" hereto,

<PAGE>

                                                                         Page 23

and an opinion from United States counsel to the Borrowers and the Guarantor in
form and substance satisfactory to the Documentation Agent and the Lenders.

     (7) Notice of Borrowing. The Administrative Agent shall have received such
notices of Borrowing as required hereunder.

     (8) No Default. No Default or Event of Default has occurred and is
continuing both immediately before and after giving effect to the Borrowing.

     (9) Due Diligence. The Agents and the Lenders shall have completed and be
satisfied with the results of their due diligence inquiries.

     (10) Comfort Letter. The Agents shall be satisfied with the structure of
the transactions contemplated by this Agreement and the Administrative Agent
shall have received a "comfort letter" from KPMG LLP regarding such structure,
satisfactory in form and substance to the Administrative Agent.

     (11) Intercreditor Agreements. The Intercreditor Agreements shall have been
duly executed and delivered by all parties thereto.

     (12) Organization and Capital Structure. The Agents and the Lenders shall
be satisfied with the organizational and capital structure of each Borrower, the
Guarantor and each Subsidiary.

     (13) Material Adverse Effect. Nothing shall have occurred nor any fact
become known which an Agent or any Lender was not previously aware of and which
is reasonably likely to have a Material Adverse Effect.

     (14) Material Adverse Change. There shall have been no material adverse
change from Kingsway's unaudited Consolidated financial statements for the nine
months ending September 30, 1998.

     (15) Fees and Disbursements. The Agents and the Lenders shall have received
payment in full of all fees and out of pocket expenses payable to the Agents and
the Lenders which have become due (including fees and expenses of counsel to the
Agents).

     (16) Material Contracts. The Agents, the Lenders or their counsel shall
have reviewed copies of all documents including without limitation all franchise
agreements, royalty agreements, contracts, permits, licenses and leases material
to the business of the Borrowers, the Guarantor and the Subsidiaries, and the
Agents, the Lenders and their counsel shall be satisfied that all such
documents, agreements, contracts, permits, licenses and leases are in full force
and effect and that the Borrowers, the Guarantor or the Subsidiaries party
thereto are not in default thereunder.

     (17) Security Interests. All Security Interests charging any asset of the
Borrowers, the Guarantor or any Subsidiary shall have been discharged other than
Permitted Encumbrances and the Documentation Agent shall have received completed
PPSA and UCC-3 termination statements, as appropriate; provided that the
Security Interests (other than Permitted Encumbrances) charging the assets of
Walshire Assurance Company or its subsidiaries, Southern United Holdings Inc. or
its subsidiaries and Hamilton Investments, Inc. or its subsidiaries shall be
discharged not later than 30 days following the Closing Date.

     (18) Consolidated Financial Statements. The Administrative Agent shall have
received Consolidated financial statements of Kingsway, satisfactory to the
Administrative Agent acting reasonably.

     (19) Termination of existing Credit Facilities. All credit facilities
established by any lender for any Borrower or any Subsidiary shall be terminated
within 30 days of the Closing Date other than credit facilities constituting
part of Permitted Indebtedness.

<PAGE>

                                                                         Page 24

     (20) Subordination Agreements. The Documentation Agent shall have received
subordination agreements from each of Kingsway Finance Nova Scotia ULC and
Kingsway US Tier II Finance Partnership in respect of any intercompany loans
outstanding or to be incurred between such entities or between either of such
entities and the Guarantor.

Section 6.02 Conditions - Subsequent Borrowing. The obligation of the Lenders to
make available any Borrowing under this Agreement after the initial Borrowing is
conditional upon the following:

     (1) Representations and Warranties True. The representations and warranties
contained in Section 7.01 and in the Guarantor's Guarantee are and shall
continue to be true and correct in every material respect as if made by the
Borrowers or the Guarantor, as applicable, contemporaneously with any Borrowing.

     (2) Indebtedness. Except for the Permitted Indebtedness, no Borrower nor
any Subsidiary shall have any other Indebtedness.

     (3) Notice of Borrowing. The Administrative Agent shall have received such
notices of Borrowing as required hereunder.

     (4) No Default. No Default or Event of Default has occurred and is
continuing both immediately before and after giving effect to the Borrowing.

                                  ARTICLE SEVEN

                         REPRESENTATIONS AND WARRANTIES

Section 7.01 Representation and Warranties. The Borrowers jointly and severally
represent and warrant to the Agent and the Lenders that:

     (1) Due Incorporation of Kingsway and Subsidiaries. Kingsway is duly
incorporated, organized and validly subsisting and in good standing under the
laws of Ontario. Each Subsidiary is duly incorporated, organized and validly
subsisting and in good standing under the laws of its incorporating
jurisdiction. Kingsway has all necessary corporate power and authority to own
its properties and assets and to carry on its business as now conducted and is
or will be duly licensed or registered or otherwise qualified in all
jurisdictions wherein the nature of its assets or the business transacted by it
makes such licensing, registration or qualification necessary, except where
failure to do so would not have a Material Adverse Effect.

     (2) Partnership. Partnership is a duly constituted and validly subsisting
general partnership in good standing under the laws of Delaware of which
Kingsway and Metro Claim Services Inc., an Ontario corporation, are the only
partners. Partnership has all necessary power and authority to carry on business
as now conducted and is or will be duly licensed or registered or otherwise
qualified in all jurisdictions wherein the nature of its assets or the business
transacted by it makes such licensing, registration or qualification necessary
except where failure to do so would not have a Material Adverse Effect.

     (3) Power. Each Borrower and the Guarantor has full power and capacity to
enter into, deliver and perform its obligations under this Agreement, the
Guarantee and all other instruments contemplated hereunder, as applicable.

     (4) Due Authorization and No Conflict - Kingsway. The execution, delivery
and performance by Kingsway of this Agreement, and the Guarantor of the
Guarantor's Guarantee, and all other instruments contemplated hereunder and the
consummation of the transactions contemplated hereby and thereby

     (a)  have been duly authorized by all necessary corporate action,

<PAGE>

                                                                         Page 25

     (b)  do not and will not conflict with, result in any breach or violation
          of, or constitute with notice, lapse of time or both, a default under
          the constating documents or by-laws of, or any Applicable Laws,
          determination or award presently in effect and applicable to the
          Borrowers or any Guarantor, or of any material commitment, agreement,
          indenture or any other instrument to which a Borrower or any Guarantor
          is now a party or is otherwise bound, and

     (c)  do not result in or require the creation of any Security Interest upon
          or with respect to any of the properties or assets of Kingsway, the
          Guarantor or any Subsidiary.

     (5) Due Authorization and No Conflict - Partnership. The execution and
delivery by Partnership of this Agreement and all other instruments contemplated
hereunder and the consummation of the transactions contemplated hereby and
thereby

     (a)  have been duly authorized,

     (b)  do not and will not conflict with, result in any breach or violation
          of, or constitute with notice, lapse of time or both, a default under
          the partnership agreement constituting Partnership or under the
          constating documents or by-laws of either Partner, or any Applicable
          Laws, determination or award presently in effect and applicable to
          Partnership or the Partners, or of any material commitment, agreement,
          indenture or any other instrument to which Partnership or either of
          the Partners is now a party or is otherwise bound, and

     (c)  do not result in or require the creation of any Security Interest upon
          or with respect to any of the properties or assets of Partnership or
          either of the Partners.

     (6) Government Approval, Regulation, etc. No authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority or
other Person (including shareholders, if applicable) is required for the due
execution, delivery or performance by either Borrower or the Guarantor of this
Agreement, the Guarantor's Guarantee or any other instrument contemplated
hereunder other than filings under applicable securities laws and filings with
Insurance Regulatory Authorities. Neither Borrower nor the Guarantor is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, or a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

     (7) Business of the Borrowers. Kingsway does not carry on any business,
activity or operation of any kind whatsoever, other than the Lines of Business.

     (8) Valid and Enforceable Obligations. This Agreement, the Guarantee and
all other instruments contemplated hereunder are, or when executed and delivered
to the Agent will be, legal, valid and binding obligations of the Borrowers and
the Guarantor, as applicable, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium and other laws
affecting the enforcement of the rights of creditors generally.

     (9) Title. Subject to Permitted Encumbrances, each Borrower, the Guarantor
and each of the Subsidiaries has good and marketable title to its real and
personal property, free and clear of all Security Interests.

     (10) No Actions. Save as set forth in Schedule "I", there are no actions,
suits, proceedings, inquiries or investigations existing, pending or, to the
knowledge of either Borrower, threatened, affecting a Borrower, the Guarantor or
any Subsidiary in any court or before or by any federal, provincial or municipal
or other governmental department, commission, board, tribunal, bureau or agency,
Canadian or foreign, which are reasonably likely to materially and adversely
affect the financial condition, property, assets, operations or

<PAGE>
                                                                         Page 26

business of a Borrower, the Guarantor or any Subsidiary, the ability of the
Borrowers to repay the Outstanding Obligations or any part thereof or which is
reasonably likely to result in a Material Adverse Effect.

     (11) Financial Information. Subject to any limitations stated therein, the
financial statements of Kingsway furnished to the Agents and the Lenders under
this Agreement or which were furnished to the Agents or to the Lenders to induce
them to enter into this Agreement or otherwise in connection with this Agreement
fairly present the financial condition of the Borrowers on a Consolidated basis
as at the date thereof, and no material adverse change has occurred in their
financial position between such date and the Closing Date. Such financial
statements and all other information, certificates, statutes, reports and other
papers and data furnished to the Agents and the Lenders are accurate, complete
and correct in all material respects, except that the Borrowers do not represent
or warrant that any forecast contained in any financial projections will
ultimately prove to be accurate. The Borrowers on a Consolidated basis have no
liabilities, including as to contingencies and unusual or forward commitments,
that are not disclosed in the foregoing financial statements or the footnotes
thereto or otherwise disclosed to the Lenders in writing or incurred pursuant to
this Agreement.

     (12) No Defaults or Events of Default. No event has occurred and is
continuing, and no circumstance exists which has not been waived, and which
constitutes a Default or Event of Default hereunder or a default or event of
default in respect of any material commitment, agreement or any other instrument
to which a Borrower, the Guarantor or any Subsidiary is now a party or is
otherwise bound, entitling any other party thereto to accelerate the maturity of
amounts of principal owing thereunder, or terminate any such material
commitment, agreement or instrument, or which would have a Material Adverse
Effect.

     (13) Compliance with Law. None of the Borrowers, the Guarantor or the
Subsidiaries is in violation of any terms of its constating documents (including
the partnership agreement constituting the Partnership) or by-laws or of any
law, regulation, rule, order, judgment, writ, injunction, decree, determination
or award presently in effect and applicable to it, the violation of which would
have a Material Adverse Effect.

     (14) Reporting Issuer. Kingsway is a reporting issuer (as that term is
defined in the Securities Act (Ontario)) in good standing.

     (15) Compliance with Securities Laws. Each Borrower, the Guarantor and each
of the Subsidiaries are in compliance in all material respects with the
provisions and requirements of all Applicable Laws including, without
limitation, the completion on a proper and timely basis of all necessary filings
under any and all such Applicable Laws.

     (16) Capital. Kingsway is authorized to issue an unlimited number of common
shares, and has issued approximately 35,986,205 as fully paid and non-assessable
common shares. Except for directors' qualifying shares of Kingsway General
Insurance Company, York Fire and Casualty Insurance Company and Transit
Insurance Company as outlined in Schedule "K1", all of the shares of all classes
in the capital stock of the Guarantor and each corporate Subsidiary and all
partnership interests in Subsidiary partnerships are directly or indirectly
beneficially owned by Kingsway. Kingsway Finance Nova Scotia ULC owns all of the
shares of all classes in the capital stock of the Guarantor. Partnership owns
all ownership interests of Kingsway Finance Nova Scotia ULC.

     (17) Non-Dilution. No Person now has any agreement, option or right capable
of becoming an agreement or option for the pledge, purchase, subscription or
issuance from any Borrower, the Guarantor or any Subsidiary of any shares of
Kingsway, the Guarantor or any Subsidiary, issued or unissued, which will cause
a change of Voting Control.

     (18) No Foreign Business. The Borrowers do not carry on any business,
employ any employees, or own any material assets outside Canada, the United
States of America, Barbados or Bermuda.

<PAGE>
                                                                         Page 26

     (19) Subsidiaries. Kingsway does not own any shares or voting securities of
any Person directly or indirectly other than the Guarantor and the Subsidiaries
identified herein, other than equities maintained in Kingsway's investment
portfolio.

     (20) Taxes. Except as set forth in Schedule "L", each Borrower, the
Guarantor and each Subsidiary has filed all foreign, federal, provincial and
local Tax Returns which are required to be filed and has paid all Taxes due
pursuant to such returns or pursuant to any assessment received by such
Borrower, Guarantor or Subsidiary except such Taxes, if any, as are being
contested in good faith and as to which adequate reserves have been provided in
accordance with GAAP. All information provided in such Tax Returns pertaining to
the Borrowers, the Guarantor or any Subsidiary is true, complete, and accurate
in all material respects. The charges, accruals and reserves on the books of the
Borrowers, the Guarantor and the Subsidiaries, as applicable, in respect of any
Taxes or other governmental charges payable for the current or prior year which
are not yet due are adequate in accordance with GAAP to the extent that the
Borrowers are aware of them. Schedule "L" sets forth as of the Closing Date
those taxable years for which a Borrower's, the Guarantor's or a Subsidiary's
Tax Returns are currently being audited by Revenue Canada and/or other
applicable Governmental Authority and any assessments or threatened assessments
otherwise outstanding. Except as set out in Schedule "L", neither Borrower, nor
the Guarantor nor any Subsidiary has received any notice of assessment of
additional taxes or any other claim of notice of any nature whatsoever that any
Tax or additional Tax is due which has not been paid or otherwise finally
settled or satisfied. Except as set out in Schedule "L", to the knowledge of the
Borrowers, there are no actions, suits, proceedings, investigations or claims,
threatened or pending, in respect of any Taxes. Except as set forth on Schedule
"L", there are no matters under discussion with any Governmental Authority
relating to any Taxes asserted by any such body. Each Borrower, the Guarantor
and each Subsidiary has withheld from its employees, customers and any other
applicable payees (and timely paid to the Governmental Authority) the proper and
accurate amount of all Taxes and other amounts required to be withheld or
collected and remitted in compliance with all Applicable Laws. There are no
liens for Taxes on the assets of any Borrower, the Guarantor or any Subsidiary
except for liens arising under Applicable Law, that are unregistered or
otherwise unperfected, for Taxes not yet due. Neither Borrower, nor the
Guarantor nor any Subsidiary has executed nor filed with Revenue Canada nor any
other Governmental Authority any agreement, waiver or other document extending
or having the effect of extending the period for assessment, reassessment or
collection of any Taxes or the filing of any Tax Returns. As of the Closing
Date, the Borrowers, the Guarantor and each of their respective Subsidiaries
have no liabilities for Taxes which could reasonably be expected to result in a
Material Adverse Effect.

     (21) Labour Matters. Except as set forth in Schedule "M", there are no
strikes or other labour disputes against a Borrower, the Guarantor or any
Subsidiary that is pending or threatened. All payments due from either Borrower
or any Subsidiary on account of workers compensation, Canada Pension Plan,
Quebec Pension Plan, ERISA, employee health plans, social security and insurance
of every kind and employee income tax source deductions and vacation pay have
been paid. Except as set forth in Schedule "M", neither Borrower, the Guarantor
nor any Subsidiary has any obligation under any collective bargaining agreement.
There is no organizing activity involving either Borrower, the Guarantor or any
Subsidiary by any labour union or group of employees. Except as set forth in
Schedule "M", no labour organization or group of employees has made a pending
demand for recognition and there are no complaints or charges against either
Borrower, the Guarantor or any Subsidiary pending or threatened to be filed with
any Governmental Authority or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
either Borrower, the Guarantor or any Subsidiary of any individual. Hours worked
by and payment made to employees of the Borrowers, the Guarantor and the
Subsidiaries have not been in violation of any applicable laws which would have
a Material Adverse Effect. The Borrowers, the Guarantor and the Subsidiaries are
in material compliance with the terms and conditions of all collective
bargaining agreements, consulting agreements, management agreements and employee
agreements and all other labour agreements.

     (22) Pensions. Except as set forth in Schedule "N",

<PAGE>
                                                                         Page 28

          (a)  all employee and employer contributions under any pension plan
               operated by the Borrower, the Guarantor or any Subsidiary have
               been made and the fund or funds established under such plans are
               funded in accordance with applicable regulatory requirements and
               the rules of such plans and there exists no going concern
               unfunded liabilities or solvency deficiencies thereunder;

          (b)  no pension plan has been terminated or partially terminated or is
               insolvent or in reorganization, nor have any proceedings been
               instituted to terminate or reorganize any pension plan;

          (c)  none of the Borrowers, the Guarantor nor any of the Subsidiaries
               has withdrawn from any pension plan in a complete or partial
               withdrawal, nor has a condition occurred which if continued would
               result in a complete or partial withdrawal;

          (d)  none of the Borrowers, the Guarantor nor any of the Subsidiaries
               has any withdrawal liability, including contingent withdrawal
               liability, to any pension plan;

          (e)  none of the Borrowers, the Guarantor nor any of the Subsidiaries
               has any liability in respect of any pension plan other than for
               required insurance premiums or contributions or remittances which
               have been paid, contributed and remitted when due;

          (f)  each Borrower, the Guarantor and each Subsidiary has made all
               contributions to its pension plans required by law or the terms
               thereof to be made by it when due and is not in arrears in the
               payment of any contribution, payment, remittance or assessment or
               in default in filing any reports, returns, statements and similar
               documents in respect of the pension plans required to be made or
               paid by it pursuant to any pension plan, any law, act,
               regulation, directive or order or any employment, union, pension,
               deferred profit sharing, benefit, bonus or other similar
               agreement or arrangement;

          (g)  none of the Borrowers, the Guarantor nor any Subsidiary is liable
               or, to the best of its knowledge, alleged to be liable, to any
               employee or former employee, director or former director, officer
               or former officer resulting from any violation or alleged
               violation of any pension plan, any fiduciary duty, and law or
               agreement in relation to any pension plan and does not have any
               unfunded pension or like obligations (including any past service
               or experience deficiency funding liabilities), other than accrued
               obligations not yet due, for which they have made full provision
               in their books and records;

          (h)  all vacation pay, bonuses, salaries and wages, to the extent
               accruing due, are properly reflected in the books and records of
               the Borrowers, the Guarantor and the Subsidiaries;

          (i)  without limiting the foregoing, all of the Borrowers', the
               Guarantor's and Subsidiaries' pension plans are duly registered
               where required by, and are in compliance and good standing in all
               material respects under, all applicable laws, acts, statutes,
               regulations, orders, directives and agreements, including,
               without limitation, ERISA, the Code, the Income Tax Act (Canada),
               and the Pension Benefits Act, 1987 (Ontario), any successor
               legislation thereto, and other applicable laws of any
               jurisdiction;

          (j)  there are no outstanding or pending or threatened investigations,
               claims, suits or proceedings in respect of any pension plans
               (including to assert rights or claims to benefits or that could
               give rise to any material liability);

          (k)  no promises of benefit improvements have been made except where
               such improvements could not have a Material Adverse Effect and,
               in any event, no such improvements will

<PAGE>
                                                                         Page 29

               result in a solvency deficiency or going concern unfunded
               liability in the affected pension plans;

          (l)  all the material obligations of the Borrowers, the Guarantor and
               the Subsidiaries (including fiduciary, funding, investment and
               administration obligations) required to be performed in
               connection with the pension plans and the funding agreements
               therefor have been performed in a timely fashion;

          (m)  there have been no improper withdrawals or applications of the
               assets of the pension plans or the benefit plans.

     (23) ERISA. Except to the extent that any of the following could not
reasonably be expected to have a Material Adverse Effect:

          (a)  neither a Reportable Event nor an "accumulating funding
               deficiency" (within the meaning of the Code, or Section 302 of
               ERISA) has occurred during the five-year period prior to the date
               on which this representation is made or deemed made with respect
               to any Plan, and each Plan has complied in all material respects
               with the applicable provisions of ERISA and the Code. No
               termination of a Single Employer Plan has occurred and no lien in
               favour of the PBGC of a Plan has arisen during the five-year
               period prior to the date as of which this representation is
               deemed made;

          (b)  the present value of all accrued benefits under each Single
               Employer Plan in which a Borrower, the Guarantor or any
               Subsidiary is a participant (based on those assumptions used to
               fund the Plans) did not, as of the last annual valuation date
               prior to the date on which this representation is made or deemed
               made, exceed the value of the assets of such Plan allocable to
               such accrued benefits;

          (c)  none of the Borrowers, the Guarantor or any Subsidiary has had a
               complete or partial withdrawal from any Multiemployer Plan, nor
               would a Borrower, the Guarantor or any Subsidiary become subject
               to any liability under ERISA if it were to withdraw completely
               from all Multiemployer Plans as of the valuation date most
               closely preceding the date on which this representation is made
               or deemed made;

          (d)  none of the Borrowers, the Guarantor or any Subsidiary nor any
               Commonly Controlled Entity has any contingent liability with
               respect to any post-retirement benefit under a Plan, other than
               liability for COBRA; and

          (e)  no such Multiemployer Plan is in "reorganization" or "insolvent"
               within the meaning of such terms as used in ERISA.

     (24) Accuracy of Information. All factual information previously or
contemporaneously furnished by or on behalf of a Borrower, the Guarantor or any
Subsidiary in writing for purposes of or in connection with this Agreement, the
Guarantor's Guarantee or any transaction contemplated hereby is true and
accurate in every material respect and such information is not incomplete by the
omission of any material fact necessary to make such information not misleading.

     (25) Solvency. Both before and immediately after giving effect to any
Borrowing requested hereunder:

          (a)  the fair saleable value of the assets of each Borrower, the
               Guarantor and their respective Subsidiaries on a Consolidated
               basis exceeds the total amount of liabilities (including
               contingent, subordinated, unmatured and unliquidated liabilities)
               of such Borrower, the Guarantor and its Subsidiaries on a
               consolidated basis, on a going-concern basis;

<PAGE>
                                                                         Page 30

          (b)  the present fair saleable value (as defined below) of the assets
               of each Borrower, the Guarantor and their respective Subsidiaries
               on a Consolidated basis exceeds the probable total liabilities
               (including contingent, subordinated, unmatured and unliquidated
               liabilities) of such Borrower, the Guarantor and its Subsidiaries
               on a Consolidated basis as they become absolute and matured;

          (c)  each Borrower, the Guarantor and their respective Subsidiaries on
               a Consolidated basis will be able to pay their debts, including
               contingent liabilities, as they mature and become due;

          (d)  each Borrower, the Guarantor and their respective Subsidiaries on
               a Consolidated basis are not, and will not be, engaged in a
               business for which their Consolidated capital is, or would be,
               unreasonably small for their Consolidated business; and

          (e)  each Borrower, the Guarantor and their respective Subsidiaries on
               a Consolidated basis have not incurred (by way of assumption or
               otherwise) any obligations or liabilities (contingent or
               otherwise) under this Agreement or any other Loan Document, nor
               have they made any conveyance pursuant to or in connection
               therewith, with actual intent to hinder, delay or defraud either
               present or future creditors of such Borrower, the Guarantor or
               any of its Subsidiaries.

          For purposes of this Section, the "fair saleable value" of each
          Borrower's, the Guarantor's and their respective Subsidiaries' assets
          means the amount which may be realized within a reasonable time,
          either through collection or sale of such assets at the regular market
          value, based upon the amount which could be obtained for such assets
          within such period by a capable and diligent seller from an interested
          buyer who is willing (but is under no compulsion) to purchase under
          ordinary selling conditions.

     (26) Subsidiary Status; Liabilities, etc. Immediately prior to the Closing
Date, neither Partnership, Kingsway US Tier II Finance Partnership nor Kingsway
Finance Nova Scotia ULC had any assets or liabilities and had performed no
business other than preparing for the transactions herein contemplated. After
giving effect to the transactions contemplated hereby, neither Partnership,
Kingsway US Tier II Finance Partnership nor Kingsway Finance Nova Scotia ULC
shall have any liabilities except incurred pursuant to, or contemplated by, this
Agreement.

     (27) Financial Year End. The Financial Year ends of each Borrower, the
Guarantor and each Subsidiary is December 31.

     (28) Guarantees. None of the Borrowers, the Guarantor or any Subsidiary has
guaranteed the obligations of any Person for borrowed money save that the
Guarantor has guaranteed the obligations of Kingsway under the credit facilities
described in Subsection 1.01(86)(vii) and (viii) and Kingsway has guaranteed the
obligations of the Guarantor under such credit facilities.

     (29) Margin Stock. (a) None of the Borrowers, the Guarantor or any
Subsidiary owns stock on margin except as previously disclosed to the Agent in
writing, (b) neither Borrower, nor the Guarantor nor any Subsidiary is engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Borrowing will be used to purchase or carry
any margin stock or for a purpose which violates, or would be consistent with,
F.R.S. Board Regulation T, U or X. Terms for which meanings are provided in
F.R.S. Board Regulation T, U or X or any regulations substituted therefor, as
from time to time in effect, are used in this Section with such meanings.

     (30) Disclosure. No representation or warranty made by a Borrower or the
Guarantor in any of the Loan Documents contains any untrue statement of a fact
or omits to state a material fact necessary in order to make the statements
contained therein, taken as a whole, not misleading in light of the
circumstances in which they are made. There is no fact known to either Borrower
which the Borrowers have not disclosed to the Agent and the Lenders which may
have a Material Adverse Effect so far as the Borrowers can now

<PAGE>
                                                                         Page 31

reasonably foresee or which may materially adversely affect the ability of the
Borrowers to perform their obligations under this Agreement.

     (31) Governmental and Third Party Authorization; Permits.

     (a)  No consent, approval, authorization or other action by, notice to, or
          registration or filing with, any Governmental Authority or other
          Person is or will be required as a condition to or otherwise in
          connection with the due execution, delivery and performance by each of
          the Borrower and its Subsidiaries of this Agreement or any of the
          other Loan Documents to which it is or will be a party or the
          legality, validity or enforceability hereof or thereof, other than (i)
          consents, authorizations and filings that have been (or on or prior to
          the Closing Date will have been) made or obtained and that are (or on
          the Closing Date will be) in full force and effect, which consents,
          authorizations and filings are listed on Schedule "O", and (ii)
          consents and filings the failure to obtain or make which would not,
          individually or in the aggregate, have a Material Adverse Effect.

          Each of the Borrower and its Subsidiaries has, and is in good standing
          with respect to, all governmental approvals, licenses, permits and
          authorizations necessary to conduct its business as presently
          conducted and to own or lease and operate its properties, except for
          those the failure to obtain which would not be reasonably likely,
          individually or in the aggregate, to have a Material Adverse Effect.

     (b)  Schedule "P" lists with respect to each Material Insurance Subsidiary,
          as of the Closing Date, all of the jurisdictions in which such
          Material Insurance Subsidiary holds licenses (including, without
          limitation, licenses or certificates of authority from relevant
          Insurance Regulatory Authorities), permits or authorizations to
          transact insurance and reinsurance business (collectively, the
          "Licenses"), and indicates the line or lines of insurance in which
          each such Material Insurance Subsidiary is permitted to be engaged
          with respect to each License therein listed. To the knowledge of the
          Borrowers, (i) no such License is the subject of a proceeding for
          suspension, revocation or limitation or any similar proceedings; (ii)
          there is no sustainable basis for such a suspension, revocation or
          limitation; and (iii) no such suspension, revocation or limitation is
          threatened by an relevant Insurance Regulatory Authority. No Material
          Insurance Subsidiary transacts any insurance business, directly or
          indirectly, in any jurisdiction other than those listed on Schedule
          "P", where such business requires any license, permit or other
          authorization of an Insurance Regulatory Authority of such
          jurisdiction.

     (32) No Business in Delaware. None of Partnership, the Guarantor or
Kingsway US Tier II Finance Partnership derive income from or connected with
sources within the State of Delaware and none have assets, activities (other
than the maintenance of an office and an agent in the State of Delaware and the
filing of documents in the State of Delaware) or employees in the State of
Delaware.

Section 7.02 Survival of Representations and Warranties. The representations and
warranties contained in this Article 7 shall survive the execution and delivery
of this Agreement and the making of Borrowings hereunder, regardless of any
investigation or examination made by the Agent, the Lenders or their counsel and
the Agents and the Lenders shall be deemed to have relied upon each of such
representations and warranties in making available each Borrowing hereunder.

                                  ARTICLE EIGHT

                                    COVENANTS

<PAGE>
                                                                         Page 32

Section 8.01 Positive Covenants. From the date hereof and until the Outstanding
Obligations are repaid in full, the Borrowers will observe and perform, or will
cause the observance and performance of each of the following covenants, unless
compliance therewith shall have been waived in writing by the Majority of the
Lenders:

     (1) Existence - Corporate. Kingsway will do or cause to be done all such
things as are necessary to maintain its corporate existence and the corporate
existence of the Guarantor and each Subsidiary in good standing, to ensure that
it and each Subsidiary have at all times the right and are duly qualified to
conduct their businesses and to obtain and maintain all rights, privileges and
franchises necessary for the conduct of their business, except where failure to
do so would not have a Material Adverse Effect on such businesses or on the
ability of Kingsway, the Guarantor or any Subsidiary to perform its obligations
hereunder or under the Loan Documents.

     (2) Existence - Partnership. Partnership will do or cause to be done all
such things as are necessary to maintain its existence (including for United
States tax purposes, its status as a United States corporation) and the
corporate existence of each of the partners of Partnership in good standing, to
ensure that it has at all times the right and is duly qualified to conduct its
business and to obtain and maintain all rights, privileges and franchises
necessary for the conduct of its business, except where failure to do so would
not have a Material Adverse Effect on such business or on its ability to perform
its obligations hereunder. Partnership will make and maintain without revocation
an effective election under the Code to be treated as a corporation for United
States federal income tax purposes; provided, however, Partnership may fail to
make such election or may revoke such election with the prior written consent of
the Majority of the Lenders if such failure or revocation would not result in a
Material Adverse Effect.

     (3) Conduct of Business. Each Borrower will maintain, operate and use its
properties and assets, and will carry on and conduct its business (a) in
substantially the same fields of enterprise as it is currently conducted and (b)
in a proper and efficient manner so as to preserve and protect such properties
and assets and business and the profits thereof and will cause the Guarantor and
each Subsidiary to do likewise in respect of their respective properties, assets
and business.

     (4) Payment of Principal, Interest and Expenses. The Borrowers will duly
and punctually pay or cause to be paid to the Agent and the Lenders the
Outstanding Obligations at the times and places and in the manner provided for
herein.

     (5) Payment of Taxes and Claims. The Borrowers will pay and discharge, and
will cause the Guarantor and each Subsidiary to pay and discharge, promptly when
due all Taxes, assessments and other governmental charges or levies imposed upon
it or upon its properties or assets or upon any part thereof, as well as all
claims of any kind (including claims for labour, materials and supplies) which,
if unpaid, would by law become a lien, charge, trust or other claim upon any
such properties or assets; but neither Borrower, nor the Guarantor nor any
Subsidiary shall be required to pay any such Tax, assessment, charge or levy or
claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower,
Guarantor or Subsidiary, as applicable, shall have set aside on its books a
reserve to the extent required by GAAP in an amount which is reasonably adequate
with respect thereto.

     (6) Cooperate With Agents and Lenders. The Borrowers shall cooperate fully
with the Agents and the Lenders with respect to any proceedings before any
court, board or other Governmental Authority which may in any way result in a
Material Adverse Effect and, in connection therewith, permit the Agent and the
Lenders or any of them, at their election, to participate in any such
proceedings.

     (7) Financial Statements. The Borrower will deliver to each Lender:

     (a) As soon as available and in any event within sixty (60) days after the
         end of each of the first three fiscal quarters of each Financial Year,
         beginning with the fiscal quarter ending March 31, 1999, unaudited
         Consolidated and consolidating financial statements of Kingsway and
         the

<PAGE>
                                                                         Page 33

         Guarantor as of the end of such fiscal quarter consisting of balance
         sheets, statements of income, cash flows and shareholders' equity for
         the fiscal quarter then ended and for that portion of the Financial
         Year then ended, in each case setting forth comparative Consolidated
         figures as of the end of and for the corresponding period in the
         preceding Financial Year, all in reasonable detail and prepared in
         accordance with GAAP (subject to the absence of notes required by GAAP
         and subject to normal year-end adjustments) applied on a basis
         consistent with that of the preceding quarter or containing disclosure
         of the effect on the financial condition or results of operations of
         any change in the application of accounting principles and practices
         during such quarter; and

     (b) As soon as available and in any event within one hundred and twenty
         (120) days after the end of each Financial Year, beginning with the
         Financial Year ending December 31, 1998, an audited Consolidated and
         consolidating financial statements of Kingsway and the Guarantor as of
         the end of such Financial Year consisting of balance sheets,
         statements of cash flow, income and shareholders' equity for the
         Financial Year then ended, including the notes thereto, in each case
         setting forth comparative figures as of the end of and for the
         preceding Financial Year together with comparative projected figures
         for the Financial Year then ended, all in reasonable detail and
         certified by the independent public accounting firm regularly retained
         by Kingsway or another independent public accounting firm of
         recognized national standing reasonably acceptable to the
         Administrative Agent, together with (y) a report thereon by such
         accountants that is not qualified as to going concern or scope of
         audit and to the effect that such financial statements present fairly
         the Consolidated financial condition and results of operations of
         Kingsway and the Guarantor as of the dates and for the periods
         indicated in accordance with GAAP applied on a basis consistent with
         that of the preceding year or containing disclosure of the effect on
         the financial condition or results of operations of any change in the
         application of accounting principles and practices during such year,
         and (z) if required by a Lender, a report by such accountants to the
         effect that, based on and in connection with their examination of the
         financial statements of the Borrowers and the Guarantor, they obtained
         no knowledge of the occurrence or existence of any Default or Event of
         Default relating to accounting or financial reporting matters, or a
         statement specifying the nature and period of existence of any such
         Default or Event of Default disclosed by their audit; provided
         however, that such accountants shall not be liable by reason of the
         failure to obtain knowledge of any Default or Event of Default that
         would not be disclosed or revealed in the course of their audit
         examination, and (ii) an unaudited consolidating balance sheet of the
         Borrowers and the Guarantor as of the end of such Financial Year and
         unaudited consolidating statements of income for the Borrowers and the
         Guarantor for the Financial Year then ended, all in reasonable detail.

     (8) Statutory Financial Statements. The Borrowers will deliver to First
Union and LaSalle, and any other Lender who so requests:

     (a) As soon as available and in any event within sixty (60) days after the
         end of each of the first three fiscal quarters of each Financial Year,
         beginning with the first fiscal quarter ending after the date hereof,
         a quarterly statement of each Insurance Subsidiary as of the end of
         such fiscal quarter and for that portion of the Financial Year then
         ended, in the form filed with the relevant Insurance Regulatory
         Authority, prepared in accordance with SAP;

     (b) As soon as available and in any event within seventy (70) days after
         the end of each Financial Year, beginning with the Financial Year
         ended December 31, 1998, an Annual Statement of each Insurance
         Subsidiary as of the end of such Financial Year and for the Financial
         Year then ended, in the form filed with the relevant Insurance
         Regulatory Authority, prepared in accordance with SAP; and

     (c) Intentionally deleted.

<PAGE>
                                                                         Page 34

     (9) Quarterly Certificate. The Borrowers shall deliver to the
Administrative Agent together with the financial statements provided for in
Subsections 8.03(7)(a) and (b) a Quarterly Certificate.

     (10) Use of Proceeds. The Borrowers shall use the proceeds of all
Borrowings for the purposes contemplated hereunder, and for no other purpose.

     (11) Currency and Interest Rate Speculation. None of the Borrowers, the
Guarantor or any of the Subsidiaries shall engage in currency trading or convert
loans from one currency to another for speculative reasons, or engage in
interest rate hedging transactions for speculative reasons.

     (12) Reserves. The Borrowers will, and will cause the Guarantor and the
Subsidiaries to, maintain appropriate reserves for Taxes, depreciation and other
contingent expenses or liabilities in accordance with GAAP.

     (13) Shareholder Information. The Borrowers shall deliver to the
Administrative Agent (for distribution to the Lenders) forthwith upon the
reasonable request of the Administrative Agent copies of all financial
statements, information circulars, registration statements, reports and other
disclosure information which a Borrower or any of its Subsidiaries shall send or
make available to its shareholders of which it is required or elects to file
with any securities regulatory authority (including the Securities and Exchange
Commission) or stock exchange having jurisdiction over it.

     (14) Securities Regulatory Filings; Certain Other Notices. The Borrowers
shall provide to Administrative Agent (for distribution to the Lenders) a copy
of each material written communication received by either Borrower, the
Guarantor or the Subsidiaries from or delivered by a Borrower, the Guarantor or
any Subsidiary to (without duplication) (a) any securities regulatory authority,
including annual filings, information circulars, directors' circulars,
statements of executive compensation and material change reports, (b) any holder
of stock or Indebtedness of a Borrower or Subsidiary, or (c) any provincial,
state or federal regulatory body, in each case, within ten days of such receipt
or delivery.

     (15) Report to Other Creditors. The Borrowers shall provide to the
Administrative Agent (for distribution to the Lenders) copies of any statement
or report provided to any other party by a Borrower, the Guarantor or a
Subsidiary pursuant to the terms of each contract or agreement relating to
Indebtedness of a Borrower, the Guarantor or a Subsidiary and not otherwise
required to be provided to the Administrative Agent pursuant to this Agreement
promptly following the provision to such other party.

     (16) Other Information. The Borrowers shall furnish to the Administrative
Agent promptly on request such other information in its possession respecting
its financial condition and its business and operations, and the financial
condition of the Guarantor and the Subsidiaries and their businesses and
operations, as the Administrative Agent (on behalf of the Lenders) may from time
to time reasonably require.

     (17) Insurance. The Borrowers shall insure and keep insured their
properties and assets and shall cause the Guarantor and the Subsidiaries to
insure and to keep insured their properties and assets, placed with such
insurers and with such coverage and against such loss or damage to the full
insurable value of such properties and assets without co-insurance as the
Administrative Agent (following consultation with the Lenders) shall reasonably
require or, in the absence of such requirement, to the extent insured against by
comparable corporations engaged in comparable businesses. The Borrowers shall
pay or cause to be paid all premiums necessary to maintain any such insurance
policies in good standing as such premiums become due and payable.

     (18) Books and Records. The Borrowers will at all times maintain, and will
cause the Guarantor and the Subsidiaries to maintain, proper records and books
of account and therein make, and cause the Guarantor and the Subsidiaries to
make, true and correct entries of all dealings and transactions relating to

<PAGE>
                                                                         Page 35

their business and, if requested by the Administrative Agent, will make the same
available for inspection by the Administrative Agent (on behalf of the Lenders)
or any agent of the Administrative Agent at all reasonable times.

     (19) Access. Each Borrower will permit, and will cause the Guarantor and
the Subsidiaries to permit, the Administrative Agent (on behalf of the Lenders)
through its officers or employees or through any consultants retained by it,
upon request, to have reasonable access at any reasonable time and from time to
time, to any of the Borrowers', the Guarantor's or any of the Subsidiaries'
premises and to any records, information or data in their possession so as to
enable the Administrative Agent to ascertain the state of the Borrowers' or
Guarantor's financial condition or operations, and will permit the
Administrative Agent (on behalf of the Lenders) to make copies of and abstracts
from such records, information or data and will upon request of the Lenders
deliver to the Administrative Agent (who shall forthwith deliver same to the
Lenders) copies of such records, information or data.

     (20) Notice of Adverse Change. The Borrowers will give to the
Administrative Agent (who shall forthwith advise the Lenders) prompt written
notice of any event (including, without limitation, any proposed change in any
Tax Law) which may result in a Material Adverse Effect.

     (21) Notice of Litigation. The Borrowers will give to the Administrative
Agent (who shall forthwith advise the Lenders) prompt written notice of any
action, suit, litigation, or other proceeding which is commenced or threatened
against any Borrower, the Guarantor or any Subsidiary, in which the plaintiff is
claiming damages in an amount greater than US $5,000,000 or in which injunctive
or similar relief is sought, other than claims arising in the ordinary course of
business.

     (22) Notice of Breach. The Borrowers will give to the Administrative Agent
(who shall forthwith advise the Lenders) notice of any Default or Event of
Default as soon as a Borrower becomes aware of same, together with a detailed
statement of a senior officer of the Borrowers of the steps, if any, being taken
to cure or remedy such Default or Event of Default.

     (23) Material Contracts. The Borrowers shall, and shall cause the Guarantor
and each Subsidiary to, perform all material obligations of a Borrower, the
Guarantor or a Subsidiary as applicable pursuant to all documents, contracts and
agreements material to the operations of a Borrower, the Guarantor or any
Subsidiary.

     (24) Compliance with Laws. The Borrowers shall, and shall cause the
Guarantor and each Subsidiary to, comply in all material respects with all
Applicable Laws.

     (25) Year 2000 Compliance. The Borrowers shall take all such steps as may
be reasonably necessary to ensure that all hardware and software products owned
or licensed by a Borrower, the Guarantor or a Subsidiary and necessary to
operate the business in all material respects will be Year 2000 Compliant by
September 30, 1999.

     (26) Notice. The Borrowers shall promptly give notice to the Lenders of the
occurrence or expected occurrence of (1) any Reportable Event with respect to
any Plan or arrangement with respect to any Plan which could reasonably be
expected to result in the incurrence by either Borrower or any of their
respective Subsidiaries of any material liability, fine or penalty, a failure to
make any required contribution to a Plan, any lien in favour of the PBGC or a
Plan, or any withdrawal from, or the termination, reorganization or insolvency
(within the meaning of such terms as used in ERISA) of any Multiemployer Plan or
(2) the institution of any proceedings or the taking of any action by the PBGC
or either Borrower of any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, reorganization or
insolvency (within the meaning of such terms as used in ERISA) of any Plan or
which would materially increase the contingent liability of either Borrower or
any of their respective Subsidiaries with respect to any post-retirement Plan
benefit other than liability for COBRA.

<PAGE>
                                                                         Page 36

     (27) Investments. The Borrowers shall provide to the Agent (for
distribution to the Lenders) such periodic reports in respect of investments and
invested assets as the Agent and the Lenders may reasonably request.

     (28) Parity of Debt. The Borrowers shall ensure that the Outstanding
Obligations shall rank in right of payment in priority to, or in parity with,
any other Senior Funded Debt other than Senior Funded Debt secured by Permitted
Encumbrances.

     (29) Ownership of Subsidiaries. Kingsway shall at all times hold directly
or indirectly 100% of all issued and outstanding stock of all classes of the
Guarantor and all Subsidiaries, and a 99% partnership interest in Partnership.

     (30) Consistent Loan Documentation. The Borrowers shall ensure that the
terms and conditions of any credit facility established by any lender are
consistent with the terms and conditions of this Agreement.

     (31) Business of Subsidiaries. The Borrowers shall ensure that Kingsway
Finance Nova Scotia ULC and Kingsway US Tier II Finance Partnership do not carry
on any business other than (a) as a financial services holding company and (b)
financing transactions relating to Funded Debt, nor shall they have any assets
or liabilities other than pursuant to or as contemplated by this Agreement.

     (32) Senior Unsecured Debt Rating. Kingsway shall maintain at all times a
senior unsecured debt rating with Moody's or Standard & Poor's debt rating
services to be updated annually.

Section 8.02 Financial Covenants.

     (1) Funded Debt to Total Capitalization. Kingsway shall maintain at all
times a ratio of Funded Debt to Total Capitalization on a Consolidated basis as
follows: (i) of not greater than 0.45:1.00 for the period commencing on the
Closing Date and ending on March 31, 2000, (ii) of not greater than 0.40% for
the period commencing April 1, 2000 and ending September 30, 2000, (iii) of not
greater than 0.35% for the period commencing October 1, 2000 and ending on
December 31, 2001, and (iv) of not greater than 0.30% at all times thereafter.

     (2) Capital Surplus Ratio. Kingsway shall maintain at all times a Capital
Surplus Ratio on a Consolidated basis of not greater than 2.75:1.00 calculated
quarterly on the last day of each fiscal quarter of Kingsway on a rolling
four-quarter basis.

     (3) Minimum Tangible Net Worth. Kingsway shall maintain at all times a
Tangible Net Worth on a Consolidated basis of not less than Cdn. $140,000,000
provided that minimum Tangible Net Worth shall increase in each fiscal quarter
by an amount equal to 50% of Consolidated Net Income during such quarter and 25%
of any equity issues undertaken in such quarter with no downward adjustment for
net losses.

     (4) Combined Ratio. Kingsway shall maintain at all times a Combined Ratio
on a Consolidated basis of not greater than the greater of (i) 105% and (ii) the
Canadian Property and Casualty Industry Average Combined Ratio over four
consecutive quarters calculated on the last day of each fiscal quarter of
Kingsway on a rolling four-quarter basis and in a consistent manner.

     (5) Interest Coverage. Kingsway shall maintain at all times an Interest
Coverage Ratio on a Consolidated basis of not less than 3.00:1.00 calculated on
the last day of each fiscal quarter of Kingsway on a rolling four-quarter basis.

Section 8.03 Restrictive Covenants. From the date hereof and until the
Outstanding Obligations are paid in full, the Borrowers shall adhere, and shall
cause the Guarantor and the Subsidiaries to adhere, to the following covenants
unless waived in writing by the Majority of the Lenders:

<PAGE>
                                                                         Page 37

     (1) Not to Amalgamate, etc. Neither Borrower, nor the Guarantor nor any of
the Subsidiaries shall enter into any transaction or series of related
transactions (whether by way of amalgamation, merger, winding-up, consolidation,
reorganization, reconstruction, dissolution, continuance, transfer, sale, lease
or otherwise) whereby all or substantially all of its undertaking, properties,
rights or assets would become the property of any Person other than another
Borrower, the Guarantor or a Material Subsidiary.

     (2) Indebtedness. Neither Borrower, nor the Guarantor nor any of the
Subsidiaries shall create, assume, issue or permit to exist, directly or
indirectly, any Indebtedness except for Permitted Indebtedness.

     (3) Negative Pledge. Neither Borrower, nor the Guarantor nor any of the
Subsidiaries shall create, assume, incur or suffer to exist any Security
Interest in or upon any of their respective undertakings, properties, rights or
assets (including, without limitation, insurance policies required pursuant to
Section 8.01(17)), other than Permitted Encumbrances.

     (4) No Impairment of Upstreaming. Except to the extent that an Insurance
Subsidiary is regulated by an Insurance Regulatory Authority, neither Borrower,
nor the Guarantor nor any Subsidiary shall directly or indirectly enter into,
assume or be bound by any agreement or instrument that restricts or limits the
ability of the Borrowers, the Guarantor or any Subsidiary to make dividend
payments or other distribution in respect of its capital stock, to repay
indebtedness owed to a Borrower, the Guarantor or any other Subsidiary, to make
loans or advances to a Borrower, the Guarantor or any Subsidiary, or to transfer
any of its assets or properties to a Borrower, the Guarantor or any Subsidiary,
in each case other than such restrictions or encumbrances existing under or by
reason of the Loan Documents.

     (5) No Guarantees. Neither Borrower, nor the Guarantor nor any of the
Subsidiaries shall be or become liable, directly or indirectly, contingently or
otherwise, for any obligation of any other Person by Guarantee other than as
permitted hereunder.

     (6) Restrictions on Subsidiaries and Investments. Neither Borrower, nor the
Guarantor nor any of the Subsidiaries shall directly or indirectly acquire or
invest in any body corporate or form any Subsidiary or affiliate or invest or
make a loan to any Person (other than a Person that is a Subsidiary as at the
date of this Agreement) unless no Default shall have occurred and be continuing
or would result therefrom and the following conditions are satisfied:

     (i)   Neither Borrower, nor the Guarantor nor any of the Subsidiaries shall
           acquire or attempt to acquire Voting Control directly or indirectly
           of the shares of any corporation unless (A) such action is supported
           or approved by the board of directors of the target corporation and
           (B) such acquisition does not place a Lender in a position of
           conflict of interest;

     (ii)  Neither Borrower, nor the Guarantor nor any Subsidiary shall make any
           investment in or enter into a venture which is outside the scope of
           its core business as at the date of this Agreement other than
           investments contained in Kingsway's equity portfolio;

     (iii) No individual acquisition or investment shall exceed US $50,000,000;

     (iv)  Acquisitions and investments shall not exceed US $125,000,000 in the
           aggregate in any Financial Year, provided that if acquisitions in any
           Financial Year total less than US $125,000,000 in the aggregate the
           Borrowers shall be entitled to carry forward 50% of the amount not so
           expended to the immediately following Financial Year;

     (v)   Prior to completion of the contemplated acquisition or investment,
           the Borrowers shall provide pro forma financial statements certified
           by a senior officer of Kingsway without personal liability confirming
           that the Borrowers will not be in breach of covenants as a result of
           the contemplated investment or acquisition.

<PAGE>

                                                                         Page 38

     (7) Material Contracts. Neither Borrower, nor the Guarantor nor any of the
Subsidiaries shall cancel or terminate any material contract or amend or
otherwise modify any material contract, or waive any default or breach under any
material contract, or take any other action in connection with any material
contract that would have a Material Adverse Effect. By way of example and not in
limitation of the foregoing, the Borrowers will not consent to or enter into any
amendment, supplement or other modification of any of the terms or provisions
contained in, or applicable to, (a) any documents relating to preferred stock
issued by either Borrower, (b) documents relating to any warrant or option
granted by either Borrower if the effect of such amendment, supplement or other
modification is to impose or increase any monetary obligation on any Borrower,
(c) any constating documents of either Borrower other than any such amendment,
supplement or other modification which is immaterial or which could not be
reasonably expected to result in a Material Adverse Effect.

     (8) No Speculative Transactions. Neither Borrower, nor the Guarantor nor
any of the Subsidiaries shall engage in any speculative transaction or any
transaction involving commodity options, futures contracts or interest rate or
currency hedging (other than currency and interest rate hedging in the ordinary
course of business consistent with prudent business management).

     (9) Margin Stock. Neither Borrower, nor the Guarantor nor any of the
Subsidiaries shall use the proceeds of any Borrowing for the purpose of
purchasing or acquiring any stock on margin.

     (10) Carry on Business. Neither the Borrower nor the Guarantor nor any of
the Subsidiaries will carry on any business other than the Lines of Business.

     (11) Margin Calls. Neither Borrower, nor the Guarantor nor any of the
Subsidiaries shall use the proceeds of any Borrowing to satisfy a margin call.


     (12) Announcements. Neither Borrower, nor the Guarantor nor any of the
Subsidiaries shall make or permit to be made by or on behalf of itself any press
release or other public announcement which mentions an Agent or a Lender without
such Agent's and such Lender's prior written consent and approval of such press
release or public announcement, which approval shall not be unreasonably
withheld or delayed, except as required by Applicable Law.

     (13) Transactions with Directors, etc. Neither Borrower nor the Guarantor
nor any of the Subsidiaries shall enter into any transaction, agreement or
arrangement with any any director, officer, shareholder or any member of the
immediate family of any director, officer or shareholder, except in the ordinary
course of business and on terms no more beneficial than would be offered to
arms-length Persons.

     (14) Restricted Payments, etc.

     (a)  The Borrowers will not, and will not permit or cause any of its
          Subsidiaries to, directly or indirectly, declare or make any dividend
          payment, or make any other distribution of cash, property or assets,
          in respect of any of its capital stock or any warrants, rights or
          options to acquire its capital stock, or purchase, redeem, retire or
          otherwise acquire for value any shares of its capital stock or any
          warrants, rights or options to acquire its capital stock, or set aside
          funds for any of the foregoing, except that:

          (i)  Kingsway may declare and make dividend payments or other
               distributions to holders of its common stock, in cash or in
               shares of its common stock, and may purchase, redeem, retire or
               otherwise acquire shares of its capital stock, in cash or in
               kind, in each case provided that, immediately after giving effect
               thereto, no Default or Event of Default would exist; and

          (ii) each wholly owned Subsidiary (except Partnership) of the Borrower
               may declare and make dividend payments or other distributions to
               Partnership or another wholly owned Subsidiary

<PAGE>

                                                                         Page 39

               of the Borrower, to the extent not prohibited under Applicable
               Law, provided that, immediately after giving effect thereto, no
               Default or Event of Default would exist; and

         (iii) Partnership may make distributions to its partners from
               available cash (provided that Partnership maintains its status as
               a "partnership" for Canadian tax purposes), in an aggregate
               amount not exceeding the tax liability of such partners actually
               due and owing Page 38 and that is attributable to their ownership
               interests in Partnership for each Financial Year, so long as (A)
               a certificate reasonably satisfactory to the Agent certified by
               the chief executive officer or chief financial officer of
               Kingsway is delivered to the Agent at least five Business Days
               prior to the payment of any such distributions demonstrating in
               reasonable detail such officer's good faith reasonable estimated
               tax liabilities of such partners attributable to their ownership
               interests in Partnership for the related Financial Year for which
               the proposed distributions is required and (B) a certificate of
               KPMG Peat Marwick LLP (or other independent public accountants of
               nationally recognized standing), reasonably satisfactory in form
               and substance to the Agent, is delivered within 90 days after the
               end of each Financial Year for each Financial Year relating to
               all such distributions within such Financial Year, concurrently
               with the reports required to be delivered pursuant to Section
               8.01(7) and (8), to the Administrative Agent, setting forth in
               detail the calculation of such amounts; provided, however, that
               if any such certificate demonstrates a lower tax liability that
               that which was anticipated and upon which distributions were paid
               to such partners, any future payment of distributions hereunder
               shall be decreased in an amount equal to the excess amount paid
               in respect of taxes during the prior Financial Year;

     (b)  The Borrowers will not, and will not permit or cause any of its
          Subsidiaries to, make (or give any notice in respect of) any voluntary
          or optional payment or prepayment of principal on any Subordinated
          Indebtedness, or directly or indirectly make any redemption (including
          pursuant to any change of control provision), retirement, defeasance
          or other acquisition for value of any Subordinated Indebtedness, or
          make any deposit or otherwise set aside funds for any of the foregoing
          purposes.

     (15) Disposition of Assets. Neither Borrowers, nor the Guarantor nor any
Subsidiary will, during the term of this Agreement, sell, assign, transfer,
convey, lease (as lessor), contribute or otherwise dispose of, or grant options,
warrants or other rights with respect to, any of its properties or assets,
having a value in excess of US $20,000,000 in the aggregate except for
disposition in the ordinary course of business of equities held in Kingsway's
equity portfolio.

     (16) Capital Expenditures. Neither Borrower, nor the Guarantor nor any
Subsidiary shall incur Capital Expenditures in any Financial Year in excess of
US $5,000,000 in the aggregate, exclusive of Permitted Acquisitions.

                                  ARTICLE NINE

                                EVENTS OF DEFAULT

Section 9.01 Events of Default. Notwithstanding anything to the contrary herein,

     (a)  the right of a Borrower to obtain a further Borrowing shall cease and
          the Lenders shall have no obligation to honour any cheques or other
          orders for payment (provided that in the case of other than Sections
          9.01(8), (11), (12) and (14) such events shall be at the direction or
          with the consent of the Majority of the Lenders), and

<PAGE>

                                                                         Page 40

     (b)  the Outstanding Obligations shall become immediately due and payable
          to the Administrative Agent (on behalf of the Lenders) and the Lenders
          may without notice to the Borrowers apply any amounts outstanding to
          the credit of the Borrowers to repayment of the Outstanding
          Obligations (provided that in the case of other than Sections 9.01(8),
          (11), (12) and (14) such events shall be at the direction or with the
          consent of the Majority of the Lenders),

upon the occurrence of any of the following events:

     (1) Failure to Pay Principal or Interest - if a Borrower fails to make
punctual payment when due of any principal amount or interest payable hereunder;

     (2) Failure to Pay Other Amounts - if a Borrower fails to make punctual
payment when due of any amount payable hereunder other than principal or
interest and if such payment is not made within 10 Business Days of the day on
which such payment is due;

     (3) False Representations, Etc. - if any representation or warranty made or
given herein, in any other Loan Document, in any certificate delivered pursuant
hereto, or in any financial statements delivered pursuant hereto or thereto, as
applicable, is false or erroneous in any material respect;

     (4) Cross-Default - if a Borrower, the Guarantor or any Subsidiary defaults
in its obligations to any Person in respect of any Indebtedness in the principal
amount of US $5,000,000 or greater or under any agreement relating to any such
Indebtedness and such default has not been waived within the applicable cure
period;

     (5) Default in Certain Covenants - if there is any default or failure in
the observance or performance of any covenant contained in Section 8.02 or in
Subsections 8.01 (28), 8.03(1), (3), (6), (8), (9), (12), (13), (14), (15), (16)
or (17);

     (6) Default in Other Covenants - if, other than in respect of covenants
contained in Section 8.02, or any covenant to pay, there is any default or
failure in the observance or performance of any other act hereby, or pursuant to
any other Loan Document, required to be done or any other covenant or condition
hereby, or pursuant to any other Loan Document, required to be observed or
performed, and the default or failure continues for 15 Business Days after
notice by the Agent to either Borrower, the Guarantor or any Subsidiary, as
applicable, specifying such default or failure;

     (7) Change in Ownership or Control - if (i) any Person acquires Voting
Control of Kingsway following the Closing Date, (ii) Kingsway ceases to (a) be a
general partner of Partnership or (b) own directly or indirectly 100% of the
issued and outstanding voting shares in the capital stock of the Guarantor or
any Subsidiary, (iii) Kingsway and Metro Claim Services Inc. cease to be the
sole partners of Partnership, (iv) Kingsway ceases to be a public company or
ceases to be widely held, or (v) Partnership is dissolved;

     (8) Insolvency - if a Borrower, the Guarantor or any Material Subsidiary is
unable to pay debts as such debts become due, or is, or is adjudged or declared
to be, or admits to being, bankrupt or insolvent;

     (9) ERISA Prohibited Transactions - (i) if any Person engages in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) if any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of a Borrower, the
Guarantor or any Subsidiary in favour of the PBGC or a Plan, (iii) if a
reportable event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) if any Single
Employer Plan shall terminate for purposes of Title IV of ERISA; (v) if a
Borrower, the Guarantor or any Subsidiary shall, or in the reasonable opinion of
the Agent is likely to, incur any liability in connection with a withdrawal
from, or the

<PAGE>

                                                                         Page 41

insolvency or Reorganization of, a Multiemployer Plan or (vi) if any other event
or condition shall occur or exist, with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all other
such events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect.

     (10) Pension Liability - with respect to any Guaranteed Pension Plan, an
ERISA Reportable Event shall have occurred and a Majority of the Lenders shall
have determined that such event reasonably could be expected to result in
liability of a Borrower, the Guarantor or any Subsidiary to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and such
event in the circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the appointment
by the appropriate United States District Court of a trustee to administer such
Guaranteed Pension Plan; or a trustee shall have been appointed by the United
States District Court to administer such Plan; or the PBGC shall have
institituted proceedings to terminate such Guaranteed Pension Plan.

     (11) Voluntary Proceedings - if a Borrower, the Guarantor or any Subsidiary
makes a general assignment for the benefit of creditors; or any proceeding or
filing is instituted or made by a Borrower, the Guarantor or any Subsidiary
seeking relief on its behalf as debtor, or to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding-up, reorganization, arrangement,
adjustment or composition of it or its debts under any similar law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its properties or assets; or a Borrower, the
Guarantor or any Subsidiary takes any corporate action to authorize any of the
actions set forth in this Section 9.01(11);

     (12) Involuntary Proceedings - if any notice of intention is filed or any
proceeding or filing is instituted or made against a Borrower, the Guarantor or
any Subsidiary in any jurisdiction seeking to have an order for relief entered
against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding-up, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its properties or assets or seeking possession, foreclosure or retention, or
sale or other disposition of, or other proceedings to enforce security over, all
or a substantial part of the assets of a Borrower, the Guarantor or any
Subsidiary unless the same is being contested actively and diligently in good
faith by appropriate and timely proceedings and is dismissed, vacated or stayed
within 30 days of institution thereof;

     (13) Adverse Judgments - if one or more final judgments for the payment of
money aggregating in excess of US $5,000,000 (whether or not covered by
insurance) shall be rendered against a Borrower, the Guarantor or any Subsidiary
and such Borrower, the Guarantor or such Subsidiary shall fail to discharge the
same within thirty (30) days from the date of notice of entry thereof.

     (14) Receiver, etc. - if a receiver, liquidator, trustee, sequestrator or
other officer with like powers is appointed with respect to, or an encumbrancer
pursuant to a Security Interest or otherwise takes possession of, or forecloses
or retains, or sells or otherwise disposes of, or otherwise proceeds to enforce
security over any of the properties or assets of either Borrower, the Guarantor
or any Material Subsidiary or gives notice of its intention to do so;

     (15) Execution, Distress - if any writ, attachment, execution,
sequestration, extent, distress or any other similar process in an amount not
greater than US $5,000,000 in the aggregate becomes enforceable against either
Borrower, the Guarantor or any Subsidiary or if a distress or any analogous
process is levied against any of the properties or assets of either Borrower,
the Guarantor or any Material Subsidiary, except where the same is being
contested actively and diligently in good faith by appropriate and timely
proceedings and the enforcement or levy has been stayed;

<PAGE>

                                                                         Page 42

     (16) Suspension of Business - if a Borrower, the Guarantor or any Material
Subsidiary suspends or ceases or threatens to suspend or cease its business;

     (17) Sale - if a Borrower, the Guarantor or any Material Subsidiary sells
or otherwise disposes of, or threatens to sell or otherwise dispose of, all or a
substantial part of its undertaking and property and assets whether in one
transaction or a series of related transactions save as permitted in this
Agreement;

     (18) Regulatory Action - if any action is taken by any regulatory body with
authority over a Borrower, the Guarantor or any Material Subsidiary to
materially limit the business activities of a Borrower, the Guarantor or any
such Material Subsidiary.

Section 9.02 Impairment of Guarantor's Guarantee, etc. Any Loan Document shall
(except in accordance with its terms), in whole or in part, terminate, cease to
be effective or cease to be the legally valid, binding and enforceable
obligation of any obligated party thereto or any Borrower or any other party
obligated under any Loan Document shall, directly or indirectly, contest in any
manner such effectiveness, validity, binding nature or enforceability.

Section 9.03 Lenders May Waive. The Majority of the Lenders may at any time
waive any Default or Event of Default which may have occurred, provided that no
such waiver shall extend to or be taken in any manner whatsoever to affect any
subsequent Default or Event of Default or the rights or remedies resulting
therefrom. No such waiver shall be effective unless given by the Administrative
Agent in writing with the consent of the Majority of the Lenders.

Section 9.04 Remedies are Cumulative. For greater certainty, the rights and
remedies of the Lenders and the Agent under this Agreement are cumulative and
are in addition to and not in substitution for any rights or remedies provided
by law; and any single or partial exercise by the Lenders or the Agents of any
right or remedy for a Default or Event of Default or breach of any term,
covenant, condition or agreement herein contained shall not be deemed to be a
waiver of or to alter, affect or prejudice any other right or remedy to which
the Lenders or the Agents may be lawfully entitled for the same default or
breach, and any waiver by the Lenders or the Agents of the strict observance,
performance or compliance with any term, covenant, condition or agreement herein
contained and any indulgence granted by the Lenders or the Agents shall be
deemed not to be a waiver of that or any subsequent default.

Section 9.05 Set-Off. The Lenders shall be entitled at any time or from time to
time after Demand or the occurrence of an Event of Default which is continuing,
without notice to set-off, consolidate and to apply any or all deposits and any
other indebtedness at any time held by or owing by such Lender to either
Borrower against and on account of the debts, liabilities or obligations of the
Borrowers to such Lender, whether or not due and payable and whether or not such
Lender has made Demand therefor.

Section 9.06 Cash Collateral Accounts. Following Demand or upon the occurrence
of an Event of Default which is continuing and in addition to any other rights
or remedies of the Agents and the Lenders hereunder, the Administrative Agent
(on behalf of the Lenders) as and by way of collateral security shall be
entitled to deposit and retain in an account to be maintained by the
Administrative Agent on behalf of the Lenders (bearing interest at the rates of
the Administrative Agent as may be applicable in respect of other deposits of
similar amounts for similar terms) amounts which are received by the
Administrative Agent from either Borrower hereunder to the extent such amounts
may be required to satisfy any Outstanding Obligations.

                                   ARTICLE TEN

                                     GENERAL

<PAGE>

                                                                         Page 43

Section 10.01  Redistribution of Payments. If at any time, the proportion which
any Lender has received or recovered in respect of its portion of any payment to
be made under this Agreement by the Borrowers for the account of such Lender or
one or more other Lenders including any moneys and/or property obtained by such
Lender in the exercise of any right of set-off, counterclaim or similar right of
such Lender is greater than its Rateable Portion, then appropriate transfers
shall be made among the Lenders through the Administrative Agent, so as to
ensure that each Lender receives its Rateable Portion of such payments.

Section 10.02  Enforcement. Each of the Lenders hereby covenants and agrees that
it shall not be entitled to take any action hereunder, including, without
limitation, any Demand or declaration of a Default or an Event of Default
hereunder but that such action shall be taken only by the Administrative Agent
with the prior written agreement of the Majority of the Lenders. Each of the
Lenders further covenants and agrees that upon any such written agreement by the
Majority of the Lenders, it shall cooperate fully to the extent requested by the
Administrative Agent or the Majority of the Lenders. Each of the Lenders further
covenants and agrees that all amounts received following Default or an Event of
Default on account of the Outstanding Obligations, are held for the benefit of
all Lenders and shall be shared among the Lenders rateably according to their
Rateable Portions and that all costs of such realization, to the extent not
reimbursed, shall be shared among the Lenders rateably in accordance with their
Rateable Portions. Each of the Lenders covenant and agree not to seek, accept or
take security from any Person in respect of the Outstanding Obligations, or any
portion thereof other than the Security.

Section 10.03  Readjustment of Obligations Among Lenders. If upon expiry of the
Credit Facility or, if sooner upon Demand or the occurrence of an Event of
Default, the Lenders shall not recover the Outstanding Obligations in full (the
amount by which the recovered amount falls short of the entire amount of the
Outstanding Obligations hereinafter called the "Shortfall"), the Shortfall shall
be shared by the Lenders rateably in accordance with their respective Rateable
Portions, and appropriate transfers and adjustments shall be made such that the
Shortfall is shared, as nearly as may be practicable, in accordance with the
respective Rateable Portions. Such adjustments and transfers shall be
accomplished through the Administrative Agent and in a manner satisfactory to
the Lenders concerned, acting reasonably.

Section 10.04  Notices. Any notice, request or other communication hereunder to
any of the parties hereto shall be in writing and be well and sufficiently given
if delivered personally or sent by prepaid registered mail to its address or by
telecopier to the number and to the attention of the person set forth below:

        (a)     In the case of the Borrowers or the Guarantor:
                c/o Kingsway Financial Services Inc.
                5310 Explorer Drive
                Mississauga, Ontario
                L4W 5H8

                Attention:       Shaun Jackson
                Telecopier No.:  (905) 629-5008

        (b)     with a copy to Partnership:
                c/o Kingsway America
                1515 Woodfield Road
                Suite 820
                Schaumberg, Illinois   60172
                Attention:       James R. Zuhlke
                Telecopier No.:  (847) 619-5275

        (c)     In the case of the Administrative Agent and the Lenders:
                c/o The Bank of Nova Scotia
                44 King Street West
                Toronto, Ontario

<PAGE>

                                                                         Page 44

          M5H 1H1

          Attention:      Paul Hodgson
          Telecopier No.: (416) 933-7399


Any such notice shall be deemed to be given and received, if delivered, when
delivered, and if mailed, on the third Business Day following the date on which
it was mailed, unless an interruption of postal services occurs or is continuing
on or within the three Business Days after the date of mailing in which case the
notice shall be deemed to have been received on the third Business Day after
postal service resumes and if sent by telecopier on the next Business Day after
the day on which the telecopy is sent. Either party may by notice to the other,
given as aforesaid, designate a changed address or telecopier number.

Section 10.05 Performance of Covenants by the Lenders. If any of the covenants
or obligations contained herein or in any Loan Document shall not be performed
by a Borrower, the Guarantor or a Subsidiary, the Administrative Agent or
Lenders upon reasonable notice to the Borrowers may perform such covenant or
obligation and, if in so doing the Administrative Agent or any Lender spends
money or incurs liability, the amount of money so spent or liability incurred
shall be treated as a US Base Rate Loan advanced to the Borrowers.

Section 10.06 Indemnity. In addition to any other indemnity provided for herein,
the Borrowers hereby jointly and severally indemnify the Agents and the Lenders
on demand against any loss (other than loss of profit), expense or liability
which the Agents or any Lender may sustain or incur as a consequence of the
action or inaction of a Borrower, the Guarantor or any Subsidiary in connection
with:

     (a)  any default in payment of the principal amount of any Borrowing or any
          part thereof or interest accrued thereon, as and when due and payable;

     (b)  the repayment or prepayment of any LIBOR Loan prior to the last day of
          its term;

     (c)  any failure to fulfill on or before any Borrowing Date the conditions
          precedent to any Borrowing as provided for in this Agreement, if as a
          result of such failure such Borrowing is not made on such date;

     (d)  the occurrence of any Default or Event of Default;

     (e)  any misrepresentation made by a Borrower or any Guarantor herein or in
          any instrument in writing delivered to the Agents or any Lender in
          connection with this Agreement;

     (f)  the costs of enforcement of the rights of the Agents and the Lenders
          under this Agreement and the Loan Documents; and

     (g)  any determination that a Lender or an Agent is a partner or a joint
          venturer with any Borrower,

including but not limited to any loss or expense sustained or incurred in
liquidating or redeploying deposits or other funds contracted for or acquired or
used to effect or maintain such Borrowing or part thereof.

Section 10.07 Kingsway Liability for Partnership Obligations; Waivers, etc. In
addition to, and not in limitation of, any direct liability of Kingsway arising
hereunder (including, without limitation, in respect of any and all Outstanding
Obligations of Kingsway), Kingsway, by virtue of its status as general partner
of Partnership, hereby expressly affirms, acknowledges and agrees for the
benefit of the Administrative Agent and the Lenders that it is liable
("Partnership Liability") for all indebtedness and other obligations of
Partnership (including, without limitation, in respect of any and all
Outstanding Obligations of Partnership) under the Delaware Uniform Partnership
Law, Del. Code Ann. tit. 6, (S)(S) 1501 - 1547 (1974), as the same may be

<PAGE>
                                                                         Page 45

amended or otherwise modified from time to time, and in connection with such
Partnership Liability hereby expressly waives (a) promptness, diligence, notice
of acceptance and any other notice with respect to any of Partnership's
Outstanding Obligations, (b) any requirement that the Administrative Agent or
any Lender exhaust any right or take any action against Partnership or any other
Person (including any guarantor) or entity or any collateral, if any, securing
the Outstanding Obligations and (c) any requirement of marshaling. In
furtherance of (and without limiting) the foregoing, Kingsway acknowledges and
agrees that its Partnership Liability shall exist in full force and effect
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any Outstanding Obligations of Partnership or the rights
of the Administrative Agent or any of the Lenders with respect thereto.
Moreover, Kingsway's Partnership Liability shall be absolute, unconditional and
irrevocable irrespective of (a) any lack of validity, legality or enforceability
of this Agreement, any Loan Document or any other agreement or instrument
relating to any thereof as to any Outstanding Obligations of Partnership; (b)
any change in the time, manner or place of payment of, or in any other term of,
all or any of the Outstanding Obligations of Partnership, or any compromise,
renewal, extension, acceleration or release with respect thereto, or any other
amendment or waiver of or any consent to departure from this Agreement or any
Loan Document; (c) any addition, exchange, release or non-perfection of
collateral, if any, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Outstanding Obligations of
Partnership; (d) the failure of the Administrative Agent or any Lender (i) to
assert any claim or demand or to enforce any right or remedy against Partnership
or any other Person (including any guarantor) under the provisions of this
Agreement, any Loan Document or otherwise, or (ii) to exercise any right or
remedy against any guarantor of, or collateral (if any) securing, any of the
Outstanding Obligations of Partnership; (e) any amendment to, rescission,
waiver, or other modification of, or any consent to departure from, any of the
terms hereof or any Loan Document; (f) any defense, set-off or counterclaim
which may at any time be available to or be asserted by Partnership against the
Administrative Agent or any Lender; (g) any limitation, impairment or
termination of the Outstanding Obligations of Partnership for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to (and Kingsway hereby expressly waives any right to or
claim of) any defense or set-off, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event or occurrence
affecting, the Outstanding Obligations of Partnership or otherwise; or (h) any
other circumstance which might otherwise constitute a defense available to, or a
legal or equitable discharge of, Partnership, any surety or any guarantor.

Section 10.08 No Set-Off or Counterclaim. The obligations of the Borrowers and
the Guarantor to make payments hereunder shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, any
set-off, compensation, counterclaim, recoupment, defence or other right which a
Borrower or the Guarantor may have against the Agent or any of the Lenders.

Section 10.09 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall not invalidate the remaining
provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

Section 10.10 Time of Essence. Time shall, in all respects, be of the essence of
this Agreement.

Section 10.11 Assignment. No Borrower may assign this Agreement or any part
hereof without the prior written consent of the Administrative Agent and each of
the Lenders. Subject to Section 10.20, a Lender shall be entitled to assign this
Agreement with the consent of the Administrative Agent not to be unreasonably
withheld.

Section 10.12 Entire Agreement. This Agreement, together with any other
instrument contemplated hereby, constitutes the entire agreement between the
parties with respect to the matters covered hereby and supersedes any other
prior agreements or representations.

Section 10.13 Amendments. No amendment, modification or waiver of any provision
of this Agreement or consent by the Lenders to any departure from any provision
of this Agreement is in any way effective unless it is in writing and signed by
the Borrowers, in respect of an amendment or modification, and the Majority of

<PAGE>
                                                                         Page 46

the Lenders, in which event the amendment, modification, waiver or consent is
effective only in the specific instance and for the specific purpose for which
it is given.

Section 10.14 Law Governing. This Agreement shall be governed by and construed
in accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as an Ontario contract
and the parties hereby submit and attorn to the non-exclusive jurisdiction of
the courts of the Province of Ontario.

Section 10.15 Forum Selection and Consent to Jurisdiction. Any litigation based
hereon, or arising out of, under, or in connection with, this Agreement or any
other Loan Document, or any course of conduct, course of dealing, statements
(whether oral or written) or actions of the Agent, the Lenders or either
Borrower shall be brought and maintained exclusively in either the Courts of
Ontario, Canada, the Courts of the State of Illinois or in the United States
District Court for the Northern District of Illinois. Each Borrower hereby
expressly and irrevocably submits to the jurisdiction of the Courts of Ontario,
Canada, the Courts of the State of Illinois and of the United States District
Court for the Northern District of Illinois for the purpose of any such
litigation as set forth above and irrevocably agrees to be bound by any judgment
rendered thereby in connection with such litigation subject to any rights of
appeal of any judgment rendered to the highest Court in Ontario, Canada or the
State of Illinois or the United States Supreme Court, as the case may be. Each
Borrower further irrevocably consents to service of process by a nationally
recognized overnight delivery service, or by personal service within or without
the State of Illinois. Each Borrower hereby expressly and irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter may have to the laying of venue of any such litigation brought in any
such Court referred to above and any claim that any such litigation has been
brought in an inconvenient forum. To the extent that either Borrower has or
hereafter may acquire any immunity from jurisdiction of any Court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution or otherwise) with respect to itself or its
property, each Borrower hereby, to the fullest extent permitted by Applicable
Law, irrevocably waives such immunity in respect of its obligations under this
Agreement and each other Loan Document.

Section 10.16 Waiver of Jury Trial, etc. The Agents, the Lenders and each
Borrower hereby knowingly, voluntarily and intentionally waive any rights they
may have to a trial by jury in respect of any litigation based hereon, or
arising out of, under, or in connection with, this Agreement or any other Loan
Document, or any course of conduct, course of dealing, statements (whether oral
or written) or actions of the Agent, the Lenders or the Borrowers. Each Borrower
acknowledges and agrees that it has received full and sufficient consideration
for this provision (and each other provision of each other Loan Document to
which it is a party) and that this provision is a material inducement for the
Agents and the Lenders entering into this Agreement and each such other Loan
Document. In no event shall any Lender or the Agent be liable for any
consequential damages which may be alleged in connection herewith or the
transactions contemplated hereby.

Section 10.17 Conflict. In the event that there is any conflict between the
provisions contained in this Agreement and the provisions contained in any
document delivered pursuant hereto or in connection herewith, the provisions of
this Agreement shall have priority over and shall override the provisions
contained in the other document.

Section 10.18 Loan Syndication. With the prior written consent of the Borrowers,
not to be unreasonably withheld, each Lender shall have the right to sell,
assign, transfer or grant a participation in its Commitment in an amount of not
less than US $5,000,000 or, if less, the full amount of such Lender's
Commitment, in whole or in part, to one or more Persons (the "Participants").
After the occurrence of an Event of Default, as applicable, any Lender shall be
entitled to undertake any such sale, assignment, transfer or grant of a
participation without notice to, or the consent of, either Borrower or the
Guarantor. Notwithstanding the foregoing, any Lender may sell, assign, transfer
or grant a participation in its Commitment to any other Lender or to an
Affiliate of any Lender in any amount and without the consent of the Borrowers.
For the purpose of selling, assigning, transferring or granting a participation
in its Commitment, a Lender may disclose, on a confidential basis, to a
potential Participant such information concerning the Borrowers, the Guarantor
and

<PAGE>
                                                                         Page 47

the Subsidiaries as such Lender considers appropriate, including information
subject to any duty of confidentiality by such Lender to the Borrowers, the
Guarantor or any Subsidiary. The Borrowers agree to execute and deliver and to
cause the Guarantor to execute and deliver such further documentation and take
such further action as the Administrative Agent or any Lender considers
necessary or advisable to give effect to such sale, assignment, transfer or
grant of participation. In the case of sale, assignment, transfer or granting of
a participation, and upon payment by the Participant to the Administrative Agent
of an administrative fee in the amount of US $2,500, for the Administrative
Agent's own account and not for the account of the Lenders, the Participant
shall have, to the extent of such sale, assignment, transfer or grant of
participation, the same rights and obligations as it would have if it were a
Lender on the Closing Date and as such had executed this Agreement as required,
and from the date of delivery of the notice of participation and undertaking
described in Section 10.20, the Participant shall be a Lender hereunder. The
selling, assigning, transferring or granting Lender (the "Outgoing Lender")
shall be relieved, to the extent of the sale, assignment, transfer or grant of
participation, of its obligations hereunder with respect to its Commitment. The
Borrowers hereby acknowledge and agree that any sale, assignment, transfer or
granting of a participation will give rise to a direct obligation of the
Borrowers to the Participant. Notwithstanding the foregoing, it is understood
and agreed by each Borrower that the rights of any Outgoing Lender with respect
to a Borrowing shall be transferred to the applicable Participant pursuant to
the terms of this Section 10.19 and such Borrowing continues to be outstanding
at all times without novation.

Section 10.19 Notice of Assignment and Undertaking. A sale, assignment, transfer
or grant of participation pursuant to Section 10.19 shall be effective upon the
Borrowers and each other Lender having received a notice of participation and
undertaking substantially in the form of Schedule "P" and the Agent receiving
the fee from the Participant in the amount of US $2,500. Upon any such sale,
assignment, transfer or grant of participation becoming effective, Schedule "A"
to this Agreement shall be automatically amended to reflect the amended
Commitments resulting from such sale, transfer, assignment or grant of
participation without further notice or other requirement.

Section 10.20 Judgment Currency. The obligations of the Borrowers pursuant to
this Agreement to make payments in a specific currency (the "Contractual
Currency") shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any other currency
except to the extent to which such tender or recovery shall result in the
effective receipt by the Lenders and the Administrative Agent of the full amount
of the Contractual Currency payable or expressed to be payable under this
Agreement and accordingly the obligations of the Borrowers shall be enforceable
as an alternative or additional cause of action for the purpose of recovering
the other currency of the amount (if any) by which such effective receipt shall
fall short of the Contractual Currency payable or expressed to be payable under
this Agreement and shall not be effected by judgment being offered for any other
sum due under this Agreement.

Section 10.21 Successors and Assigns. This Agreement shall be binding upon and
enure to the benefit of the parties and their respective successors and assigns.

Section 10.22 Survival. The obligations of the Borrowers under Sections 3.03(4),
4.06, 5.04, 5.05 and 10.07 and the obligations of the Lenders under Section
11.04 shall in each case survive any termination of this Agreement, the payment
in full of the Outstanding Obligations and the termination of the Commitments,
except to the extent otherwise expressly provided thereto.

                                 ARTICLE ELEVEN

                                   THE AGENTS

Section 11.01 Appointment and Authorization.

<PAGE>
                                                                         Page 48

(1) Each Lender hereby irrevocably appoints and authorizes, and hereby agrees
that it will require any assignee or transferee of any of its interests herein
to appoint and authorize, the Agents to be its agent and its attorney in its
name and on its behalf, to take such actions and to exercise such powers
hereunder as are delegated to the Agents by the terms hereof, together with such
powers as are reasonably incidental thereto. Neither Agent nor any of its
directors, officers, employees or agents shall be liable for any action taken or
omitted to be taken by it or them hereunder or in connection herewith, except
for its or their own gross negligence or wilful misconduct.

(2) The Agents shall have no duties or obligations other than as expressed
herein, and, without limitation, the Agents do not undertake, and the Lenders
relieve the Agents from, any implied duties, (including fiduciary duties) and
there shall not be construed against the Agents any implied covenants or terms.

Section 11.02 Interest Holders. The Agents may treat each Lender or the Person
designated in the last notice filed with it under this Section, as the holder of
all of the interests of such Lender in respect of this Agreement, until written
notice of a sale, assignment, transfer or grant pursuant to Section 10.19,
signed by such Lender (or the person designated in the last notice filed with
the Agent) and the Person designated in such written notice has been filed with
the Administrative Agent.

Section 11.03 Documents. The Agents are not, and shall not be, under any duty to
examine, enquire into or pass upon the validity, effectiveness or genuineness of
any instrument, document or communication furnished pursuant hereto or in
connection herewith, and the Agents are entitled to assume that the same are
valid, effective and genuine, have been signed or sent by the proper parties and
are what they purport to be.

Section 11.04 Agent and Affiliates. With respect to its Commitment and the
advances made by it as a Lender hereunder, the Agents have the same rights and
powers hereunder as any other Lender and may exercise the same as though they
were not the Agents, and the Agents and their Affiliates and subsidiaries may
accept deposits from, lend money to and generally engage in any kind of business
with any Borrower and its Affiliates and subsidiaries and Persons doing business
with the Borrowers and/or any of its Affiliates and/or subsidiaries as if it
were not the Agent and without any obligation to account therefor.

Section 11.05 Responsibility of Agents. The duties and obligations of the Agents
hereunder are only those expressly set forth herein or therein. The
Administrative Agent has no duty to investigate whether a Default or an Event of
Default has occurred. The Administrative Agent is entitled to assume that no
Default or Event of Default has occurred and is continuing, unless the
Administrative Agent has actual knowledge or has been notified in writing by a
Borrower of such fact or has been notified in writing by a Lender that such
Lender considers that a Default or an Event of Default has occurred and is
continuing, such notification to specify in detail the nature thereof.

Section 11.06 Action by Administrative Agent.

(a)  The Administrative Agent is entitled to use its discretion with respect to:

     (i)  exercising or refraining from exercising any rights which may be
          vested in it by this Agreement or the Guarantee, and

     (ii) taking or refraining from taking any action or acts which it may be
          able to take under or in respect of this Agreement or the Guarantor's
          Guarantee,

     unless the Administrative Agent has been instructed by the Majority of the
     Lenders to exercise or refrain from exercising such rights or to take or
     refrain from taking such actions; provided, however, that the
     Administrative Agent may not exercise any rights under this Agreement or
     the Guarantor's Guarantee or commence any action for the collection of
     amounts owing hereunder without the request of the Majority of the Lenders.
     Upon receiving the indemnities required hereunder, the Administrative Agent
     shall, at the request of the Majority of the Lenders, exercise any or all
     such rights and/or

<PAGE>
                                                                         Page 49

     commence such action. The Administrative Agent shall incur no liability
     under or in respect of this Agreement with respect to anything which it may
     do or refrain from doing in the reasonable exercise of its judgment or
     which may seem to it to be necessary or desirable in the circumstances,
     except for its gross negligence or wilful misconduct;

(b)  the Agents shall in all cases be fully protected in acting or refraining
     from acting under this Agreement and the Guarantor's Guarantee in
     accordance with the instructions of the Majority of the Lenders and any
     action taken or failure to act pursuant to such instructions shall be
     binding on all Lenders.

Section 11.07 Notice of Events of Default. If the Administrative Agent acquires
actual knowledge or is notified in writing of any Default or Event of Default,
the Administrative Agent shall promptly notify the Lenders and shall take such
action and assert such rights under this Agreement and the Guarantor's Guarantee
as the Majority of the Lenders shall request in writing, and the Administrative
Agent is not subject to any liability by reason of its acting pursuant to any
such request. If the Majority of the Lenders fail, for ten (10) Business Days
after receipt of the notice of any Default or Event of Default, to request the
Agent to take action or to assert rights under this Agreement in respect of such
Default or Event of Default, the Administrative Agent may, but shall not be
required to, subject to subsequent specific instructions from the Majority of
the Lenders, take such action or assert such rights as it deems in its
discretion advisable for the protection of the interests of the Lenders except
that, if the Majority of the Lenders have instructed the Administrative Agent
not to take such action or assert such rights, in no event shall the Agent act
contrary to such instructions.

Section 11.08 Responsibility Disclaimed. The Agents shall be under no liability
or responsibility whatsoever as Agents:

(a)  to the Borrowers, the Guarantor or any other Person as a consequence of any
     failure or delay in the performance by, or any breach by, any Lender or
     Lenders of any of its or their obligations under this Agreement;

(b)  to any Lender or Lenders, as a consequence of any failure or delay in
     performance by, or any breach by, any Borrower, the Guarantor of any of
     their respective obligations hereunder or under the Guarantee; or

(c)  to any Lender or Lenders for

     (i)   any statements, representations or warranties in this Agreement or
           the Guarantor's Guarantee or in any other information provided
           pursuant to this Agreement or the Guarantor's Guarantee;

     (ii)  the accuracy or completeness of the data made available to the
           Lenders in connection with the negotiation of this Agreement or the
           Guarantor's Guarantee; or

     (iii) the due execution, legality, validity, enforceability, genuineness,
           sufficiency or value of this Agreement, the Guarantor's Guarantee or
           any instrument or document furnished pursuant hereto or thereto.

Section 11.09 Indemnification. The Lenders agree to indemnify the Agents (to the
extent not reimbursed by the Borrowers) pro rata according to their Rateable
Portion of the Credit Facilities from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against an Agent in any way relating to or arising
out of its actions as Agent relating to this Agreement, the Guarantor's
Guarantee or any other document contemplated hereby, except that no Lender shall
be liable to an Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or wilful misconduct of such Agent.

<PAGE>
                                                                         Page 50

Section 11.10 Credit Decision. Each Lender represents and warrants to the Agents
that:

(a)  in making its decision to enter into this Agreement and to make its
     Commitment available to the Borrowers, it is independently taking whatever
     steps it considers necessary to evaluate the financial condition and
     affairs of the Borrowers and that it has made an independent credit
     judgment without reliance upon any information furnished by the Agents; and

(b)  so long as any portion of the Credit Facilities is being utilized by either
     Borrower, it will continue to make its own independent evaluation of the
     financial condition and affairs of the Borrowers.

Section 11.11 Non-US Lenders. Each Lender that is not a "United States person"
(as such term is defined in Section 7701(a)(30) of the Code) will submit to
Partnership and the Administrative Agent on or before the Closing Date (or, in
the case of a Person that becomes a Lender after the Closing Date by assignment
promptly upon such assignment) two duly completed and signed copies of either
(i) Form 1001 of the United States Internal Revenue Service entitling such
Lender to a complete exemption from withholding on all amounts to be received by
such Lender pursuant to this Agreement or (ii) Form 4224 of the United States
Internal Revenue Service relating to all amounts to be received by such Lender
pursuant to this Agreement. Each such Lender will, from time to time after
submitting either such form, submit to Partnership and the Administrative Agent
such additional duly completed and signed copies of one or the other such forms
(or such successor forms or other documents as will be adopted from time to time
by the relevant United States taxing authorities) as may be (i) reasonably
requested in writing by Partnership or the Agent and (ii) appropriate under then
current United States law or regulations to avoid United States withholding
taxes on payments in respect of any amounts to be received by such Lender
pursuant to this Agreement. Upon the reasonable request of Partnership or the
Administrative Agent, each Lender that has not provided the forms or other
documents, as provided above, on the basis of being a "United States person"
will submit to Partnership and the Administrative Agent a certificate to the
effect that it is such a "United States person".

     If any Lender which is not a "United States person" determines that it is
unable to submit to Partnership and the Administrative Agent any form or
certificate that such Lender is requested to submit pursuant to the preceding
paragraph, or that it is required to withdraw or cancel any such form or
certificate, or that any such form or certificate previously submitted has
otherwise become ineffective or inaccurate, such Lender will promptly notify
Partnership and the Administrative Agent of such fact.

Section 11.12 Successor Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, (i) an Agent may resign by giving ten (10)
Business Days prior written notice to the Lenders, or (ii) a Majority of the
Lenders may terminate an Agent, at any time by giving 30 days written notice
thereof to the Lenders, the Borrowers and the Agents, as applicable. Upon any
such resignation or termination, the Majority of the Lenders and the Borrowers
shall have the right to appoint a successor Agent who shall be one of the
Lenders. If no successor Agent shall have been so appointed and shall have
accepted such appointment by the time of such resignation or termination, then
the retiring or terminated Agent may, on behalf of the Lenders appoint a
successor Agent from among the Lenders; the Borrowers hereby approving each of
the Lenders as a successor agent for purposes of this Section 11.12. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, duties and obligations of the retiring Agent and the
retiring Agent shall be discharged from its duties and obligations hereunder.
After any retiring Agent's resignation or termination hereunder as Agent, the
provisions of this Article Eleven shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent.

Section 11.13 Delegation by Agent. With the prior approval of the Majority of
the Lenders, such approval not to be unreasonably withheld, the Agents shall
have the right to delegate any of their duties or obligations hereunder or under
any of the other Loan Documents as Agent to any Affiliate of such Agent so long
as such Agent shall not thereby by relieved of such duties or obligations.

<PAGE>
                                                                         Page 51

Section 11.14 Determinations by Agent. Any determination to be made by the
Agents under this Agreement shall be made by the Agents in good faith and, if
required hereby, acting reasonably, and, if so made, shall be prima facie
evidence of the matters so determined, absent manifest error.

Section 11.15 Reliance Upon Agent. The Borrowers shall be entitled to rely upon
any certificate, notice or other document or other advice, statement or
instrument provided to it by the Administrative Agent pursuant to this
Agreement, and the Borrowers shall generally be entitled to deal with the
Administrative Agent with respect to matters under this Agreement with which the
Administrative Agent is authorized to deal (whether alone or on behalf of the
Lenders or the Majority of the Lenders) without any obligation whatsoever to
satisfy itself as to the authority of the Administrative Agent to act on behalf
of the Lenders or the Majority of the Lenders, as the case may be and without
any liability whatsoever to the Lenders for relying upon any certificate, notice
or other document or other advice, statement or instruction provided to it by
the Agent, notwithstanding any lack of authority of the Administrative Agent to
provide the same.

Section 11.16 Payment Protection. Unless upon the date of receipt by a Lender of
any notice of Borrowing the Administrative Agent has been notified by such
Lender that such Lender will not make available to the Administrative Agent its
Rateable Portion of such Borrowing, the Administrative Agent shall be entitled
to assume that such Lender has made such portion of the Borrowing available to
the Agent on the Borrowing Date in accordance with the provisions hereof and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrowers on such date a corresponding amount. If and to the extent such
Lender shall not have so made its Rateable Portion of the Borrowing available to
the Administrative Agent, such Lender and the Borrowers agree to pay or repay,
as the case may be, to the Agent forthwith on demand such Lender's Rateable
Portion of the Borrowing together with interest thereon at the rate provided
herein in respect of such Borrowing for each day from the date such amount is
made available to the Borrowers until the date such amount is paid or prepaid to
the Administrative Agent. The amount payable to the Agent pursuant hereto shall
be as set forth in a certificate delivered by the Administrative Agent to such
Lender and the Borrowers and shall be prima facie evidence, for all purposes,
absent manifest error. If such Lender makes the payment to the Administrative
Agent required herein, the amount so paid shall constitute such Lender's
Rateable Portion of the Borrowing for purposes of this Agreement. The failure of
any Lender to make available the Rateable Portion of the Borrowing shall not
relieve any other Lender of its obligation, if any, hereunder to make available
its Rateable Portion of the Borrowing on the Borrowing Date but no Lender shall
be responsible for the failure of any other Lender to make its Rateable Portion
available on such Borrowing Date. Nothing herein shall affect or limit any right
of action a Borrower may have under Applicable Law against the defaulting
Lender.

Section 11.17 Remittance of Payments. Forthwith after receipt of any repayment
pursuant to this Agreement or payment of interest or fees hereunder, the
Administrative Agent shall remit to each Lender its Rateable Portion of such
payment in accordance with the advances made by such Lender hereunder; provided
that if the Administrative Agent, on the assumption that it will receive a
payment hereunder on the due date thereof, remits to each Lender its Rateable
Portion of such payment and the Borrowers fail to make such payment, each of the
Lenders agree to repay to the Administrative Agent forthwith on demand such
Lender's Rateable Portion of the payment made pursuant hereto together with all
reasonable costs and expenses incurred by the Administrative Agent in connection
therewith and interest thereon (at a rate of interest reasonably determined by
the Administrative Agent) for each day from the date such amount is remitted to
the Lenders, the exact amount of the repayment required to be made by the
Lenders pursuant hereto to be as set forth in a certificate delivered by the
Administrative Agent to each Lender, which certificate shall be prima facie
evidence for all purposes absent manifest error.

Section 11.18 Prompt Notice to the Lenders. Notwithstanding any other provision
herein, the Administrative Agent agrees to provide to the Lenders, with copies
where appropriate of all information, notices and reports required to be given
to the Administrative Agent by the Borrowers including, without limitation, all
information relating to the Credit Facility, promptly upon receipt of same,
excepting therefrom information and notices relating solely to the role of Agent
hereunder.

<PAGE>

                                                                         Page 52

Section 11.19  Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
the said counterparts taken together shall be deemed to constitute one and the
same instrument. A set of copies of this Agreement signed by all the parties
shall be lodged with the Borrowers and the Documentation Agent.

     IN WITNESS WHEREOF the parties have executed this Agreement as of the day
and year first above written.

                                        KINGSWAY FINANCIAL SERVICES INC.

                                        By:     /s/ William G. Star
                                                ----------------------------
                                                Name: William G. Star
                                                Title: President & CEO


                                        By:     /s/ W. Shaun Jackson
                                                ----------------------------
                                                Name: W. Shaun Jackson
                                                Title: Executive Vice President
                                                       & CFO


                                        KINGSWAY U.S. FINANCE PARTNERSHIP
                                        by its Partners

                                                KINGSWAY FINANCIAL SERVICES INC.

                                        By:     /s/ W. Shaun Jackson
                                                ----------------------------
                                                Name: W. Shaun Jackson
                                                Title: Executive Vice President
                                                       & CFO

                                                METRO CLAIM SERVICES INC.

                                        By:     /s/ W. Shaun Jackson
                                                ----------------------------
                                                Name: W. Shaun Jackson
                                                Title: Secretary


                                        CANADIAN IMPERIAL BANK OF COMMERCE

                                        By:     /s/ Robert Gill
                                                ----------------------------
                                                Name: Robert Gill
                                                Title: Executive Director

                                        By:     ____________________________
                                                Name:
                                                Title:


                                        THE BANK OF NOVA SCOTIA

                                        By:     /s/ Paul Hodgson
                                                ----------------------------
                                                Name: Paul Hodgson
                                                Title: Relationship Manager

                                        By:     /s/ W. J. Brown
                                                ----------------------------
                                                Name: W. J. Brown
                                                Title: Vice President

<PAGE>
                                                                         Page 53

                                         LASALLE NATIONAL BANK

                                         By:      /s/ Janet R. Gates
                                                  ------------------------------
                                                  Name: Janet R. Gates
                                                  Title: Senior Vice President

                                         By:      ______________________________
                                                  Name:
                                                  Title:


                                         FIRST UNION NATIONAL BANK

                                         By:      /s/ Gail M. Golightly
                                                  ------------------------------
                                                  Name: Gail M. Golightly
                                                  Title: Senior Vice President

                                         By:      ______________________________
                                                  Name:
                                                  Title:


                                         THE BANK OF NOVA SCOTIA,
                                         AS ADMINISTRATIVE AGENT

                                         By:      /s/ Paul Hodgson
                                                  ------------------------------
                                                  Name: Paul Hodgson
                                                  Title: Relationship Manager

                                         By:      ______________________________
                                                  Name:
                                                  Title:


                                         CANADIAN IMPERIAL BANK OF COMMERCE,
                                         AS DOCUMENTATION AGENT

                                         By:      /s/ Robert Gill
                                                  ------------------------------
                                                  Name: Robert Gill
                                                  Title: Executive Director

                                         By:      ______________________________
                                                  Name:
                                                  Title:

<PAGE>
                                                                         Page 54

                                         CANADIAN IMPERIAL BANK OF COMMERCE NEW
                                         YORK AGENCY

                                         By:      /s/ Nora Q. Catiis
                                                  ------------------------------
                                                  Name: Nora Q. Catiis
                                                  Title: Executive Director

                                         By:      ------------------------------
                                                  Name:
                                                  Title:


<PAGE>
                                  SCHEDULE "A"

                                   Commitments

As at the Closing Date.

Kingsway Facility
-----------------

Lender                                                           Commitment
------                                                           ----------

CIBC                                                             US $2,500,000

Scotiabank                                                       US $2,500,000

LaSalle                                                          US $2,500,000

First Union                                                      US $2,500,000
                                                                 ---------------

Commitment - Kingsway Facility                                   US $10,000,000


Partnership Facility
--------------------

Lender                                                           Commitment
------                                                           ----------

CIBC                                                             US $22,500,000

Scotiabank                                                       US $22,500,000

LaSalle                                                          US $22,500,000

First Union                                                      US $22,500,000
                                                                 ---------------

Commitment - Partnership Facility                                US $90,000,000

Total Commitment                                                 US $100,000,000

<PAGE>

                                  SCHEDULE "B"

                                Conversion Notice

TO:  THE BANK OF NOVA SCOTIA
     as Administrative Agent for the Lenders as defined
     in the Credit Agreement dated [date]
     among Kingsway Financial Services Inc. and
     Kingsway U.S. Finance Partnership, as Borrowers
     and Canadian Imperial Bank of Commerce,
     The Bank of Nova Scotia, LaSalle National Bank and
     First Union National Bank, as Lenders
     and The Bank of Nova Scotia, as Administrative Agent and Co-Syndications
     Agent and Canadian Imperial Bank of Commerce, as Co-Syndications Agent and
     Documentation Agent (the "Credit Agreement")

FROM: [Insert Borrower]

DATE:

1.   This Conversion Notice is delivered to you pursuant to the provisions of
     the Credit Agreement. All defined terms set forth in this Conversion Notice
     shall have the respective meanings set forth in the Credit Agreement.

2.   We hereby request a Conversion of a US Base Rate Loan into a LIBOR Loan as
     follows:

     (a)  Facility: ____________________________________________________________

     (b)  Conversion Date: _____________________________________________________

     (c)  Conversion Amount: ___________________________________________________

     (d)  LIBOR Period: ________________________________________________________

3.   We hereby request a Conversion of a maturing LIBOR Loan into a US Base Rate
     Loan as follows:

     (a)  Facility: ____________________________________________________________

     (b)  Conversion Date: _____________________________________________________

     (c)  Conversion Amount: ___________________________________________________


                                   [Borrower]

                                   Per:                               c/s


                                   Name:
                                   Title:

<PAGE>

                                  SCHEDULE "C"

                             Intercreditor Agreement

<PAGE>

                                  SCHEDULE "D"

                                LIBOR Loan Notice

TO:  THE BANK OF NOVA SCOTIA
     as Administrative Agent for the Lenders as defined
     in the Credit Agreement dated [date]
     among Kingsway Financial Services Inc. and
     Kingsway U.S. Finance Partnership, as Borrowers
     and Canadian Imperial Bank of Commerce,
     The Bank of Nova Scotia, LaSalle National Bank and
     First Union National Bank, as Lenders
     and The Bank of Nova Scotia, as Administrative Agent and Co-Syndications
     Agent and Canadian Imperial Bank of Commerce, as Co-Syndications Agent and
     Documentation Agent (the "Credit Agreement")

FROM: [Insert Borrower]

DATE:

1.   This LIBOR Loan Notice is delivered to you pursuant to the provisions of
     the Credit Agreement. All defined terms set forth in this LIBOR Loan Notice
     shall have the respective meanings set forth in the Credit Agreement.

2.   We hereby request a Borrowing under the Credit Facilities by way of a LIBOR
     Loan as follows:

     (a)  Borrowing Date:

     (b)  Amount of LIBOR Loan:

     (c)  LIBOR Period:

     (d)  Facility:

3.   We hereby request a LIBOR Loan Rollover under the Credit Facility as
     follows:

     (a)  LIBOR Loan Rollover Date:

     (b)  Amount of Maturing LIBOR Loan:

     (c)  LIBOR Period of New LIBOR Loan:

     (d)  Facility:


                                   [Borrower]

                                   Per:                               c/s


                                   Name:
                                   Title:

<PAGE>

                                  SCHEDULE "E"

                               Security Interests

<PAGE>

                                  SCHEDULE "F"

                              Quarterly Certificate

                                                                          [DATE]

TO:  THE BANK OF NOVA SCOTIA
     as Administrative Agent for the Lenders as defined
     in the Credit Agreement dated [date]
     among Kingsway Financial Services Inc. and
     Kingsway U.S. Finance Partnership, as Borrowers
     and Canadian Imperial Bank of Commerce,
     The Bank of Nova Scotia, LaSalle National Bank and
     First Union National Bank, as Lenders
     and The Bank of Nova Scotia, as Administrative Agent and Co-Syndications
     Agent and Canadian Imperial Bank of Commerce, as Co-Syndications Agent and
     Documentation Agent (the "Credit Agreement")

Dear Sirs:

     Re:
          Quarter Ending

     In accordance with the Credit Agreement, I, [insert name and title of
certifying officer] hereby certify without personal liability that:

1. I am familiar with and have examined the provisions of the Credit Agreement
and have made reasonable investigations of corporate records and inquiries of
other officers and senior personnel of the Borrower and based on the foregoing
and as of the date of this certificate:

     (a)  except as indicated below or in any Schedule annexed hereto, the
          representations and warranties contained in the Credit Agreement are
          true and correct in all material respects;

     (b)  to the best of my knowledge and belief, there is no Default or Event
          of Default under the Credit Agreement;

     (c)  the Borrowers are, and have been since the date of the last Quarterly
          Certificate delivered pursuant to the Credit Agreement, operating in
          accordance with all applicable regulatory financial ratio guidelines;

     (d)  to the best of my knowledge and belief, the covenants contained in the
          Credit Agreement have not been breached.

2. That as at the last day of the fiscal quarter ending
____________________________________, on a Consolidated basis,

     (w)  Funded Debt of Kingsway totalled _________________________ calculated
          as follows:

          (i)   indebtedness for borrowed money ___________________________;
                plus

          (ii)  Capitalized Lease Obligations ___________________________; plus

          (iii) Purchase Money Obligations ___________________________; plus

          (iv)  outstanding letters of credit ___________________________
                (excluding letters of credit the beneficiary of which is a
                Borrower, the Guarantor or a Subsidiary); plus

<PAGE>

          (v)  fees incurred in respect of above ___________________________;
               plus

          (vi) interest accrued in respect of above ___________________________.

     (x)  Total Capitalization of Kingsway totalled ___________________________
          calculated as follows:

          (i)  Funded Debt ___________________________; plus

          (ii) Shareholders equity ___________________________,

and accordingly, the ratio of Funded Debt to Total Capitalization as calculated
in accordance with the Credit Agreement is ___________________________ and
therefore not greater than a maximum ratio of required under Section 8.02(1) of
the Credit Agreement.

3.   That as at the last day of the fiscal quarter ending
     ___________________________, on a Consolidated basis,

     (v)  Net Written Premiums of Insurance Subsidiaries totalled
          ___________________________;

     (w)  Statutory Capital and Surplus of Kingsway totalled
          ___________________________ calculated as follows:

          (i)   Shareholders equity of Insurance Subsidiaries
                ___________________________; plus

          (ii)  Funded Debt ___________________________; less

          (iii) goodwill and other intangibles ___________________________,

and accordingly, the ratio of net premiums written to Capital Surplus Ratio is
___________________________ and therefore not greater than 3.0:1 required under
Section 8.02(2) of the Credit Agreement.

4. That (i) Net Income (as calculated in accordance with the Credit Agreement)
in the first quarter ending _____________________ was
___________________________ on a Consolidated basis, (ii) the proceeds of equity
issuances available in ___________________________ the fiscal quarter ending
amounted to ___________________________, and accordingly as at the last day of
the fiscal quarter ending ____________________ on a Consolidated basis Tangible
Net Worth as calculated in accordance with the Credit Agreement
___________________________ is and is therefore greater than the minimum
Tangible Net Worth of ___________________________ required under the Credit
Agreement.

5. That as at the last day of the fiscal quarter ending
___________________________ on a Consolidated basis,

     (w)  the Claims Ratio is ___________________________ on a Consolidated
          basis, and

     (x)  the Expense Ratio is ___________________________ on a Consolidated
          basis,

and accordingly, the Combined Ratio as calculated in accordance with the Credit
Agreement is ___________________________ and accordingly less than 105% required
under the Credit Agreement, or less than the Canadian Property and Casualty
Industry Average for the last four quarters which is
___________________________.

6. That as at the last day of the fiscal quarter ending
___________________________ on a Consolidated basis,

     (w)  EBITDA totalled ___________________________ calculated as follows:

          (i)   earnings ___________________________; plus

          (ii)  interest ___________________________; plus

          (iii) depreciation ___________________________; plus

          (iv)  income taxes ___________________________; plus

<PAGE>


          (v)  amortization ___________________________; plus

          (vi) extraordinary loss (gains) ___________________________

     and

     (x)  Interest Expense totalled ___________________________,

and accordingly, the Interest Coverage Ratio of Kingsway as calculated in
accordance with the Credit Agreement is __________________, and therefore not
less than 3.0:1 permitted under the Credit Agreement.

7. That as at the last day of the fiscal quarter ending _____________________
the senior unsecured debt rating of Kingsway is ___________________________ as
determined by __________________________ rating service.

8. Annexed as a Schedule to this Certificate is:

     (i)   a summary of invested assets of the Borrowers, the Guarantor and the
           Subsidiaries on a non-Consolidated basis;

     (ii)  a description of the equity portfolio of the Borrowers, the Guarantor
           and the Subsidiaries; and

     (iii) the status of margin positions of the Borrowers, the Guarantor and
           the Subsidiaries.

Capitalized terms used herein but not defined herein have the meanings
attributed to them in the Credit Agreement.

                                        By: ____________________________________

                                        Title: _________________________________

<PAGE>

                                  SCHEDULE "G"

                                  Subsidiaries

<PAGE>

                                  SCHEDULE "H"

                            US Base Rate Loan Notice

TO:  THE BANK OF NOVA SCOTIA
     as Administrative Agent for the Lenders as defined
     in the Credit Agreement dated [date]
     among Kingsway Financial Services Inc. and
     Kingsway U.S. Finance Partnership, as Borrowers
     and Canadian Imperial Bank of Commerce,
     The Bank of Nova Scotia, LaSalle National Bank and
     First Union National Bank, as Lenders
     and The Bank of Nova Scotia, as Administrative Agent and Co-Syndications
     Agent and Canadian Imperial Bank of Commerce, as Co-Syndications Agent and
     Documentation Agent (the "Credit Agreement")

FROM: [Insert Borrower]

DATE:

1.   This US Base Rate Loan Notice is delivered to you pursuant to the
     provisions of the Credit Agreement. All defined terms set forth in this US
     Base Rate Loan Notice shall have the respective meanings set forth in the
     Credit Agreement.

2.   We hereby request a Borrowing under the Credit Facility by way of a US Base
     Rate Loan as follows:

     (a)  Borrowing Date:

     (b)  Amount of Loan:

     (c)  Facility:

                        (Term)

                                   [Borrower]
                                   Per:                          c/s


                                   Name:
                                   Title:

<PAGE>

                                  SCHEDULE "I"

                                 FORM OF OPINION

                  [COUNSEL TO KINGSWAY FINANCIAL SERVICES INC.]

<PAGE>

                                  SCHEDULE "J"

                                   LITIGATION

<PAGE>

                                  SCHEDULE "K"

                             INTEREST RATES AND FEES

The interest rate payable on Outstanding Borrowings will vary dependent upon the
senior unsecured debt rating of Kingsway based on Standard & Poor's, Dominion
Bond Rating Service or Moody's debt ratings or upon the ratio of Funded Debt to
Total Capitalization as calculated in accordance with Section 8.02(1) whichever
is higher. In the event of a split debt rating, the highest rating shall apply.

If the better of senior unsecured debt rating or the ratio of Funded Debt to
Total Capitalization is determined to be within the ranges outlined in Column 1
then (i) the interest rate on LIBOR Loans is the LIBO Rate plus the percentage
set out in the corresponding square of Column 2, and (ii) interest on US Base
Rate Loans is the US Base Rate plus the percentage set out in the corresponding
square of Column 3.

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------
               1                                          2                                     3
-----------------------------------------------------------------------------------------------------------------
Better of Senior Unsecured Debt                      LIBOR Margin                          US Base Rate
      Rating OR Funded
     Debt/Capitalization
-----------------------------------------------------------------------------------------------------------------
<S>                                            <C>                                  <C>
greater or equal to A-/A3                       65.0                                 0
FD/C less than 0.20x
-----------------------------------------------------------------------------------------------------------------
BBB+Baa1                                        75.0                                 0
FD/C less than 0.25x
-----------------------------------------------------------------------------------------------------------------
BBB/Baa2                                        87.5                                 0
FD/C less than 0.30x
-----------------------------------------------------------------------------------------------------------------
BBB-/Baa3                                       100.0                                0
FD/C less than 0.375x
-----------------------------------------------------------------------------------------------------------------
BB+/Ba1                                         125.0                                25.0
FD/C less than 0.4x
-----------------------------------------------------------------------------------------------------------------
less than or equal to BB/Ba2                    150.0                                50.0
FD/C less than 0.45x
-----------------------------------------------------------------------------------------------------------------
</TABLE>

If the use of one means of measurement over the other would result in a
difference of more than one gradation, the applicable pricing level will be the
one level above the level indicated by the lower of the two measurements.

<PAGE>

                                  SCHEDULE "K1"

                          Directors' Qualifying Shares

<PAGE>

                                  SCHEDULE "L"

                                      Taxes

<PAGE>

                                  SCHEDULE "M"

                                 Labour Disputes

<PAGE>

                                  SCHEDULE "N"

                                  Pension Plans

<PAGE>

                                  SCHEDULE "O"

                                    Consents

<PAGE>

                                  SCHEDULE "P"

                                  Jurisdictions

<PAGE>

                                  SCHEDULE "Q"

                  FORM OF NOTICE OF ASSIGNMENT AND UNDERTAKING
                  --------------------------------------------

                              NOTICE OF ASSIGNMENT
                                 AND UNDERTAKING

TO:      Canadian Imperial Bank of Commerce
         BCE Place
         161 Bay Street, 8th Floor
         Toronto, Ontario
         M5J 2S8

         Attention: Executive Director - Financial Institutions

         (as Agent for the Lenders referred to below)

AND TO:  the Lenders

AND TO:  Kingsway Financial Services Inc.
         and Kingsway U.S. Finance Partnership

     We refer to the Credit Agreement dated as of [date] (such agreement as the
same may have been amended or may be amended in the future being herein referred
to as the "Credit Agreement") among Kingsway Financial Services Inc. and
Kingsway U.S. Finance Partnership (the "Borrowers"), Canadian Imperial Bank of
Commerce, The Bank of Nova Scotia, LaSalle National Bank and First Union
National Bank (the "Lenders"), and The Bank of Nova Scotia, as Administrative
Agent for the Lenders.

     Terms used herein with initial capital letters which are defined in the
Credit Agreement and which are not otherwise defined herein are used herein with
the meanings ascribed to such terms in the Credit Agreement.

     Be advised that pursuant to Section 10.16 of the Credit Agreement, the
undersigned has assumed a portion of the Total Commitment and corresponding
rights and obligations under the Credit Facility as follows:

         Assigning Lender
                                    ------------------------------

         Assumed Commitment        $
                                    ------------------------------

         (the "Assumed Commitment")

     In consideration of the receipt of the sum of Cdn. $10.00, the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby undertakes
to be bound by the provisions of the Credit Agreement and to perform all
obligations under or pursuant to the Credit Agreement, to the extent of the
Assumed Commitment, to the same extent as if the undersigned had been an
original party to the Credit Agreement having a Commitment with respect to the
Credit Facility equal to the Assumed Commitment.

         DATED this            day of                                       .
                    ----------

         [Name of assignee Lender]

         By:
            ------------------------------
         Title:

<PAGE>

       THIS CREDIT AMENDING AGREEMENT made as of the 11th day of August, 2000.

A M O N G:

                        KINGSWAY FINANCIAL SERVICES INC.
                      AND KINGSWAY U.S. FINANCE PARTNERSHIP
                                  As Borrowers

                                       AND

                       The Lenders named herein as Lenders

                                       AND

                            THE BANK OF NOVA SCOTIA,
                As Administrative Agent and Co-Syndications Agent

                                       AND

                       CANADIAN IMPERIAL BANK OF COMMERCE,
                As Co-Syndications Agent and Documentation Agent



     WHEREAS:

     1. Pursuant to a Credit Agreement made as of the 23rd day of February, 1999
between the parties hereto (the "Credit Agreement"), the Lenders and the Agents
established certain credit facilities in favour of the Borrowers;

     2. The Borrowers failed to comply with certain provisions of the Credit
Agreement and in particular, Section 8.02(5) for the period commencing January
1, 2000 and ending March 31, 2000 and for the period commencing April 1, 2000
and ending June 30, 2000 (collectively the "Covenant Default") thereby entitling
the Agents and the Lenders to declare an Event of Default;

     3. The Agents and the Lenders have agreed to refrain from declaring an
Event of Default in respect of the Covenant Default upon satisfaction of certain
conditions as outlined in Article IV of this Credit Amending Agreement and in
consideration of execution of this Credit Amending Agreement;

     4. The Agents, the Lenders and the Borrowers have agreed to amend certain
terms and conditions of the Credit Agreement in the manner hereinafter set
forth;

     FOR VALUABLE CONSIDERATION, the parties agree as follows:

<PAGE>

                                    ARTICLE I
                              AMENDMENT TO PAYMENTS

1.01 Amendment to Payments. Section 4.01 of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:

     "4.01 Repayment. Unless Outstanding Obligations shall be required to be
     paid at an earlier date pursuant to the terms hereof, the Borrowers shall
     repay the Outstanding Obligations as follows:

          (a)  The Borrowers shall pay not less than $2,500,000 U.S. on each of
               August 11, 2000 and December 31, 2000;

          (b)  The Borrowers shall pay not less than $2,500,000 U.S. on the last
               Business Day of each June and December commencing June 30, 2001;
               and

          (c)  The Borrowers shall pay the balance of the Outstanding
               Obligations in full on the Maturity Date."

1.02 Amendment to Mandatory Prepayment. Section 4.02 of the Credit Agreement is
hereby amended by adding the following sentence at the end of the Section:

     "Amounts prepaid under this Section shall be applied against the scheduled
     payments provided for in section 4.01 in inverse order of maturity
     commencing with the last scheduled payment."

1.03 Amendment to Voluntary Prepayment. Section 4.03 of the Credit Agreement is
hereby amended by adding the following sentence at the end of the Section:

     "Amounts prepaid under this Section shall be applied against the scheduled
     payments provided for in section 4.01 in inverse order of maturity
     commencing with the last scheduled payment."

                                   ARTICLE II

                             AMENDMENT TO COVENANTS

2.01 Amendment to Financial Funded Debt to Total Capitalization Covenant.
Section 8.02(1) of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

     "(1) Funded Debt to Total Capitalization. Kingsway shall maintain at all
     times a ratio of Funded Debt to Total Capitalization on a Consolidated
     basis as follows: (i) of not greater than 0.45:1.00 for the period
     commencing on the Closing Date and ending on March 31, 2000, (ii) of not
     greater than 0.40:1.00 for the period commencing April 1, 2000 and ending
     September 30, 2000, (iii) of not greater than

                                        2

<PAGE>

     0.375:1.00 for the period commencing October 1, 2000 and ending on December
     31, 2000, (iv) of not greater than 0.35:1.00 for the period commencing
     January 1, 2001 and ending on December 31, 2001, and (v) of not greater
     than 0.30:1.00 at all times thereafter."

2.02 Amendment to Interest Coverage Ratio. Section 8.02(5) of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:

     "(5) Interest Coverage. Kingsway shall maintain an Interest Coverage Ratio
     on a Consolidated basis calculated on the last day of each fiscal quarter
     of Kingsway on a rolling four quarter basis as follows:

          (i)   for the quarter ended December 31, 1999 of not less than
                2.75:1.00;

          (ii)  for the quarter ended March 31, 2000 of not less than 2.12:1.00;

          (iii) for the quarter ended June 30, 2000 of not less than 1.50:1.00;

          (iv)  for the quarter ended September 30, 2000 of not less than
                1.40:1.00; and

          (v)   at all times thereafter of not less than 3.00:1.00."

2.03 Amendment to No Guarantees Covenant. Section 8.03(5) of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:


     "(5) No Guarantees. Neither Borrower, nor the Guarantor nor any of the
     Subsidiaries shall be, or become liable, directly or indirectly,
     contingently or otherwise, for any obligation of any other Person by
     Guarantee other than (i) the guarantee dated July 1, 1999 issued by
     Kingsway Financial Services Inc. in favour of General Reinsurance
     Corporation in respect of the liabilities of Southern United Fire Insurance
     Company, (ii) the guarantee issued or to be issued by Kingsway Financial
     Services Inc. in favour of the Insurance Commission of Connecticut in
     respect of the capital and surplus requirements of Lincoln General and
     (iii) as otherwise permitted hereunder."

2.04 Amendment to Financial Statements Covenant. Section 8.01(7) of the Credit
Agreement is hereby amended by adding the following Subsection as Section
8.01(7)(c):

     "(c) As soon as available and in any event within 45 days after the end of
          each month beginning with July 2000, unaudited Consolidated and
          consolidating Financial Statements of Kingsway and the Guarantor as of
          the end of such month consisting of balance sheets, statements of
          income, cash flows and shareholders' equity for the month then ended
          and for that portion of the Financial Year then ended, all in
          reasonable detail and prepared in accordance with GAAP (subject to the
          absence

                                        3

<PAGE>

          of notes required by GAAP and subject to normal year-end adjustments)
          applied on a basis consistent with that of the preceding month or
          containing disclosure of the effect on the financial condition or
          results of operations of any change in the application of accounting
          principles and practices during such month."

2.05 Additional Covenant. Section 8.03 of the Credit Agreement is hereby amended
by adding the following Subsection as Section 8.03(17):

     "(17) Normal Course Issuer Bids. Notwithstanding the provisions of
           Subsection 8.03(14)(a)(i), Kingsway shall not be entitled to
           repurchase its common shares under its normal course issuer bid
           programme until such time as the Borrowers are in compliance with
           the financial covenants set out in Section 8.02 of the Credit
           Agreement as such covenants existed on the Closing Date."

                                   ARTICLE III
                              AMENDMENT TO SCHEDULE

3.01 Amendment to Schedule. Schedule "K" of the Credit Agreement is hereby
deleted in its entirety effective as at the date hereof and replaced with
Schedule "K" attached to this Credit Amending Agreement.

                                   ARTICLE IV
                        CONDITIONS PRECEDENT TO AMENDMENT

4.01 Conditions Precedent. The obligations of the Agent and the Lenders to amend
the Credit Agreement in accordance with the provisions of this Credit Amending
Agreement and to waive the Covenant Default is conditional upon satisfactory
evidence being given to the Administrative Agent, the Lenders and their counsel
as to compliance with the following conditions:

     (1)  the Borrower shall have paid to the Administrative Agent for the
          rateable benefit of the Lenders an amendment fee of $250,000 U.S.; and

     (2)  the Borrower shall have delivered all such additional documentation as
          the Administrative Agent and the Lenders shall reasonably require to
          effect the amendments contemplated in this Credit Amending Agreement.

                                        4

<PAGE>

                                    ARTICLE V

                                  MISCELLANEOUS

5.01 Nature of Amendments. It is acknowledged and agreed that the terms of this
Credit Amending Agreement are in addition to and, unless specifically provided
for, shall not limit, restrict, modify, amend or release any of the
understandings, agreements or covenants as set out in the Credit Agreement. The
Credit Agreement shall henceforth be read and construed in conjunction with this
Credit Amending Agreement and the Credit Agreement together with all of the
powers, provisions, conditions, covenants and agreements contained or implied in
the Credit Agreement shall be and shall continue to be in full force and effect.
References to the "Credit Agreement" or the "Agreement" in the Credit Agreement
or in any other document delivered in connection with, or pursuant to, the
Credit Agreement, shall mean the Credit Agreement, as amended hereby.

5.02 No Waiver to Certain Rights. Notwithstanding the provisions to this Credit
Amending Agreement and in particular, notwithstanding the waiver of the Covenant
Default, the Borrowers acknowledge and agree and the Lenders shall have the
right to appoint an independent actuary at the Borrowers' expense in the event
that the financial results of the Borrowers for the period ending as at the last
day of the fourth fiscal quarter of Kingsway in 2000 fail to meet the revised
financial projections delivered by the Borrowers to the Agents and the Lenders.
The determination that the aforementioned financial results met, or failed to
meet, the revised financial projections shall be made by no later than 30 days
following receipt by the Agents and the Lenders of the financial results.

5.03 Assignment. This Credit Amending Agreement shall enure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns but shall not be assignable by the Borrowers or either of them without
the prior written consent of the Agents and Lenders.

5.04 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

5.05 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as an Ontario contract
and the parties hereby submit and attorn to the non-exclusive jurisdiction of
the courts of the Province of Ontario.

5.06 Further Assurances. The Borrowers shall from time to time and at all times
hereafter, upon every reasonable request from the Agents or the Lenders, make,
do, execute and deliver or cause to be made, done, executed and delivered, all
such further acts, deeds and assurances and things as may be necessary in the
opinion of the Agents for more effectually implementing and carrying out the
true intent and meaning of this Credit Amending Agreement.

                                        5

<PAGE>

5.07 Counterparts. This Credit Amending Agreement may be executed in any number
of counterparts, each of which shall constitute an original and all of which,
taken together, shall constitute one and the same agreement.

     IN WITNESS WHEREOF the parties hereto have executed this Credit Amending
Agreement.

                                     KINGSWAY FINANCIAL SERVICES INC.

                                     By: /s/  William Star
                                         --------------------------------------
                                         Name:  William Star
                                         Title:  President & CEO

                                     By: /s/  W. Shaun Jackson
                                         --------------------------------------
                                         Name:  W. Shaun Jackson
                                         Title:  Executive Vice President & CFO

                                     KINGSWAY U.S. FINANCE PARTNERSHIP
                                     by its Managers

                                         James R. Zuhlke, President & CEO,
                                         KINGSWAY AMERICA INC.

                                     By: /s/  James R. Zuhlke
                                         --------------------------------------
                                         Name:  James R. Zuhlke
                                         Title:  President & CEO

                                         John B. Procter, Vice-President & CFO,
                                         KINGSWAY AMERICA INC.

                                     By: /s/  John Proctor
                                         --------------------------------------
                                         Name:  John Proctor
                                         Title:  Vice President & CFO

                                     CANADIAN IMPERIAL BANK OF COMMERCE

                                     By: /s/  Robert Gill
                                         --------------------------------------
                                         Name:  Robert Gill
                                         Title:  Executive Director

                                     By: /s/  Vlada Desrna
                                         --------------------------------------
                                         Name:  Vlada Desrna
                                         Title: Director

                                        6

<PAGE>

                                     THE BANK OF NOVA SCOTIA

                                     By: /s/  W.J. Brown
                                         --------------------------------------
                                         Name:  W.J. Brown
                                         Title:  Vice President

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:

                                     LASALLE BANK, N.A.

                                     By: /s/  Janet R. Gates
                                         --------------------------------------
                                         Name:  Janet R. Gates
                                         Title:  Senior Vice President

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:

                                     FIRST UNION NATIONAL BANK

                                     By: /s/ Thomas L. Stitchberry
                                         --------------------------------------
                                         Name:  Thomas L. Stitchberry
                                         Title:  Senior Vice President

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:

                                     THE BANK OF NOVA SCOTIA,
                                     AS ADMINISTRATIVE AGENT

                                     By: /s/  R. Boucaton
                                         --------------------------------------
                                         Name:  R. Boucaton
                                         Title: Director

                                     By: /s/  John Hall
                                         --------------------------------------
                                         Name: John Hall
                                         Title:  Senior Manager

                                        7

<PAGE>

                                     CANADIAN IMPERIAL BANK OF COMMERCE,
                                     AS DOCUMENTATION AGENT

                                     By: /s/  Robert Gill
                                         --------------------------------------
                                         Name:  Robert Gill
                                         Title:  Executive Director

                                     By: /s/  Vlada Desrna
                                         --------------------------------------
                                         Name:  Vlada Desrna
                                         Title: Director

                                         CANADIAN IMPERIAL BANK OF COMMERCE NEW
                                         YORK AGENCY

                                     By: /s/  Nora Q. Catiis
                                         --------------------------------------
                                         Name:  Nora Q. Catiis
                                         Title:  Authorized Signatory

                                     By:
                                         --------------------------------------
                                         Name:
                                         Title:



                                        8

<PAGE>

                                  SCHEDULE "K"

                             INTEREST RATES AND FEES

The interest rate payable on Outstanding Borrowings will vary dependent upon the
senior unsecured debt rating of Kingsway based on Standard & Poors, Dominion
Bond Rating Service or Moody's debt ratings or upon the ratio of Funded Debt to
Total Capitalization as calculated in accordance with Section 8.02(1) whichever
is higher. In the event of a split debt rating, the highest rating shall apply.

If the better of senior unsecured debt rating or the ratio of Funded Debt to
Total Capitalization is determined to be within the ranges outlined in Column 1
then (i) the interest rate on LIBOR Loans is the LIBO Rate plus the percentage
set out in the corresponding square of Column 2, and (ii) interest on US Base
Rate Loans is the US Base Rate plus the percentage set out in the corresponding
square of Column 3.

<TABLE>
<CAPTION>
                   1                                 2                        3

Better of Senior Unsecured Debt Rating           LIBOR Margin            US Base Rate
     OR Funded Debt/Capitalization
<S>                                              <C>                     <C>
X A-/A3                                             115.0                    50.0
FD/C (less than) 0.20x

BBB+Baa1                                            125.0                    50.0
FD/C (less than) 0.25x

BBB/Baa2                                            137.5                    50.0
FD/C (less than) 0.30x

BBB-/Baa3                                           150.0                    50.0
FD/C (less than) 0.375x

BB+/Ba1                                             175.0                    75.0
FD/C (less than) 0.4x

a BB/Ba2                                            200.0                   100.0
FD/C (less than) 0.45x
</TABLE>

If the use of one means of measurement over the other would result in a
difference of more than one gradation, the applicable pricing level will be the
one level above the level indicated by the lower of the two measurements.

                                        9

<PAGE>

          THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of March 30, 2001,
is among :

                        KINGSWAY FINANCIAL SERVICES INC.
                      AND KINGSWAY U.S. FINANCE PARTNERSHIP
                                  As Borrowers
                                       AND
                       The Lenders named herein as Lenders
                                       AND
                       LASALLE BANK NATIONAL ASSOCIATION,
                As Administrative Agent and Co-Syndications Agent
                                       AND
                       CANADIAN IMPERIAL BANK OF COMMERCE,
                As Co-Syndications Agent and Documentation Agent

           WHEREAS:

          1. Pursuant to a Credit Agreement made as of the 23rd day of February,
1999 among the parties hereto (the "Original Credit Agreement"), the Lenders and
the Agents established certain credit facilities in favour of the Borrowers;

          2. Pursuant to a Credit Amending Agreement made as of August 11, 2000
among the parties hereto (the "First Amendment") (the Original Credit Agreement,
as amended by the First Amendment, hereinafter is referred to as the "Credit
Agreement"), the Agents and the Lenders agreed, in consideration of the
amendments to the Original Credit Agreement therein set forth, to refrain from
declaring an Event of Default in respect of the failure of the Borrowers to
comply with certain provisions of the Original Credit Agreement;

          3. The Borrowers have returned to full compliance with the financial
covenants under the Original Credit Agreement and have requested that the Agents
and the Lenders (i) agree to relieve the Borrowers from the obligation, imposed
pursuant to the First Amendment, to provide monthly financial information to the
Agent and the Lenders and (ii) consent to the execution and delivery of the
Guaranty Agreement in favour of State and County Mutual Fire Insurance Company
described herein;

          4. The Agents and the Lenders are willing to grant the requests of the
Borrowers upon satisfaction of certain conditions as outlined in Article III of
this Second Amendment to Credit Agreement and in consideration of execution of
this Second Amendment

<PAGE>

                                       -2-

to Credit Agreement;

           5. The Agents, the Lenders and the Borrowers have agreed to amend
certain terms and conditions of the Credit Agreement, in the manner hereinafter
set forth;

            FOR VALUABLE CONSIDERATION, the parties agree as follows:

                                   ARTICLE I

                             AMENDMENT TO DEFINITION

1.01 Amendment to Definition of "Branch of Account." Section 1.01(10) of the
Credit Agreement is hereby deleted in its entirety and replaced with the
following:

     "(10) "Branch of Account" means LaSalle Bank National Association, 135 S.
           LaSalle Street, Chicago, Illinois 60603, ABA #071000505, Account
           #1378018/7300, Attention: Commercial Loan Syndication Unit,
           Reference: Kingsway."
                                   ARTICLE II

                             AMENDMENT TO COVENANTS

2.01 Amendment to No Guarantees Covenant. Section  8.03(5) of the Credit
Agreement is hereby  deleted in its entirety and replaced with the following:

     "(5) No Guarantees. Neither Borrower, nor the Guarantor nor any of the
     Subsidiaries shall be, or become liable, directly or indirectly,
     contingently or otherwise, for any obligation of any other Person by
     Guarantee other than (i) the Guaranty Agreement effective January 1, 2001
     (the "State and County Guaranty") issued by Kingsway in favour of State and
     County Mutual Fire Insurance Company ("State and County") in respect of the
     liabilities of (A) Kingsway Reinsurance Corporation ("Reinsurer") under
     that certain 100% Quota Share Reinsurance Agreement effective January 1,
     2001 (the "State and County Reinsurance Agreement") between Reinsurer and
     State and County and (B) Southern United General Agency of Texas, Inc.
     ("General Agency") under that certain agreement effective January 1, 2001
     (the "State and County General Agency Agreement") whereby State and County
     appointed General Agency to act as general agent for State and County, (ii)
     the guarantee issued or to be issued by Kingsway Financial Services Inc. in
     favour of the Insurance Commission of Connecticut in respect of the capital
     and surplus requirements of Lincoln General and (iii) as otherwise
     permitted hereunder."

2.02 Amendment to Financial Statements Covenant. Section 8.01(7)(c) of the
Credit

<PAGE>

                                      -3-

Agreement is hereby deleted in its entirety and replaced with the following:

     "(c) As soon as available and in any event within 45 days after the end of
          each month beginning with July 2000, unaudited Consolidated and
          consolidating Financial Statements of Kingsway and the Guarantor as of
          the end of such month consisting of balance sheets, statements of
          income, cash flows and shareholders' equity for the month then ended
          and for that portion of the Financial Year then ended, all in
          reasonable detail and prepared in accordance with GAAP (subject to the
          absence of notes required by GAAP and subject to normal year-end
          adjustments) applied on a basis consistent with that of the preceding
          month or containing disclosure of the effect on the financial
          condition or results of operations of any change in the application of
          accounting principles and practices during such month; provided,
          however, that no such monthly reports shall be required for the month
          of January, 2001 or any month thereafter unless the Consolidated Net
          Income is less than zero for any fiscal quarter ending on or after the
          date hereof. In the event the Consolidated Net Income is less than
          zero for any fiscal quarter ending on or after the date hereof, then
          the Borrowers shall resume such monthly reporting commencing with the
          month following such fiscal quarter and shall continue such monthly
          reporting for each month through the last month of the first full
          Financial Year thereafter in which the Consolidated Net Income for
          such Financial Year is greater than zero and no Default or Event of
          Default exists and is continuing."
                                  ARTICLE III

                        CONDITIONS PRECEDENT TO AMENDMENT

3.01 Conditions Precedent. The obligations of the Agent and the Lenders to amend
the Credit Agreement in accordance with the provisions of this Second Amendment
to Credit Agreement is conditional upon satisfactory evidence being given to the
Administrative Agent, the Lenders and their counsel as to compliance with the
following conditions:

(1)  the Borrowers shall delivered to the Administrative Agent copies, certified
          by the Chief Financial Officer of the Borrowers, of the executed State
          and County Guaranty, the State and County Reinsurance Agreement and
          the State and County General Agency Agreement, each of which shall be
          in form and substance satisfactory to the Administrative Agent and its
          counsel;

(2)  the Borrowers shall have delivered to the Administrative Agent evidence
          satisfactory to

<PAGE>

                                       -4-

          the Administrative Agent and its counsel that the guarantee dated July
          1, 1999 issued by Kingsway in favour of General Reinsurance
          Corporation in respect of the liabilities of Southern United Fire
          Insurance Company has been terminated and that Kingsway has no further
          obligations or liabilities thereunder; and
(3)  the Borrower shall have delivered all such additional documentation as the
          Administrative Agent and the Lenders shall reasonably require to
          effect the amendments contemplated in this Second Amendment to Credit
          Agreement.
                                   ARTICLE IV

                                  MISCELLANEOUS

4.01 Nature of Amendments. It is acknowledged and agreed that the terms of this
Second Amendment to Credit Agreement are in addition to and, unless specifically
provided for, shall not limit, restrict, modify, amend or release any of the
understandings, agreements or covenants as set out in the Credit Agreement. The
Credit Agreement shall henceforth be read and construed in conjunction with this
Second Amendment to Credit Agreement and the Credit Agreement together with all
of the powers, provisions, conditions, covenants and agreements contained or
implied in the Credit Agreement shall be and shall continue to be in full force
and effect. References to the "Credit Agreement" or the "Agreement" in the
Credit Agreement or in any other document delivered in connection with, or
pursuant to, the Credit Agreement, shall mean the Credit Agreement, as amended
hereby.

4.02 Assignment. This Second Amendment to Credit Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns but shall not be assignable by the Borrowers or either of
them without the prior written consent of the Agents and Lenders.

4.03 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

4.04 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as an Ontario contract
and the parties hereby submit and attorn to the non-exclusive jurisdiction of
the courts of the Province of Ontario.

4.05 Further Assurances. The Borrowers shall from time to time and at all times
hereafter, upon every reasonable request from the Agents or the Lenders, make,
do, execute and deliver

<PAGE>

                                       -5-

or cause to be made, done, executed and delivered, all such further acts, deeds
and assurances and things as may be necessary in the opinion of the Agents for
more effectually implementing and carrying out the true intent and meaning of
this Second Amendment to Credit Agreement.

4.06 Counterparts. This Second Amendment to Credit Agreement may be executed in
any number of counterparts, each of which shall constitute an original and all
of which, taken together, shall constitute one and the same agreement.

<PAGE>

                                      -6-

                  IN WITNESS WHEREOF the parties hereto have executed this
Second Amendment to Credit Agreement.

                             KINGSWAY FINANCIAL SERVICES INC.

                             By: /s/ William G. Star
                             William G. Star
                             President & Chief Executive Officer
                             By: /s/ W. Shaun Jackson
                             W. Shaun Jackson
                             Executive Vice President & Chief Financial Officer
                             KINGSWAY U.S. FINANCE PARTNERSHIP
                             by its Managers
                                 James R. Zuhlke, President & CEO,
                                 KINGSWAY AMERICA INC.

                             By: /s/ James R. Zuhlke
                             James R. Zuhlke
                             Manager
                                 John B. Proctor Jr., Vice President, CFO
                                 KINGSWAY AMERICA INC.

                             By: /s/ John B. Proctor, Jr.
                             John B. Proctor, Jr.
                             Manager

                             CANADIAN IMPERIAL BANK OF COMMERCE
                             By: /s/ Robert Gill
                             Name: Robert Gill
                             Title: Executive Director
                             By: /s/ Karen Kiskorna
                             Name: Karen Kiskorna
                             Title: Director

<PAGE>

                            THE BANK OF NOVA SCOTIA
                            By: /s/ W.J. Brown
                            Name: W.J. Brown
                            Title: Vice-President
                            By:
                            Name:
                            Title:

                            LASALLE BANK NATIONAL ASSOCIATION
                            By: /s/ Janet R. Gates
                            Name: Janet R. Gates
                            Title: Senior Vice President

                            FIRST UNION NATIONAL BANK
                            By: /s/ Daniel J. Norton
                            Name: Daniel J. Norton
                            Title: Director
                            By:
                            Name:
                            Title:

                            LASALLE BANK NATIONAL ASSOCIATION,
                            AS ADMINISTRATIVE AGENT
                            By: /s/ Janet R. Gates
                            Name: Janet R. Gates
                            Title: Senior Vice President

                            CANADIAN IMPERIAL BANK OF COMMERCE,
                            AS DOCUMENTATION AGENT
                            By: /s/ Robert Gill
                            Name: Robert Gill
                            Title: Executive Director
                            By: /s/ Karen Kiskorna
                            Name: Karen Kiskorna
                            Title: Director

                            CANADIAN IMPERIAL BANK OF COMMERCE NEW YORK AGENCY
                            By: /s/ Howard Palmer
                            Name: Howard Palmer
                            Title: Executive Director, CIBC World Markets Corp.,
                                   as agent
                            By:
                            Name:
                            Title:

<PAGE>

          THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of June 30, 2001,
is among :
                        KINGSWAY FINANCIAL SERVICES INC.
                      AND KINGSWAY U.S. FINANCE PARTNERSHIP
                                   As Borowers
                                       AND
                       The Lenders named herein as Lenders
                                       AND
                       LASALLE BANK NATIONAL ASSOCIATION,
                As Administrative Agent and Co-Syndications Agent
                                       AND
                       CANADIAN IMPERIAL BANK OF COMMERCE,
                As Co-Syndications Agent and Documentation Agent

          WHEREAS:

          1.   Pursuant to a Credit Agreement made as of the 23rd day of
February, 1999 among the parties hereto (the "Original Credit Agreement"), the
Lenders and the Agents established certain credit facilities in favour of the
Borrowers;

          2.   Pursuant to a Credit Amending Agreement made as of August 11,
2000 among the parties hereto (the "First Amendment"), the Agents and the
Lenders agreed, in consideration of the amendments to the Original Credit
Agreement therein set forth, to refrain from declaring an Event of Default in
respect of the failure of the Borrowers to comply with certain provisions of the
Original Credit Agreement;

          3.   Pursuant to a Second Amendment to Credit Agreement made as of
March 30, 2001 among the parties hereto (the "Second Amendment") (the Original
Credit Agreement, as amended by the First Amendment and the Second Amendment,
hereinafter is referred to as the "Credit Agreement"), as a result of the return
of the Borrowers to full compliance with the financial covenants under the
Original Credit Agreement, the Agents and the Lenders (i) agreed to relieve the
Borrowers from the obligation, imposed pursuant to the First Amendment, to
provide monthly financial information to the Agent and the Lenders and (ii)
consented to the execution and delivery of the Guaranty Agreement in favour of
State and County Mutual Fire Insurance Company described therein;

          4.   The Borrowers now have requested that the Agents and the Lenders
consent to the execution and delivery of another Guaranty Agreement in favour of
State

<PAGE>

                                      -2-

National Insurance Company, State National Specialty Insurance Company and State
and County Mutual Fire Insurance Company described herein;

          5.   The Agents and the Lenders are willing to grant the requests of
the Borrowers upon satisfaction of certain conditions as outlined in Article II
of this Third Amendment to Credit Agreement and in consideration of execution of
this Third Amendment to Credit Agreement;

          6.   The Agents, the Lenders and the Borrowers have agreed to amend
certain terms and conditions of the Credit Agreement, in the manner hereinafter
set forth;

            FOR VALUABLE CONSIDERATION, the parties agree as follows:

                                   ARTICLE I

                              AMENDMENT TO COVENANT

1.01 Amendment to No Guarantees Covenant. Section 8.03(5) of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:
     "(5) No Guarantees. Neither Borrower, nor the Guarantor nor any of the
     Subsidiaries shall be, or become liable, directly or indirectly,
     contingently or otherwise, for any obligation of any other Person by
     Guarantee other than (i) the Guaranty Agreement effective January 1, 2001
     (the "State and County Guaranty") issued by Kingsway in favour of State and
     County Mutual Fire Insurance Company ("State and County") in respect of the
     liabilities of (A) Kingsway Reinsurance Corporation ("Kingsway
     Reinsurance") under that certain 100% Quota Share Reinsurance Agreement
     effective January 1, 2001 (the "State and County Reinsurance Agreement")
     between Reinsurer and State and County and (B) Southern United General
     Agency of Texas, Inc. ("General Agency") under that certain agreement
     effective January 1, 2001 (the "State and County General Agency Agreement")
     whereby State and County appointed General Agency, to the extent provided
     therein, to act as general agent for State and County, (ii) the Guaranty
     Agreement effective April 1, 2001 (the "State National Guaranty") issued by
     Kingsway in favour of State National Insurance Company, Inc. ("State
     National"), State National Specialty Insurance Company ("State National -
     Florida") and State and County in respect of the liabilities of (A)
     Kingsway Reinsurance under that certain 100% Quota Share Reinsurance
     Agreement effective April 1, 2001 between Kingsway Reinsurance

<PAGE>

                                      -3-

     and State and County, (B) Lincoln General Insurance Company ("Lincoln
     General") under that certain 90% Quota Share Reinsurance Agreement
     effective April 1, 2001 among Lincoln General, State National and State
     National - Florida, (C) Lincoln General under that certain Excess Stop Loss
     Reinsurance Agreement effective April 1, 2001 among Lincoln General, State
     National and State National - Florida, and (D) Reliant American Insurance
     Company ("Reliant American") under that certain agreement effective April
     1, 2001 (the "Reliant American General Agency Agreement") whereby State
     National, State National - Florida and State and County appointed Reliant
     American, to the extent provided therein, to act as general agent for State
     National, State National - Florida and State and County, (iii) the
     guarantee issued or to be issued by Kingsway Financial Services Inc. in
     favour of the Insurance Commission of Connecticut in respect of the capital
     and surplus requirements of Lincoln General and (iv) as otherwise permitted
     hereunder."

                                   ARTICLE II

                        CONDITIONS PRECEDENT TO AMENDMENT

2.01 Conditions Precedent. The obligations of the Agent and the Lenders to amend
the Credit Agreement in accordance with the provisions of this Third Amendment
to Credit Agreement is conditional upon satisfactory evidence being given to the
Administrative Agent, the Lenders and their counsel as to compliance with the
following conditions:

(1)  the Borrowers shall delivered to the Administrative Agent copies, certified
          by the Chief Financial Officer of the Borrowers, of the executed State
          National Guaranty, the reinsurance agreements with Kingsway
          Reinsurance and Lincoln General guaranteed thereby and the Reliant
          American General Agency Agreement, each of which shall be in form and
          substance satisfactory to the Administrative Agent and its counsel;
          and

(2)  the Borrower shall have executed and delivered to Administrative Agent this
          Third Amendment to Credit Agreement and shall have delivered all such
          additional documentation as the Administrative Agent and the Lenders
          shall reasonably require to effect the amendments contemplated in this
          Third Amendment to Credit Agreement.

                                   ARTICLE III

                                  MISCELLANEOUS

3.01 Nature of Amendments. It is acknowledged and agreed that the terms of this
Third

<PAGE>

                                      -4-

Amendment to Credit Agreement are in addition to and, unless specifically
provided for, shall not limit, restrict, modify, amend or release any of the
understandings, agreements or covenants as set out in the Credit Agreement. The
Credit Agreement shall henceforth be read and construed in conjunction with this
Third Amendment to Credit Agreement and the Credit Agreement together with all
of the powers, provisions, conditions, covenants and agreements contained or
implied in the Credit Agreement shall be and shall continue to be in full force
and effect. References to the "Credit Agreement" or the "Agreement" in the
Credit Agreement or in any other document delivered in connection with, or
pursuant to, the Credit Agreement, shall mean the Credit Agreement, as amended
hereby.

3.02 Assignment. This Third Amendment to Credit Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns but shall not be assignable by the Borrowers or either of
them without the prior written consent of the Agents and Lenders.

3.03 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

3.04 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as an Ontario contract
and the parties hereby submit and attorn to the non-exclusive jurisdiction of
the courts of the Province of Ontario.

3.05 Further Assurances. The Borrowers shall from time to time and at all times
hereafter, upon every reasonable request from the Agents or the Lenders, make,
do, execute and deliver or cause to be made, done, executed and delivered, all
such further acts, deeds and assurances and things as may be necessary in the
opinion of the Agents for more effectually implementing and carrying out the
true intent and meaning of this Third Amendment to Credit Agreement.

3.06 Counterparts. This Third Amendment to Credit Agreement may be executed in
any number of counterparts, each of which shall constitute an original and all
of which, taken together, shall constitute one and the same agreement.

<PAGE>

                                      -5-

                  IN WITNESS WHEREOF the parties hereto have executed this Third
Amendment to Credit Agreement.

                              KINGSWAY FINANCIAL SERVICES INC.
                              By: /s/ William G. Stan
                              William G. Star
                              President & Chief Executive Officer
                              By: /s/ W. Shaun Jackson
                              W. Shaun Jackson
                              Executive Vice President & Chief Financial Officer
                              KINGSWAY U.S. FINANCE PARTNERSHIP
                              by its Managers
                                     James R. Zuhlke, President & CEO,
                                     KINGSWAY AMERICA INC.

                              By:/s/ James R. Zuhlke
                              James R. Zuhlke
                              Manager
                                     John B. Proctor Jr., Vice President, CFO
                                     KINGSWAY AMERICA INC.

                              By:/s/ John  B Proctor, Jr.
                              John B. Proctor, Jr.
                              Manager

                              CANADIAN IMPERIAL BANK OF COMMERCE
                              By:/s/ Robert Gill
                              Name: Robert Gill
                              Title: Executive Director
                              By:/s/ Karen F. Kiskorna
                              Name: Karen F. Kiskorna
                              Title: Director

<PAGE>

                                      -6-

                              THE BANK OF NOVA SCOTIA
                              By: /s/ W.J. Brown
                              Name: W.J. Brown
                              Title: Vice - President

                              LASALLE BANK NATIONAL ASSOCIATION
                              By: /s/ Janet R. Gates
                              Name: Janet R. Gates
                              Title: Senior Vice President

                              FIRST UNION NATIONAL BANK
                              By: /s/ Daniel J Norton
                              Name: Daniel J Norton
                              Title: Director

                              LASALLE BANK NATIONAL ASSOCIATION, AS
                              ADMINISTRATIVE AGENT
                              By: /s/ Janet R. Gates
                              Name: Janet R. Gates
                              Title: Senior Vice President

                              CANADIAN IMPERIAL BANK OF COMMERCE,
                              AS DOCUMENTATION AGENT
                              By: /s/ Robert Gill
                              Name: Robert Gill
                              Title: Executive Director
                              By: /s/ Karen F. Kiskorna
                              Name: Karen F. Kiskorna
                              Title: Director

                              CANADIAN IMPERIAL BANK OF COMMERCE
                              NEW YORK AGENCY
                              By: /s/ Nora Q. Catiis
                              Name: Nora Q. Catiis
                              Title: Authorized Signatory

<PAGE>

          THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of October 5,
2001, is among:

                        KINGSWAY FINANCIAL SERVICES INC.
                      AND KINGSWAY U.S. FINANCE PARTNERSHIP
                                  As Borrowers
                                       AND
                       The Lenders named herein as Lenders
                                       AND
                       LASALLE BANK NATIONAL ASSOCIATION,
                As Administrative Agent and Co-Syndications Agent
                                       AND
                       CANADIAN IMPERIAL BANK OF COMMERCE,
                As Co-Syndications Agent and Documentation Agent

          WHEREAS:

          1.   Pursuant to a Credit Agreement made as of the 23rd day of
February, 1999 among the parties hereto (the "Original Credit Agreement"), the
Lenders and the Agents established certain credit facilities in favour of the
Borrowers;

          2.   Pursuant to a Credit Amending Agreement made as of August 11,
2000 among the parties hereto (the "First Amendment"), the Agents and the
Lenders agreed, in consideration of the amendments to the Original Credit
Agreement therein set forth, to refrain from declaring an Event of Default in
respect of the failure of the Borrowers to comply with certain provisions of the
Original Credit Agreement;

          3.   Pursuant to a Second Amendment to Credit Agreement made as of
March 30, 2001 among the parties hereto (the "Second Amendment"), as a result of
the return of the Borrowers to full compliance with the financial covenants
under the Original Credit Agreement, the Agents and the Lenders (i) agreed to
relieve the Borrowers from the obligation, imposed pursuant to the First
Amendment, to provide monthly financial information to the Agent and the Lenders
and (ii) consented to the execution and delivery of the Guaranty Agreement in
favour of State and County Mutual Fire Insurance Company described therein;

          4.   Pursuant to a Third Amendment to Credit Agreement made as of June
30, 2001 among the parties hereto (the "Third Amendment") (the Original Credit
Agreement, as amended by the First Amendment, the Second Amendment and the Third
Amendment, hereinafter is referred to as the "Credit Agreement"), the Agents and
the Lenders consented to

                                      -2-

<PAGE>

the execution and delivery of a Guaranty Agreement in favour of State National
Insurance Company, State National Specialty Insurance Company and State and
County Mutual Fire Insurance Company described therein;

          5.   The Borrowers now have requested that the Agents and the Lenders
consent to (i) the issuance, from time to time, of letters of credit for the
account of Kingsway Financial Services Inc. ("Kingsway") and for the benefit of
Old American County Mutual Fire Insurance Company and (ii) the execution and
delivery of an Indemnity and Hold Harmless Agreement in favour of MSI Insurance
Companies and the issuance, from time to time, of letters of credit for the
account of Kingsway and for the benefit of MSI Insurance Companies, each
described herein;

          6.   The Agents and the Lenders are willing to grant the requests of
the Borrowers upon satisfaction of certain conditions as outlined in Article II
of this Fourth Amendment to Credit Agreement and in consideration of execution
of this Fourth Amendment to Credit Agreement;

          7.   The Agents, the Lenders and the Borrowers have agreed to amend
certain terms and conditions of the Credit Agreement, in the manner hereinafter
set forth;

          FOR VALUABLE CONSIDERATION, the parties agree as follows:

                                    ARTICLE I

                              AMENDMENT TO COVENANT

1.01 Amendment to No Guarantees Covenant. Section 8.03(5) of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:

     "(5) No Guarantees. Neither Borrower, nor the Guarantor nor any of the
     Subsidiaries shall be, or become liable, directly or indirectly,
     contingently or otherwise, for any obligation of any other Person by
     Guarantee other than:

(i)  the Guaranty Agreement effective January 1, 2001 (the "State and County
          Guaranty") issued by Kingsway in favour of State and County Mutual
          Fire Insurance Company ("State and County") in respect of the
          liabilities of

(A)       Kingsway Reinsurance Corporation ("Kingsway Reinsurance") under that
               certain 100% Quota Share Reinsurance Agreement effective January
               1, 2001 (the "State and County Reinsurance Agreement") between
               Kingsway

                                      -3-

<PAGE>

               Reinsurance and State and County, and

(B)       Southern United General Agency of Texas, Inc. ("General Agency") under
               that certain agreement effective January 1, 2001 (the "State and
               County General Agency Agreement") whereby State and County
               appointed General Agency, to the extent provided therein, to act
               as general agent for State and County,

(ii)  the Guaranty Agreement effective April 1, 2001 (the "State National
          Guaranty") issued by Kingsway in favour of State National Insurance
          Company, Inc. ("State National"), State National Specialty Insurance
          Company ("State National - Florida") and State and County in respect
          of the liabilities of:

(A)       Kingsway Reinsurance under that certain 100% Quota Share Reinsurance
               Agreement effective April 1, 2001 between Kingsway Reinsurance
               and State and County,

(B)       Lincoln General Insurance Company ("Lincoln General") under that
               certain 90% Quota Share Reinsurance Agreement effective April 1,
               2001 among Lincoln General, State National and State National -
               Florida,

(C)       Lincoln General under that certain Excess Stop Loss Reinsurance
               Agreement effective April 1, 2001 among Lincoln General, State
               National and State National - Florida, and

(D)       Reliant American Insurance Company ("Reliant American") under that
               certain agreement effective April 1, 2001 (the "Reliant American
               General Agency Agreement") whereby State National, State National
               - Florida and State and County appointed Reliant American, to the
               extent provided therein, to act as general agent for State
               National, State National - Florida and State and County,

(iii) the letters of credit that may be obtained, from time to time, by Kingsway
          for the benefit of Old American County Mutual Fire Insurance Company
          ("Old American") to support the liabilities of Kingsway Reinsurance
          under that certain Quota Share Reinsurance Agreement effective October
          5, 2001 between Kingsway Reinsurance and Old American (the "Old
          American Reinsurance Agreement"),

(iv)  the Indemnity and Hold Harmless Agreement effective October 5, 2001 (the
          "MSI Indemnity") issued by Kingsway America Inc. ("Kingsway America"),
          on behalf of itself and its affiliated companies, in favour of MSI
          Insurance Companies ("MSI")

                                      -4-

<PAGE>

          in respect of the insurance policies issued in MSI's name on behalf of
          Kingsway America by West Point Underwriters,

(v)   the letters of credit that may be obtained, from time to time, by Kingsway
          for the benefit of MSI to support the liabilities of Kingsway America
          under the MSI Indemnity Agreement,

(vi)  the guarantee issued or to be issued by Kingsway in favour of the
          Insurance Commission of Connecticut in respect of the capital and
          surplus requirements of Lincoln General, and

(vii) as otherwise permitted hereunder."

                                   ARTICLE II

                        CONDITIONS PRECEDENT TO AMENDMENT

2.01  Conditions Precedent. The obligations of the Agent and the Lenders to
amend the Credit Agreement in accordance with the provisions of this Fourth
Amendment to Credit Agreement is conditional upon satisfactory evidence being
given to the Administrative Agent, the Lenders and their counsel as to
compliance with the following conditions:

(1)   the Borrowers shall have delivered to the Administrative Agent copies,
          certified by the Chief Financial Officer of the Borrowers, of the Old
          American Reinsurance Agreement and the MSI Indemnity, each of which
          shall be in form and substance satisfactory to the Administrative
          Agent and its counsel; and

(2)   the Borrower shall have executed and delivered to Administrative Agent
          this Fourth Amendment to Credit Agreement and shall have delivered all
          such additional documentation as the Administrative Agent and the
          Lenders shall reasonably require to effect the amendments contemplated
          in this Fourth Amendment to Credit Agreement.

                                   ARTICLE III

                                  MISCELLANEOUS

3.01  Nature of Amendments. It is acknowledged and agreed that the terms of this
Fourth Amendment to Credit Agreement are in addition to and, unless specifically
provided for, shall not limit, restrict, modify, amend or release any of the
understandings, agreements or covenants as set out in the Credit Agreement. The
Credit Agreement shall henceforth be read and construed in conjunction with this
Fourth Amendment to Credit Agreement and the Credit Agreement together with all
of the powers, provisions, conditions, covenants and agreements contained or
implied in the Credit Agreement shall be and shall continue to be in full force
and

                                       -5-

<PAGE>

effect. References to the "Credit Agreement" or the "Agreement" in the Credit
Agreement or in any other document delivered in connection with, or pursuant to,
the Credit Agreement, shall mean the Credit Agreement, as amended hereby.

3.02  Assignment. This Fourth Amendment to Credit Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns but shall not be assignable by the Borrowers or either of
them without the prior written consent of the Agents and Lenders.

3.03  Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

3.04  Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be treated in all respects as an Ontario contract
and the parties hereby submit and attorn to the non-exclusive jurisdiction of
the courts of the Province of Ontario.

3.05  Further Assurances. The Borrowers shall from time to time and at all times
hereafter, upon every reasonable request from the Agents or the Lenders, make,
do, execute and deliver or cause to be made, done, executed and delivered, all
such further acts, deeds and assurances and things as may be necessary in the
opinion of the Agents for more effectually implementing and carrying out the
true intent and meaning of this Fourth Amendment to Credit Agreement.

3.06  Counterparts. This Fourth Amendment to Credit Agreement may be executed in
any number of counterparts, each of which shall constitute an original and all
of which, taken together, shall constitute one and the same agreement.

                                      -6-

<PAGE>

          IN WITNESS WHEREOF the parties hereto have executed this Fourth
Amendment to Credit Agreement.

                              KINGSWAY FINANCIAL SERVICES INC.
                              By: /s/ William G. Star
                              William G. Star
                              President & Chief Executive Officer
                              By: /s/ W. Shaun Jackson
                              W. Shaun Jackson
                              Executive Vice President & Chief Financial Officer
                              KINGSWAY U.S. FINANCE PARTNERSHIP
                              by its Managers
                                      James R. Zuhlke, President & CEO,
                                      KINGSWAY AMERICA INC.

                              By: /s/ James R. Zuhlke
                              James R. Zuhlke
                              Manager
                                      John B. Proctor Jr., Vice President, CFO
                                      KINGSWAY AMERICA INC.

                              By: /s/ John B. Proctor, Jr.
                              John B. Proctor, Jr.
                              Manager

                              CANADIAN IMPERIAL BANK OF COMMERCE
                              By: /s/ Robert Gill
                              Name: Robert Gill
                              Title: Executive Director
                              By: /s/ Peter A. Mastromanini
                              Name: Peter A. Mastromanini
                              Title: Director

                                       -7-

<PAGE>

                                        THE BANK OF NOVA SCOTIA
                                        By: /s/ W. J. Brown
                                        Name: W. J. Brown
                                        Title:Vice-President

                                        LASALLE BANK NATIONAL ASSOCIATION
                                        By: /s/ Janet R. Gates
                                        Name: Janet R. Gates
                                        Title: Senior Vice President

                                        FIRST UNION NATIONAL BANK
                                        By: /s/ Daniel J. Norton
                                        Name: Daniel J. Norton
                                        Title: Director

                                        LASALLE BANK NATIONAL ASSOCIATION, AS
                                        ADMINISTRATIVE AGENT
                                        By: /s/ Janet R. Gates
                                        Name: Janet R. Gates
                                        Title: Senior Vice President

                                        CANADIAN IMPERIAL BANK OF COMMERCE,
                                        AS DOCUMENTATION AGENT
                                        By: /s/ Robert Gill
                                        Name: Robert Gill
                                        Title: Executive Director
                                        By: /s/ Peter A. Mastromanini
                                        Name: Peter A. Mastromanini
                                        Title: Director

                                        CANADIAN IMPERIAL BANK OF COMMERCE NEW
                                        YORK AGENCY
                                        By: /s/ Nora Q. Catiis
                                        Name: Nora Q. Catiis
                                        Title: Authorized signatory

                                       -8-

<PAGE>

                               Kingsway Letterhead



                                September 9, 2002

STRICTLY PRIVATE & CONFIDENTIAL


LaSalle Bank National Association           Canadian Imperial Bank of Commerce
135 South LaSalle Street                    BCE Place, 161 Bay Street
Chicago, Illinois 60603                     Toronto, Ontario
United States of America                    Canada M5J 258

The Bank of Nova Scotia                     Wachovia Securities, Inc.
Suite 2700                                  One First Union Center
600 Peachtree Street N.E.                   301 S. College Street
Atlanta, Georgia 30308                      Charlotte, North Carolina 28288
United States of America                    United States of America

     Re:  Credit Facility in Favour of Kingsway Financial Services Inc. and
          Kingsway U.S. Finance Partnership (the "Borrowers")

Dear Ladies and Gentlemen:

     Reference is made to the Credit Agreement dated as of February 23, 1999, as
subsequently amended (the "Credit Agreement"), among the Borrowers, the Lenders
named in the Credit Agreement, LaSalle Bank National Association, as
Administrative Agent and Co-Syndication Agent and Canadian Imperial Bank of
Commerce, as Co-Syndication Agent and Documentation Agent. All capitalized terms
used but not elsewhere defined herein shall have the respective meanings
ascribed to such terms in the Credit Agreement.

     The purpose of this letter is to provide for the Lenders' consent and
waiver to certain actions of the Borrowers and to amend certain provisions of
the Credit Agreement.

     Consent to Indebtedness

     Kingsway intends to issue a Canadian public debenture in the approximate
amount of Cdn. $100,000,000 (the "Canadian Debt"). In connection with the
issuance of the Canadian Debt, the Guarantor will issue an unsecured guaranty.

     The Guarantor, through Kingsway Financial Capital Trust I, a trust
beneficially held by the Borrowers (the "Trust"), intends to raise capital by
the means of issuance of preferred securities in the approximate amount of U.S.
$75,000,000 (the "Trust Preferred Securities"). The Trust will use the proceeds
of the public offering of the Trust Preferred Securities to acquire debentures
from the Borrowers (the "Trust Debentures"). The Guarantor's obligations to the
Trust arising under the Trust Debentures will be subordinate to the Outstanding
Obligations. In connection with the issuance of the Trust Preferred Securities,
Kingsway will issue a guarantee

<PAGE>

LaSalle Bank National Association
Canadian Imperial Bank of Commerce
The Bank of Nova Scotia
Wachovia Securities, Inc.
September 9, 2002
Page 1

which will be subordinate to the Outstanding Obligations.

     The Borrowers believe that the issuance of the Canadian Debt and the Trust
Debentures will be Permitted Indebtedness if the Majority of the Lenders consent
to the existence and ranking of the contemplated indebtedness as required by
Section 1.01(84)(v). Therefore, in order to issue the Canadian Debt and the
Trust Debentures, the Borrowers require and request a consent from the Lenders
to the issuance of the Canadian Debt and the Trust Debentures.

     The Borrowers also request a one time waiver of Section 8.03(5) to permit
(i) Kingsway to guaranty the Trust Preferred Securities and (ii) the Guarantor
to guaranty the Canadian Debt.

     The Borrowers believe that due to the subordination of the Trust Debenture
to the Outstanding Obligations, the Borrowers' Indebtedness under the Trust
Debentures will be excluded from the Funded Debt for the purpose of calculation
of the Funded Debt to Total Capitalization ratio under Section 8.02(1). The
Borrowers will not include the proceeds of the Trust Preferred Securities
offering in the calculation of the Tangible Net Worth under Section 8.02(3).

     Amendments

     The Borrowers request the Agents and the Lenders to agree to amend the
following sections of the Credit Agreement:

     (a)  Section 1.01(83) by inserting the following new subsection (vii) at
the end of the Section.

          "(vii) Security Interests securing the indebtedness described in
     Section 1.01(84)"; and

     (b)  Section 1.01(84) by inserting the following subsection (xiv) at the
end of the Section:

          "(xiv) Indebtedness under the syndicated letter of credit facility
     established by Royal Bank of Canada Europe Limited as facility agent in
     favour of Kingsway Reinsurance Corporation not exceeding U.S. $350,000,000
     in respect of letters of credit to be issued on the application of Kingsway
     Reinsurance Corporation for the benefit of certain Subsidiaries of the
     Canadian Borrower, State National Specialty Insurance Company, State and
     County Mutual Insurance Company or General Reinsurance Corporation."

<PAGE>

LaSalle Bank National Association
Canadian Imperial Bank of Commerce
The Bank of Nova Scotia
Wachovia Securities, Inc.
September 9, 2002
Page 2

     In order to induce the consent and waiver of the Lenders hereunder and to
obtain the Lenders' and the Agents' agreement to the proposed amendment, each of
the Borrowers hereby (i) represents and warrants to the Lenders that no Default
or Event of Default exists under the Credit Agreement as of the date hereof, and
that the Canadian Debt and the Trust Preferred Securities, after giving effect
to the consent and waiver requested herein, shall not result in a Default or an
Event of Default under the Credit Agreement, (ii) agrees that a consent of the
Majority of the Lenders shall be required to redeem in cash the Trust Preferred
Securities, (iii) agrees that upon the occurrence of a Default or an Event of
Default the Trust will not pay any dividends on the Trust Preferred Securities
and the Trust will not redeem the Trust Preferred Securities, and (iv) agrees
that a Default or Event of Default under the Credit Agreement will not result in
a default or an event of default in respect of the Trust Debentures and
acceleration of the Outstanding Obligations under the Credit Agreement will not
result in an acceleration of the obligations under the Trust Debentures.

     This consent, waiver and amendment is limited to the specific matters set
forth herein and, except as provided herein, does not in any way amend or alter
the Credit Agreement or the provisions thereof, which remain in full force and
effect. This consent, waiver and amendment is conditional upon (i) with respect
to the Canadian Debt, (A) the receipt by the Lenders, and review and approval by
the Majority of the Lenders of all documentation pertaining to the Canadian
Debt, and, (B) the receipt of the Canadian Debt preliminary rating of at least
BBB by each of Standard & Poor and Dominion Bond Rating Service and (ii) with
respect to the Trust Debentures, (C) the receipt by the Lenders, and review and
approval by the Majority of the Lenders of all documentation pertaining to the
Trust Debenture and the Trust Preferred Securities, (D) the receipt of the Trust
Preferred Securities preliminary rating of at least BB+ by Standard & Poor, and
(E) the receipt by the Agent of an intercreditor agreement with the Trust in
respect of the obligations of the Borrowers or their Subsidiaries to the Trust
in connection with the Trust Debentures, providing, among other things, for
subordination of the Trust Debentures to the payment in full of the Outstanding
Obligations.

     Each Borrower hereby ratifies and confirms its liabilities, obligations and
agreements under the Credit Agreement and acknowledges and agrees that (a) it
has no defenses, claims or set-offs to the enforcement by the Lenders of such
liabilities, obligations and agreements, (b) each Lender has fully performed all
obligations to each Borrower thereunder which such Lender may have had or has on
and as of the date hereof, and (c) other than as specifically set forth herein,
each Lender (i) expressly reserves and preserves all of its rights and remedies
under the Credit Agreement and (ii) does not waive, diminish or limit any term
or condition contained in the Credit Agreement. The execution and delivery of
this consent, waiver and amendment by the Lenders shall not be deemed to
establish or create a custom or course of dealing among the

<PAGE>

LaSalle Bank National Association
Canadian Imperial Bank of Commerce
The Bank of Nova Scotia
Wachovia Securities, Inc.
September 9, 2002
Page 3

Lenders and the Borrowers.

     Please acknowledge your approval of this consent, waiver and amendment by
countersigning below.

                              Very truly yours,

                              KINGSWAY FINANCIAL SERVICES INC.

                              By: /s/ William G. Star
                              William G. Star
                              President & Chief Executive Officer

                              By: /s/ W. Shaun Jackson
                              W. Shaun Jackson
                              Executive Vice President & Chief Financial Officer


<PAGE>

     LaSalle Bank National Association
     Canadian Imperial Bank of Commerce
     The Bank of Nova Scotia
     Wachovia Securities, Inc.
     September 9, 2002
     Page 4

                                        KINGSWAY U.S. FINANCE PARTNERSHIP
                                        by its Managers
                                               James R. Zuhlke, President & CEO,
                                               KINGSWAY AMERICA INC.
                                        By: /s/ James R. Zuhlke
                                        James R. Zuhlke
                                        Manager

                                               KINGSWAY AMERICA INC.

                                        By: /s/ James R. Zuhlke

<PAGE>

     LaSalle Bank National Association
     Canadian Imperial Bank of Commerce
     The Bank of Nova Scotia
     Wachovia Securities, Inc.
     September 9, 2002
     Page 5

     Accepted and Agreed this
     ___ day of September, 2002


     CANADIAN IMPERIAL BANK OF COMMERCE
By:    /s/ Karen F. Kiskorna
Name:  Karen F. Kiskorna
Title: Director
By:    /s/ Lynn McDonald
Name:  Lynn McDonald
Title: Managing Director

     THE BANK OF NOVA SCOTIA
By:    /s/ William E. Zarrett
Name:  William E. Zarrett
Title: Managing Director

     LASALLE BANK NATIONAL ASSOCIATION
By:    /s/ Brad Kronland
Name:  Brad Kronland
Title: Assistant Vice President

     FIRST UNION NATIONAL BANK
By:
Name:
Title:

<PAGE>

     LaSalle Bank National Association
     Canadian Imperial Bank of Commerce
     The Bank of Nova Scotia
     Wachovia Securities, Inc.
     September 9, 2002
     Page 6

     Accepted and Agreed this
     ___ day of September, 2002
     LASALLE BANK NATIONAL ASSOCIATION,
     AS ADMINISTRATIVE AGENT
By:    /s/ Brad Kronland

Brad Kronland
Assistant Vice President
     CANADIAN IMPERIAL BANK OF COMMERCE,
     AS DOCUMENTATION AGENT
By:    /s/ Nora Q. Catiis
Name:  Nora Q. Catiis
Title: Authorized Signatory
By:
Name:
Title:

     CANADIAN IMPERIAL BANK OF COMMERCE
     NEW YORK AGENCY
By:    /s/ Nora Q. Catiis
Name:  Nora Q. Catiis
Title: Authorized Signatory

<PAGE>

           THIS FIFTH AMENDMENT TO CREDIT AGREEMENT, dated as of October 25,
2002, is among :

                        KINGSWAY FINANCIAL SERVICES INC.
                      AND KINGSWAY U.S. FINANCE PARTNERSHIP
                                  As Borrowers
                                       AND
                       The Lenders named herein as Lenders
                                       AND
                       LASALLE BANK NATIONAL ASSOCIATION,
                As Administrative Agent and Co-Syndications Agent
                                       AND
                       CANADIAN IMPERIAL BANK OF COMMERCE,
                As Co-Syndications Agent and Documentation Agent

           WHEREAS:

     1.    Pursuant to a Credit Agreement made as of the 23rd day of February,
1999 among the parties hereto, as subsequently amended (the "Credit Agreement"),
the Lenders and the Agents established certain credit facilities in favour of
the Borrowers;

     2.    The Agents, the Lenders and the Borrowers have agreed to amend
certain terms and conditions of the Credit Agreement, in the manner hereinafter
set forth;

           FOR VALUABLE CONSIDERATION, the parties agree as follows:

                                    ARTICLE I

                              AMENDMENT TO COVENANT

1.01 Amendment to Capital Surplus Ratio Covenant. Subsection 8.02(2) of the
Credit Agreement is hereby deleted in its entirety and replaced with the
following:

     "(2)  Capital Surplus Ratio. Kingsway shall maintain at all times a Capital
     Surplus Ratio on a Consolidated basis calculated quarterly on the last day
     of each fiscal quarter of the Canadian Borrower on a rolling four-quarter
     basis as follows:

           (i)    from the Closing Date to and including June 30, 2002 of not
     greater than 2.75:1.00;

           (ii)   from July 1, 2002 to and including December 31, 2002 of not
     greater than 3.50:1.00; and

           (iii)  thereafter of not greater than 2.75:1.00."

                                   ARTICLE II

<PAGE>

                CONDITIONS PRECEDENT TO AMENDMENT; EFFECTIVE DATE

2.01 Conditions Precedent. The obligations of the Agent and the Lenders to amend
the Credit Agreement in accordance with the provisions of this Fifth Amendment
to Credit Agreement is conditional upon satisfactory evidence being given to the
Administrative Agent, the Lenders and their counsel that the Borrower shall have
executed and delivered to Administrative Agent this Fifth Amendment to Credit
Agreement and shall have delivered all such additional documentation as the
Administrative Agent and the Lenders shall reasonably require to effect the
amendments contemplated in this Fifth Amendment to Credit Agreement. This Fifth
Amendment to Credit Agreement shall be effective as of June 30, 2002.

                                   ARTICLE III

                                  MISCELLANEOUS

3.01 Nature of Amendments and Defined Terms. It is acknowledged and agreed that
the terms of this Fifth Amendment to Credit Agreement are in addition to and,
unless specifically provided for, shall not limit, restrict, modify, amend or
release any of the understandings, agreements or covenants as set out in the
Credit Agreement. The Credit Agreement shall henceforth be read and construed in
conjunction with this Fifth Amendment to Credit Agreement and the Credit
Agreement together with all of the powers, provisions, conditions, covenants and
agreements contained or implied in the Credit Agreement shall be and shall
continue to be in full force and effect. References to the "Credit Agreement" or
the "Agreement" in the Credit Agreement or in any other document delivered in
connection with, or pursuant to, the Credit Agreement, shall mean the Credit
Agreement, as amended hereby. Capitalized terms utilized in this Fifth Amendment
to Credit Agreement but not defined herein shall have the meaning ascribed to
such terms in the Credit Agreement.

3.02 Assignment. This Fifth Amendment to Credit Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns but shall not be assignable by the Borrowers or either of
them without the prior written consent of the Agents and Lenders.

3.03 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.

3.04 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of Canada
applicable therein and shall be

<PAGE>

treated in all respects as an Ontario contract and the parties hereby submit and
attorn to the non-exclusive jurisdiction of the courts of the Province of
Ontario.

3.05 Further Assurances. The Borrowers shall from time to time and at all times
hereafter, upon every reasonable request from the Agents or the Lenders, make,
do, execute and deliver or cause to be made, done, executed and delivered, all
such further acts, deeds and assurances and things as may be necessary in the
opinion of the Agents for more effectually implementing and carrying out the
true intent and meaning of this Fifth Amendment to Credit Agreement.

3.06 Counterparts. This Fifth Amendment to Credit Agreement may be executed in
any number of counterparts, each of which shall constitute an original and all
of which, taken together, shall constitute one and the same agreement.

<PAGE>

     IN WITNESS WHEREOF the parties hereto have executed this Fifth Amendment to
Credit Agreement.

                          KINGSWAY FINANCIAL SERVICES INC.
                          By: /s/ William G. Star
                          William G. Star
                          President & Chief Executive Officer

                          By: /s/ W. Shaun Jackson
                          W. Shaun Jackson
                          Executive Vice President & Chief Financial Officer

                          KINGSWAY U.S. FINANCE PARTNERSHIP
                          by its Partners

                          KINGSWAY FINANCIAL SERVICES INC.
                          By:    /s/ James R. Zuhlke
                          Name:  James R. Zuhlke
                          Title: Manager

                          METRO CLAIM SERVICES INC.
                          By:    /s/ W. Shaun Jackson
                          Name:  W. Shaun Jackson
                          Title: Secretary

<PAGE>

                                      CANADIAN IMPERIAL BANK OF COMMERCE

                                      By: /s/ Ralph Sehgal
                                      Name:  Ralph Sehgal
                                      Title: Executive Director
                                      By: /s/ Mark Chandler
                                      Name:  Mark Chandler
                                      Title: Executive Director

                                      LASALLE BANK NATIONAL ASSOCIATION
                                      By: /s/ Brad Kronland
                                      Brad Kronland
                                      Assistant Vice President

                                      LASALLE BANK NATIONAL ASSOCIATION,
                                      AS ADMINISTRATIVE AGENT
                                      By: /s/ Brad Kronland
                                      Brad Kronland
                                      Assistant Vice President

                                      CANADIAN IMPERIAL BANK OF COMMERCE,
                                      AS DOCUMENTATION AGENT
                                      By: /s/ Ralph Sehgal
                                      Name: Ralph Sehgal
                                      Title: Executive Director
                                      By: /s/ Geoff Bond
                                      Name: Geoff Bond
                                      Title: Managing Director

                                      CANADIAN IMPERIAL BANK OF COMMERCE
                                      NEW YORK AGENCY
                                      By: /s/ George Knight
                                      Name: George Knight
                                      Title: Managing Director

<PAGE>

                                           THE BANK OF NOVA SCOTIA
                                           By: /s/ William E. Zarrett
                                           Name: William E. Zarrett
                                           Title: Managing Director

                                           FIRST UNION NATIONAL BANK
                                           By:
                                           Name:
                                           Title: