<PAGE>
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                                                                   Exhibit 10(f)

            PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT

<TABLE>
<CAPTION>
ARTICLE                                                                     PAGE
-------                                                                     ----
<S>                                                                         <C>
COVERAGE                                                                      2
TERM                                                                          2
TERRITORY                                                                     3
EXCLUSIONS                                                                    3
DEFINITIONS                                                                   6
LOSS OCCURRENCE                                                               7
NET RETAINED LIABILITY                                                        8
SELF INSURED OBLIGATIONS                                                      9
OTHER REINSURANCE                                                             9
REPORTS AND REMITTANCES                                                       9
RESERVES AND FUNDING                                                         10
SPECIAL FUNDING/TERMINATION                                                  12
LOSS NOTICES AND SETTLEMENTS                                                 13
LATE PAYMENT PENALTY                                                         14
OFFSET                                                                       15
SALVAGE AND SUBROGATION                                                      15
DELAYS, ERRORS, OR OMISSIONS                                                 15
AMENDMENTS                                                                   15
ACCESS TO RECORDS                                                            16
INSOLVENCY                                                                   16
ARBITRATION                                                                  17
CONFLICT WITH LAW                                                            19
TAXES                                                                        19
FEDERAL EXCISE TAX                                                           19
CURRENCY                                                                     20
SERVICE OF SUIT                                                              20
AGENCY                                                                       21
INTERMEDIARY                                                                 21

EXHIBIT A -- FIRST LAYER                                                     22
EXHIBIT B -- SECOND LAYER                                                    23
EXHIBIT C -- THIRD LAYER                                                     24
</TABLE>


                                        1

<PAGE>

            PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT

     THIS AGREEMENT is made and entered into by and between MERCHANTS MUTUAL
INSURANCE COMPANY, a New York corporation, and MERCHANTS INSURANCE COMPANY OF
NEW HAMPSHIRE, INC., a New Hampshire corporation, and any and all insurance
companies which are now or hereafter come under the same ownership or management
as Merchants Mutual Insurance Company (hereinafter called the "Company") of the
one part, and the various Reinsurers as identified by the Interests and
Liabilities Agreements attaching to and forming a part of this Agreement
(hereinafter called the "Reinsurers") of the other part.

     The parties hereto agree as hereinbelow in consideration of the mutual
covenants contained in the following Articles and attached Exhibits and upon the
terms and conditions set forth therein:

COVERAGE

     The Reinsurers will indemnify the Company for any loss or losses occurring
during the term of this Agreement under all policies, classified by the Company
as:

          PROPERTY, INCLUDING BUT NOT LIMITED TO: FIRE, ALLIED LINES,
          FARMOWNERS, HOMEOWNERS, BUSINESS OWNERS, COMMERCIAL MULTIPLE PERIL,
          EARTHQUAKE, INLAND MARINE, BOILER AND MACHINERY, AUTOMOBILE PHYSICAL
          DAMAGE, BURGLARY AND THEFT, EXTENDED COVERAGE, AND GLASS.

     All reinsurance for which the Reinsurers will be obligated by virtue of
this Agreement will be subject to the same terms, conditions, interpretations,
waivers, modifications, and alterations as the respective policies of the
Company to which this Agreement applies. Nothing herein will in any manner
create any obligations or establish any rights against the Reinsurers in favor
of any third parties or any persons not parties to this Agreement except as
provided in the Insolvency Article.

TERM

     This Agreement will apply to all loss occurrences during the 12-month term
extending from 12:01 a.m. Eastern Standard Time on January 1, 2005 to 12:01 a.m.
Eastern Standard Time on January 1, 2006.

     Should this Agreement expire while a loss occurrence covered hereunder is
in progress, all losses arising from such loss occurrence will be deemed to have
been incurred prior to the expiration of this Agreement, subject to the other
conditions of this


                                        2

<PAGE>

Agreement, and provided that no part of said loss occurrence is claimed against
any renewal or replacement of this Agreement.

     Notwithstanding the expiration of this Agreement as hereinabove provided,
the provisions of this Agreement will continue to apply to all obligations and
liabilities of the parties incurred hereunder to the end that all such
obligations and liabilities will be fully performed and discharged.

TERRITORY

     The territorial scope of this Agreement will be worldwide and identical to
that of the Company's policies.

EXCLUSIONS

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

     A.   Liability assumed by the Company under any form of treaty reinsurance;
          however, group intra-company reinsurance, local agency reinsurance
          accepted in the normal course of business, and/or policies written by
          another carrier at the Company's request and reinsured 100% by the
          Company will not be excluded hereunder.

     B.   Liability accruing to the Company under:

          1.   Accident and Health policies, Personal and Bodily Injury
               Liability policies, Workers Compensation policies/Employers'
               Liability policies, Fidelity bonds and/or similar contracts of
               insurance and/or reinsurance now written or which may hereafter
               be written and coded and classified as Casualty and/or Fidelity
               business.

          2.   Property Damage Liability policies and/or contracts of insurance
               and/or reinsurance now written or which may hereafter be written
               or coded and classified as Casualty business.

          3.   Third Party Liability Coverages (including Medical Payments).

     C.   Business classified as crop hail insurance or multiple peril crop
          insurance and insurance of growing or standing timber.

     D.   Aircraft Hulls in flight.


                                        3

<PAGE>

     E.   Loss or liability excluded by the Pools, Associations, and Syndicates
          Exclusion Clause attached to this Agreement, except that
          notwithstanding the provisions of the attached Clause, this exclusion
          will not apply as respects Industrial Risk Insurers and FM Global.

     F.   All insurances written in co-insurance with Nuclear Pools and
          reinsurance thereof.

     G.   Mortgage Impairment insurances and similar kinds of insurances however
          styled, providing coverage to an insured as respects its mortgagee
          interest in property. However, this exclusion does not apply to the
          standard Errors and Omissions Form and any endorsement applicable
          thereto, attached to Fire policies nor to Mortgage Holder's Protection
          policies.

     H.   Loss or liability excluded by the following clauses attached to this
          Agreement:

          1.   Nuclear Energy Risks Exclusion Clause (Reinsurance) (1994)
               (Worldwide excluding U.S.A. & Canada).

          2.   Nuclear Incident Exclusion Clauses--Physical Damage--Reinsurance
               - U.S.A. & Canada.

     I.   Loss or liability excluded by the Insolvency Funds Exclusion Clause
          attached to this Agreement.

     J.   Loss and/or damage and/or costs and/or expenses arising from seepage
          and/or pollution and/or contamination, other than contamination from
          smoke damage. Nevertheless, this exclusion does not preclude any
          payment of the cost of the removal of debris of property damaged by a
          loss otherwise covered hereunder, but subject always to a limit of 25%
          of the Company's property loss under the policy.

     K.   The interest of Public Utilities in overhead telephone and electric
          power transmission and distribution lines.

     L.   War Risks for all classes of business in accordance with the Coverage
          Article.

     M.   Financial Guarantee or Insolvency.

     N.   Loss or liability excluded by the Terrorism Exclusion Clause attached
          to this Agreement.


                                        4

<PAGE>

     O.   Any loss, damage, cost, expense or liability arising from fungi that
          is not directly caused by or does not arise directly from a loss event
          that is covered under this Agreement. "Fungi" means any type or form
          of fungus, mold or mildew and any mycotoxins, spores, scents or
          byproducts produced or released by fungi.

     P.   Extra contractual obligations and excess limits liability.

     If any risks reinsured hereunder as set forth in the Coverage Article but
falling within the scope of the above exclusions are assigned to the Company
under an Assigned Risk Plan the coverage afforded by this Agreement will apply
to such risks, but only for the policy limits prescribed by said Plan, and
subject to the limits of this Agreement.

     The exclusions enumerated above, with the exception of E., F., H., I., L.,
M., N., O. and P. will not apply when they are merely incidental to the main
operations of the insured, provided such main operations are covered by the
Company and are not themselves excluded from the scope of this Agreement. The
Company will be the sole judge of what is "incidental."

     Should the Company, by reason of an inadvertent act, error, or omission, be
bound to afford coverage excluded hereunder, the Reinsurers will waive the
exclusion(s) with the exception of E., F., H., I., L., M., N., O. and P. The
duration of said waiver will not extend beyond the time the notice of such
coverage has been received by the responsible underwriting authority of the
Company plus the minimum time period required thereafter for the Company to
terminate such coverage.

     The Company may submit to the Reinsurers, for special acceptance hereunder,
business not covered by this Agreement. In the event of agreement by Lead
Reinsurers, such special acceptance will be made and will be subject to the
terms hereof (except as modified by the special acceptance), and will be binding
on all Reinsurers with respect to their respective shares. In the event
agreement is not achieved, such special acceptance will be made only with
respect to the interests and liabilities of each Reinsurer who agrees to such
special acceptance, and will be subject to the terms hereof (except as modified
by the special acceptance), and will be binding on each such Reinsurer with
respect to its share. Any special acceptance business covered under the
reinsurance Agreement being replaced by this Agreement will be automatically
covered hereunder.

     Further, should Reinsurers become a party to this Agreement subsequent to
the acceptance of any business not normally covered hereunder, they will
automatically accept same as being a part of this Agreement.

     Should any judicial entity having jurisdiction invalidate any exclusion in
the Company's policy, any amount of loss for which the Company is liable because
of such invalidation will not be excluded hereunder.


                                        5

<PAGE>

DEFINITIONS

     The following terms, wherever used in this Agreement, will have the
meanings set forth herein, and will be deemed to refer to the singular, plural,
or otherwise inflected forms of such terms, as the context requires:

     A.   "Gross net earned premium" will mean the gross earned premium of the
          Company for classes of business reinsured hereunder as specified in
          the Coverage Article, less the earned portion of premium for
          reinsurance as set forth in the Other Reinsurance Article. Further,
          the Company will include in the gross net earned premium hereunder,
          15% of its gross earned premium under Commercial Multiple Peril
          policies (Coverall), 35% as respects Commercial Multiple Peril
          policies (Non-Coverall), 40% as respects Businessowners policies, and
          85% as respects Farmowners and Homeowners policies.

     B.   "Policies" will mean all policies, binders, contracts, or agreements
          of insurance or reinsurance, whether written or oral.

     C.   "Risk" will be subject to definition solely by the Company.

     D.   "Ultimate net loss" will mean the actual loss or losses sustained by
          the Company under its policies, after deduction of all salvages and
          recoveries, and inuring reinsurance whether recoverable or not.
          Ultimate net loss will be inclusive of loss expense arising from the
          settlement of claims, and a pro rata share of salaries and expenses of
          the Company's field employees while adjusting such claims, and
          expenses of the Company's officials incurred in connection with such
          claims (but excluding salaries of the Company's officials and office
          expenses of the Company). All salvages, recoveries, or reinsurance
          received subsequent to any loss settlement hereunder will be applied
          as if received prior to the settlement, and all necessary adjustments
          will be made by the parties hereto. Nothing in this definition,
          however, should be construed to mean that losses under this Agreement
          are not recoverable until the Company's ultimate net loss has been
          ascertained.

          As respects any one loss occurrence, all recoveries from the Company's
          underlying reinsurance programs, will inure to the benefit of
          Reinsurers unless otherwise indicated in this Article or in the
          Retention and Limit sections of the attached Exhibits.

          At the Company's option, ultimate net loss may include the actual loss
          expenses arising from the settlement of all claims or a flat 7% factor
          may be applied to the actual losses in lieu of the actual loss
          expense.


                                        6

<PAGE>

LOSS OCCURRENCE

     "Loss occurrence" as used in this Agreement will mean the sum of all
individual losses directly occasioned by any one disaster, accident, or loss or
series of disasters, accidents, or losses arising out of one event, which occurs
within the area of one state of the United States or province of Canada and
states or provinces contiguous thereto and to one another. However, the
territorial limitation of "loss occurrence" to one state of the United States or
province of Canada and states or provinces contiguous thereto will not apply to
loss occurrences involving Hawaii, Puerto Rico, or territories outside the
United States and Canada. The duration and extent of any one "loss occurrence"
will be limited to all individual losses sustained by the Company occurring
during any period of 168 consecutive hours arising out of and directly
occasioned by the same event except that the term "loss occurrence" will be
further defined as follows:

     A.   As regards windstorm, hail, tornado, hurricane, and cyclone, including
          ensuing collapse and water damage, all individual losses sustained by
          the Company occurring during any period of 72 consecutive hours
          arising out of and directly occasioned by the same event. The event
          need not be limited to one state or province or states or provinces
          contiguous thereto.

     B.   As regards riot, riot attending a strike, civil commotion, vandalism,
          and malicious mischief, all individual losses sustained by the Company
          occurring during any period of 72 consecutive hours within the area of
          one municipality or county and the municipalities or counties
          contiguous thereto arising out of and directly occasioned by the same
          event. The maximum duration of 72 consecutive hours may be extended in
          respect of individual losses that occur beyond such 72 consecutive
          hours during the continued occupation of an insured's premises by
          strikers, provided such occupation commenced during the aforesaid
          period.

     C.   As regards earthquake (the epicenter of which need not necessarily be
          within the territorial confines referred to in the opening paragraph
          of this Article) and fire following directly occasioned by the
          earthquake, only those individual fire losses that commence during the
          period of 168 consecutive hours may be included in the Company's "loss
          occurrence."

     D.   As regards "freeze," only individual losses directly occasioned by
          collapse, breakage of glass, and water damage (caused by bursting of
          frozen pipes and tanks) may be included in the Company's "loss
          occurrence."

     Except for those "loss occurrences" referred to in B. above, the Company
may choose the date and time when any such period of consecutive hours commences
provided that it is not earlier than the date and time of the occurrence of the
first recorded individual loss sustained by the Company arising out of that
disaster, accident, or loss and provided that only one such period of 168
consecutive hours will apply with respect to


                                        7

<PAGE>

one event, except for those loss occurrences referred to in A. above, where only
one such period of 72 consecutive hours will apply with respect to one event,
regardless of the duration of the event.

     As respects those "loss occurrences" referred to in B. above, if the
disaster, accident, or loss occasioned by the event is of greater duration than
72 consecutive hours, then the Company may divide that disaster, accident, or
loss into two or more "loss occurrences" provided no two periods overlap and no
individual loss is included in more than one such period and provided that no
period commences earlier than the date and time of the occurrence of the first
recorded individual loss sustained by the Company arising out of that disaster,
accident, or loss.

     No individual losses occasioned by an event that would be covered by 72
hours provisions may be included in any "loss occurrence" claimed under the 168
hours provisions.

     Losses directly or indirectly occasioned by:

          (i)  loss of, alteration of, or damage to, or

          (ii) a reduction in the functionality, availability or operation of

     a computer system, hardware, program, software, data, information
     repository, microchip, integrated circuit or similar device in computer
     equipment or non-computer equipment, whether the property of the
     policyholder of the Company or not, do not in and of themselves constitute
     an event unless arising out of one or more of the following perils: fire,
     lightning, explosion, aircraft or vehicle impact, falling objects,
     windstorm, hail, tornado, cyclone, hurricane, earthquake, volcano, tsunami,
     flood, freeze or weight of snow.

     With respect to business classified by the Company as Inland Marine, if two
or more losses arise during the course of any one trip by land transportation
conveyance or any one voyage by a waterborne vessel, the Company will have the
option of adding them together and treating them as one loss occurrence.

NET RETAINED LIABILITY

     This Agreement will apply only to that portion of any insurance or
reinsurance that the Company retains net for its own account, and such portion
will be used in calculating the amount of any loss hereunder as well as the
amount in excess of which this Agreement attaches. The amount of the Reinsurers'
liability hereunder with respect to any loss will not be increased by the
inability of the Company to collect from any other reinsurers any amounts that
may have become due from them, whether such inability arises from the insolvency
of such reinsurers or otherwise.


                                        8

<PAGE>

SELF-INSURED OBLIGATIONS

     As respects business covered hereunder, this Agreement will cover all
obligations of the Company assumed by it as a self-insurer (or self-insured
obligations in excess of any valid collectible insurance available to the
Company) to the same extent as if all types of insurance or reinsurance covered
by this Agreement were afforded under the broadest form of policies issued by
the Company.

     Insurance or reinsurance wherein the Company is named as the insured or
reinsured party, either alone or jointly with some other party, will be deemed
to be insurance or reinsurance coming within the scope of this Agreement,
notwithstanding that no legal liability may arise in respect thereof by reason
of the fact that the Company is named as the insured or reinsured party or one
of the insured or reinsured parties.

OTHER REINSURANCE

     The Company is permitted to have other treaty reinsurance. The premium for
any such reinsurance that inures to the benefit of this Agreement will not be
included within the subject premium hereunder. Additionally, the Company may
purchase facultative reinsurance on any subject risk it deems advisable, and the
premium for that portion of the Company's policy reinsured elsewhere will not be
included within the subject premium hereunder.

REPORTS AND REMITTANCES

     Within 60 days following the expiration of this Agreement, the Company will
furnish the Reinsurers with a report of reinsurance premium due them for that
period. Such report will show and properly segregate the Company's premium to
which the reinsurance rate applies as well as contain such other information as
may be required by the Reinsurers for completion of their NAIC interim and/or
annual statements. The premium due the Reinsurers will be balanced against the
minimum and deposit premiums set forth in the Rate and Premium Sections of the
attached Exhibits, and any balance shown to be due the Reinsurers will be
remitted with said report. Any balance shown to be due the Company will be paid
within 30 days following receipt of said report by the Reinsurers.


                                        9

<PAGE>

RESERVES AND FUNDING

     (Applicable only if Reinsurers cannot qualify for credit by each
     governmental authority having jurisdiction over the Company's United States
     reserves and/or Canadian reserves.)

     With respect to policies issued by the Company coming within the scope of
this Agreement, the Company agrees that, when it files with the Insurance
Department or sets up on its books reserves for known losses that have been
reported to the Reinsurers (including loss and loss expense paid by the Company
but not recovered from the Reinsurers, loss and loss expense reported and
outstanding and an allowance for IBNR as determined by the Company), which it is
required by law to set up, it will forward to the Reinsurers a statement showing
the proportion of such reserves applicable to them. The Reinsurers hereby agree
that they will fund their portion of the aforementioned reserves by one of the
following methods of funding:

     A.   As regards Reinsurers unauthorized in any state of the United States
          or the District of Columbia, such funding may be made by cash
          advances, trust agreements, escrow accounts for the benefit of the
          Company, letters of credit, or a combination thereof.

     B.   As regards Reinsurers unauthorized in any province or jurisdiction of
          Canada, such funding will be equal to 115% of their proportion of
          reserves by a letter of credit for no more than 15% of the total
          funding required and cash advances for the remaining balance.

     The Reinsurers will have the option of determining the method of funding
referred to above, provided it is acceptable to the Company and the applicable
regulatory authorities.

     If a Reinsurer's choice of funding is or includes a letter of credit, it
will apply for and secure delivery to the Company of a clean, irrevocable,
unconditional letter of credit, dated on or before December 31 of the year in
which the request is made, issued by a member of the Federal Reserve System or
any bank approved for use by the NAIC Securities Valuation Office, provided that
said bank is at all times acceptable to the Company, and containing provisions
acceptable to the insurance regulatory authorities having jurisdiction over the
Company's reserves in an amount equal to that Reinsurer's proportion of said
reserves. In the event that the issuing bank becomes unacceptable to the
Company, the Company may request, at any time, that the letter of credit be
reissued by a bank that is acceptable to the Company and the applicable
regulatory authorities. The letter of credit will be issued for a period of not
less than one year, and will be automatically extended for one year from its
date of expiration or any future expiration date unless 30 days prior to any
expiration date the issuing bank notifies the Company by registered mail that it
elects not to consider the letter of credit extended for any additional period.
An issuing bank, not a member of the Federal Reserve System or not chartered in


                                       10

<PAGE>

the state of domicile of the Company, will provide 60 days notice to the Company
prior to any expiration in the event of nonextension.

     Notwithstanding any other provisions of this Agreement, the Company or its
court-appointed successor in interest may draw upon the cash advances, trust
agreements, escrow accounts and/or letters of credit at any time without
diminution because of the insolvency of the Company or of any Reinsurer for one
or more of the following purposes only:

     A.   To pay the Reinsurer's share or to reimburse the Company for the
          Reinsurer's share of any loss reinsured by this Agreement, which has
          not been otherwise paid.

     B.   To make refund of any sum in excess of the actual amount required to
          pay the Reinsurer's share of any liability reinsured by this
          Agreement.

     C.   In the event of nonextension of letters of credit as provided for
          above, to establish deposits of the Reinsurer's share of reserves for
          losses and/or unearned premium under this Agreement.

     D.   To pay any other amounts the Company claims are due under this
          Agreement.

     The issuing bank will have no responsibility whatsoever in connection with
the propriety of withdrawals made by the Company or the disposition of funds
withdrawn, except to ensure that withdrawals are made only upon the order of
properly authorized representatives of the Company.

     At annual intervals, or more frequently as agreed but never more frequently
than semi-annually, the Company will prepare and forward to the Reinsurers a
statement to reflect the Reinsurers' share of reserves for losses. If the
statement shows that the Reinsurers' share of such reserves exceeds the balance
available through cash advances, trust agreements, escrow accounts and/or
letters of credit as of the statement date, then the Reinsurers will, within 30
days after receipt of notice of such excess, make an adjustment to increase the
amount available. If, however, the statement shows that the Reinsurers' share of
such reserves is less than the balance available through the chosen method of
funding as of the statement date, then the Company will, within 30 days after
receipt of written request from the Reinsurers, release such excess by making
the appropriate adjustment.


                                       11

<PAGE>

SPECIAL FUNDING/TERMINATION

     The Company may elect to request special funding for any Reinsurer's
participation or may terminate any Reinsurer's participation hereon at any time
on a cut-off basis by giving 30 days prior written notice to said Reinsurer upon
the happening of any one of the following circumstances:

     A.   The Reinsurer ceases assuming new and renewal property and casualty
          treaty reinsurance;

     B.   A state insurance department or other legal authority orders the
          Reinsurer to cease writing business;

     C.   The Reinsurer has become insolvent or has been placed into liquidation
          or receivership (whether voluntary or involuntary), or there has been
          instituted against it proceedings for the appointment of a receiver,
          liquidator, rehabilitator, conservator, or trustee in bankruptcy, or
          other agent known by whatever name, to take possession of its assets
          or control of its operations;

     D.   The Reinsurer's surplus has been reduced by whichever is greater,
          either 25% of the amount of surplus at the inception of this Agreement
          or 25% of the amount at the latest anniversary, or has lost any part
          of, or has reduced its paid-up capital (this provision D. will not
          apply to Underwriting Members of Lloyd's, London);

     E.   The Reinsurer has undergone a material change in senior management or
          has merged with or has become acquired or controlled by any company,
          corporation, or individual(s) not controlling the Reinsurer's
          operations previously; or

     F.   The Reinsurer has reinsured its entire liability under this Agreement
          without the Company's prior written consent.

     G.   The Reinsurer has been assigned an A.M. Best's rating of less than
          "A-" (a Standard & Poor's Insurance Solvency International rating of
          less than "BBB" will apply as respects alien Reinsurers other than
          Underwriting Members of Lloyd's, London, and a Standard & Poor's
          Lloyd's Syndicate Stability rating of less than "2" will apply as
          respects Underwriting Members of Lloyd's, London).

     If the Company elects to exercise its special funding option, said
Reinsurer will, within 30 calendar days of the date of the Company's request to
do so, provide the Company with a cash advance, trust agreement (including
funding into the Underwriting Members of Lloyd's London Central Reserve Trust
Fund), escrow account for the benefit of the Company, letter of credit, or a
combination thereof acceptable to the Company to


                                       12

<PAGE>

fund the Reinsurer's share of the reserves hereunder for losses (including loss
and loss expense paid by the Company but not recovered from the Reinsurer, loss
and loss expense reported and outstanding, and an allowance for IBNR as
determined by the Company) and unearned premium, as if it were an unauthorized
Reinsurer and subject to the Reserves and Funding Article.

     If the Company instead elects to terminate the Reinsurer's participation,
said Reinsurer will immediately return the unearned portion of any premium paid
hereunder and any applicable minimum premium provisions will be waived.

     For the purposes of this Article, unearned premium is defined as the
difference between the deposit premium and the premium earned as of the date of
termination.

     Additionally, if said Reinsurer's participation is terminated pursuant to
subparagraphs A. through G. of this Article, then the Company, at its sole
discretion, may elect to commute the Reinsurer's liability for losses, including
loss expense, whether known or unknown, on policies covered under this
Agreement. In the event the Company and the Reinsurer cannot agree upon the
capitalized value of the Reinsurer's liability on such policies, the two parties
will mutually appoint an actuary within 30 days to resolve the matter of
valuation and will share equally in any expense associated with such appointment
in a manner agreed upon at the time of appointment. The appointed actuary will
not be under the control of either party and will be a Fellow of the Casualty
Actuarial Society. The value determined by said actuary will be set forth in a
sworn statement expressing the actuary's professional opinion that said value is
fair for the complete release of all liabilities being commuted. Payment by the
Reinsurer of the amount of liability ascertained will constitute a complete and
final release of the Reinsurer with respect to its liability for all losses,
including loss expense, whether known or unknown, on policies covered under this
Agreement.

LOSS NOTICES AND SETTLEMENTS

     The Company will advise the Reinsurers promptly of all losses that, in the
opinion of the Company, may involve the Reinsurers under this Agreement and of
all subsequent developments pertaining thereto that may materially affect the
Reinsurers as well. Inadvertent omission in dispatching the aforementioned
notices will in no way affect the obligation of the Reinsurers under this
Agreement, provided the Company informs the Reinsurers of such omission promptly
upon discovery.

     The Company will have the right to settle all claims under its policies.
The settlements, provided they are within the terms of this Agreement, will be
unconditionally binding on the Reinsurers in proportion to their participation
in this Agreement. When so requested, however, the Company will afford the
Reinsurers, at the Reinsurers' own expense, an opportunity to be associated with
the Company in the defense of any claim, suit, or proceeding involving this
Agreement, and the Company and the Reinsurers will cooperate in every respect in
such defense. Amounts due the Company hereunder in the


                                       13

<PAGE>

settlement of loss and loss expense will be payable by the Reinsurers within 10
days upon being furnished by the Company with reasonable evidence of the amount
paid or to be paid in excess of the Company's ultimate net loss retention as set
forth in the Retention and Limit sections of the attached Exhibits, by reason of
any one loss occurrence. However, with respect to any loss which has been
previously individually advised and which is settled for $1,000,000 or more, the
Company may give the Reinsurers written notice of its intention to imminently
pay any such loss on a certain date and may require the Reinsurers to have their
share of such loss in the hands of the Company by such date. Such written notice
will allow the Reinsurers at least two working days after their receipt to
prepare and dispatch its payment by check or wire transfer.

LATE PAYMENT PENALTY

     Payments from the Reinsurers to the Company will have as a due date the
date on which the proof of loss or demand for payment is received by the
Reinsurers, and will be overdue 60 days thereafter. For the purpose of this
paragraph only, payments received by the local Intermediary within the 60 day
deadline will not be considered overdue. Payments due from any Reinsurer to the
Company will not be considered overdue if the Reinsurer requests, in writing,
that such payment be made by drawing on a letter of credit or other similar
method of funding that has been established for this Agreement, provided that
there is an adequate balance in place, and further provided that such advice to
draw is received by the local Intermediary within the 60 day deadline set forth
above. Payments from the Company to the Reinsurers will have as a due date the
date specified in this Agreement and will be overdue 60 days thereafter. Premium
adjustments will be overdue 60 days from the Agreement due date or 120 days
after the expiration or renewal date, whichever is greater.

     The Company will provide the Reinsurers a proof of loss and a copy of the
claim adjuster's report(s) or any other evidence of indemnification. If,
subsequent to receipt of this evidence, the information contained therein is
insufficient or not in accordance with the contractual conditions of this
Agreement, then the payment due date as specified above will be deemed to be the
date upon which the Reinsurers received the additional information necessary to
approve payment of the claim and the claim is presented in an acceptable manner.
This paragraph is only for the purpose of establishing when a claim payment is
overdue, and will not alter the provisions of the Loss Notices and Settlements
Article or other pertinent contractual stipulations.

     Overdue amounts will bear simple interest from the overdue date at a rate
determined by the one month London Interbank Offered Rate for the first business
day of the calendar month in which the amount becomes overdue, as published in
The Wall Street Journal, plus one percentage point, to be calculated weekly. If
the sum of the compensating additional amount computed in respect of any overdue
payment is less than 0.25% of the amount overdue or $1,000, whichever is
greater, and/or the overdue period is one week or less, then the interest amount
will be waived.


                                       14

<PAGE>

     For the purpose of this Article, reinsuring Underwriting Members of
Lloyd's, London, will be considered to be one entity.

OFFSET

     All amounts due or otherwise accrued to any of the parties hereto or any of
their parents, affiliates, or subsidiaries, whether by reason of premiums,
losses, expenses, or otherwise, under this Agreement or any other agreement will
at all times be subject to the right of offset and the net balance will be due
and payable, unless expressly prohibited by law or regulation.

SALVAGE AND SUBROGATION

     The Reinsurers will be credited with their share of salvage and/or
subrogation in respect of claims and settlements under this Agreement, less
their share of recovery expense. Unless the Company and Reinsurers agree to the
contrary, the Company will enforce its right to salvage and/or subrogation and
will prosecute all claims arising out of such right. Should the Company refuse
or neglect to enforce this right, the Reinsurers are hereby empowered and
authorized to institute appropriate action in the name of the Company.

     Amounts recovered from salvage and/or subrogation will always be used to
reimburse the excess reinsurers (and the Company, should it carry a portion of
excess coverage net) in the reverse order of their participation in the loss
before being used in any way to reimburse the Company for its primary loss. If
the amount recovered exceeds the recovery expense, the recovery expense will be
borne by each party in proportion to its benefit from the recovery. If the
recovery expense exceeds the amount recovered, the amount recovered (if any)
will be applied to the reimbursement of recovery expense and the remaining
expense as well as any originally incurred loss expense will be added to the
ultimate net loss.

DELAYS, ERRORS, OR OMISSIONS

     Any inadvertent delay, error, or omission will not be held to relieve
either party hereto from any liability that would attach to it hereunder if such
delay, error, or omission had not been made, providing any error or omission
will be rectified upon discovery.

AMENDMENTS

     This Agreement may be altered or amended in any of its terms and conditions
by mutual consent of the Company and the Reinsurers either by addenda hereto or
by an exchange of letters; such addenda or letters will then constitute a part
of this Agreement.


                                       15

<PAGE>

ACCESS TO RECORDS

     Provided the Company receives prior notice, the Reinsurers, through their
designated representatives and at their own expense, will have the right to
inspect, at any reasonable time, all records of the Company that pertain in any
way to this Agreement.

INSOLVENCY

     (This Article will apply severally to each reinsured company referenced
     within the definition of "Company" in the Preamble to this Agreement.
     Further, this Article and the laws of the domiciliary state will apply in
     the event of the insolvency of any company intended to be covered
     hereunder. In the event of a conflict between any provision of this Article
     and the laws of the domiciliary state of any company intended to be covered
     hereunder, that domiciliary state's laws will prevail.)

     In the event of the Company's insolvency, the reinsurance afforded by this
Agreement will be payable by the Reinsurers on the basis of the Company's
liability under the policies reinsured without diminution because of the
Company's insolvency or because its liquidator, receiver, conservator, or
statutory successor has failed to pay all or a portion of any claims, subject
however to the right of the Reinsurers to offset against such funds due
hereunder, any sums that may be payable to them by said insolvent Company in
accordance with applicable law. The reinsurance will be payable by the
Reinsurers directly to the Company, or to its liquidator, receiver, conservator,
or statutory successor except (a) where this Agreement specifically provides
another payee of such reinsurance in the event of the Company's insolvency or
(b) where the Reinsurers, with the consent of the direct insured or insureds,
have assumed such policy obligations of the Company as direct obligations of
themselves to the payees under such policies in substitution for the Company's
obligation to such payees. Then, and in that event only, the Company, with the
prior approval by the Superintendent of Insurance of the state of New York of
the Certificate of Assumption on New York risks, is entirely released from its
obligation and the Reinsurers will pay any loss directly to payees under such
policies.

     The Company's liquidator, receiver, conservator, or statutory successor
will give written notice of the pendency of a claim against the Company under
the policies reinsured within a reasonable time after such claim is filed in the
insolvency proceeding. During the pendency of such claim, the Reinsurers may
investigate said claim and interpose in the proceeding where the claim is to be
adjudicated, at their own expense, any defense that they may deem available to
the Company, or to its liquidator, receiver, conservator, or statutory
successor. The expense thus incurred by the Reinsurers will be chargeable
against the Company, subject to court approval, as part of the expense of
conservation or liquidation to the extent that such proportionate share of the
benefit will accrue to the Company solely as a result of the defense undertaken
by the Reinsurers. Where two or more Reinsurers are involved in the same claim,
and a majority in interest


                                       16

<PAGE>

elect to interpose defense to such claim, the expense will be apportioned in
accordance with the terms of this Agreement as though such expense had been
incurred by the Company.

ARBITRATION

     As a condition precedent to any right of action under this Agreement, any
dispute (whether during the currency of this Agreement or after expiration or
termination of this Agreement) between the Company and any Reinsurer arising out
of or in connection with this Agreement, including its formation or actual
validity, will be submitted to the decision of a board of arbitration
(hereinafter called the "board") composed of two arbitrators and an umpire
meeting at a site in New York, unless some other site is mutually agreed by the
parties. Each member of the board will be disinterested in the outcome of the
arbitration, and will be an active or former official or experienced individual
who has operated in the United States insurance or reinsurance industry.

     To the extent not otherwise mutually agreed or provided for in this
Article, the procedures and rules applicable to arbitration under the laws of
New York, as from time to time set forth, will govern the procedures of the
arbitration. All time limitations stated in this Article may be amended by
mutual consent of the parties, and will be amended automatically to the extent
made necessary by any circumstances beyond the control of the parties.

     All notices in connection with the arbitration will be in writing and sent
certified or registered mail, return receipt requested. The claimant's notice
demanding arbitration will reference this Article, will state in particulars all
issues to be resolved in its view, and will name the arbitrator appointed by it.
Within 30 days of receipt of the claimant's notice, the respondent will notify
the claimant of any additional issues to be resolved in the arbitration and of
the name of its appointed arbitrator.

     If the respondent fails to appoint its arbitrator within 30 days after
having received the claimant's notice demanding arbitration, the claimant is
authorized to and will appoint the second arbitrator and will notify the
respondent of the name of the arbitrator appointed for it. The two arbitrators
will appoint an umpire before instituting the hearing. If the two arbitrators
fail to agree upon the appointment of an umpire within 30 days after
notification of the appointment of the second arbitrator, within 10 days
thereafter the claimant will petition the United States District Court having
geographical jurisdiction over the site of arbitration to appoint the umpire (or
if the federal court declines to act, the state court having general
jurisdiction in such area); the selection of the umpire will be within the
exercise of sound discretion by the court. The board will notify the claimant
and the respondent of the umpire's identity within 10 days of the umpire's
appointment.


                                       17

<PAGE>

     The arbitration hearing will commence within 60 days of the appointment of
the umpire. Within 30 days of the date of notice of appointment of the umpire,
the claimant and respondent each will submit initial briefs to the board
outlining the issues in dispute and the basis and reasons for their respective
positions. Within 10 days after filing of the initial briefs the claimant and
the respondent may submit reply briefs. Initial and reply briefs may be amended
by the submitting party at any time, but not later than 10 days prior to the
date of commencement of the arbitration hearing. Reasonable responses will be
allowed at the hearing to new material contained in any amendments filed to the
briefs but not addressed previously.

     Subject to customary and recognized legal rules of privilege, each party
will have the obligation to produce as witnesses to the arbitration such of its
employees or those of its affiliates as the other party may request, and any
documents that the other party may request, providing always that those
witnesses and documents be relevant to the issues before the arbitration and
provided further that the parties may mutually agree as to further discovery
prior to the arbitration. The board may, at its discretion, request and consider
underwriting and placement information provided by the Company to the
Reinsurers, as well as any correspondence exchanged by the parties that is
related to this Agreement and any information obtained in accordance with the
Access to Records Article. The umpire will be the final judge of rules of
privilege and relevancy of any witnesses and documents, if there is any
disagreement by the parties.

     The board will conduct the hearing and make its award with regard to the
terms expressed in this Agreement, the original intentions of the parties to the
extent reasonably ascertainable, and the custom and usage of the
property-casualty insurance and reinsurance business. At the hearing, evidence
will be allowed but the formal rules of evidence will not apply; cross
examination and rebuttal will be allowed. Within 20 days of the close of the
hearing, at their own election or at the request of the board, the claimant and
the respondent may submit post-hearing briefs to be considered by the board
before making its decision.

     The board will make its award within 30 days following the close of the
hearing or the submission of post-hearing briefs, whichever is later. The
decision by the majority of the members of the board will be in writing and will
be final and binding upon the parties. The board is empowered to grant interim
relief as it may deem appropriate. Either the claimant or the respondent may
apply to any court having jurisdiction for an order confirming the award; a
judgment of such court will thereupon be entered on the award.

     The claimant and the respondent will each bear the expense of the
arbitrator appointed by or for it and will jointly and equally bear the expense
of the umpire and any stenographer requested. The remaining costs of the
arbitration proceedings will be allocated by the board.


                                       18

<PAGE>

     To the extent requested by the Company, the Reinsurer, or other Reinsurers
hereon, where the issues in dispute between the Company and the Reinsurer are
related or largely identical or similar to issues in dispute between the Company
and other Reinsurers, all parties may join together in a consolidated
arbitration under the terms and conditions contained in this Article to resolve
all common issues; provided, however, that:

     A.   The two arbitrators and umpire will be appointed by the Company and
          the original arbitrating Reinsurer;

     B.   Each party to a consolidated arbitration will have the right to its
          own attorney, position, and related claims and defenses;

     C.   No party will be prevented from presenting its position by the
          position put forth by any other party;

     D.   The consolidated arbitration will not be construed as changing the
          liability of the Reinsurers under the terms of this Agreement from
          several to joint; and

     E.   The cost and expenses of the arbitration, including the fees of the
          arbitrators and the umpire (but exclusive of attorneys' fees, which
          will be borne exclusively by the respective retaining party), will be
          borne pro rata by each party participating in the consolidated
          arbitration.

CONFLICT WITH LAW

     In the event any provision of this Agreement is rendered illegal or
unenforceable in any jurisdiction, such provision will be considered void as
respects that jurisdiction only, and such a consideration will not affect the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.

TAXES

     The Company will pay all taxes (except Federal Excise Tax) on premiums
reported to the Reinsurers on this Agreement.

FEDERAL EXCISE TAX

     The Reinsurers will allow for the purpose of paying Federal Excise Tax the
applicable percentage of the premium payable hereon (as imposed under Section
4371 of the Internal Revenue Service Code) to the extent such premium is subject
to such tax. In the event of any return of premium, the Reinsurers will deduct
the aforesaid percentage


                                       19

<PAGE>

from the return premium payable hereon and the Company or its agent will recover
such tax from the United States Government.

CURRENCY

     The sign "$" in this Agreement refers to United States of America dollars,
except in those cases where the policies are issued by a Canadian branch office
of the Company, in which case it will refer to Canadian dollars.

     In the event the Company is involved in a loss requiring payments in United
States and Canadian currency, the Company's retention and the amount recoverable
hereunder will be apportioned between the two currencies in the same proportion
as the amount of loss in each currency bears to the total amount of loss
sustained by the Company.

     For the purposes of this Agreement, where the Company receives premiums or
pays losses in currencies other than United States currency, such premiums and
losses will be converted into United States dollars at the actual rates of
exchange at which these premiums and losses are entered in the Company's books.

SERVICE OF SUIT

     (This Article applies to Reinsurers domiciled outside the United States of
     America and/or unauthorized in any state, territory, or district of the
     United States of America that has jurisdiction over the Company and in
     which a subject suit has been instituted. This Article is not intended to
     conflict with or override the parties' obligation to arbitrate their
     disputes in accordance with the Arbitration Article.)

     In the event any Reinsurer hereon fails to pay any amount claimed due
hereunder, such Reinsurer, at the request of the Company, will submit to the
jurisdiction of a court of competent jurisdiction within the United States and
will comply with all requirements necessary to give that court jurisdiction.
Nothing in this Article constitutes or should be understood to constitute a
waiver of the Reinsurer's right to commence an action in any court of competent
jurisdiction in the United States, to remove an action to a United States
District Court, or to seek a transfer of a case to another court as permitted by
the laws of the United States or of any state in the United States. Service of
process in such suit may be made upon Mendes and Mount, 750 Seventh Avenue, New
York, New York 10019-6829, or another party specifically designated in the
applicable Interests and Liabilities Agreement attached hereto. In any suit
instituted against it upon this Agreement, the Reinsurer will abide by the final
decision of such court or of any appellate court in the event of an appeal.


                                       20

<PAGE>

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

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

AGENCY

     For purposes of sending and receiving notices and payments required by this
Agreement, the reinsured company that is set forth first in the definition of
"Company" in the Preamble to this Agreement will be deemed the agent of all
other reinsured companies referenced in the Preamble. In no event, however, will
any reinsured company be deemed the agent of another with respect to the terms
of the Insolvency Article.

INTERMEDIARY

     Aon Re Inc., an Illinois corporation, or one of its affiliated corporations
duly licensed as a reinsurance intermediary, is hereby recognized as the
Intermediary negotiating this Agreement for all business hereunder. All
communications (including but not limited to notices, statements, premiums,
return premiums, commissions, taxes, losses, loss expenses, salvages, and loss
settlements) relating to this Agreement will be transmitted to the Company or
the Reinsurers through the Intermediary. Payments by the Company to the
Intermediary will be deemed payment to the Reinsurers. Payments by the
Reinsurers to the Intermediary will be deemed payment to the Company only to the
extent that such payments are actually received by the Company.


                                       21

<PAGE>

                                    EXHIBIT A
                                   FIRST LAYER

RETENTION AND LIMIT

     No claim will be made hereunder unless the Company has first sustained, by
reason of any one loss occurrence, an ultimate net loss in excess of $5,000,000.
The Reinsurers will then be liable for the amount of ultimate net loss in excess
of $5,000,000 any one loss occurrence, but the limit of liability of the
Reinsurers will not exceed $5,000,000 with respect to any one loss occurrence.

     The Company will retain net for its own account 5% of the excess losses
hereunder.

REINSTATEMENT

     In the event that all or any portion of the reinsurance under this Exhibit
A is exhausted by loss, the amount so exhausted will be reinstated from the time
of occurrence of such loss. The Reinsurers' liability will not exceed $5,000,000
in respect of any one loss occurrence nor $10,000,000 during the 12-month term
of this Agreement.

     For each amount so reinstated, the Company will pay an additional premium
based upon the pro rata amount of the reinstatement only. The provisional
reinstatement premium, based on the deposit premium and finally adjusted as set
forth in the Rate and Premium section of this Exhibit A, will be paid by the
Company at the same time the Reinsurers pay the loss.

RATE AND PREMIUM

     For the term of this Agreement, there will be a deposit premium hereon of
$xxx,x00 payable in equal quarterly installments of $xxx,xxx on January 1st,
April 1st, July 1st, and October 1st. At Agreement expiration, the Company will
adjust the deposit premium against a rate of 1.333% of its gross net earned
premium, subject to a minimum premium of $xxx,000.


                                       22

<PAGE>

                                    EXHIBIT B
                                  SECOND LAYER

RETENTION AND LIMIT

     No claim will be made hereunder unless the Company has first sustained, by
reason of any one loss occurrence, an ultimate net loss in excess of
$10,000,000, inclusive of underlying catastrophe reinsurance. The Reinsurers
will then be liable for the amount of ultimate net loss in excess of $10,000,000
any one loss occurrence, but the limit of liability of the Reinsurers will not
exceed $10,000,000 with respect to any one loss occurrence.

     The Company will retain net for its own account 5% of the excess losses
hereunder.

REINSTATEMENT

     In the event that all or any portion of the reinsurance under this Exhibit
B is exhausted by loss, the amount so exhausted will be reinstated from the time
of occurrence of such loss. The Reinsurers' liability will not exceed
$10,000,000 in respect of any one loss occurrence nor $20,000,000 during the
12-month term of this Agreement.

     For each amount so reinstated, the Company will pay an additional premium
based upon the pro rata amount of the reinstatement only. The provisional
reinstatement premium, based on the deposit premium and finally adjusted as set
forth in the Rate and Premium section of this Exhibit B, will be paid by the
Company at the same time the Reinsurers pay the loss.

RATE AND PREMIUM

     For the term of this Agreement, there will be a deposit premium hereon of
$xxx,000, payable in equal quarterly installments of $xxx,x00 on January 1st,
April 1st, July 1st, and October 1st. At Agreement expiration, the Company will
adjust the deposit premium against a rate of 1.778% of its gross net earned
premium, subject to a minimum premium of $xxx,000.


                                       23

<PAGE>

                                    EXHIBIT C
                                   THIRD LAYER

RETENTION AND LIMIT

     No claim will be made hereunder unless the Company has first sustained, by
reason of any one loss occurrence, an ultimate net loss in excess of
$20,000,000, inclusive of underlying catastrophe reinsurance. The Reinsurers
will then be liable for the amount of ultimate net loss in excess of $20,000,000
any one loss occurrence, but the limit of liability of the Reinsurers will not
exceed $45,000,000 with respect to any one loss occurrence.

     The Company will retain net for its own account 5% of the excess losses
hereunder.

REINSTATEMENT

     In the event that all or any portion of the reinsurance under this Exhibit
C is exhausted by loss, the amount so exhausted will be reinstated from the time
of occurrence of such loss. The Reinsurers' liability will not exceed
$45,000,000 in respect of any one loss occurrence nor $90,000,000 during the
term of this Agreement.

     For each amount so reinstated, the Company will pay an additional premium
based upon the pro rata amount of the reinstatement only. The provisional
reinstatement premium, based on the deposit premium and finally adjusted as set
forth in the Rate and Premium section of this Exhibit C, will be paid by the
Company at the same time the Reinsurers pay the loss.

RATE AND PREMIUM

     For the term of this Agreement, there will be a deposit premium hereon of
$x,xxx,000, payable in equal quarterly installments of $xxx,xxx on January 1st,
April 1st, July 1st, and October 1st. At Agreement expiration, the Company will
adjust the deposit premium against a rate of 3.429% of its gross net earned
premium, subject to a minimum premium of $x,xxx,000.


                                       24

<PAGE>

                POOLS, ASSOCIATIONS & SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

     (1)  All business derived directly or indirectly from any Pool, Association
          or Syndicate which maintains its own reinsurance facilities.

     (2)  Any Pool or Scheme (whether voluntary or mandatory) formed after March
          1, 1968 for the purpose of insuring property whether on a country-wide
          basis or in respect of designated areas. This exclusion shall not
          apply to so-called Automobile Insurance Plans or other Pools formed to
          provide coverage for Automobile Physical Damage.

SECTION B:

     It is agreed that business written by the Company for the same perils,
which is known at the time to be insured by, or in excess of underlying amounts
placed in the following Pools, Associations or Syndicates, whether by way of
insurance or reinsurance, is excluded hereunder:

          Industrial Risk Insurers,
          FM Global,
          Any Pool, Association or Syndicate formed for the purpose of writing
             Oil, Gas or Petro-Chemical Plants and/or Oil or Gas Drilling Rigs,
          United States Aircraft Insurance Group,
          Canadian Aircraft Insurance Group,
          Global Aerospace.

Section B does not apply:

     (1)  Where the Total Insured Value over all interests of the risk in
          question is less than $250,000,000.

     (2)  To interests traditionally underwritten as Inland Marine and/or Stock
          and/or Contents written on a Blanket basis.

     (3)  To Contingent Business Interruption, except when the Company is aware
          that the key location is known at the time to be insured in any Pool,
          Association or Syndicate named above, other than as provided for under
          Section B(1).


                                   Page 1 of 3

<PAGE>

     (4)  To risks as follows:

          Offices, Hotels, Apartments, Hospitals, Educational Establishments,
          Public Utilities (other than Railroad Schedules) and Builder's Risks
          on the classes of risks specified in this subsection (4) only.

Where this clause attaches to Catastrophe Excesses, the following Sections C and
D are added:

SECTION C:

     Nevertheless the Reinsurer specifically agrees that liability accruing to
the Company from its participation in Residual Market Mechanisms including but
not limited to:

     (1)  The following so-called "Coastal Pools":

          Alabama Insurance Underwriting Association
          Citizens Property Insurance Corporation (CPIC)
          Louisiana Citizens Coastal Plan
          Mississippi Windstorm Underwriting Association
          North Carolina Insurance Underwriting Association
          South Carolina Wind and Hail Underwriting Association
          Texas Windstorm Insurance Association

                                       AND

     (2)  All "Fair Plan" and "Rural Risk Plan" business,

                                       AND

     (3)  California Earthquake Authority (CEA),

for all perils otherwise protected hereunder shall not be excluded herefrom,
except however, that this reinsurance does not include any increase in such
liability resulting from:

          (a)  The inability of any other participant in such Residual Market
               Mechanisms to meet its liability.

          (b)  Any claim against such Residual Market Mechanisms or any
               participant therein, including the Company, whether by way of
               subrogation or otherwise, brought by or on behalf of any
               insolvency fund (as defined in the Insolvency Funds Exclusion
               Clause incorporated in this Contract).


                                   Page 2 of 3

<PAGE>

SECTION D:

     (1)  Notwithstanding Section C above, in respect of the CEA, where an
          assessment is made against the Company by the CEA, the Company may
          include in its ultimate net loss only that assessment directly
          attributable to each separate loss occurrence covered hereunder. The
          Company's initial capital contribution to the CEA shall not be
          included in the ultimate net loss.

     (2)  Notwithstanding Section C above, in respect of CPIC, where an
          assessment is made against the Company by CPIC, the maximum loss that
          the Company may include in the ultimate net loss in respect of any
          loss occurrence hereunder shall not exceed the lesser of:

          (a)  The Company's assessment from CPIC for the accounting year in
               which the loss occurrence commenced, or

          (b)  The product of the following:

               (i)  The Company's percentage participation in CPIC for the
                    accounting year in which the loss occurrence commenced; and

               (ii) CPIC's total losses in such loss occurrence.

          Any assessments for accounting years subsequent to that in which the
          loss occurrence commenced may not be included in the ultimate net loss
          hereunder. Moreover, notwithstanding Section C above, in respect of
          CPIC, the ultimate net loss hereunder shall not include any monies
          expended to purchase or retire bonds as a consequence of being a
          member of CPIC.

          For the purposes of this Contract, the Company may not include in the
          ultimate net loss any assessment or any percentage assessment levied
          by CPIC to meet the obligations of an insolvent insurer, member or
          other party, or to meet any obligations arising from the deferment by
          CPIC of the collection of monies.

1/1/04


                                   Page 3 of 3

<PAGE>

           NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (REINSURANCE) (1994)
                      (WORLDWIDE EXCLUDING U.S.A. & CANADA)

This agreement shall exclude Nuclear Energy Risks whether such risks are written
directly and/or by way of reinsurance and/or via Pools and/or Associations.

For all purposes of this agreement Nuclear Energy Risks shall mean all first
party and/or third party insurances or reinsurances (other than Workers'
Compensation and Employers' Liability) in respect of:

     (I)  All Property on the site of a nuclear power station. Nuclear Reactors,
          reactor buildings and plant and equipment therein on any site other
          than a nuclear power station.

     (II) All Property, on any site (including but not limited to the sites
          referred to in (I) above) used or having been used for:

          (a)  the generation of nuclear energy; or

          (b)  the Production, Use or Storage of Nuclear Material.

     (III) Any other Property eligible for insurance by the relevant local
          Nuclear Insurance Pool and/or Association but only to the extent of
          the requirements of that local Pool and/or Association.

     (IV) The supply of goods and services to any of the sites, described in (I)
          to (III) above, unless such insurances or reinsurances shall exclude
          the perils of irradiation and contamination by Nuclear Material.

Except as undernoted, Nuclear Energy Risks shall not include:

     (i)  Any insurance or reinsurance in respect of the construction or
          erection or installation or replacement or repair or maintenance or
          decommissioning of Property as described in (I) to (III) above
          (including contractors' plant and equipment);

     (ii) Any Machinery Breakdown or other Engineering insurance or reinsurance
          not coming within the scope of (i) above;

Provided always that such insurance or reinsurance shall exclude the perils of
irradiation and contamination by Nuclear Material.


                                   Page 1 of 3

<PAGE>

However, the above exemption shall not extend to:

     (1)  The provision of any insurance or reinsurance whatsoever in respect
          of:

          (a)  Nuclear Material;

          (b)  Any Property in the High Radioactivity Zone or Area of any
               Nuclear Installation as from the introduction of Nuclear Material
               or - for reactor installations - as from fuel loading or first
               criticality where so agreed with the relevant local Nuclear
               Insurance Pool and/or Association.

     (2)  The provision of any insurance or reinsurance for the undernoted
          perils:

          -    Fire, lightning, explosion;

          -    Earthquake;

          -    Aircraft and other aerial devices or articles dropped therefrom;

          -    Irradiation and radioactive contamination;

          -    Any other peril insured by the relevant local Nuclear Insurance
               Pool and/or Association;

               in respect of any other Property not specified in (1) above which
               directly involves the Production, Use or Storage of Nuclear
               Material as from the introduction of Nuclear Material into such
               Property.

Definitions

"Nuclear Material" means:

     (i)  Nuclear fuel, other than natural uranium and depleted uranium, capable
          of producing energy by a self-sustaining chain process of nuclear
          fission outside a Nuclear Reactor, either alone or in combination with
          some other material; and

     (ii) Radioactive Products or Waste.

"Radioactive Products or Waste" means any radioactive material produced in, or
any material made radioactive by exposure to the radiation incidental to the
production or utilisation of nuclear fuel, but does not include radioisotopes
which have reached the final stage of fabrication so as to be usable for any
scientific, medical, agricultural, commercial or industrial purpose.


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"Nuclear Installation" means:

     (i)  Any Nuclear Reactor;

     (ii) Any factory using nuclear fuel for the production of Nuclear Material,
          or any factory for the processing of Nuclear Material, including any
          factory for the reprocessing of irradiated nuclear fuel; and

     (iii) Any facility where Nuclear Material is stored, other than storage
          incidental to the carriage of such material.

"Nuclear Reactor" means any structure containing nuclear fuel in such an
arrangement that a self-sustaining chain process of nuclear fission can occur
therein without an additional source of neutrons.

"Production, Use or Storage of Nuclear Material" means the production,
manufacture, enrichment, conditioning, processing, reprocessing, use, storage,
handling and disposal of Nuclear Material.

"Property" shall mean all land, buildings, structures, plant, equipment,
vehicles, contents (including but not limited to liquids and gases) and all
materials of whatever description whether fixed or not.

"High Radioactivity Zone or Area" means:

     (i)  For nuclear power stations and Nuclear Reactors, the vessel or
          structure which immediately contains the core (including its supports
          and shrouding) and all the contents thereof, the fuel elements, the
          control rods and the irradiated fuel store; and

     (ii) For non-reactor Nuclear Installations, any area where the level of
          radioactivity requires the provision of a biological shield.

N.M.A. 1975a (10/3/94)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited.


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U.S.A.

         NUCLEAR INCIDENT EXCLUSION CLAUSE--PHYSICAL DAMAGE--REINSURANCE

1.   This Reinsurance does not cover any loss or liability accruing to the
     Reassured, directly or indirectly and whether as Insurer or Reinsurer, from
     any Pool of Insurers or Reinsurers formed for the purpose of covering
     Atomic or Nuclear Energy risks.

2.   Without in any way restricting the operation of paragraph (1) of this
     Clause, this Reinsurance does not cover any loss or liability accruing to
     the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
     from any insurance against Physical Damage (including business interruption
     or consequential loss arising out of such Physical Damage) to:

     I.   Nuclear reactor power plants including all auxiliary property on the
          site, or

     II.  Any other nuclear reactor installation, including laboratories
          handling radioactive materials in connection with reactor
          installations, and "critical facilities" as such, or

     III. Installations for fabricating complete fuel elements or for processing
          substantial quantities of "special nuclear material", and for
          reprocessing, salvaging, chemically separating, storing or disposing
          of "spent" nuclear fuel or waste materials, or

     IV.  Installations other than those listed in paragraph (2) III above using
          substantial quantities of radioactive isotopes or other products of
          nuclear fission.

3.   Without in any way restricting the operations of paragraphs (1) and (2)
     hereof, this Reinsurance does not cover any loss or liability by
     radioactive contamination accruing to the Reassured, directly or
     indirectly, and whether as Insurer or Reinsurer, from any insurance on
     property which is on the same site as a nuclear reactor power plant or
     other nuclear installation and which normally would be insured therewith
     except that this paragraph (3) shall not operate

     (a)  where Reassured does not have knowledge of such nuclear reactor power
          plant or nuclear installation, or

     (b)  where said insurance contains a provision excluding coverage for
          damage to property caused by or resulting from radioactive
          contamination, however caused. However on and after 1st January 1960
          this sub-paragraph (b) shall only apply provided the said radioactive
          contamination exclusion provision has been approved by the
          Governmental Authority having jurisdiction thereof.


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4.   Without in any way restricting the operations of paragraphs (1), (2) and
     (3) hereof, this Reinsurance does not cover any loss or liability by
     radioactive contamination accruing to the Reassured, directly or
     indirectly, and whether as Insurer or Reinsurer, when such radioactive
     contamination is a named hazard specifically insured against.

5.   It is understood and agreed that this Clause shall not extend to risks
     using radioactive isotopes in any form where the nuclear exposure is not
     considered by the Reassured to be the primary hazard.

6.   The term "special nuclear material" shall have the meaning given it in the
     Atomic Energy Act of 1954 or by any law amendatory thereof.

7.   Reassured to be sole judge of what constitutes:

     (a)  substantial quantities, and

     (b)  the extent of installation, plant or site.

NOTE: Without in any way restricting the operation of paragraph (1) hereof, it
     is understood and agreed that

     (a)  all policies issued by the Reassured on or before 31st December 1957
          shall be free from the application of the other provisions of this
          Clause until expiry date or 31st December 1960 whichever first occurs
          whereupon all the provisions of this Clause shall apply.

     (b)  with respect to any risk located in Canada policies issued by the
          Reassured on or before 31st December 1958 shall be free from the
          application of the other provisions of this Clause until expiry date
          or 31st December 1960 whichever first occurs whereupon all the
          provisions of this Clause shall apply.

N.M.A. 1119 (12/12/57)


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CANADA

         NUCLEAR INCIDENT EXCLUSION CLAUSE--PHYSICAL DAMAGE--REINSURANCE

1.   This Agreement does not cover any loss or liability accruing to the
     Reinsured directly or indirectly, and whether as Insurer or Reinsurer, from
     any Pool of Insurers or Reinsurers formed for the purpose of covering
     Atomic or Nuclear Energy risks.

2.   Without in any way restricting the operation of paragraph 1 of this clause,
     this Agreement does not cover any loss or liability accruing to the
     Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
     from any insurance against Physical Damage (including business interruption
     or consequential loss arising out of such Physical Damage) to:

     (a)  nuclear reactor power plants including all auxiliary property on the
          site, or

     (b)  any other nuclear reactor installation, including laboratories
          handling radioactive materials in connection with reactor
          installations, and critical facilities as such, or

     (c)  installations for fabricating complete fuel elements or for processing
          substantial quantities of radioactive materials, and for reprocessing,
          salvaging, chemically separating, storing or disposing of spent
          nuclear fuel or waste materials, or

     (d)  installations other than those listed in (c) above using substantial
          quantities of radioactive isotopes or other products of nuclear
          fission.

3.   Without in any way restricting the operation of paragraphs 1 and 2 of this
     clause, this Agreement does not cover any loss or liability by radioactive
     contamination accruing to the Reinsured, directly or indirectly, and
     whether as Insurer or Reinsurer, from any insurance on property which is on
     the same site as a nuclear reactor power plant or other nuclear
     installation and which normally would be insured therewith, except that
     this paragraph 3 shall not operate:

     (a)  where the Reinsured does not have knowledge of such nuclear reactor
          power plant or nuclear installation, or

     (b)  where the said insurance contains a provision excluding coverage for
          damage to property caused by or resulting from radioactive
          contamination, however caused.


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4.   Without in any way restricting the operation of paragraphs 1, 2 and 3 of
     this clause, this Agreement does not cover any loss or liability by
     radioactive contamination accruing to the Reinsured, directly or
     indirectly, and whether as Insurer or Reinsurer, when such radioactive
     contamination is a named hazard specifically insured against.

5.   This clause shall not extend to risks using radioactive isotopes in any
     form where the nuclear exposure is not considered by the Reinsured to be
     the primary hazard.

6.   The term "radioactive material" means uranium, thorium, plutonium,
     neptunium, their respective derivatives and compounds, radioactive isotopes
     of other elements and any other substances which may be designated by or
     pursuant to any law, act or statute, or any law amendatory thereof as being
     prescribed substances capable of releasing atomic energy, or as being
     requisite for the production, use or application of atomic energy.

7.   Reinsured to be sole judge of what constitutes:

     (a)  substantial quantities, and

     (b)  the extent of installation, plant or site.

8.   Without in any way restricting the operation of paragraphs 1, 2, 3 and 4 of
     this clause, this Agreement does not cover any loss or liability accruing
     to the Reinsured, directly or indirectly, and whether as Insurer or
     Reinsurer caused:

     (a)  by any nuclear incident as defined in or pursuant to the Nuclear
          Liability Act or any other nuclear liability act, law or statute, or
          any law amendatory thereof, or nuclear explosion, except for ensuing
          loss or damage which results directly from fire, lightning or
          explosion of natural, coal or manufactured gas;

     (b)  by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
     of this clause, paragraph 8 of this clause shall only apply to all original
     contracts of the Reinsured whether new, renewal or replacement which become
     effective on or after December 31, 1992.

N.M.A. 1980a (01/04/96)
Form approved by Lloyd's Underwriters' Non-Marine Association Ltd.


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                        INSOLVENCY FUNDS EXCLUSION CLAUSE

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

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                               TERRORISM EXCLUSION

Notwithstanding any provision to the contrary within this reinsurance Agreement
or any endorsement thereto, it is agreed that this reinsurance Agreement
excludes loss, damage, cost, or expense directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with any
act of terrorism, as defined herein, regardless of any other cause or event
contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or
threat of action designed to influence the government de jure or de facto of any
nation or any political division thereof, or in pursuit of political, religious,
ideological, or similar purposes to intimidate the public or a section of the
public of any nation by any person or group(s) of persons whether acting alone
or on behalf of or in connection with any organization(s) or government(s) de
jure or de facto, and which:

(i)  involves violence against one or more persons; or

(ii) involves damage to property; or

(iii) endangers life other than that of the person committing the action; or

(iv) creates a risk to health or safety of the public or a section of the
     public; or

(v)  is designed to interfere with or to disrupt an electronic system.

This reinsurance Agreement also excludes loss, damage, cost, or expense directly
or indirectly caused by, contributed to by, resulting from, or arising out of or
in connection with any action in controlling, preventing, suppressing,
retaliating against, or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and
limitations of this reinsurance Agreement, in respect only of personal lines
this reinsurance Agreement will pay actual loss or damage (but not related cost
or expense) caused by any act of terrorism provided such act is not directly or
indirectly caused by, contributed to by, resulting from, or arising out of or in
connection with biological, chemical, radioactive, or nuclear pollution or
contamination or explosion.