EMPLOYERS REINSURANCE CORPORATION

                                  WHOLE ACCOUNT
                      AGGREGATE EXCESS OF LOSS RETROCESSION
                              REINSURANCE AGREEMENT


ARTICLE                                                                     PAGE
-------                                                                     ----

I                 BUSINESS COVERED                                             2
II                TERM                                                         2
III               TERRITORY                                                    3
IV                EXCLUSIONS                                                   3
V                 COVERAGE AND AGGREGATE LIMIT                                 4
VI                DEFINITIONS                                                  5
VII               NET RETAINED LINES                                           9
VIII              REINSURANCE LAYER PREMIUMS, PROPERTY                         9
                  CATASTROPHE PREMIUMS, NON-PROPERTY
                  CATASTROPHE ULTIMATE NET LOSS PREMIUMS,
                  SPECIAL RETURN PREMIUM, SPECIAL FEE AND
                   REINSURER'S MARGIN
IX                CEDING COMMISSION                                           13
X                 MAINTENANCE FEES                                            13
XI                CURRENCY                                                    14
XII               TAXES                                                       14
XIII              ACCOUNTS, REMITTANCES AND LOSS SETTLEMENTS                  14
XIV               FUNDS WITHHELD PROFIT SHARING ACCOUNT                       16
XV                INTEREST CREDIT                                             17
XVI               EXCESS OF POLICY LIMITS                                     17
XVII              EXTRA CONTRACTUAL OBLIGATIONS                               18
XVIII             OFFSET                                                      18
XIX               COMMUTATION                                                 19
XX                PROFIT SHARING                                              20
XXI               CHANGE IN ADMINISTRATIVE PRACTICES/                         20
                   CHANGE IN OWNERSHIP
XXII              ERRORS AND OMISSIONS                                        20
XXIII             ACCESS TO RECORDS                                           21
XXIV              INSOLVENCY                                                  21
XXV               ARBITRATION                                                 22
XXVI              LOSS RESERVE FUNDING                                        22
XXVII             GOVERNING LAW                                               24
XXVIII            INTERMEDIARY                                                24


<PAGE>


                                  WHOLE ACCOUNT
                      AGGREGATE EXCESS OF LOSS RETROCESSION
                              REINSURANCE AGREEMENT

                  (hereinafter referred to as the "Agreement")

                                    issued to

                        EMPLOYERS REINSURANCE CORPORATION
                              Overland Park, Kansas

                   (hereinafter referred to as the "Company")

                                       by

             NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA
                            Pittsburgh, Pennsylvania

                  (hereinafter referred to as the "Reinsurer")



                                    ARTICLE I
                                    ---------

BUSINESS COVERED
----------------

This Agreement is to indemnify the Company with respect to the Subject  Ultimate
Net  Losses  which may  accrue to the  Company  as a result of losses  occurring
during the Term and claims made on claims made form underlying  coverages during
the Term, all as per underlying  policies and binders of insurance,  facultative
certificates and programs of Reinsurance Agreements  (hereinafter referred to as
"Subject  Business")  as respects  all classes of business  underwritten  by the
Company,  including the six 2001 accident year whole account aggregate excess of
loss  coverages  written by the Company in respect of the  Company's  Affiliated
Companies,  as listed in Article VI, Definition J., except for business excluded
in Article  IV,  Exclusions,  all  subject to the terms and  conditions  of this
Agreement.

                                   ARTICLE II
                                   ----------

TERM
----

This  Agreement  shall be effective  from  January 1, 2001 through  December 31,
2001, both days inclusive.

Should this Agreement expire while a loss covered hereunder is in progress,  the
Reinsurer  shall be responsible  for the loss in progress in the same manner and
to the same extent it would have

                                     Page 2

<PAGE>


been  responsible had the Agreement  expired the day following the conclusion of
the loss in progress.



                                   ARTICLE III
                                   -----------

TERRITORY
---------

This Agreement shall cover the Company's  Business Covered,  wherever losses may
occur.


                                   ARTICLE IV
                                   ----------

EXCLUSIONS
----------

This Agreement shall not apply to and specifically excludes:

A.       Nuclear Incident, in accordance with the following clauses:

         1.     Nuclear Incident Exclusion Clause - Liability -  Reinsurance,
                attached hereto;

         2.     Nuclear Incident Exclusion Clause-Physical Damage - Reinsurance,
                attached hereto;

B.       Nuclear  Energy  Risks,  in  accordance  with  the Nuclear Energy Risks
         Exclusion clause attached hereto;

C.       War  Risks,  in  accordance with  the War Risks Exclusion (Reinsurance)
         clause attached hereto;

D.       Insolvency and Financial Guaranty;

E.       Pools, Associations and Syndicates.

F.       Credit   default  swaps,   credit  derivatives,   collateralized   debt
         obligations,  collateralized  bond  obligations and collateralized loan
         obligations.  This exclusion  shall not apply to trade credit business
         routinely underwritten by GE Frankona;

G.       The G.E. Re reinsurance assumption  from  the  Farmers  Group  shall be
         excluded from all Company and affiliated Company calculations hereon;

H.       Life Insurance and Reinsurance Coverages;

I.       Finite Aggregate Excess of Loss Whole Account Coverages;

J.       Business  underwritten  by  Luxembourg European Reinsurance Company and
         Irish European Reinsurance Company Ltd.

                                     Page 3

<PAGE>


K.       Exposures  from  direct insurance  policies underwritten by the Company
         and Affiliated Companies for G.E. affiliates.


                                    ARTICLE V
                                    ---------

COVERAGE AND AGGREGATE LIMIT
----------------------------

A.       Coverage - The Reinsurer shall  indemnify  the  Company  for X% Subject
         Ultimate Net Loss, in excess of X% of  Subject Net Earned  Premium (the
         "Retention") in  accordance  with  the  following  Coverage  Layers and
         subject to the Aggregate Limit in Section B.
         below:

         Layer 1 - Coverage  for  Layer  1 shall equal X% percent of Subject Net
         Earned Premium excess of the Retention.

         Layer 2 - Coverage  for  Layer  2  shall equal X% of Subject Net Earned
         Premium excess of X% of Subject Net Earned Premium.

         Layer 3 - Coverage for Layer 3 shall equal X% (X point X percent) of
         Subject Net Earned Premium excess of X% of Subject Net Earned Premium.

         Layer 4 - Coverage  for  Layer 4 shall  equal X% of  Subject Net Earned
         Premium excess of X% of Subject Net Earned Premium.

         Layer 5 - Coverage  for  Layer  5  shall equal X% of Subject Net Earned
         Premium excess of X% of Subject Net Earned Premium

         Layer 6 - Coverage  for  Layer 6  shall  equal X% of Subject Net Earned
         Premium excess of X% of Subject Net Earned Premium.

B.       Aggregate  Limit - In  no event shall  the Reinsurer be liable for more
         than X% of Subject Net Earned  Premium, subject to a maximum  Aggregate
         Limit of $X  million.  Should  the result of  multiplying  Subject  Net
         Earned Premium by X% exceed $X  million, each of the Layers of Coverage
         in A.  above  shall be  reduced  proportionately  by  multiplying  each
         respective Layer of  Coverage  percentage of Subject Net Earned Premium
         by the lesser of X% or  the result of dividing $X million by the result
         of multiplying Subject Net Earned Premium by X%.

                                     Page 4

<PAGE>




                                   ARTICLE VI
                                   ----------

DEFINITIONS
-----------

A.       "Affiliated  Companies"  shall   mean   Coregis,  GE   Frankona,  First
         Specialty, GE Re, Medical Protective and Westport.

B.       "Allocated Loss  Adjustment Expense", as used in this Agreement,  shall
         mean all  expenditures  by  the  Company  made in  connection  with the
         disposition  of a claim,  loss  or legal  proceeding  including but not
         limited to expenses of salvage  and  subrogation  and legal expenses of
         litigation,  investigation,  negotiation,  cost  of bonds, court costs,
         Statutory  Penalties,  Prejudgment  Interest  or  Delayed  Damages  and
         post-judgment interest.  Allocated Loss Adjustment  Expenses shall also
         include the  Company's  defense costs and legal  expenses  incurred  in
         direct  connection  with legal  actions,  including but not limited  to
         declaratory  judgment  actions,  brought by any party to determine  the
         Company's   defense  and/or   indemnification   obligations   that  are
         allocable only to policies and claims subject to  this  Agreement.  Any
         declaratory  judgment  action  expenses  shall  be  deemed to have been
         fully  incurred on the same date as the original  claim (if any) giving
         rise to the action.  Allocated Loss  Adjustment  Expense(s)  shall also
         include legal expenses, including  such expenses related to declaratory
         judgment  actions,  incurred  in   connection  with  Extra  Contractual
         Obligations and Loss In Excess Of Original Policy Limits.

         Allocated  Loss  Adjustment  Expenses  shall not include the Company's
         office expenses  and salaries of employees of the Company,  except:  1)
         payments to  attorneys on  the  Company's  staff who are engaged in the
         investigation,  litigation  or  settlement   of  claims,  suits,  legal
         proceedings  or losses  reinsured  under  this  Agreement;  2) when the
         Company  uses  its  own  employees  or  officials,   including   claims
         personnel  and  engineers  to  settle  losses,  the  Company  shall  be
         permitted  to include a pro rata  share of  expenses  incurred  by  and
         salaries  related to  such  employees and  officials,  including  claim
         personnel and engineers.

         The term "Prejudgment  Interest or Delayed Damages" shall mean interest
         or damages added to  a settlement, verdict, award, or judgment based on
         the amount of time  prior to the settlement, verdict, award or judgment
         whether  or  not  made  part  of the  settlement,  verdict,  award,  or
         judgment.

         The Company  warrants that Allocation of Loss Adjustment  Expenses will
         remain  consistent while the treaty is in force and/or the Reinsurer is
         at risk.

         The  term "Statutory Penalties" shall mean fines imposed by statutes or
         laws.

C.       "Determination of Exceeding Plan" shall mean the following:

         The  Company  and  all of its  Affiliated  Companies  will be deemed to
         exceed  Plan  when  the sum of  the  "Excess  Non-Property  Catastrophe
         Ultimate Net Loss" for the combined  Company  and all of its Affiliated
         Companies exceeds $X million in the aggregate.

                                     Page 5

<PAGE>


         The Company and all of  its  Affiliated  Companies will be deemed to be
         at or below Plan when  the sum of the "Excess Non-Property  Catastrophe
         Ultimate Net Loss" for  the combined  Company and all of its Affiliated
         Companies is equal to or less than $X million in the aggregate.

         "Excess   Non-Property   Catastrophe   Ultimate   Net  Loss"  -  Excess
         Non-Property Catastrophe Ultimate Net Loss for  each individual company
         shall be determined by subtracting the lesser of a) or b), from c).

         a)     actual Non-Property Catastrophe Ultimate Net Loss or
         b)     the Plan Non-Property Catastrophe Ultimate Net Loss
         c)     the actual Non-Property  Catastrophe Ultimate  Net Loss for each
                individual company.

         The actual  Non-Property Catastrophe Ultimate Net Loss for each company
         shall  equal the  actual  Non-Property  Catastrophe  Ultimate  Net Loss
         Ratio multiplied by the actual Net Earned Premium for that company.

         Plan Non-Property  Catastrophe Ultimate Net Loss for each company shall
         equal the  Plan  Non-Property  Catastrophe  Ultimate Net Loss Ratios in
         the  table below  multiplied by the actual Net Earned  Premium for that
         company.

                                                 Non-Property
            Company and                        Catastrophe Plan
         Affiliated Companies               Ultimate Net Loss Ratios
         --------------------               ------------------------

         ERC                                         X%
         GE Re                                       X%
         GE Frankona                                 X%
         Medical Protective                          X%
         Westport                                    X%
         Coregis                                     X%
         First Specialty                             X%

         If there  are  individual  companies  that  comprise  the  above  table
         listings, then  such individual company breakdown shall be used in lieu
         of the table listings and consolidated figures above.

D.       "Net Earned Premium" shall mean net earned premium for both the Company
         and its  Affiliated  Companies  combined  which  is  estimated to be $X
         million.  Net Earned Premium shall be net of  all inuring  reinsurances
         except for the six 2001 accident year whole  account  aggregate  excess
         of loss reinsurances. Both assumed and ceded  reinstatement premiums of
         the  Company  shall  be  included  in  the  calculation  of Net  Earned
         Premium.

E.       "Property Catastrophe Loss" - Property Catastrophe Loss as used in this
         Agreement  shall mean property  losses  recorded  by the Company and/or
         Affiliated  Companies  which involve two or  more original  policies as
         issued by the Company and/or Affiliated

                                     Page 6


<PAGE>



         Companies and that, in respect of  USA  events,  are  assigned  a  "PCS
         Number"  by   Property  Claims Services,  or in respect of events other
         than  USA, are  designated  by Sigma as property catastrophes.

F.       "Property  Catastrophe  Ultimate   Net  Loss  Limitation"  -   Property
         Catastrophe  Ultimate  Net  Loss  Limitation  shall equal X% of the Net
         Earned Premium of  the combined  Company and its Affiliated  Companies,
         subject to a  maximum of $X million, less all Non-Property  Catastrophe
         Ultimate  Net  Losses  in  respect  of  the  combined  Company  and its
         Affiliated  Companies in excess of  X% (estimate $X million) of the Net
         Earned Premium of the combined  Company and its Affiliated Companies to
         the extent the  Non-Property  Catastrophe  Ultimate  Net Losses  can be
         ceded  to  this  Agreement.  This  limitation  operates  as  a  Subject
         Ultimate  Net  Loss   priority   for  coverage   whereby   Non-Property
         Catastrophe  Subject  Ultimate  Net Loss has priority of coverage  over
         Property  Catastrophe  Ultimate  Net Loss. This  limitation  shall only
         apply when the  sum of Property  Catastrophe  Ultimate  Net Losses plus
         Non-Property  Catastrophe  Ultimate  Net Loss for the combined  Company
         and its Affiliated  Companies  results  in Subject  Ultimate Net Losses
         for the Company in excess of the sum  of the  Retention  and  Aggregate
         Limit hereon.

         Should  Property  Catastrophe  Ultimate  Net  Losses  in  excess  of $X
         million  (Plan  amount) for the  combined  Company and  its  Affiliated
         Companies when added to Non-Property  Catastrophe  Ultimate  Net Losses
         for the  combined  Company  and  its  Affiliated  Companies  result  in
         Subject  Ultimate  Net Losses for  the  Company in excess of the sum of
         the  Retention  and  the  Aggregate  Limit,  the ERC  Company  Property
         Catastrophe  Ultimate  Net  Losses  shall be  eliminated  first  giving
         priority to the Affiliated Companies  Property Catastrophe Ultimate Net
         Losses for Property Catastrophe Ultimate Net Losses.

         "Property  Catastrophe  Ultimate   Net  Loss  for  Underlying  Six 2001
         Accident Year Whole Account  Aggregate  Excess of Loss Coverages" - The
         Company  shall  include   Property   Catastrophe   Ultimate   Net  Loss
         limitations within each of the property exposed six 2001  accident year
         whole  account  aggregate  excess  of  loss  coverages  equal  to   the
         respective  sum of  budgeted  catastrophe  Ultimate  Net Loss  plus the
         underlying  aggregate  limit for each  respective  company (i.e, for GE
         Frankona,  Property  Catastrophe  Ultimate  Net Loss  is  limited to $X
         million,  for GE Re $X  million).  Property  Catastrophe  Ultimate  Net
         Losses are estimated to be $X million.

G.       "Subject Net Earned Premium" shall mean the net earned premium of the
         Company  only for the Term net of all  other  reinsurances  (excluding
         this whole account coverage). Subject Net Earned Premium shall exclude
         the six assumed 2001 accident year whole account  aggregate  excess of
         loss  coverages.  Subject  Net Earned  Premium is  estimated  to be $X
         million.  Subject Net Earned  Premium shall include all other business
         except for the six 2001 accident year whole account  aggregate  excess
         of loss  coverages  written by the Company in respect of the Company's
         Affiliated Companies. Both assumed and ceded reinstatement premiums of
         the Company shall be included in the calculation of Subject Net Earned
         Premium.

H.       "Subject  Ultimate Net Loss" shall  mean  the  aggregate sum of amounts
         paid  or  payable  by  the   Company  on  its  net  retained  liability
         (including  ultimate  net  loss in  respect  of the six

                                     Page 7

<PAGE>


         assumed  2001 accident year aggregate excess of loss coverages  written
         by the  Company in respect of the  Company's  Affiliated  Companies) in
         settlement  of losses, including Allocated Loss Adjustment Expenses, in
         respect  of  Business  Covered   during  the Term,  plus  reserves  for
         outstanding losses and  Allocated Loss Adjustment  Expenses,  including
         reserves for incurred  but not  reported  claims,  X% of liability  for
         Loss in excess of  Original Policy Limits and X% of liability for Extra
         Contractual  Obligations  emanating  from  underlying  contracts of the
         Company's clients.

         Subject  Ultimate  Net  Loss  shall  be  net of  inuring  reinsurances,
         whether collectible or not, except as  provided below, and all salvages
         and  recoveries  credited to the  Company's  net  retention;  provided,
         however,  that in the event of the  insolvency of the Company,  payment
         by the Reinsurer  shall be made in  accordance  with the  provisions of
         Article XXIV ,  Insolvency.  Nothing  herein shall be construed to mean
         that  losses  under  this  Agreement  are  not  recoverable  until  the
         Company's Subject Ultimate Net Loss has been ascertained.

         Expected Subject Ultimate Net Loss is estimated to be $X million.

I.       "Ultimate Net Loss" shall  mean  the  aggregate  sum of amounts paid or
         payable by each  Company  and its  Affiliated  Companies  on  their net
         retained liability,  excluding, for the Company, the ultimate  net loss
         in respect of the 2001 accident year whole account aggregate  excess of
         loss  coverages  written by the  Company  in  respect of the  Company's
         Affiliated  Companies,  in settlement  of losses,  including  Allocated
         Loss Adjustment  Expenses,  in respect of  Business  Covered during the
         Term,  net of  all  reinsurances  ceded  except  for  this  Reinsurance
         Agreement  and  the six 2001  accident  year  whole  account  aggregate
         excess  of loss  reinsurances  ceded from the Affiliated  Companies and
         assumed by the Company.

         The  combined  Ultimate   Net Loss of the  Company  and its  Affiliated
         Companies is estimated to be $X million.

J.       Underlying  Aggregate  Limit  and Retention for each Affiliated Company
         shall mean the amounts in the table below:

                                                                Ultimate Net
                                   Amounts in ($000,s)           Loss Ratios
         Affiliated Company        Aggregate Limit           Aggregate Retention
         ------------------        ---------------           -------------------

         GE Re                             X                          X%
         GE Frankona                       X                          X%
         Medical Protective                X                          X%
         Westport                          X                          X%
         Coregis                           X                          X%
         First Specialty                   X                          X%


                                     Page 8

<PAGE>


                                   ARTICLE VII
                                   -----------

NET RETAINED LINES
------------------

This  Agreement  applies  only to that  portion of any policy  which the Company
retains  net for its own  account,  and in  calculating  the  amount of any loss
hereunder  and also in computing  the amount and amounts in excess of which this
Agreement attaches, only loss or losses in respect of that portion of any policy
which the Company retains net for its own account shall be included.

The amount to be retained for the Company's own account shall also be reduced by
any loss recoveries in respect of corporate  Errors and Omissions and Directors'
and Officers' insurance coverages.

The amount of the  Reinsurer's  liability under this Agreement in respect of any
loss or losses shall not be increased by reason of the  inability of the Company
to collect from any other reinsurer,  whether  specific or general,  any amounts
which may have  become due from such other  reinsurer,  whether  such  inability
arises from the insolvency of such other reinsurer or otherwise.

The  same  above  methodology  as  respects  the  Company  shall  also  apply to
Affiliated Companies.


                                  ARTICLE VIII
                                  ------------

REINSURANCE  LAYER   PREMIUMS,  PROPERTY   CATASTROPHE   PREMIUMS,  NON-PROPERTY
--------------------------------------------------------------------------------
CATASTROPHE SUBJECT ULTIMATE NET LOSS PREMIUMS, SPECIAL RETURN  PREMIUM, SPECIAL
--------------------------------------------------------------------------------
FEE  AND REINSURER'S MARGIN
---------------------------

The following are all the Premiums:

A.       Reinsurance  Layer  Premiums - The  Company shall pay to the Reinsurer,
         via credit to the Funds Withheld  Profit Sharing Account, at January 1,
         2001, the following Reinsurance Layer Premiums:

         Layer 1 - Layer 1 Reinsurance  Premium  shall  equal X% of  Subject Net
         Earned Premium, subject to a maximum Layer 1 Reinsurance  Premium of $X
         million.

         Layer 2 - Layer 2 Reinsurance Premium  shall  equal X% of ceded Subject
         Ultimate Net Loss, if  any, to  Layer 2, subject to  a  maximum Layer 2
         Reinsurance Premium of X% of Subject Net Earned Premium.

         Layer 3 - Layer 3  Reinsurance  Premium shall equal X% of ceded Subject
         Ultimate  Net  Loss, if  any, to  Layer 3, subject to a maximum Layer 3
         Reinsurance Premium of X% of Subject Net Earned Premium.

                                     Page 9

<PAGE>


         Layer 4 - Layer 4  Reinsurance  Premium shall equal X% of ceded Subject
         Ultimate Net  Loss,  if any, to Layer 4,  subject to a maximum  Layer 4
         Reinsurance Premium of X% of Subject Net Earned Premium.

         Layer 5 - If  the Company and all of its  Affiliated  Companies  exceed
         Plan, as per  the Determination of Exceeding Plan Definition in Article
         VI,  Section C., then  Layer 5  Reinsurance  Premium  shall equal X% of
         ceded  Subject  Ultimate  Net  Loss,  if any, to Layer 5,  subject to a
         maximum  Layer 5  Reinsurance  Premium  of  X% of  Subject  Net  Earned
         Premium.

         If the  Company  and all of its  Affiliated  Companies  are at or below
         Plan, as  per the Determination of Exceeding Plan Definition in Article
         VI.,  Section C., then Layer 5  Reinsurance  Premium  shall equal X% of
         ceded  Subject  Ultimate  Net Loss,  if any, to  Layer 5,  subject to a
         maximum  Layer 5  Reinsurance  Premium  of X% of  Subject   Net  Earned
         Premium.

         Layer 6 - Layer 6 Reinsurance  Premium shall equal X% of  ceded Subject
         Ultimate Net Loss,  if any, to Layer 6,  subject to a  maximum  Layer 6
         Reinsurance Premium of X% of Subject Net Earned Premium.

         All  Reinsurance  Layer  Premiums  shall be  calculated  quarterly,  60
         (sixty)  days  in  arrears   from  each   calendar   quarter  end.  All
         Reinsurance  Layer   Premiums  shall be  deemed  credited  to the Funds
         Withheld Account at January 1, 2001.

B.       Property  Catastrophe  Premiums  -  If  the  Company  and  all  of  its
         Affiliated   Companies  exceed  Plan,  as  per   the  Determination  of
         Exceeding Plan  Definition in  Article VI, Section C., then the Company
         shall pay to the Reinsurer a  Property  Catastrophe  Premium, by credit
         to the Funds  Withheld  Profit  Sharing  Account,  at  January 1, 2001.
         Property  Catastrophe  Premium  shall  equal the sum of  the results of
         applying the rates to the values in the following tables:


         1.        ERC Company Only                   Gross        Gross Maximum
                Subject Property Cat. UNL           Additional       Additional
                in excess of $X million              Premium           Premium
                 for ERC, in millions                 Rate           In Millions
                -------------------------           ----------     -------------
                 from           up to & including

                  $X       to       $X                  X%               $X
                  $X       to       $X                  X%               $X
                  $X       to       $X                  X%               $X
                  $X       to       $X                  X%               $X
                  $X       to       $X                  X%               $X
                  $X       to       $X                  X%               $X
                                                                         --
                  Total Maximum                                          $X
                                                                         ==



          plus


                                    Page 10
<PAGE>


          2.         Affiliated Companies
                      Property Cat. UNL                 Gross      Gross Maximum
                    in excess of $X million           Additional     Additional
                  for all Affiliated Companies         Premium         Premium
                         in millions                    Rate         In Millions
                  ----------------------------        ----------   -------------
                  from            up to & including

                  $X       to       $X                   X%              $X
                  $X       to       $X                   X%              $X
                  $X       to       $X                   X%              $X
                  $X       to       $X                   X%              $X
                  $X       to       $X                   X%              $X
                  $X       to       $X                   X%              $X
                                                                         --
                  Total Maximum                                          $X
                                                                         ==

                  The  amounts  for  Property  Catastrophe  Ultimate  Net Losses
                  shall,  for  purposes  of the above tables,  only include such
                  Property  Catastrophe   Ultimate   Net  Losses  in  excess  of
                  respective  plan   Ultimate  Net Losses that  are not excluded
                  from   Ultimate  Net  Losses  as  a  result  of  the  Property
                  Catastrophe  Ultimate  Net  Loss  Limitation   provision,  per
                  Article VI, Section E. For purposes of  applying  the Property
                  Catastrophe   Additional   Premium  rates,   should   Property
                  Catastrophe  Ultimate  Net Losses in excess of $X million plan
                  for the  combined  Company and its Affiliated  Companies when
                  added  to  Non-Property   Catastrophe   Subject  Ultimate  Net
                  Losses exceed the  Aggregate  Limit, the  ERC Company Property
                  Catastrophe  Ultimate  Net  Losses shall be  eliminated  first
                  giving  priority   to  the   Affiliated   Companies   Property
                  Catastrophe  Ultimate  Net  Losses  for  Property  Catastrophe
                  Ultimate  Net Losses and  the  Property   Catastrophe  Premium
                  table.

         Property   Catastrophe  Premiums  shall  be  calculated  quarterly,  60
         (sixty)  days  in arrears  from each  calendar  quarter  end.  Property
         Catastrophe  Premiums  shall  be deemed  credited to the Funds Withheld
         Account at January 1, 2001.

C.       Non-Property Catastrophe Ultimate Net Loss Premiums - The Company shall
         pay to the  Reinsurer,  via credit to the Funds Withheld Profit Sharing
         Account, at  January 1, 2001, a Non-Property  Catastrophe  Ultimate Net
         Loss  Premium  equal  to the  result of  applying  actual  Non-Property
         Catastrophe  Ultimate  Net  Losses  in excess of the plan  Non-Property
         Catastrophe  Ultimate  Net  Losses  in  respect  of GE  Frankona  only,
         against the rates in  the table below.  Plan  Non-Property  Catastrophe
         Ultimate  Net  Loss  shall  equal X% of GE  Frankona's  underlying  Net
         Earned  Premium (which is estimated to equal $X million). GE Frankona's
         Net Earned Premium shall be  gross of premiums in respect of their 2001
         accident year whole  account aggregate excess of loss coverage with the
         Company, but net of all other inuring reinsurances.

                                    Page 11

<PAGE>



                Extra Non-Property Cat
                 Ultimate Net Loss
            above the GE Frankona Plan                Gross         Incremental
                       from-to                       Premium       Gross Premium
                     In Millions                      Rate          In Millions
            --------------------------               -------       -------------
                from         up to & including

                $X   to    $X                           X%               $X
                $X   to    $X                           X%               $X
                $X   to    $X                           X%               $X
                $X   to    $X                           X%               $X
                $X   to    $X                           X%               $X
                $X   to    $X                           X%               $X
                                                                         --
                Total Maximum                                            $X
                                                                         ==

         Non-Property   Catastrophe   Ultimate   Net  Loss  Premiums   shall  be
         calculated  quarterly,  60 (sixty) days in  arrears from each  calendar
         quarter end.  Non-Property  Catastrophe  Ultimate Net Loss Premiums, if
         any, shall be deemed credited to the Funds  Withheld Account at January
         1, 2001.

D.       Special  Return  Premium - If  ceded  Subject Ultimate Net Loss is less
         than $X million,  then the  Company  is  entitled  to a Special  Return
         Premium.  The  Special  Return   Premium  is  payable  upon  the  final
         settlement  of  ceded  Subject   Ultimate   Net  Loss  or  Commutation,
         whichever  occurs earlier.  The Special  Return Premium is payable from
         the  Funds  Withheld   Profit  Sharing   Account  until  depleted   and
         thereafter  from other  funds of  the  Reinsurer.  The  Special  Return
         Premium shall be equal to the  result of subtracting  the product of X%
         of ceded  Subject  Ultimate  Net  Loss  from the  result  of  aggregate
         Reinsurance  Premiums  less  Ceding  Commissions  due  hereon  less the
         portion of  Reinsurer's  Margin due  as of January 1, 2001. The Special
         Return Premium may not be less than zero.

E.       Special Fee - The  Company  shall  pay  the Reinsurer a Special Fee, in
         addition  to all other  Premiums,  payable  at each  time when  Subject
         Ultimate  Net Losses are deemed paid via offset to the  Funds  Withheld
         Profit Sharing Account. The Special Fee shall equal the  Federal Excise
         Tax reimbursement rate, which would be applicable to  non-U.S.  (alien)
         reinsurers  subject to Federal  Excise Tax,  applied  to all respective
         Premiums  deemed paid,  via offset against  Subject  Ultimate  Net Loss
         settlements due from the Reinsurer.  Such Special Fee shall be  paid to
         the  Reinsurer  in cash  and  shall  not be  deducted  from  the  Funds
         Withheld Profit Sharing Account.

F.       Reinsurer's Margin - The Company  shall pay the Reinsurer a Reinsurer's
         Margin of $X million on January 1, 2001.

         In addition to the above, the Company shall pay the Reinsurer annually,
         a  Reinsurer's Margin equal to the result of multiplying X basis points
         by  the amount  which the ceded outstanding portion of Subject Ultimate
         Net  Loss  exceeds  the Funds  Withheld  Profit Sharing Account at each
         respective year end. Such Reinsurer's Margin shall be

                                    Page 12

<PAGE>


         paid by  March 31st of each succeeding  year. All Subject  Ultimate Net
         Loss  ceded  under  this  Agreement  shall be deemed  ceded in the 2001
         calendar  year, for purposes of  calculating  Reinsurer's  Margins that
         the Reinsurer  is entitled to. There shall be no interest in respect of
         such  Reinsurer's  Margin.  Such  Reinsurer's  Margin shall be deducted
         from the Funds Withheld Profit Sharing Account as of January 1, 2001.


                                   ARTICLE IX
                                   ----------

CEDING COMMISSION
-----------------

The  Reinsurer  shall  allow  the  Company  a Ceding  Commission  equal to X% of
Reinsurance  Layer  Premiums,  X% of  Property  Catastrophe  Premiums  and X% of
Non-Property  Catastrophe Subject Ultimate Net Loss Premiums.

Ceding  Commission  shall be  debited  from the Funds  Withheld  Profit  Sharing
Account as respective Premiums are credited.


                                    ARTICLE X
                                    ---------

MAINTENANCE FEES
----------------

If this  Agreement is not commuted on or before June 30, 2011,  then the Company
shall pay to the Reinsurer,  as per the table below, in addition to all Premium,
a $X million  Maintenance Fee payable at the beginning of each calendar  quarter
until this  Agreement is commuted.  Maintenance  Fees are payable in  accordance
with the following table:
<TABLE>
<CAPTION>


                                                                                Percentage of $X million
                                                                                   Maintenance Fee
                                            Percentage of $X million               Credited to the
                                                Maintenance Fee                    Funds Withheld
For the Entire Period:                       Paid to the Reinsurer:             Profit Sharing Account:
----------------------                       ----------------------             -----------------------
<S>                                                   <C>                                <C>
July 1, 2011 - June 30, 2012                           X%                                 X%
July 1, 2012 - June 30, 2013                           X%                                 X%
July 1, 2013 - June 30, 2014                           X%                                 X%
July 1, 2014 - June 30, 2015                           X%                                 X%
July 1, 2015 - June 30, 2016 & thereafter              X%                                 X%

</TABLE>


Notwithstanding the above, if the Company and its Affiliated Companies are at or
below  plan  for  Non-Property  Catastrophe  Ultimate  Net  Losses,  as per  the
Determination  of Exceeding Plan Definition in Article VI., Section C., then the
above  Maintenance  Fees shall not be paid to the  Reinsurer  or credited to the
Funds Withheld Profit Sharing Account.

                                    Page 13


<PAGE>



                                   ARTICLE XI
                                   ----------

CURRENCY
--------

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

Amounts paid or received by the Company in any other currency shall be converted
to United States Dollars at the rate of exchange at the date such transaction is
entered on the books of the Company.


                                   ARTICLE XII
                                   -----------

TAXES
-----

A.       In  consideration  of  the  terms under which this Agreement is issued,
         the  Company  undertakes  not to  claim any  deduction  of the  premium
         hereon when making  Canadian  tax  returns or when making tax  returns,
         other than income or profit tax  returns,  to any state or territory of
         the United States of America or to the District of Columbia.

B.       The  Company  shall  be  responsible for any and all Federal Excise Tax
         arising out of this  Agreement.  Such  Federal  Excise Tax shall not be
         considered premium or impact the Funds  Withheld Profit Sharing Account
         hereon.  Federal Excise Tax is only  applicable  in respect of non-U.S.
         Reinsurers  which are subject to Federal Excise  Tax. In such instance,
         the Company shall be liable for Federal Excise Tax.


                                  ARTICLE XIII
                                  ------------

ACCOUNTS, REMITTANCES AND LOSS SETTLEMENTS
------------------------------------------

A.       Within  60 (sixty)  days following  the  end  of each calendar quarter,
         beginning  with the quarter ending December 31, 2001, the Company shall
         report to the Reinsurer the amount of:

1.       Cumulative Subject Net Earned Premium;

2.       Cumulative Subject Ultimate Net Loss paid;

3.       Subject Ultimate Net Loss outstanding;

4.       Ceded Subject Ultimate Net Loss paid and incurred under this Agreement;


                                    Page 14
<PAGE>


5.       Reinsurance  Layer   Premiums,   Property   Catastrophe   Premiums  and
         Non-Property  Catastrophe  Ultimate  Net Loss Premiums calculations, in
         accordance with Article VIII;

6.       Funds  Withheld  Profit  Sharing  Account  calculations and balance, in
         accordance with Article XIII.

         Reports  shall  continue  until  final  settlement  of  all  losses  or
         Commutation, in accordance with Article XIX.

B.       Within  60  (sixty) days  following  the  end of each calendar quarter,
         beginning with the quarter ending  December 31, 2001, the Company shall
         report to the Reinsurer the amount of the following  by each Affiliated
         Company:

         1.     Net Earned Premium;

         2.     Paid  and  Outstanding,  including  Incurred  But  Not Reported,
                Property Catastrophe Ultimate Net Loss;

         3.     Paid  and  Outstanding,  including  Incurred  But  Not Reported,
                Non-Property Catastrophe Ultimate Net Loss;

         4.     Paid  and  Outstanding,  including  Incurred  But  Not Reported,
                Total Ultimate Net Loss;

         5.     Paid  and  Outstanding, including  Incurred  But  Not  Reported,
                Ultimate Net Loss ceded to the Company.

         Reports  shall  continue  until  final  settlement  of  all  losses  or
         Commutation, in accordance with Article XIX.

C.       The Company has the right to cede X dollars of any Subject Ultimate Net
         Loss under this Agreement.  However, should  the Company choose to cede
         Subject  Ultimate  Net Loss  herein,  it  must fully  cede all  Subject
         Ultimate Net Loss or cede Subject Ultimate Net  Loss in accordance with
         the paragraph below, in respect of Business Covered.

         The Company shall have the unilateral right to elect partial cession of
         ceded  Subject  Ultimate  Net  Loss  under  this   Agreement,  up  to a
         cumulative  amount of  partial  cession  equal  to X% of ceded  Subject
         Ultimate Net Loss.  Such cession shall  be on pro rata basis in respect
         of subject loss in excess of the  Retention.  Any cession or cumulative
         cession  of  Subject  Ultimate  Net  Loss in  excess  of X% of  Subject
         Ultimate Net Loss shall require the  cession of X% of Subject  Ultimate
         Net Loss.  The Company shall retain  net the  difference  between X% of
         otherwise  applicable  ceded   Subject  Ultimate  Net  Losses  and  the
         percentage elected for cession.
         Once the  Company has elected an Ultimate  Net Loss cession to be made,
         the Ultimate  Net Loss cession  shall only be reduced in the event that
         Subject  Ultimate  Net Loss  decreases by such amount for the reduction
         or by full or partial Commutation, as per Article XIX.

                                    Page 15

<PAGE>


D.       Remittance of  premium  amounts  shall be due and payable in accordance
         with Article VIII.

E.       Settlement of Subject Ultimate Net Loss paid in excess of the Retention
         shall be  made by the  Reinsurer  to the  Company  quarterly  within 30
         (thirty) days  of receipt of the report by the Reinsurer or 90 (ninety)
         days after  the end of the quarter,  whichever occurs later. Subject to
         the Reinsurer's  Aggregate  Limit,  settlement shall be made first from
         the  Funds  Withheld   Profit  Sharing  Account  until  depleted,   and
         thereafter from other funds of the Reinsurer.

F.       In  the  event of  a  material  Commutation  or  lump sum or structured
         settlement  of any  agreement  by  the  Company  which  results  in the
         payment of ceded Subject  Ultimate  Net Loss prior to the time required
         had such  event not  occurred,  then  the  Subject  Ultimate  Net Loss,
         Retention and ceded  Subject  Ultimate  Net Loss shall be determined as
         if such event had not occurred.

         For  purposes of  this  provision, any  one  Commutation or lump sum or
         structured  settlement  event  or  aggregate  of  these  events,  which
         accumulate to actual  payments  totaling $X or  more shall be deemed to
         be material.

         The analysis to determine  the Subject  Ultimate  Net Loss,  Retention,
         ceded  Subject  Ultimate Net Loss and payout  pattern  which would have
         occurred  will be  calculated  by the  Company  and  be  subject to the
         Reinsurer's  agreement.  If  the  Reinsurer  does  not  agree  with the
         Company's  calculations,  then  the  analysis  will be  performed by an
         independent  actuarial  firm  which  is  mutually  acceptable  to  both
         parties.  The Reinsurer and the Company will equally bear the  costs of
         such  analysis  and the results of such  analysis  shall be  binding in
         determining the Subject  Ultimate Net Loss,  Retention,  ceded  Subject
         Ultimate Net Loss and payout pattern.


                                   ARTICLE XIV
                                   -----------

FUNDS WITHHELD PROFIT SHARING ACCOUNT
-------------------------------------

The Company shall maintain a Funds Withheld Profit Sharing Account  comprised of
following cumulative amounts:

         1.     Reinsurance Layer Premiums; plus

         2.     Property Catastrophe Premiums; plus

         3.     Non-Property Catastrophe Ultimate Net Loss Premiums; plus

         4.     Maintenance Fees credited; less

         5.   Special Return Premiums; less

Page 16

<PAGE>


         6.   Reinsurer's Margin paid; less

         7.   Ceded Subject Ultimate Net Loss when due by the Reinsurer; less

         8.   Ceding Commission when due by the Reinsurer; less

         9.   Commutation settlement; plus

         10.   Interest Credit.

Reinsurance  Layer  Premiums,  Property  Catastrophe  Premiums and  Non-Property
Catastrophe Subject Ultimate Net Loss Premiums shall be deemed to be payable and
credited to the Funds Withheld  Profit Sharing Account as of January 1, 2001 for
Interest Credit purposes hereon.

The Company shall  calculate and report the balance of the Funds Withheld Profit
Sharing  Account to the  Reinsurer  within 60 (sixty)  days from the end of each
calendar quarter.


                                   ARTICLE XV
                                   ----------

INTEREST CREDIT
---------------

At the end of each calendar quarter, the Company shall credit the Funds Withheld
Profit Sharing  Account with an Interest  Credit  determined by multiplying  the
average daily balance of the Funds Withheld  Profit  Sharing  Account during the
preceding quarter by X% to achieve an effective X% annual yield.

Interest Credit shall continue even in the event of the Company's insolvency.


                                   ARTICLE XVI
                                   -----------

EXCESS OF POLICY LIMITS
-----------------------

A.       This Agreement  shall  protect  the  Company, within the limits hereof,
         for X% of loss in  excess  of the  limit of  its  original  Reinsurance
         Agreements  and insurance  policies,  such  loss in excess of the limit
         having  been  incurred  because of failure by  it to settle  within the
         Reinsurance  Agreement  or  insurance  policy  limit  or by  reason  of
         alleged or actual  negligence  or bad  faith in  rejecting  an offer of
         settlement or in the preparation of  the defense or in the trial of any
         action  against  its insured or  reinsured  or in  the  preparation  or
         prosecution of an appeal consequent upon such action.

         However, this  Article shall not apply where the loss has been incurred
         due to fraud  by a member  of the  board of  directors  or a  corporate
         officer of  the  Company  acting  individually  or  collectively  or in
         collusion  with any individual or corporation or any other organization
         or  party involved in the presentation,  defense,  or settlement of any
         claim covered hereunder.

                                    Page 17

<PAGE>


         For  the  purposes  of this  Article,  the word  "loss"  shall mean any
         amounts  for which the Company would have been contractually  liable to
         pay  had  it not  been  for  the  limit  of  the  original  Reinsurance
         Agreement or insurance policy.

B.       This Agreement shall protect the Company for X% of its share of loss in
         excess of  policy  limits  emanating  from the  underlying  policies or
         contracts   attaching  to  the  Company's  Reinsurance   Agreements  or
         insurance policies.


                                  ARTICLE XVII
                                  ------------

EXTRA CONTRACTUAL OBLIGATIONS
-----------------------------

A.       This Agreement shall protect the Company, within the limits hereof, for
         X% of  any Extra Contractual  Obligations.  The term "Extra Contractual
         Obligations"  is defined  as those  liabilities  not covered  under any
         other provision of the  Company's original  Reinsurance  Agreements and
         insurance  policies  and  which arise from the handling of any claim on
         Business Covered  hereunder,  such liabilities  arising because of, but
         not limited to, the following: failure  by the Company to settle within
         the Reinsurance  Agreement or insurance  policy limit, or  by reason of
         alleged or actual  negligence  or bad  faith in  rejecting  an offer of
         settlement or in the preparation of  the defense or in the trial of any
         action  against  its insured or  reinsured  or in  the  preparation  or
         prosecution of an appeal consequent upon such action.

         The date on which any Extra Contractual  Obligation  is incurred by the
         Company shall be deemed, in all  circumstances,  to be  the date of the
         original loss event.

         However, this Article shall not apply where the loss  has been incurred
         due to fraud by a member  of the  board  of  directors  or a  corporate
         officer of the  Company  acting  individually  or  collectively  or  in
         collusion with any individual or corporation or  any other organization
         or party  involved in the  presentation,  defense or  settlement of any
         claim covered hereunder.

B.       This Agreement shall protect the Company for X% of its share of Extra
         Contractual  Obligations  emanating  from  the  underlying  policies or
         contracts   attaching  to  the  Company's  Reinsurance   Agreements  or
         insurance policies.


                                  ARTICLE XVIII
                                  -------------

OFFSET
------

The Company or the Reinsurer  shall have and may exercise,  at any time and from
time to time, the right to offset any balance or balances  whether on account of
Reinsurance  Layer  Premiums,   Property  Catastrophe   Premiums,   Non-Property
Catastrophe  Ultimate  Net  Loss  Premium,   Special  Return  Premiums,   Ceding
Commissions,  Interest Credit or on account of ceded Subject Ultimate Net Losses
paid,  or  otherwise  any amounts  due from one party to the other party  hereto
under the terms of this Agreement.

Page 18

<PAGE>


                                   ARTICLE XIX
                                   -----------

COMMUTATION
-----------

A.       The  Company  shall  have  the  sole  option  to  fully   commute  this
         Agreement  at any calendar quarter end after the expiration of the Term
         of this  Agreement  subject to the balance of the Funds Withheld Profit
         Sharing  Account being greater than $X. Should the balance of the Funds
         Withheld  Profit  Sharing  Account  be  equal  to  or  below  $X,  then
         Commutation shall not be available.

          Upon the Company's election to commute, the Reinsurer shall pay to the
          Company the lesser of:

         1.     The  existing  value  of   the  Funds  Withheld  Profit  Sharing
                Account as of the Commutation date; or

         2.     The   present  value  of   ceded   Subject  Ultimate   Net  Loss
                outstanding  as of  the Commutation date, as determined  by  the
                Company.

         Such  payment,  together  with  any   Profit  Sharing   payment,  shall
         constitute a full  and final  settlement  of all  liability  under this
         Agreement, and the Reinsurer will  thereby be released from all current
         and future liability under this Agreement.

B.       The Company shall also have  the  right to elect Partial Commutation at
         any  calendar  quarter  end  after the  expiration  of the Term of this
         Agreement,  up to  a  cumulative  Commutation  of X% of  ceded  Subject
         Ultimate  Net Loss. Upon the Company's election of Partial Commutation,
         the Reinsurer shall pay the lesser of:

         1.     The existing value of the Funds Withheld Profit Sharing Account,
                calculated on a pro rated  basis, as of the  Partial Commutation
                date; or

         2.     The   present  value   of  ceded  Subject   Ultimate  Net   Loss
                outstanding, calculated  on  a pro rated basis, as determined by
                the Company.

         Cumulative  Partial  Commutation  in  excess  of  X% of  ceded  Subject
         Ultimate Net Loss shall require the Commutation of  X% of ceded Subject
         Ultimate Net Loss.

C.       Commutation  payments in accordance with this Article shall be deducted
         from the Funds Withheld Profit Sharing Account.

                                    Page 19
<PAGE>




                                   ARTICLE XX
                                   ----------

PROFIT SHARING
--------------

The Reinsurer  shall pay to the Company,  by debit to the Funds Withheld  Profit
Sharing  Account,  X% of the  residual  balance,  if any, of the Funds  Withheld
Profit Sharing Account upon final payment of ceded Subject  Ultimate Net Loss or
Commutation.  Payment  of  Profit  Sharing  shall  constitute  a full and  final
settlement of any  liability  under this  Agreement  and the Reinsurer  shall be
released from all current and future liability under this Agreement.


                                   ARTICLE XXI
                                   -----------

CHANGE IN ADMINISTRATIVE PRACTICES/CHANGE IN OWNERSHIP
------------------------------------------------------

The Company agrees not to materially change its claims handling  procedures,  or
procedures  for  payment  of  claims  in any  manner  from that in effect at the
inception of this  Agreement  which  materially  affects  this  Agreement or the
obligations of the parties hereunder,  unless the Company has received the prior
written  approval of the Reinsurer to such changes pursuant to the provisions of
this Article, such approval not to be unreasonably withheld.

In the event the Company changes its claims handling  procedures,  or procedures
for payment of claims or  experiences a change in  ownership,  the Company shall
notify the  Reinsurer  in writing of such  changes  and give the  Reinsurer  the
opportunity  to review such  changes and  determine  whether any  revisions  are
required to this  Agreement.  In the event the  Reinsurer  determines  that this
Agreement needs to be revised and the Company and the Reinsurer fail to agree on
acceptable changes within 60 (sixty) days of such determination,  an independent
actuarial  firm  shall be hired to  determine  the  Subject  Ultimate  Net Loss,
Allocated Loss  Adjustment  Expenses,  and/or Subject Net Earned Premium for the
purposes of this Agreement.

Furthermore,  in the event of an  administrative  or claims handling practice of
any insurance  contract or other  arrangement by the Company with one or more of
its  insureds or  reinsureds  which will have the effect,  in the opinion of the
Reinsurer,  of a material change in the anticipated settlement pattern of losses
hereunder,  then for purposes of settlement  hereunder,  losses  related to such
policies  shall be  reported  as  though  such  change  or  arrangement  had not
occurred.  Such determination shall be made with the concurrence of both parties
hereto,  subject to an  independent  actuarial  analysis if agreement  cannot be
reached.  The cost of any such actuarial work as hereinabove  specified shall be
shared equally by both parties.


                                  ARTICLE XXII
                                  ------------

ERRORS AND OMISSIONS
--------------------

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

                                    Page 20

<PAGE>



                                  ARTICLE XXIII
                                  -------------

ACCESS TO RECORDS
-----------------

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


                                  ARTICLE XXIV
                                  ------------

INSOLVENCY
----------

A.       In  the  event of  the  insolvency  of the Company,  reinsurance  under
         this Agreement  shall be payable by  the Reinsurer (on the basis of the
         liability  of  the  Company  under  the  policy or  policies  reinsured
         without  diminution  because of the insolvency of the Reinsurer) to the
         Company or to its liquidator, receiver, or statutory  successor, except
         as provided by section 4118A of the New York insurance law or except:

         1)     Where  the  Agreement  specifically  provides  another  payee of
                such reinsurance in the event of the insolvency of the  Company;
                and

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

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

C.       Should  the Company  go  into  liquidation  or  should  a  receiver  be
         appointed,  the  Reinsurer  shall be  entitled to deduct from any sums,
         which may be or may become due to  the  Company  under this  Agreement,
         any sums  which are due to the  Reinsurer  by  the  Company  under this
         Agreement  and which are payable at a fixed or  stated date, as well as
         any other  sums due the  Reinsurer  which  are  permitted  to be offset
         under applicable law.

                                    Page 21

<PAGE>



                                   ARTICLE XXV
                                   -----------

ARBITRATION
-----------

A.       As  a  condition  precedent to  any  right  of action hereunder, if any
         dispute  shall  arise  between  the  Company  and  the  Reinsurer  with
         reference  to  the  formation  or   validity  of  this  Agreement,  the
         interpretation  of this  Agreement or  their rights with respect to any
         transaction  involved,  whether  such  dispute  arises  before or after
         termination of this Agreement,  such  dispute, upon the written request
         of either party,  shall be submitted  to three  arbitrators,  one to be
         chosen by each  party,  and the  third by the two so chosen.  If either
         party refuses or neglects to  appoint an arbitrator  within 30 (thirty)
         days  after  the  receipt  of  written  notice  from  the  other  party
         requesting   it  to  do  so,  the  requesting  party  may  appoint  two
         arbitrators.  If  the two arbitrators fail to agree on the selection of
         a third arbitrator within  30 (thirty) days of their appointment,  each
         of them  shall  name  two,  of whom  each  shall  decline  one  and the
         decision shall be made by the  American  Arbitration  Association.  All
         arbitrators  shall   be  active  or  retired  disinterested   executive
         officers  of  insurance  or   reinsurance   companies   not  under  the
         management or control of either party to this Agreement.

B.       The arbitrators  are  relieved  of  all judicial  formalities  and  may
         abstain from  following  the strict rules of law; they shall make their
         award with a view to effecting  the general  purpose of this  Agreement
         in a  reasonable  manner  rather  than  in  accordance  with a  literal
         interpretation  of the  language.  Each  party shall submit its case to
         its arbitrator within 30 (thirty) days of  the appointment of the third
         arbitrator. The arbitrators shall render a  decision within 30 (thirty)
         days of  the close of the  arbitration  hearing.  The  arbitrators  are
         precluded  from  awarding  any treble,  punitive or exemplary  damages,
         however so denominated.

C.       The decision in  writing of  any two  arbitrators, when filed  with the
         parties hereto,  shall be final and binding on  both parties.  Judgment
         may be entered upon the final decision of the  arbitrators in any court
         having  jurisdiction.  Each party  shall  bear  the  expense of its own
         arbitrator and shall jointly and equally bear with  the other party the
         expense  of  the  third  arbitrator   and  of  the  arbitration.   Said
         arbitration  shall take  place in  Overland  Park,  Kansas  unless some
         other place is mutually agreed upon by the Company and the Reinsurer.


                                   ARTICE XXVI
                                   -----------

LOSS RESERVE FUNDING
--------------------

(This  Article  applies only to a Reinsurer who does not qualify for full credit
with any insurance  regulatory  authority having jurisdiction over the Company's
reserves.)

It is agreed  that when the  Company  files  with the  Insurance  Department  or
establishes  reserves for claims  covered and  unearned  premium  hereunder,  as
required by law, the Company shall forward to the Reinsurer a statement  showing
the proportion of such loss and unearned premium reserves which is applicable to
the Reinsurer.  The Reinsurer  hereby agrees to apply for and

Page 22
<PAGE>


secure delivery to the Company of a clean,  irrevocable and unconditional Letter
of Credit,  with a minimum term of one year,  that is issued or  confirmed,  and
presentable  and payable in the United States by any bank or trust company,  and
is in a format acceptable to the governmental authority having jurisdiction over
the Company's reserves, in an amount equal to the Reinsurer's proportion of such
loss and  unearned  premium  and  commission  reserves  which  exceed  the Funds
Withheld Profit Sharing Account balance.

The Company and the  Reinsurer  agree that the Letter of Credit  provided by the
Reinsurer  under this  provision may be drawn upon at any time,  notwithstanding
any other  provisions in this  Agreement,  including  without  limitation by any
liquidator,  rehabilitator,  receiver  or  conservator  of such  Company for the
following purposes:

       1)     to  reimburse  the  Company  for  the Reinsurer's share of Subject
              Ultimate  Net  Loss  paid  by  the  Company  under the Reinsurance
              Agreements reinsured under this Agreement and  which have not been
              otherwise paid;

       2)     to reimburse the Company for  the  Reinsurer's  share  of  premium
              returned  under  the  Reinsurance  Agreement  reinsured under this
              Agreement   on   account   of  cancellation  of  such  Reinsurance
              Agreements;

       3)     to  fund  an  account  with  the  Company  in  an  amount at least
              equal  to the deduction, for reinsurance ceded, from the Company's
              liabilities  for  amounts  ceded under this  Agreement.  Such cash
              deposits shall be  held in an interest  bearing  account  separate
              from  the  Company's  other  assets,  and interest  thereon  shall
              accrue  to  the  benefit  of  the  Reinsurer.  Such  amount  shall
              include,  but not be limited  to amounts for  reserves  for claims
              and losses incurred,  including  losses incurred but not reported,
              allocated loss adjustment expenses, and unearned premiums;

       4)     to  pay  any  other  amounts the Company claims are due under this
              Agreement;

       5)     to return any amounts drawn down on Letters of Credit in excess of
              the actual amounts required for (1), (2) and (3) above, or in case
              of (4) above, any amounts which are subsequently determined not to
              be due.

All of the foregoing should be applied without  diminution because of insolvency
on the part of the Company or the Reinsurer.

The designate bank shall have no  responsibility  whatsoever in connection  with
the  proprietary of withdrawals  made by the Company or the disposition of funds
withdrawn,  except  to see that  withdrawals  are made  only  upon the  order of
properly authorized representatives of the Company.

The  Company  agrees to pay the actual  costs of  obtaining  any such  Letter of
Credit for  amounts  up to, but not  exceeding,  X basis  points  times the time
weighted  annual  average  face amount of such Letter of Credit.  The  Reinsurer
shall provide  documentation of the charges from the bank or trust company which
issues  the Letter of Credit  and the  Company  shall have the option to pay the
bank or trust company directly or to reimburse the Reinsurer for such costs.

                                    Page 23
<PAGE>


                                  ARTICLE XXVII
                                  -------------

GOVERNING LAW
-------------

This  Agreement  shall  be  governed  as  to  performance,  administration,  and
interpretation by the laws of the State of New York, exclusive of the rules with
respect to  conflicts  of law, and except as to rules with respect to credit for
reinsurance  in which  case the  rules of all  applicable  states  shall  apply.
Notwithstanding the foregoing,  however,  this Article does not govern or affect
in any way the basis for any  decision or award of an  arbitration  panel acting
pursuant to the Article XXIII.


                                 ARTICLE XXVIII
                                 --------------

INTERMEDIARY
------------

Pegasus  Advisors  - Towers  Perrin  Reinsurance  is  hereby  recognized  as the
Intermediary   negotiating   this  Treaty  for  all  business   hereunder.   All
communications  (including  but not  limited to  notices,  statements,  premium,
return premium,  commissions,  taxes, losses, allocated loss adjustment expense,
salvages  and loss  settlements)  relating  hereto shall be  transmitted  to the
Company or the Reinsurer  through Pegasus Advisors - Towers Perrin  Reinsurance,
Forestal Centre, 175 Powder Forest Drive,  Weatogue,  CT 06089.  Payments by the
Company  to the  Intermediary  shall be  deemed  to  constitute  payment  to the
Reinsurer.  Payments by the  Reinsurer  to the  Intermediary  shall be deemed to
constitute  payment to the  Company  only to the extent that such  payments  are
actually received by the Company.

                                    Page 24


<PAGE>




                       INTERESTS AND LIABILITIES AGREEMENT

                                     To the

                                  WHOLE ACCOUNT
                      AGGREGATE EXCESS OF LOSS RETROCESSION
                              REINSURANCE AGREEMENT
                            Effective January 1, 2001

            (hereinafter referred to as the "Reinsurance Agreement")

                                     between

                        EMPLOYERS REINSURANCE CORPORATION

                   (hereinafter referred to as the "Company")

                                       and

             NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA

            (hereinafter referred to as the "Subscribing Reinsurer")





It is hereby  mutually  agreed that the  Subscribing  Reinsurer  shall have a X%
share in the interests and liabilities as set forth in the captioned Reinsurance
Agreement.  The share of the  Subscribing  Reinsurer shall be separate and apart
from the shares of the other reinsurers and shall not be joint with those of the
other reinsurers and the Subscribing  Reinsurer shall in no event participate in
the interests and liabilities of the other reinsurers.


In  Witness  Whereof,   the  parties  hereto  have  caused  this  Interests  and
Liabilities  Agreement  to be  signed in  triplicate  by their  duly  authorized
representatives.


Signed this   1   day of October, 2001,
For and on behalf of Employers Reinsurance Corporation

By:           Jeffrey J. Cooper
           ---------------------

Title:          Vice President
           ---------------------

<PAGE>




Signed this   27th   day of  September, 2001,
For and on behalf of National Union Fire Insurance Company of Pittsburgh, PA

By:           Robert J. Coords
           --------------------

Title:        Attorney-In-Fact
           --------------------