<PAGE>
                          FIRST WHOLE ACCOUNT AGGREGATE
                   EXCESS OF LOSS RETROCESSION AGREEMENT (E1)
                                       for
                        EMPLOYERS REINSURANCE CORPORATION










                            Effective January 1, 1997













                                  Prepared by:

                                BATES TURNER LLC
                           5200 Metcalf, P.O. Box 2959
                           Overland Park, Kansas 66201

                                   Telephones:
                                 (800) 465-8072
                                 (913) 676-5920

                                   Telecopier:
                                 (913) 676-5940


<PAGE>
                                    CONTENTS
                                    -------- 

                        EMPLOYERS REINSURANCE CORPORATION
                  FIRST WHOLE ACCOUNT AGGREGATE EXCESS OF LOSS
                           RETROCESSION AGREEMENT (E1)

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

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

      I     APPLICATION OF AGREEMENT..........................................1
     II     BUSINESS RETROCEDED...............................................1
    III     RETENTION AND RETROCESSION........................................2
     IV     RETROCESSIONAIRE RESERVE DETERMINATION..........................2-3
      V     DEFINITIONS.....................................................3-5
     VI     RETROCESSION PREMIUM AND ADJUSTMENT...............................5
    VII     EXPERIENCE ACCOUNT BALANCE........................................6
   VIII     LOSS SETTLEMENTS..................................................6
     IX     COMMUTATION AND EXPERIENCE REFUND...............................6-7
      X     COMMUTATION APPROVAL ON CORPORATION'S POLICIES....................7
     XI     EXPIRATION DURING LOSS............................................8
    XII     STOP LOSS (AGGREGATE) INCLUSION...................................8
   XIII     WARRANTY..........................................................8
    XIV     CURRENCY..........................................................8
     XV     ACCESS TO RECORDS.................................................9
    XVI     ERRORS AND OMISSIONS..............................................9
   XVII     TAXES.............................................................9
  XVIII     OFFSET............................................................9
    XIX     INSOLVENCY.......................................................10
     XX     ARBITRATION......................................................11
    XXI     NONWAIVER........................................................12
   XXII     INTERMEDIARY.....................................................12


<PAGE>
                  FIRST WHOLE ACCOUNT AGGREGATE EXCESS OF LOSS
                           RETROCESSION AGREEMENT (E1)
                           entered into by and between
                        EMPLOYERS REINSURANCE CORPORATION
                              Overland Park, Kansas
                     (hereinafter called the "Corporation")
                                       and
                           NATIONAL INDEMNITY COMPANY
                                 Omaha, Nebraska
                   (hereinafter called the "Retrocessionaire")

                            Effective January 1, 1997

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

WITNESSETH
----------

In  consideration  of the mutual  covenants  hereinafter  contained and upon the
terms and conditions hereinafter set forth, the parties hereto agree as follows:


                                    ARTICLE I
                                    ---------    

APPLICATION OF AGREEMENT
------------------------

This  Agreement  applies  to  all  in  force,  new  and  renewal  insurance  and
reinsurance  written by the Corporation,  as respects  occurrences  taking place
anywhere in the world at or after January 1, 1997, 12:01 a.m.,  Central Standard
Time, and prior to January 1, 1998, 12:01 a.m., Central Standard Time.


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

BUSINESS RETROCEDED
-------------------

This Agreement applies to all insurance and reinsurance  business written by the
Corporation  covering in respect of exposures worldwide,  including  reinsurance
assumed from  subsidiary  and/or  affiliate  companies,  excluding life business
written as such,  but not  excluding  death  benefits  under  accident or health
Policies or workers' compensation Policies.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                          Page 2


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

RETENTION AND RETROCESSION
--------------------------

The  Corporation  shall retain for its own account as its own net  retention all
Ultimate Net Loss in the aggregate incurred during the term of this Agreement in
respect of its Net Retained Liability up to and including the higher of either:

A)       an amount  equal to XX% of  Subject  Gross Net  Earned  Premium  Income
         (hereinafter "SGNEPI"), or

B)       the total  Ultimate Net Loss in the  aggregate  not exceeding an amount
         equal to XXX.X% of SGNEPI minus the limit ceded hereunder.

The  Retrocessionaire  shall  indemnify  the  Corporation  in respect of its Net
Retained  Liability for all Ultimate Net Loss in the aggregate  incurred  during
the term of this Agreement in excess of the Corporation's own net retention.

The Retrocessionaire's  annual limit of liability shall not exceed the lesser of
an amount equal to XX.XX% of SGNEPI, or $XXX,XXX,XXX.

Notwithstanding  the above,  the  liability  of the  Retrocessionaire  shall not
exceed the aggregate  amount of ceded Ultimate Net Loss incurred and reported by
the Corporation to the Retrocessionaire as of February 1, 1998.


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

RETROCESSIONAIRE RESERVE DETERMINATION
--------------------------------------

A)       The  Corporation  shall  determine  the  level  of total  reserves  for
         Ultimate Net Loss for the term of this Agreement and shall revise those
         reserves from time to time as  subsequent  events  require.  Should the
         Retrocessionaire  disagree with the reserves  posted by the Corporation
         for the term of this  Agreement,  the  Retrocessionaire  shall select a
         firm, acceptable to the Corporation,  to perform an independent reserve
         analysis.  In  the  event  the  Retrocessionaire   elects  to  have  an
         independent  reserve  analysis  conducted,  the loss settlement date on
         which the Corporation  seeks payment shall be delayed until  completion
         of the analysis, or six months past the loss settlement date, whichever
         first occurs. The results of the independent  reserve analysis shall be
         binding in establishing  the retention amount for this cover until such
         time as a subsequent study is conducted or the Retrocessionaire and the
         Corporation  mutually  agree to changes in the  retention.  The cost of
         such study  shall be borne by the  Retrocessionaire.  In no event shall
         the  retention  be  less  than  provided  under  Article  III  of  this
         Agreement.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                          Page 3


RETROCESSIONAIRE RESERVE DETERMINATION
--------------------------------------
(continued)

B)       If, subsequent to the  Retrocessionaire  making any payments under this
         Agreement,  the reserves for the term of this  Agreement are increased,
         either by action of the  Corporation or in accordance  with paragraph A
         of  this   Article,   then  the   Corporation   shall   refund  to  the
         Retrocessionaire  the excess  amount  paid by the  Retrocessionaire  as
         determined  using the  revised  retention,  if any,  plus the  Interest
         Credit calculated in accordance with this Article.  The Interest Credit
         is  payable  immediately  for the  number  of days  beginning  with the
         date(s) of premature  payment(s) by the  Retrocessionaire and ending at
         the  date  the   Retrocessionaire  is  reimbursed  for  such  premature
         payment(s) and/or paid the Interest Credit due.

C)       The  Interest  Credit  shall be the  average  of the three  month  U.S.
         Treasury Bill rate plus XXX basis points applied against the refund due
         to the Retrocessionaire.


                                    ARTICLE V
                                    ---------

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

As used in this Agreement:

A)       The term  "Ultimate Net Loss" shall mean the actual loss or losses paid
         or  payable  by  the   Corporation   in  settlement  of  claims  or  in
         satisfaction of awards or judgments (including prejudgment interest and
         plaintiff's  costs included in the judgment)  plus losses  Incurred But
         Not  Reported  (hereinafter  "IBNR") for all lines of business  covered
         under  this  Agreement,  subject  however  to an  aggregate  limit  for
         Catastrophe Losses (including  Catastrophe Losses from parental covers)
         of $XXX,XXX,XXX within such Ultimate Net Loss.

         Subject  to the  limits of this  Agreement,  "Ultimate  Net Loss"  also
         includes  Loss  In  Excess  Of  Policy  Limits  and  Extra  Contractual
         Obligations  losses which are incurred as a result of the Corporation's
         participation  in any Original Policy which provides  coverage for such
         losses,  on the condition that the  Corporation  has, in advance of any
         conduct by the Original  Insured in connection with the  investigation,
         trial or  settlement of any claim or failure to pay or delay in payment
         of any benefits under any Original Policy,  counseled with the Original
         Insured and concurred in the Original Insured's course of conduct.

         The amount of loss paid or payable by the Corporation shall include all
         claim expenses covered under the Original Policy, but shall not include
         the  Corporation's   own  claim  expenses.   Salvages  and  recoveries,
         including recoveries under all other reinsurances, whether collected or
         not,  are to be first  deducted  from the  amount  of the loss  paid or
         payable  to  arrive  at the  amount  of  liability,  if any,  attaching
         hereunder.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                          Page 4


DEFINITIONS
-----------
(continued)

B) The term "Extra Contractual Obligations" shall mean:

         1)       Eighty   percent  of  any  amount   paid  or  payable  by  the
                  Corporation in excess of its Policy limits  (limited to within
                  the limit of this Agreement however), but otherwise within the
                  terms of its  Policy  (hereinafter  called  "Loss In Excess Of
                  Policy  Limits"),  as a result of an action  against it by its
                  Insured,  or its Insured's  assignee,  to recover  damages the
                  Corporation  is  legally  obligated  to  pay  because  of  the
                  Corporation's  alleged  or actual  negligence  or bad faith in
                  rejecting  a  settlement  within  its  Policy  limits,  or  in
                  discharging  its duty to defend or prepare  the defense in the
                  trial of any action against its Insured, or in discharging its
                  duty to prepare or prosecute an appeal consequent upon such an
                  action.

         2)       Eighty  percent of any punitive,  exemplary,  compensatory  or
                  consequential  damages  (limited  to within  the limit of this
                  Agreement  however),  other  than  Loss In  Excess  Of  Policy
                  Limits,  paid or payable by the  Corporation as a result of an
                  action against it by its Insured, its Insured's assignee, or a
                  third party claimant,  which action alleges  negligence or bad
                  faith on the part of the Corporation in handling a claim under
                  a Policy subject to this Agreement.

         The term "Extra  Contractual  Obligations" shall not include any amount
         paid or payable by the Corporation  where such amount has been incurred
         by the  Corporation  due to the  fraud  of a  member  of the  board  of
         directors, a corporate officer of the Corporation or any other employee
         with claims settlement  authority,  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.

C)       The term "Net Retained Liability" shall mean that portion of any Policy
         which  the  Corporation  retains  net  for  its  own  account,  and  in
         calculating  the amount of Ultimate  Net Loss  hereunder,  only loss in
         respect of that portion of any Policy which the Corporation retains net
         for its own account shall be included.

         The amount of the  Retrocessionaire's  liability  under this  Agreement
         shall not be increased by reason of the inability of the Corporation to
         collect  from  any  other  Retrocessionaire(s),   whether  specific  or
         general,   any   amounts   which   may  have   become   due  from  such
         Retrocessionaire(s),  whether such inability arises from the insolvency
         of such other Retrocessionaire(s) or otherwise.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                          Page 5


DEFINITIONS
-----------
(continued)

D)       The term "Subject  Gross Net Earned  Premium  Income" or "SGNEPI" shall
         mean the  Corporation's  subject  gross  premium  income  written  less
         premiums paid for  cancellations  and reductions of rates and for other
         reinsurance carried by the Corporation, recoveries under which inure to
         the  benefit of this  Agreement,  plus the subject  gross net  unearned
         premium  at the  beginning  of the  term,  less the  subject  gross net
         unearned  premium at the end of the term,  said unearned  premium being
         calculated on a monthly pro rata basis.

E)       The term  "Catastrophe  Losses" shall mean property  losses recorded by
         the Corporation  which involve two or more Policies and total more than
         $X,XXX,XXX of incurred loss net of inuring protection(s).

F)       The  unqualified  term  "Policy"  shall  mean  all  binders,  policies,
         certificates,  agreements,  treaties,  bonds or contracts of insurance,
         reinsurance or retrocession  accepted or held covered  provisionally or
         otherwise underwritten by the Corporation.

G)       The term  "Original  Policy"  shall mean the  initial  binder,  policy,
         certificate,   agreement,   bond  or  contract  of  insurance  that  is
         subsequently reinsured.

H)       The  unqualified  term  "Insured"  when used as a noun  shall  mean the
         person who obtained or is otherwise  covered by insurance issued by the
         Corporation,  or  the  reinsured  who  obtained  reinsurance  from  the
         Corporation,  or the  retrocedent  who obtained  retrocession  from the
         Corporation, as the context so requires.

I)       The term  "Original  Insured"  shall mean the entity who obtained or is
         otherwise  covered  by  insurance  that is  subsequently  reinsured  or
         retroceded under this Agreement.


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

RETROCESSION PREMIUM AND ADJUSTMENT
-----------------------------------

A minimum and deposit  premium of $XX,XXX,XXX is due in 1997 in equal  quarterly
installments of $XX,XXX,XXX each at January 1, April 1, July 1, and October 1.

The retrocession  premium shall be an amount equal to the amount of Ultimate Net
Loss ceded under this Agreement as reported by the Corporation as of February 1,
1998, divided by (X + i)X, where i is the yield on the bond maturing on February
15, 20XX as of February 15, 1998. The retrocession  premium,  after deduction of
the minimum and deposit  premium  previously  paid,  shall be due and payable on
February 15, 1998.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                          Page 6


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

EXPERIENCE ACCOUNT BALANCE
--------------------------

The  Retrocessionaire  shall calculate a notional  Experience Account Balance at
the end of each quarter year until  expiration of all of the  Retrocessionaire's
obligations under this Agreement. The Experience Account Balance shall equal:

  The minimum and deposit premium received by the Retrocessionaire at inception
                                less $XX,XXX,XXX
                                      plus
     XX% of the retrocession premium due hereon, if any, at February 1, 1998
                                      plus
          interest credited by applying the average of the three-month
            U.S. Treasury Bill rate less XX basis points against the
          Experience Account Balance for the quarter, calculated daily
                                      less
         Ultimate Net Loss paid by the Retrocessionaire for the quarter.

The "average of the three-month U.S.  Treasury Bill rate" shall equal the sum of
the three rates as published in the Wall Street Journal on the last business day
of each month in the quarter, divided by three.


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

LOSS SETTLEMENTS
----------------

The Corporation shall report quarterly to the  Retrocessionaire  the development
of the incurred  Ultimate Net Loss ceded by a report  showing in summary  format
the  percentage  and dollar amount of Ultimate Net Loss for the term, as advised
at February 1, 1998, which has been paid by the Corporation. At such time as the
amount of paid Ultimate Net Loss exceeds the retention under this Agreement, the
Retrocessionaire  shall  reimburse the  Corporation by payment within 60 days of
the advice of amounts becoming due.


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

COMMUTATION AND EXPERIENCE REFUND
---------------------------------

This Agreement may be commuted at the Corporation's  sole option in the event of
no Ultimate Net Loss being ceded  hereunder by giving 90 days advance  notice at
any time of its intent to so commute after  expiration of the term. In the event
of ceded Ultimate Net Loss  hereunder,  the  Corporation  may still, at its sole
option,  commute by giving 90 days advance notice, but not prior to December 31,
2007.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                          Page 7


COMMUTATION AND EXPERIENCE REFUND
---------------------------------
(continued)

If at the time of  commutation  the amount of unpaid  Ultimate  Net Loss is less
than or equal to the Experience Account Balance, the Retrocessionaire  agrees to
pay all unpaid Ultimate Net Loss as of the date of commutation.

If at the time of commutation  the amount of unpaid Ultimate Net Loss is greater
than the  Experience  Account  Balance,  the unpaid  Ultimate  Net Loss shall be
commuted at an amount to be mutually agreed. If mutual agreement is not reached,
then no commutation shall be permitted.

In the event that unpaid  Ultimate  Net Loss is commuted,  the  Retrocessionaire
agrees to pay an  experience  refund equal to the positive  difference,  if any,
between the Experience Account Balance and the commuted value of unpaid Ultimate
Net Loss.

Payment by the Retrocessionaire of the commuted unpaid Ultimate Net Loss and the
experience  refund, if any, shall constitute a complete and final release of the
Retrocessionaire in respect of its obligations under this Agreement.

Any amount due to the  Corporation  as calculated  above shall be payable by the
Retrocessionaire within 30 days following the date of commutation.


                                    ARTICLE X
                                    ---------

COMMUTATION APPROVAL ON CORPORATION'S POLICIES
----------------------------------------------

In the event of a commutation of any Policy resulting in the payment of Ultimate
Net  Loss  in  excess  of  $X,XXX,XXX  prior  to the  time  required  under  the
Corporation's Policies for the term of this Agreement,  then the retention under
this Agreement shall be determined as if such  commutation or other  arrangement
had not occurred. The analysis to determine both the ultimate reserve amount and
the payout pattern which would have occurred on a commuted Policy shall,  unless
waived  in  writing  by  the  Retrocessionaire,  be  made  on  the  basis  of an
independent reserve analysis. The Retrocessionaire will select a firm acceptable
to the Corporation to conduct the analysis.  The Retrocessionaire shall bear the
cost of such  analysis  and the  results  of such  analysis  shall be binding in
determining  the  ultimate  reserve  amount and payout  pattern for the commuted
reinsurance contract.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                          Page 8


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

EXPIRATION DURING LOSS
----------------------

(This article applies only to property insurance and reinsurance.)

If this Agreement expires while an occurrence  covered hereunder is in progress,
the Retrocessionaire's liability hereunder shall, subject to the other terms and
conditions of this  Agreement,  be determined  as if the entire  occurrence  had
taken place prior to the expiration of this Agreement,  provided that no part of
such occurrence is claimed against any renewal or replacement of this Agreement.


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

STOP LOSS (AGGREGATE) INCLUSION
-------------------------------

All  aggregate  Policies  coming  within  the scope of this  Agreement  shall be
covered on a risks  attaching  basis  rather  than on an  occurrence  basis.  An
aggregate  Policy issued for a period of more than 12 months shall be considered
as  attaching  at each  anniversary  date of such Policy while such Policy is in
force.


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

WARRANTY
--------

The  Corporation  shall not introduce  any change in its  generally  established
practices, including but not limited to accounting,  acceptance and underwriting
policies,  in respect of the  business  which is the  subject of this  Agreement
without the prior approval of the Retrocessionaire,  and such approval shall not
be unreasonably withheld by the Retrocessionaire.  The Corporation  specifically
warrants  that it will not change its gross line guide nor  inuring  protections
without  prior  advice  to and  approval  from  the  Retrocessionaire,  and such
approval shall not be unreasonably withheld by the Retrocessionaire.


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

CURRENCY
--------

All  financial  transactions  contemplated  by this  Agreement  shall  be in the
currency of the United States of America.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                          Page 9


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

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

At any reasonable time, the  Retrocessionaire or its designated  representatives
shall have free access to all records of the  Corporation  which pertain to this
Agreement.


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

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

Any inadvertent delays,  omissions or errors shall not be held to relieve either
party  hereto from any  liability  which would  attach to it  hereunder  if such
delay,  omission or error had not been made,  provided  such delay,  omission or
error is rectified  upon  discovery,  and does not impose any greater  liability
upon the other party than would have attached  hereunder if the delay,  omission
or error had not occurred.


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

TAXES
-----

In  consideration  of the terms under which this  Agreement is entered into, the
Corporation  will not claim a deduction  in respect of the  premium  hereon when
making tax returns,  other than income or profits tax  returns,  to any state or
territory of the United  States of America,  the District of Columbia or Canada,
and the  Corporation  will be liable for payment of all premium taxes on premium
ceded under this Agreement.


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

OFFSET
------

The  Corporation  and the  Retrocessionaire  shall  have the right to offset any
balance(s) due from one to the other under this  Agreement.  The party asserting
the right of offset may exercise such right any time whether the  balance(s) due
are on  account  of  premiums  or  losses  or  otherwise.  In the  event  of the
insolvency  of a party hereto,  offset shall only be allowed in accordance  with
the provision of Section 7427 of the Insurance Law of the State of New York.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                         Page 10


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

INSOLVENCY
----------

In the event of the insolvency of the Corporation,  the retrocession  under this
Agreement  shall be payable  directly to the  Corporation or to its  liquidator,
receiver,  conservator  or statutory  successor on the basis of the liability of
the Corporation  without diminution because of the insolvency of the Corporation
or because the liquidator,  receiver,  conservator or statutory successor of the
Corporation  has  failed to pay all or a portion  of any  claim.  It is  agreed,
however,  that the liquidator,  receiver,  conservator or statutory successor of
the  Corporation  shall  give  written  notice  to the  Retrocessionaire  of the
pendency of a claim  against the  Corporation  indicating  the Policy  reinsured
which  claim   would   involve  a  possible   liability   on  the  part  of  the
Retrocessionaire  within a  reasonable  time  after  such  claim is filed in the
conservation or liquidation  proceeding or in the receivership,  and that during
the pendency of such claim, the  Retrocessionaire may investigate such claim and
interpose,  at its own  expense,  in the  proceeding  where  such claim is to be
adjudicated,  any  defense  or  defenses  that  it  may  deem  available  to the
Corporation or its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the  Retrocessionaire  shall be chargeable,  subject to
the approval of the Court,  against the  Corporation  as part of the expenses of
conservation  or  liquidation  to the extent of a pro rata share of the  benefit
which may accrue to the Corporation solely as a result of the defense undertaken
by the Retrocessionaire.

Where  two or more  Retrocessionaires  are  involved  in the  same  claim  and a
majority in interest elect to interpose defense of such claim, the expense shall
be  apportioned  in accordance  with the terms of this  Agreement as though such
expense had been incurred by the Corporation.

It is further  understood and agreed that, in the event of the insolvency of the
Corporation,  the retrocession under this Agreement shall be payable directly by
the  Retrocessionaire  to  the  Corporation  or  to  its  liquidator,  receiver,
conservator or statutory successor, except as provided by Section 4118(a) of the
New York Insurance Law or except (a) where the Agreement  specifically  provides
another  payee  of such  retrocession  in the  event  of the  insolvency  of the
Corporation  and (b) where the  Retrocessionaire  with the consent of the direct
Insured or Insureds has assumed such Policy  obligations  of the  Corporation as
direct obligations of the Retrocessionaire to the payees under such Policies and
in substitution for the obligations of the Corporation to such payees.


<PAGE>
                                               Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                         Page 11


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

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

As a condition  precedent to any right of action hereunder,  any dispute arising
out of  this  Agreement  shall  be  submitted  to the  decision  of a  board  of
arbitration composed of two arbitrators and an umpire, meeting in Overland Park,
Kansas,   unless   otherwise   mutually   agreed  by  the  Corporation  and  the
Retrocessionaire.

The members of the board of arbitration shall be active or retired disinterested
officials of insurance or reinsurance  companies,  or  underwriters  at Lloyd's,
London.  Each party shall appoint its arbitrator and the two  arbitrators  shall
choose an umpire before instituting the hearing.  In the event that either party
should fail to choose an arbitrator  within 30 days following a written  request
by the other party to enter upon  arbitration,  the requesting  party may choose
two  arbitrators  who  shall in turn  choose  an  umpire  before  entering  upon
arbitration.  In the event the two arbitrators fail to agree on an umpire either
party  shall  have the right to submit the  matter to the  American  Arbitration
Association  in effect at that  time to name an  umpire in  accordance  with the
qualifications provided hereinabove.

Each party shall present its case to the  arbitrators  within 60 days  following
the date of their appointment.  The board shall make its decision with regard to
the custom and usage of the insurance and reinsurance business.  The board shall
issue its  decision  in writing  based upon a hearing in which  evidence  may be
introduced  without  following  strict  rules of  evidence  but in  which  cross
examination  and  rebuttal  shall be allowed.  The board shall make its decision
within 60 days  following  the  termination  of the hearings  unless the parties
consent to an extension.  The majority  decision of the board shall be final and
binding upon all parties to the proceeding.  Judgment upon the final decision of
the board may be entered in any court of competent jurisdiction.

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

Each party shall bear the expense of its own  arbitrator  and shall  jointly and
equally  bear with the other party the expense of the umpire.  In the event both
arbitrators  are chosen by one party,  the  expense of the  arbitrators  and the
umpire shall be jointly and equally  borne  between the parties.  The  remaining
costs of the arbitration proceedings shall be allocated by the board.

This Article shall survive the termination of this Agreement.


<PAGE>
                                              Employers Reinsurance Corporation
                          First Whole Account Aggregate XOL Retro Agreement (E1)
                                                                         Page 12


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

NONWAIVER
---------

The failure of the Corporation or the  Retrocessionaire  to insist on compliance
with this  Agreement  or to  exercise  any right or remedy  hereunder  shall not
constitute a waiver of any rights or remedies  contained herein, nor stop either
party from thereafter  demanding full and complete compliance nor prevent either
party from exercising such rights or remedies in the future.


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

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

Bates  Turner LLC is hereby  recognized  as the  Intermediary  negotiating  this
Agreement for business hereunder. All communications (including, but not limited
to, notices, statements,  premiums, return premiums, commissions, taxes, losses,
loss adjustment expenses,  salvages and loss settlements)  relating hereto shall
be transmitted to the Corporation or the  Retrocessionaire  through Bates Turner
LLC, 5200 Metcalf,  P.O. Box 2959, Overland Park, Kansas, 66201. Payments by the
Corporation to the Intermediary shall constitute payment to the Retrocessionaire
to  the  extent  of  such  payments.  Payments  by the  Retrocessionaire  to the
Intermediary shall only constitute payment to the Corporation to the extent that
such payments are actually received by the Corporation.


IN WITNESS  WHEREOF,  the parties hereto by their duly authorized  officers have
executed this Agreement in triplicate.

At Overland Park, Kansas, this 1st day of May, 1997.
                               ---        ---

EMPLOYERS REINSURANCE CORPORATION

By:        /s/ Hoyt H. Wood, Jr.
   --------------------------------------

Attest:    /s/ Jane R. Gruschka 
       ----------------------------------

At Stamford, Connecticut, this 20th day of June, 1997.
                               ----        ----

NATIONAL INDEMNITY COMPANY
     Per Berkshire Hathaway Group

By:        /s/ John Arendt
   --------------------------------------

Attest:    /s/ Brian Garrison
       ----------------------------------