<PAGE>
                         SECOND WHOLE ACCOUNT AGGREGATE
                   EXCESS OF LOSS RETROCESSION AGREEMENT (E2)
                                       for
                        EMPLOYERS REINSURANCE CORPORATION








                            Effective January 1, 2000


(Certain  portions of this Exhibit have been omitted and filed  separately  with
the Securities and Exchange  Commission  pursuant to a request for  confidential
treatment)




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

                        EMPLOYERS REINSURANCE CORPORATION
                  SECOND WHOLE ACCOUNT AGGREGATE EXCESS OF LOSS
                           RETROCESSION AGREEMENT (E2)

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

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

      I     APPLICATION OF AGREEMENT...........................................1
     II     BUSINESS RETROCEDED................................................1
    III     RETENTION AND RETROCESSION.........................................2
     IV     EXTENDED REPORTING DATE OPTION.....................................2
      V     RETROCESSIONAIRE RESERVE DETERMINATION.............................3
     VI     DEFINITIONS......................................................3-6
    VII     RETROCESSION PREMIUM AND ADJUSTMENT................................6
   VIII     EXPERIENCE ACCOUNT BALANCE.......................................6-7
     IX     LOSS SETTLEMENTS...................................................7
      X     COMMUTATION AND EXPERIENCE REFUND..................................8
     XI     COMMUTATION APPROVAL ON CORPORATION'S POLICIES.....................8
    XII     EXPIRATION DURING LOSS.............................................9
   XIII     STOP LOSS (AGGREGATE) INCLUSION....................................9
    XIV     WARRANTY........................................................9-12
     XV     CURRENCY..........................................................12
    XVI     ACCESS TO RECORDS.................................................12
   XVII     ERRORS AND OMISSIONS..............................................12
  XVIII     TAXES.............................................................13
    XIX     OFFSET............................................................13
     XX     INSOLVENCY.....................................................13-14
    XXI     ARBITRATION....................................................14-15
   XXII     NONWAIVER.........................................................15
  XXIII     INTERMEDIARY......................................................15
   XXIV     PARTICIPATION AND SIGNATURES......................................16


<PAGE>
                  SECOND WHOLE ACCOUNT AGGREGATE EXCESS OF LOSS
                           RETROCESSION AGREEMENT (E2)
                           entered into by and between
                        EMPLOYERS REINSURANCE CORPORATION
                              Overland Park, Kansas
                     (hereinafter called the "Corporation")
                                       and
               the Retrocessionaire specifically identified on the
                         signature page attached hereto
                   (hereinafter called the "Retrocessionaire")

                            Effective January 1, 2000

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

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, 2000, 12:01 a.m.,  Central Standard
Time, and prior to January 1, 2001, 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 and reinsurance assumed from
the  Corporation's  membership in any underwriting  association,  excluding life
business  written as such,  but not excluding  death  benefits under accident or
health Policies or workers' compensation Policies.


<PAGE>
                                                                          Page 2


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

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

The  Corporation  shall  retain for its own  account  as its own net  retention,
subject  to the  First  Whole  Account  Aggregate  Excess  of Loss  Retrocession
Agreement (E1), 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
an amount equal to XX% of Subject Gross Net Earned Premium  Income  (hereinafter
"SGNEPI") or $X,XXX,XXX,XXX, whichever is greater.

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,  up
to:

A)       an amount equal to the first X.XX% of SGNEPI  excess of an amount equal
         to XX% of SGNEPI  provided that the total Ultimate Net Loss incurred by
         the  Corporation  exceeds an amount equal to XXX.XX% of SGNEPI and that
         the First Whole Account Aggregate Excess of Loss Retrocession Agreement
         (E1) does not  provide  protection  for an amount  equal to this  first
         X.XX% of SGNEPI, and

B)       an amount  equal to  XX.XX% of SGNEPI  excess of the  sum of an  amount
         equal to XXX.XX% of SGNEPI plus the amount recoverable under Part A  of
         this Article III.

The  Retrocessionaire's  annual  limit of  liability  in respect of Part A above
shall  not  exceed  the  lesser  of an  amount  equal  to X.XX%  of  SGNEPI,  or
$XXX,XXX,XXX;  nor shall the  Retrocessionaire's  annual  limit of  liability in
respect  of Part A and Part B above,  combined,  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, 2001 or such alternate
date as established by the Corporation under the Extended Reporting Date Option.


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

EXTENDED REPORTING DATE OPTION
------------------------------

At the sole  option  of the  Corporation,  on or before  February  1,  2001,  by
providing written notice to the  Retrocessionaire,  the Corporation may elect to
establish an alternate  date of not later than June 1, 2002,  for  reporting the
aggregate   amount  of  ceded   ultimate   net  loss   incurred  for  which  the
retrocessionaire shall be liable (hereinafter the "Alternate Date").


<PAGE>
                                                                          Page 3


                                    ARTICLE V
                                    ---------

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 reserve  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 reserves. The cost of such
         study shall be borne by the Retrocessionaire.

B)       If, subsequent to the  Retrocessionaire  making any payments under this
         Agreement,  the reserves for the term of this  Agreement are decreased,
         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 reserves, 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)
         such excess amounts were paid by the Retrocessionaire and ending at the
         date the  Retrocessionaire  is  reimbursed  for such excess amount paid
         and/or is 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 VI
                                   ----------

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 the following  limits within
         such Ultimate Net Loss:

         1)       an   aggregate   limit   for   all   Catastrophe   Losses   of
                  $X,XXX,XXX,XXX  ($XXX,XXX,XXX  with respect to recoveries  due
                  under Part A of Article III);


<PAGE>
                                                                          Page 4


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

         2)       an aggregate sublimit for Catastrophe Losses occurring outside
                  of  the  United  States  of  America,   its   territories  and
                  possessions and Canada of $XXX,XXX,XXX; and

         3)       a per occurrence limit as respects occurrences taking place on
                  or  after  January  1,  2000  and  prior  to July 1,  2000  of
                  $X,XXX,XXX,XXX ($XXX,XXX,XXX  with  respect  to recoveries due
                  under  Part  A  of  Retention  and  Retrocession), and  a  per
                  occurrence limit as  respects occurrences  taking  place on or
                  after  July  1,  2000  and   prior  to   January  1,  2001  of
                  $XXX,XXX,XXX  with respect to recoveries due under  Part A  of
                  Retention and Retrocession).

         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.

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.


<PAGE>
                                                                          Page 5


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

         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, however gross of
         recoveries from the underlying First Whole Account  Aggregate Excess of
         Loss  Retrocession  Agreement  (E1), 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.

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.


<PAGE>
                                                                          Page 6


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

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 VII
                                   -----------

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

A minimum  and deposit  premium of  $XX,XXX,XXX  is due in 2000 as follows:  the
first  installment of $XX,XXX,XXX at January 1, and  installments  of $X,XXX,XXX
each at April 1, July 1 and  October  1. The  retrocession  premium  for Part A,
Retention  and  Retrocession,  shall be an amount  equal to XX% of the amount of
Ultimate Net Loss ceded and for Part B, Retention and  Retrocession  shall be an
amount  equal to XX% of the  amount  of  Ultimate  Net  Loss  ceded  under  this
agreement  as  reported  by the  Corporation  as of  February  1,  2001,  or the
Alternate Date.

The  retrocession  premium,  after  deduction of the minimum and deposit premium
previously  paid,  shall be due at February 15, 2001, or the Alternate  Date. In
addition to such retrocession premium,  there shall be an amount paid reflecting
an interest accrual from February 15, 2001 to the Alternate Date, if applicable,
at the rate of X.XXX% per  quarter  which  shall be applied to such  reinsurance
premium.

The Corporation shall pay to the Retrocessionaire $XX,XXX,XXX of the minimum and
deposit  premium  at  January 1, 2000.  The  balance of all  premium,  including
retrocession  premium due February 15,  2001,  if any,  shall be withheld by the
Corporation in an Experience Account for the purpose of subsequent loss payments
and profit sharing.


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

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

The Corporation 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.  At January 1, 2000 the  Experience  Account
Balance shall be zero. The Experience Account Balance thereafter shall equal:


<PAGE>
                                                                          Page 7


EXPERIENCE ACCOUNT BALANCE (continued)
--------------------------------------

         The Experience Account Balance at the inception of the quarter
      plus the minimum and deposit premium, if any, due during the quarter
              less $XX,XXX,XXX and Federal Excise Tax, if applicable
      plus the retrocession premium due hereon, if any, during the quarter
                     less Federal Excise Tax, if applicable
     plus interest credited by applying a rate of X.XXX% against the average
      positive Experience Account Balance for the quarter, calculated daily
          less the Spread paid to the Retrocessionaire for the quarter
      less Ultimate Net Loss paid by the Retrocessionaire for the quarter.

"Spread" shall mean the amount equal to the following percentages of the average
positive  Experience  Account  Balance  for the  quarter  during  the  following
calendar years, respectively:

       A)   X.XX% during calendar year 2000;

       B)   X.XX% during calendar years 2001, 2002 and 2003;

       C)   X.XXX% during calendar years 2004, 2005 and 2006; and

       D)   X.XX% during calendar year 2007 and all calendar years thereafter.

If the  Ultimate  Net Loss  exceeds  XXX% of SGNEPI,  there  shall be a pro rata
increase in the Spread of X.X% for each  percentage  point increase over XXX% of
SGNEPI,  subject to a maximum  Spread of X.X% per calendar  year.  The increased
Spread shall be per year, starting in calendar year 2001.

At the option of the  Retrocessionaire,  the accrued Spread shall be paid to the
Retrocessionaire at the end of any quarter in cash or withheld in the Experience
Account.


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

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,  2001,  or the  Alternate  Date,  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  for such paid  Ultimate  Net Loss by payment  within 30 days of the
advice of  amounts  becoming  due.  To the  extent  the  Experience  Account  is
sufficient,  the Retrocessionaire may reimburse the Corporation by consenting to
the  Corporation  retaining for its own account from the Experience  Account the
amount of such paid Ultimate Net Loss.

Notwithstanding the above, the Retrocessionaire  shall have no obligation to pay
any part of any loss which  would cause the  Experience  Account to be less than
the product of negative XX% and the total premium ceded.


<PAGE>
                                                                          Page 8


                                    ARTICLE X
                                    ---------

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

This  Agreement  may be commuted at the  Corporation's  sole option by giving 90
days  advance  written  notice  at any time of its  intent to so  commute  after
expiration of the term.

If at the time of commutation the amount of ceded Ultimate Net Loss is zero, the
Retrocessionaire shall pay to the Corporation a no claims bonus in the amount of
$XXX,XXX.

If at the time of  commutation  the amount of unpaid  Ultimate  Net Loss is more
than  zero  but  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 after deduction of the accrued Spread due
the  Retrocessionaire,  if any, which shall be paid to the  Retrocessionaire  at
that time, and the commuted value of unpaid  Ultimate Net Loss.  Such payment of
an experience  refund shall be made by the  Corporation's  retention for its own
account from the Experience Account.

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 XI
                                   ----------

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 paid Ultimate
Net Loss 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>
                                                                          Page 9


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

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 XIII
                                  ------------

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 XIV
                                   -----------

WARRANTY
--------

The  Corporation  shall not introduce  any change in its  generally  established
practices,  including  but not limited to  accounting,  claims,  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.

The  reinsurance  program in place as of January 1, 2000  relative to Industrial
Risk Insurers is:

A)  The Underlying Treaties:

    1)  First  underlying  property  per  risk   treaty  or  $XX,XXX,XXX  xs  of
        $X,XXX,XXX
         - Occurrence  limitation - none
         - Annual aggregate limit $XX,XXX,XXX
         - Amount of reinsurance placed XX%
         - ERC's net $X,XXX,XXX subject to the above mentioned limitation of the
           treaty

<PAGE>
                                                                         Page 10


WARRANTY (continued)
-------------------


    2)  Second  underlying  property  per  risk  treaty  or  $XX,XXX,XXX  xs  of
        $XX,XXX,XXX
         - Occurrence limitation $XX,XXX,XXX
         - Annual aggregate limit $XXX,XXX,XXX
         - Amount placed XXX%
         - ERC's  net -X-, subject  to  the  above  mentioned limitations of the
           treaty

    Note:  The association shall have  sole discretion  in defining risk for the
    purposes of each of these  above two contracts and the limits and retentions
    for  each  and  every risk  may apply  on a  policy, loss, insured, account,
    location or amount subject basis.

    3)  Underlying Catastrophe Excess of Loss
         - Limit $XX,XXX,XXX xs of $XX,XXX,XXX
         - Reinstatement one full
         - Amount placed XX%
         - ERC's  net $X,XXX,XXX subject to above  mentioned  limitations of the
           treaty

B)  The Main Program:

    1)  Per Risk Excess of Loss
         - Limit $XX,XXX,XXX xs of $XX,XXX,XXX
         - Reinstatements two full
         - Amount placed XX.XXX%
         - ERC's  net  $X,XXX,XXX subject to  the above mentioned limitations of
           the treaty

    2)  Catastrophe Excess of Loss #1
         - Limit $XX,XXX,XXX xs of $XX,XXX,XXX
         - Reinstatement one full
         - Amount placed XX.XXX%
         - ERC's  net $XX,XXX,XXX subject to  the above mentioned limitations of
           the treaty

         Note:  Definition of occurrence includes reinstatement of coverage in a
         wind event.  (Coverage for two 72 hour periods within 168 hours.)

     3)  Combined Per Risk and Catastrophe Layer #1
         - Limit $XXX,XXX,XXX xs of $XXX,XXX,XXX
         - Reinstatement one full
         - Amount placed XX.XX%
         - ERC's  net $XX,XXX,XXX subject to the above  mentioned limitations of
           the treaty.


<PAGE>

                                                                         Page 11

WARRANTY (continued)
-------------------

    4)  Combined Per Risk and Catastrophe Layer #2
         - Limit $XXX,XXX,XXX xs of $XXX,XXX,XXX
         - Reinstatement one full
         - Amount placed XX.XXX%
         - ERC's net $XX,XXX,XXX subject to  the above  mentioned limitations of
           the treaty

    5)  Combined Per Risk and Catastrophe Excess of Loss Layer #3
         - Limit $XXX,XXX,XXX xs of $XXX,XXX,XXX
         - Reinstatement one full
         - Amount placed XX.XXXX%
         - ERC's  net $XX,XXX,XXX subject to the above  mentioned  reinstatement
           limitations of the treaty

    6)  Per Risk Only Layer #1
         - Limit $XX,XXX,XXX xs of $XXX,XXX,XXX
         - Reinstatement one full
         - Amount placed XXX%
         - ERC's   net   $-X-  subject  to  the  above  mentioned  reinstatement
           limitations of the treaty

    7)  Per Risk Only Layer #2
         - Limit $XXX,XXX,XXX xs of $XXX,XXX,XXX
         - Reinstatement one full
         - Amount placed XXX%
         - ERC's   net   $-X-  subject  to  the  above  mentioned  reinstatement
           limitations of the treaty


The business is written in the name of IRI Association and then passed on to ERC
and HSB  accordingly  in the ratio XX.X% of the net  written  premium to ERC and
X.X% of the net  written  premium  to HSB.  After  applying  the  aforementioned
reinsurance  structure,   ERC's  net  is  subject  to  the  following  aggregate
reinsurance program.

C)  The Aggregate Program:

    1)  First Aggregate Excess
         - Limit $X,XXX,XXX xs of $XXX,XXX,XXX (in the aggregate)
         - Amount placed XX%
         - ERC's  net  $X,XXX,XXX




<PAGE>
                                                                         Page 12


WARRANTY (continued)
--------------------

1)  Second Aggregate Excess
         - Limit $XX,XXX,XXX xs of $XXX,XXX,XXX (in the aggregate)
         - Amount placed XX.X%
         - ERC's  net  $XX,XXX,XXX

1)  Third Aggregate Excess
         - Limit $XX,XXX,XXX xs of $XXX,XXX,XXX
         - Amount placed XX.XX%
         - ERC's  net  $X,XXX,XXX

1)  Fourth Aggregate Excess
         - Limit $XX,XXX,XXX xs of $XXX,XXX,XXX
         - Amount placed XX.XX%
         - ERC's  net  $X,XXX,XXX

These  aggregate  agreements  contain a warranty that excludes  losses,  if any,
which exceed the automatic treaty limits of the per risk and catastrophe  excess
program described above.


                                    ARTICLE XV
                                    ----------
CURRENCY
--------

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


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

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 XVII
                                  ------------

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.





<PAGE>

                                                                         Page 13
                                  ARTICLE XVIII
                                  -------------

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 XIX
                                   -----------

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.


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

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.



<PAGE>
                                                                         Page 14

INSOLVENCY (continued)
----------------------

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.


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

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.




<PAGE>
                                                                         Page 15

ARBITRATION (continued)
-----------------------

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.


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

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 estop either
party from thereafter  demanding full and complete compliance nor prevent either
party from exercising such rights or remedies in the future.


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

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

Bates  Turner  Intermediaries  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 Intermediaries LLC, 6329 Glenwood,  Suite
200, 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.



<PAGE>
                                                                         Page 16


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

PARTICIPATION AND SIGNATURES
----------------------------

This Agreement  obligates the  Retrocessionaire  specifically  identified  below
("Subscribing  Retrocessionaire")  for XX.XX% of the  liability  and amounts set
forth under this Agreement and the Subscribing Retrocessionaire is entitled to a
corresponding part of the premiums set forth under this Agreement.

The share of the Subscribing  Retrocessionaire  in the interests and liabilities
of all  retrocessionaires  in respect of this  Agreement  shall be separate  and
apart from the shares of the other retrocessionaires to this Agreement,  and the
interests and liabilities of the Subscribing  Retrocessionaire  shall be several
and not joint with those of the other  retrocessionaires  and in no event  shall
the Subscribing Retrocessionaire participate in the interests and liabilities of
the other retrocessionaires.


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

At Overland Park, Kansas, this 24 day of August, 2000.
                               --        -----

EMPLOYERS REINSURANCE CORPORATION

By:          /s/ Jeffrey J. Cooper
   --------------------------------------

Attest:       /s/ Kimberly S. Brown
       ----------------------------------

At Barnardsville, New Jersey, this 20th day of September, 2000.
                                   ----        ---------

FEDERAL INSURANCE COMPANY
  Per Chubb Re, Inc.

By:          /s/ Peter Kellogg
   --------------------------------------

Attest:       /s/ Jeffrey O. Smith
       ----------------------------------