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                                                                    EXHIBIT 10.3

             THIRD AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT

         This Third Amendment and Limited Waiver to Credit Agreement (the
"Amendment") is made as of this ___ day of November, 2003 by and among CNA
SURETY CORPORATION (the "Borrower"), the Lenders from time to time a party to
the Credit Agreement defined below (the "Lenders") and LASALLE BANK NATIONAL
ASSOCIATION, as Administrative Agent for the Lenders (the "Administrative
Agent") and in its individual capacity as a Lender ("LaSalle").

                              W I T N E S S E T H:

         WHEREAS, the Borrower, the Lenders and the Administrative Agent are
parties to that certain Credit Agreement, dated as of September 30, 2002, as
amended by that certain First Amendment to Credit Agreement, dated as of
December 30, 2002 between the Borrower, the Lenders named therein and
Administrative Agent, and as further amended pursuant to that certain Second
Amendment to Credit Agreement, dated as of September 30, 2003 between the
Borrower, the Lenders named there and Administrative Agent (collectively, the
"Credit Agreement);

         WHEREAS, the parties hereto desire to (i) provide for a limited waiver
under the Credit Agreement, and (ii) further amend the Credit Agreement as more
fully set forth herein;

         NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the adequacy of which is
hereby acknowledged, and subject to the terms and conditions hereof, the parties
hereto agree as follows:

SECTION I. DEFINITIONS. Unless otherwise defined herein, all capitalized terms
shall have the meaning given to them in the Credit Agreement.

SECTION II. LIMITED WAIVER.

         2.1      Pursuant to Section 6.15 of the Credit Agreement, the Borrower
is required to maintain a Consolidated Fixed Charge Coverage Ratio of not less
than 2.50 to 1.0 as of the end of each fiscal quarter for the period of four
fiscal quarters ending on such date. Borrower has requested and Administrative
Agent and the Lenders have agreed to waive compliance by the Borrower under
Section 6.15 solely with respect to the fiscal quarter ended September 30, 2003.
Except as expressly set forth herein, this waiver is not intended to be and
shall not be construed as a waiver or amendment of any of the terms and
provisions of the Credit Agreement, which terms and provisions remain in full
force and effect. Furthermore, such waiver shall not constitute a future waiver
of compliance with the Consolidated Fixed Charge Coverage Ratio, any other
financial covenants or any other provisions under the Credit Agreement or any
other document executed in connection therewith.

SECTION III. AMENDMENTS TO CREDIT AGREEMENT.

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         3.1      The Credit Agreement is hereby amended by deleting Section
2.5.2 in its entirety and inserting the following in its stead:

         "2.5.2   UTILIZATION FEE. If at any time fifty percent (50%) or more of
the Revolving Credit Commitment is drawn and utilized, the Borrower agrees to
pay to the Administrative Agent for the ratable account of each Lender based on
each such Lender's Pro Rata Share a utilization fee at a per annum rate equal to
0.05% times the aggregate outstanding drawn and utilized amount of the Revolving
Credit Commitment, payable in arrears on each Payment Date and on the Revolving
Loan Termination Date. All accrued utilization fees shall be payable on the
effective date of any termination of the obligations of the Lenders to make
Loans hereunder."

         3.2      The Credit Agreement is hereby amended by deleting Section
6.15 in its entirety and inserting the following in its stead:

         "6.15    CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Borrower will
maintain a Consolidated Fixed Charge Coverage Ratio of not less than 2.50 to 1.0
as of the end of each fiscal quarter for the period of four fiscal quarters
ending on such date; provided, however, for the fiscal quarters ended December
31, 2003, March 31, 2004 and June 30, 2004, the Consolidated Fixed Charge
Coverage Ratio shall be replaced with a minimum required EBITDA as set forth
below:

<TABLE>
<CAPTION>
Fiscal Quarter Ended                            Minimum Required EBITDA
--------------------                            -----------------------
<S>                                             <C>
 December 31, 2003                                    $12,500,000

 March 31, 2004                                       $13,500,000

 June 30, 2004                                        $14,000,000
</TABLE>

         Thereafter, the Consolidated Fixed Charge Coverage Ratio shall be
reinstated and the Borrower shall be required to maintain such Consolidated
Fixed Charge Coverage Ratio of not less than 2.50 to 1.0 as of the end of each
fiscal quarter for the period of four fiscal quarters ending on such date."

SECTION IV. CONDITIONS PRECEDENT. The effectiveness of this Amendment is
expressly conditioned upon satisfaction of the following conditions precedent:

         4.1      The Lenders shall have received a copy of this Amendment duly
executed by the Borrower.

         4.2      The Administrative Agent shall have received an amendment and
waiver fee in the amount of $30,000.

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         4.2      The Administrative Agent shall have received such other
documents, certificates and assurances as it shall reasonably request, all of
which shall have been delivered on or prior to the date hereof.

SECTION IV. REAFFIRMATION OF THE BORROWER. The Borrower hereby represents and
warrants to the Lenders that (i) the warranties set forth in Article 5 of the
Credit Agreement are true and correct on and as of the date hereof, except to
the extent (a) that any such warranties relate to a specific date, or (b)
changes thereto are a result of transactions for which the Lenders have granted
their consent; (ii) the Borrower is on the date hereof in compliance with all of
the terms and provisions set forth in the Credit Agreement as hereby amended;
and (iii) upon execution hereof no Default or Unmatured Default has occurred and
is continuing or has not previously been waived in writing by the Lenders,
except as follows:

SECTION V. FEES AND EXPENSES. The Borrower shall pay, upon demand, all
reasonable attorneys' fees and out-of-pocket costs of the Administrative Agent
in connection with this Amendment and the agreements, documents and other items
contemplated hereunder.

SECTION VI. FULL FORCE AND EFFECT. Except as herein amended or cancelled, the
Credit Agreement and all other Loan Documents shall remain in full force and
effect.

SECTION VII. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.

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         IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the day and year specified above.

                                 CNA SURETY CORPORATION

                                 By:    _________________________________
                                 Name:  _________________________________
                                 Title: _________________________________

                                 LASALLE BANK NATIONAL ASSOCIATION,
                                 in its capacity as Administrative Agent and as
                                 a Lender

                                 By:    _________________________________
                                 Name:  _________________________________
                                 Title: _________________________________

                                 U.S. BANK NATIONAL ASSOCIATION, as a
                                 Lender

                                 By:    _________________________________
                                 Name:  _________________________________
                                 Title: _________________________________

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