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                                                                   Exhibit 10.35

                                SEVENTH AMENDMENT
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                  SEVENTH AMENDMENT (this "Amendment"), dated as of May 17,
2001, among Ceres Group, Inc., a Delaware corporation (the "Borrower"), the
lending institutions party to the Credit Agreement referred to below (each a
"Bank" and, collectively, the "Banks"), and The Chase Manhattan Bank, as
Administrative Agent (the "Administrative Agent"). All capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
provided such terms in the Credit Agreement.


                              W I T N E S S E T H :
                              - - - - - - - - - -


                  WHEREAS, the Borrower, the Banks and the Administrative Agent
are party to a Credit Agreement, dated as of February 17, 1999 (as amended,
modified and supplemented prior to the date hereof, the "Credit Agreement"); and

                  WHEREAS, the Borrower has requested that the Banks provide the
amendments provided for herein and the Banks have agreed to provide such
amendments on the terms and conditions set forth herein;

                  NOW, THEREFORE, it is agreed:

                  1. Section 7.02(j) of the Credit Agreement is hereby amended
by inserting the text ", other than the assets related to the Sale Leaseback
Transaction," immediately after the text "assets" appearing in sub-clause (y)
thereof.

                  2. Section 9 of the Credit Agreement is hereby amended by (a)
deleting the definition of "Test Period" appearing therein, and (b) inserting
the following definitions in the appropriate alphabetical location:

                  " `New Equity Issuance' shall mean the public offering of
         5,000,000 shares of Borrower's common stock.

                  `Sale Leaseback Transaction' shall mean the sale leaseback
         transaction to be entered into by the Borrower with respect to the
         property located at 17800 Royalton Road in Cleveland, Ohio for a
         purchase offer of approximately $16,000,000 and a 15-year lease.

                  `Test Period' shall mean (a) for purposes of Section 7.11, (i)
         for any determination made on and prior to December 31, 2001, the
         period from April 1, 2001 to the last day of the fiscal quarter of the
         Borrower then last ended, PROVIDED that for this purpose the first Test
         Period shall end on June 30, 2001, and (ii) for any determination made
         thereafter, the four consecutive fiscal quarters of the Borrower ended
         on the last day of the most recently


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         ended fiscal quarter of the Borrower (taken as one accounting period)
         and (b) for purposes of Section 7.17, the four consecutive fiscal
         quarters of the Borrower ended on the last day of the most recently
         ended fiscal quarter of the Borrower (taken as one accounting period)."

                  3. Notwithstanding anything to the contrary contained in the
Credit Agreement, the Borrower and the Banks hereby acknowledge and agree that
the outstanding Revolving Loans shall be repaid and the Total Revolving Loan
Commitment shall be permanently reduced in an amount equal to $2,500,000 from
the proceeds of the earlier to occur of either (x) the Sale Leaseback
Transaction, on the date of such transaction or (y) the New Equity Issuance, at
the time of such issuance.

                  4. Each of the Banks hereby waives any Default or Event of
Default that has arisen or will arise under the Credit Agreement solely as a
result of the Borrower's non-compliance with Section 7.11 of the Credit
Agreement for any Test Period ending prior to or on March 31, 2001.

                  5. Each of the Banks hereby waives any Default or Event of
Default that has arisen or will arise under the Credit Agreement solely as a
result of the Borrower's non-compliance with Section 7.13 of the Credit
Agreement for the fiscal quarter ending on March 31, 2001.

                  6. Notwithstanding anything to the contrary contained in the
Credit Agreement, the level of Consolidated Net Worth of the Borrower is hereby
permitted to be less than the amount set forth in Section 7.13 of the Credit
Agreement for the period (the "Waiver Period") starting April 1, 2001 through
the earlier of (x) September 29, 2001 or (y) the date of the New Equity
Issuance, but in no event shall the Consolidated Net Worth of the Borrower be
less than $102,000,000 during such Waiver Period.

                  7. In order to induce the Banks to enter into this Amendment,
the Borrower represents and warrants that (i) all of the representations and
warranties contained in the Credit Agreement or in the other Credit Documents
are true and correct in all material respects on and as of the Seventh Amendment
Effective Date, both before and after giving effect to this Amendment unless any
such representation and warranty expressly indicates that it is being made as of
any other specific date in which case such representation and warranty shall be
true and correct in all material respects as of such other specified date, and
(ii) there exists no Default or Event of Default on the Seventh Amendment
Effective Date, both before (except with respect to any Default or Event of
Default described in Sections 4 and 5 of this Amendment) and after giving effect
to this Amendment.

                  8. This Amendment shall become effective as of the date hereof
(the "Seventh Amendment Effective Date") when the Borrower and the Required
Banks shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to the Administrative Agent at its Notice Office;



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                  9. So long as the Seventh Amendment Effective Date occurs, the
Borrower shall pay to each Bank which has consented to the Seventh Amendment, a
non-refundable arrangement fee equal to 0.25% of the aggregate principal amount
of its Total Commitment outstanding on the Seventh Amendment Effective Date. All
fees payable pursuant to the immediately preceding sentence shall be paid to the
Administrative Agent within one Business Day after the Seventh Amendment
Effective Date, which fees shall be distributed by the Administrative Agent to
the relevant Banks in the amounts specified in the immediately preceding
sentence.

                  10. From and after the Seventh Amendment Effective Date, all
references in the Credit Agreement and each of the Credit Documents to the
Credit Agreement shall be deemed to be references to the Credit Agreement as
amended hereby.

                  11. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.

                  12. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be lodged with the Borrower and the Administrative Agent.

                  13. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK

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                  IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
hereof.

                                   CERES GROUP, INC.

                                   By: /s/ Larry E. Wharton
                                      ----------------------------------------
                                        Title: Sr. V.P. & Treasurer


                                   THE CHASE MANHATTAN BANK,
                                       Individually and as Administrative Agent

                                   By: /s/ Helen Newcomb
                                      ----------------------------------------
                                        Title:


                                   DRESDNER BANK AG NEW YORK BRANCH
                                       AND GRAND CAYMAN BRANCH

                                   By:
                                      ----------------------------------------
                                        Title:

                                   By:
                                      ----------------------------------------
                                        Title:


                                   KEYBANK NATIONAL ASSOCIATION

                                   By: /s/ Sherrie Manson
                                      ----------------------------------------
                                        Title: Vice President

                                   FIRSTAR BANK MILWAUKEE, N.A.

                                   By: /s/
                                      ----------------------------------------
                                        Title: Senior Vice President


                                   FLEET NATIONAL BANK

                                   By:
                                      ----------------------------------------
                                        Title:




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                                   THE CIT GROUP/EQUIPMENT FINANCING, INC.


                                   By: /s/ Patrick N. Riley
                                      ----------------------------------------
                                        Name: Patrick N. Riley
                                        Title: Senior Credit Analyst















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