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                                                                   Exhibit 10.34

                                                                hannover life re

                                  June 29, 2000

Mr. Thomas P. Clark
Chief Financial Officer
Health Risk Management, Inc.
10900 Hampshire Avenue South
Minneapolis, Minnesota 55438-2306

      RE:   Proposed Reinsurance Transaction Between Hannover Life Reassurance
            Company of America ("HLR US") and HRM Health Plans (PA) (the "Ceding
            Company"), and Health Risk Management, Inc. (the "Administrator")

Dear Tom:

      Thank you for your interest in entering into a proposed reinsurance
transaction with HLR US relating to the reinsurance of the Oaktree Health Plan
and PA/Healthmate's Medicaid policies of insurance. This letter confirms certain
guidelines and requirements of HLR US with respect to which participation by HLR
US in the proposed transaction is subject. This letter constitutes a binding
agreement on the part of HLR US, is intended to, and shall create a legally
binding commitment and obligation on the part of HLR US and the Ceding Company
or the Administrator.

      HLR US will consummate the proposed transaction on a coinsurance funds
withheld basis, meaning that the Ceding Company will cede to HLR US reserves and
retain assets supporting such reserves, in which case such assets will be placed
and held in trust. The trust may be established with a First Union National Bank
in Pennsylvania.

      HLR US is a Florida-domiciled reinsurer. Accordingly, all assets to be
transferred to and held on the books of HLR US, whether or not transferred and
held in trust for the benefit of HLR US, must qualify as admitted assets under
Florida insurance laws and must have a book value equal to or greater than the
value of reserves relating to policies and contracts intended to be reinsured
with HLR US. Assets and reserves should be valued in accordance the statutory
accounting practices and procedures permitted or prescribed by the insurance
department of the state of domicile of the Ceding Company ("SAP").

      It is HLR US's preference to receive cash rather than non-cash assets.
However, non-cash assets may be transferred if (i) they comply with HLR US's
investment requirements, (ii) they are valued in accordance with SAP and in
manner consistent with this letter, and (iii) their SAP market value is greater
than or equal to their book value.

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Mr. Thomas P. Clark
June 29, 2000
Page 2


      The investment committee of Hannover Re, HLR US's parent company, has
promulgated investment requirements relating to, among other things, the
character and quality of assets to be transferred to HLR US, as well as the
method in which such assets may be permissibly invested. The investment
requirements must be strictly followed. A copy of the investment requirements is
attached for your consideration.

      An outline of the transaction is set forth below

      1.    The Business Reinsured. The Ceding Company would cede and transfer
            to HLR US, and that HLR US would reinsure on a coinsurance funds
            withheld basis, 33% quota share of the Oaktree Health Plan and
            PA/Healthmate Medicaid policies insured by the Ceding Company. If,
            and when, the membership on the Business Reinsured increases by 15%
            the quota share percentage will reduce to 30%. The Ceding Company
            will establish a trust account wherein the Ceding Company will
            deposit SAP asset supporting reserves on the Business Reinsured. The
            trust account will be established for the sole use and benefit of
            HLR US and will remain effective for as long as the reinsurance of
            the Business Reinsured remains effective. At no time will the SAP
            book value of the assets in the trust account fall below 100% of the
            then-outstanding reserves under the Business Reinsured. If it does,
            the Ceding Company must, within 10 days, fund the trust with assets
            or cash to equal 100% of the then-outstanding reserves.

      2.    Effective Date. The effective date of the reinsurance transaction is
            targeted for June 30, 2000, at 11:59 pm, provided the Ceding Company
            acquires all necessary or required regulatory approvals and third
            party consents, if any. HLR US will only be responsible for claims
            incurred on or after July 1, 2000.

      3.    Ceding Allowance. It is anticipated that as part of this reinsurance
            transaction the Ceding Company will cede to HLR US the Business
            Reinsured and HLR US will provide to the Ceding Company a ceding
            allowance of $4,000,000. The ceding allowance will represent the
            initial loss carryforward ("LCF"), together with all expenses and
            losses incurred by HLR US under the Business Reinsured, which will
            accrue interest at a rate per annum equal to 15%. If at any time,
            the Business Reinsured is negative or not sufficiently profitable to
            pay the interest accrued during the period on the LCF, then the
            Ceding Company shall pay HLR US the interest due and accrued for the
            period minus profits, if any, from the Business Reinsured at the end
            of each quarter.

      4.    Expense Allowances. HLR US will pay the Ceding Company an expense
            allowance equal to $7.92 per member, per month for administration of
            the Business Reinsured. HLR US will not be obligated to pay agent
            commissions and premium taxes. If the loss ratio on the Business
            Reinsured exceeds 85% then the

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Mr. Thomas P. Clark
June 29, 2000
Page 3


            Expense Allowance will reduce by $1.00, and if loss ratio exceeds
            88% then the Expense Allowance will reduce by $2.50.

      5.    Recapture; Termination. It is presently contemplated that the Ceding
            Company will have a right to recapture the Business Reinsured after
            the first 24 months after the Effective Date. Upon exercise of such
            right, the Ceding Company will pay to HLR US the outstanding LCF
            under the reinsurance agreement in an amount sufficient to assure
            HLR US a 18% return on its investment since the Effective Date. The
            calculation of such amount will include the provision for target
            surplus in the amount of 200% of Company Action Level RBC and will
            be subject to other turns and conditions as are mutually agreeable
            to the parties. From and after the date of recapture, HLR US shall
            have no liability under the reinsurance agreement with respect to
            the recaptured business. HLR US will have the right to terminate
            reinsurance as to new business and inforce business with 90 days
            notice on any anniversary date. If the Ceding Company recaptures the
            Business Reinsured within 24 months after the Effective Date, then,
            in addition to the recapture calculation above, the Ceding Company
            shall pay to HLR US an additional recapture fee equal to $25,000 for
            each and every month that the Business Reinsured is recaptured prior
            to the end of the 24th month after the Effective Date.

      6.    Administration. The Business Reinsured will be administered and
            serviced by the Administrator, which will also prepare all
            accountings and settlement reports relating to, among other things,
            claims, losses, premium, premium taxes and reserves. HLR US will
            have the right to require a change in the administration of the
            Business Reinsured if HLR US reasonably believes that the
            Administrator has failed or refused to perform reasonably all
            administration functions or has become financially impaired, in
            which case the Ceding Company will engage another Administrator
            satisfactory to HLR US to perform administration and will cause, at
            the Ceding Company's expense, to deliver to the replacement
            administrator all reports, records, documents, instruments, files
            and other information regarding the Business Reinsured necessary or
            required to perform administration of the Business Reinsured.

      7.    Experience Refund. Once the initial Ceding Allowance plus interest
            at a rate per annum equal to 15% is repaid in full, HLR US shall pay
            the Ceding Company an Experience Refund equal to 80% of the
            Distributable Profits. Distributable Profits equals premium income
            less any adjustment minus paid claims, and applicable Expense
            Allowance paid by HLR US to the Ceding Company.

      8.    Reserves. The Ceding Company will represent to HLR US the amount of
            SAP reserves relating to the Business Reinsured as of the Effective
            Date and will transfer to HLR US assets with a market value equal
            to or greater than the value

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Mr. Thomas P. Clark
June 29, 2000
Page 4


            of such SAP reserves. The assets must conform with HLR US's
            investment requirements and will be deposited in a trust account
            established by the Ceding Company for the sole use and benefit of
            HLR US. HLR US will not be responsible for any short-fund in
            reserves.

      9.    Premium. The Ceding Company will represent to HLR US the amount of
            annualized premium relating to the Business Reinsured as of the
            Effective Date.

      10.   Rate Increase. It is the responsibility of the Ceding Company to
            file for rate increases on timely basis. HLR US's pricing
            assumptions with respect to the proposed transaction contemplate
            such filings, and the belief that such filings will be made is a
            material inducement to HLR US agreeing so consider the proposed
            transaction. Accordingly, failure to make such filings will result
            in a material breach of the reinsurance agreement and may be grounds
            for termination of the agreement as to all of the Business
            Reinsured.

      11.   Confidentiality. All information delivered to and from HLR US and
            delivered to and from the Ceding Company or the Administrator shall
            be delivered, received and maintained in the strictest confidence
            and may not be used by a party without the express written consent
            of the party disclosing the information. All such information may
            not be disclosed to any other person, firm, corporation or entity,
            except those officers, employees and representatives of the parties
            who have a need to know such information, without the express
            written consent of the party disclosing the information.

      Tom, we understand that time is of the essence in this project and that
your team will provide their efforts as needed. We, too, are committed to use
all resources necessary to ensure efficient and effective progress of the
transaction. During the course of the next few days it is expected that issues
for both the Ceding Company and HLR US will arise. Be assured that we will deal
with the transaction in good faith and use our best efforts to reach a mutually
satisfactory accommodation.

      If this letter correctly reflects your understanding of the transaction,
please indicate by signing this letter below. If you have any comments or
questions, please do not hesitate to contact me.

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Mr. Thomas P. Clark
June 29, 2000
Page 5


                                        Very truly yours,


                                        /s/ Victor E. Castellanos

                                        Victor E. Castellanos
                                        Vice President

VC;sn
Enclosure
cc: Mr. William W. Walker
    Mr. Bill Pyatt
    Peter Schaefer
    Mr. Steve Najjar

ACCEPTED AND APPROVED:

HRM HEALTH PLANS (PA), INC.


By: /s/ Thomas P. Clark
    -------------------------------

Title: CFO
       ----------------------------

Dare: June 30, 2000
      -----------------------------

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Mr. Thomas P. Clark
June 29, 2000
Page 6


                  HANNOVER LIFE REASSURANCE COMPANY OF AMERICA

                               Investment Policy

I.    General

      These investment guidelines are developed under the premise that HLR US
      will continue to depend upon a steady, secure and calculable income
      generated by its invested assets to meet cash flow needs, thus
      necessitating a well balanced, low risk portfolio. However, growth is also
      important in order to guarantee maintenance of principal and to increase
      the future value of the portfolio. The purpose of these investment
      guidelines is to assure and secure a steady investment income stream while
      allowing for growth within the portfolio.

      HLR US's management expects a controlled growth in HLR US's underwriting
      activities over the next several years producing a positive cash flow. The
      funds to be invested will be generated by underwriting, as well as
      investment activities.

      The basic underlying strategy will, therefore, be a core portfolio of buy
      and hold positions, as well as, a percentage of trading vehicles in order
      to better take advantage of market cycles. Appreciation in the core
      portfolio will be recognized from time to time if considered advantageous
      by the Investment Committee.

II.   Objectives

      The following objectives, ranked by priority, should be accomplished:

      1.    The investments should be secured. To provide safety of principal
            and interest, investment instruments have to be of high quality.

      2.    A high return on investment on an after tax basis.

      3.    The portfolio has to be well diversified by category as well as by
            issuer.

III.  Investment Restrictions

      1.    All executed investment transactions have to comply with the
            regulatory restrictions imposed by the Florida Insurance Laws and
            any other applicable regulatory requirements. The attached exhibit
            of eligible investments specified by the Florida Statutes form an
            integral part of these guidelines.

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Mr. Thomas P. Clark
June 29, 2000
Page 7


      2.    All investment transactions must be reviewed, approved and ratified
            quarterly by the Investment Committee or the Board of Directors.

      3.    Investments in real estate, acquisition of stocks representing an
            equity interest of 5% or more, and capital contributions to
            subsidiaries require the prior written approval of the Boards of
            Directors.

      4.    Investments will be denominated in US-$ only. Investments in foreign
            currencies or in debt instruments located outside the United States
            require the prior approval of the Board of Directors. (Exception:
            See Convertible Bond Investment Guidelines).

      5.    Investments must be listed with the SVO of the NAIC. If a given
            security is not listed at the time of purchase, HLR US is
            responsible for applying for listing prior to the current quarter's
            end.

      6.    No MBS derivatives (defined as inverse-floaters, interest only
            strips and/or residuals) will be permitted in the portfolio.

IV.   Portfolio Guidelines

      1.    Duration

            Portfolio duration must equal liability duration (plus or minus) .5
            years (liability duration to be determined through a
            duration/convexity study to be performed by the Company). Current
            liability duration is assumed to be approximately 5.

      2.    Convexity

            Portfolio convexity should be maximized to a level as close as
            possible to that of the liabilities, not to fall below -1.0.

      3.    Credit

            Overall portfolio credit quality must be equal to or greater than
            AA/AA. Individual securities must be rated at least investment grade
            (Baa3/BBB) with no more than 10% overall permitted in the BBB (NAIC
            2) category. At least 40% of the portfolio must be invested in U.S.
            Government, U.S. Government guaranteed or U.S. Government Agency
            issues with at least 20% invested in U.S. Treasury securities.

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Mr. Thomas P. Clark
June 29, 2C00
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            An exception to this shall be the convertible securities which shall
            have a minimum average quality of BBB- and shall not be included in
            the 10% overall limitation of BBBs mentioned in the above
            paragraph.

      4.    Liquidity

            At least 40% of the portfolio must be invested in highly liquid
            securities defined as follows:

            o     U.S. Treasury Bonds
            o     U.S. Agency Debentures
            o     GNMA Pass-Througb Pools
            o     FNMA, FHLMC Pass-Through Pools

V.    Diversification

            No more than 40% of the portfolio will be permitted in any one of
            the following categories:

            o     U.S. Government Agency Debentures
            o     Mortgage Barked Securities (CMOs, CMBS, and pass-through pools
                  combined)
            o     Corporate Bonds

            No more than 20% of the portfolio will be permitted in any of the
            following categories:

            o     Municipal Bonds
            o     Private Placement Bonds

            No more than 15% of the portfolio will be permitted in any of the
            following categories:

            o     Preferred Stocks
            o     Asset Backed Securities
            o     Convertible Securities (both bond and preferred stocks), with
                  no more than 5% of convertible allocation permitted in any one
                  issue.

            No more than 10% of the portfolio will be permitted in short term
            securities with a minimum of 1% required as defined below. (No one
            issuer should exceed $5,000,000.)

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Mr. Thomas P. Clark
June 29, 2000
Page 9


            o     Certificates of Deposit
            o     Money Market Funds
            o     Commercial Paper (Al/P1 rated)
            o     Repurchase Agreements
            o     Time Deposits

VI.   Private Placement Underwriting Guidelines

o     All investments must be of investment grade quality - a minimum rating of
      Baa3/BBB-NAIC 2 or its equivalent by a nationally recognized rating agency
      i.e., Standard & Poor; Moody's; Duff & Phelps; Fitch; Canadian Bond Rating
      Co.; International Bond Rating Co. etc. or indirectly via a shadow rating
      i.e. other outstanding public and or private debt that is structurally
      equivalent rated Baa3/BBB-NAIC 2 or better.

o     Both affirmative and negative covenants shall be appropriate for the type
      of company and transaction and protect the noteholder against unwanted
      subordination and unreasonable credit deterioration.

o     Private placements must include explicit language regarding prepayment
      terms. Preferably non-call or callable with a make whole provision.

o     The average quality of the Private placement portfolio shall be no lower
      than A3/A-.

o     The Private placement portfolio shall be well diversified across
      industries, with no more than 10% of invested assets in any one industry
      and 1.5% of invested assets in any one issuer.

o     The Private placement portfolio shall make up no more than 10% of invested
      assets. All issue restrictions in guidelines shall also apply to private
      placement issues.

VII.  CONVERTIBLE BOND INVESTMENT GUIDELINES

o     All investments will be of investment grade quality at the time of
      purchase. For this purpose, a security is investment grade if (1) the
      issuer of the security has outstanding senior indebtedness rated BBB- or
      better by Standard & Poors, Baa3 or better by Moody's Investor Services or
      a comparable rating by a recognized rating agency (an "Investment Grade
      Rating"), or (2) in the event that an issuer of the security has
      outstanding senior indebtedness that is not rated by a recognized rating
      agency, in the good faith judgment of Advisor, such indebtedness would, if
      rated, have an Investment Grade Rating, or (3) if the issuer of the
      security does

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Mr. Thomas P. Clark
June 29, 2000
Page 10


      not have any outstanding senior indebtedness, in the good faith judgment
      of Advisor, if such indebtedness existed, it would have an Investment
      Grade Rating. A convertible security generally carries a rating that is
      lower than the credit rating of the issuer's outstanding senior
      indebtedness. As a result, a portion of the portfolio (up to 25%) may
      consist of securities that carry a minimum credit of BB-/Ba3.

o     All investments will be U.S.-$ denominated only. The convertible portfolio
      may invest up to 50% of its assets in U.S.-$ denominated obligations of
      non-U.S. entities.

o     The convertible portfolio may invest up to 30% of its assets in
      convertible preferred stocks.

o     The convertible portfolio may invest in 144A placement securities.

VIII. Execution of Portfolio Transactions

      The management of HLR US is hereby vested with the authority to execute
      purchases and sales of investments within the objectives and restrictions
      referenced herein.

      Asset Allocation & Management Company, LLC (AAM) will recommend the
      investments to be purchased and/or sold. The actual execution of
      investment transactions will be performed by AAM or a responsible HLR US
      official appointed by the President, Treasurer, or by the Investment
      Department of Hannover Ruckversicherungs-AG.

      The management of HLR US is responsible for monitoring the existing
      security holdings, implementing proper internal control procedures,
      accurate recording of all investment transactions, and for overall
      investment performance.

IX.   Performance Measurements

      The yield on the whole invested portfolio should exceed a minimum of 6%.

      HLR US management will prepare for review by the Investment Committee
      yearly comparisons with investment returns accomplished by other
      comparable companies and/or appropriate published indexes.