`PLA ASSUMPTION AGREEMENT

      THIS ASSUMPTION AGREEMENT (the "Agreement") is executed as of the 3rd day
of May, 2004 ("Execution Date") by and between Federated National Insurance
Company, a Florida licensed and authorized insurance company (hereinafter
referred to as "Carrier") and Citizens Property Insurance Corporation
(hereinafter referred to as "CITIZENS").

                                    RECITALS

      I. Definitions. Any term not defined in this section which is defined
elsewhere in this Agreement shall have the meaning ascribed to it therein.

            a. "Aggregate Losses" shall mean those losses which include, but are
not limited to, compensatory, punitive, bad faith and other damages arising
from, and all loss adjustment expenses relating to, the adjustment or defense of
any and all claims with respect to losses occurring on or after the Assumption
Date with respect to the Policies.

            b. "Assumed Premium" shall mean Initial Assumed Premium as adjusted
by a monthly remittance and bordereau process developed by the Carrier and
CITIZENS to account for policy cancellations, return premiums and policyholder
requested coverage changes after the Assumption Date with the positive and
negative adjustments.

            c. "Assumption" shall mean the transference of risks from CITIZENS
to the Carrier whereby the Carrier agrees to assume all obligations of CITIZENS
with respect to the Policies and agrees to pay one hundred percent (100%) of the
Aggregate Losses of the Policies as of a date and time certain.

            d. "Assumption Date" shall mean that date upon which an Assumption
is consummated.

            e. "Assumption Procedures" shall mean those procedures required by
CITIZENS to comply with the provisions of Section 627.3517, Florida Statutes,
and this Agreement, as set forth in Exhibit E attached hereto.

            f. "Carrier" shall mean the insurance company designated above which
company is, and shall remain during the term of this Agreement, a duly licensed
entity authorized to transact property and casualty insurance business in the
State of Florida.




            g. "Carrier's Policy" shall mean the insurance policy offered by the
Carrier to a CITIZENS insured upon expiration of a Policy pursuant to this
Agreement.

            h. "Ceding Commission Rate" shall be as defined in Exhibit B
attached hereto.

            i. "CITIZENS" shall mean Citizens Property Insurance Corporation as
created by the Legislature of the State of Florida pursuant to Section
627.351(6), Florida Statutes, and any successor entity.

            j. "Department" shall mean the Office of Insurance Regulation.

            k. "Escrow Agent" shall mean the party that shall join in the
execution of the Escrow Agreement in the capacity of the Escrow Agent.

            l. "Escrow Agreement" shall mean the Escrow Agreement to be executed
between the parties establishing an escrow account (the "Escrow Account") in
accordance with the requirements of this Agreement.

            m. "Independent Auditor" shall mean a certified public accountant or
certified public accounting firm, licensed in the State of Florida, to perform
professional auditing services and who is without bias with respect to the
outcome of the audit services and with respect to the Carrier.

            n. "Initial Assumed Premium" shall mean Written Premium, less the
Written Premium earned by CITIZENS with respect to the Policies as of the
Assumption Date.

            o. "Parties" shall mean the Carrier and CITIZENS.

            p. "Plan" shall mean the Plan of Operation of CITIZENS, as amended.

            r. "Policy" or "Policies" or "Removed Policy or "Removed Policies"
shall mean those CITIZENS Policies removed by the Carrier from the Personal
Lines Account of CITIZENS pursuant to this Agreement. "Policy" or "Policies" as
the context requires, may refer to individual Policies.

            s. "Program" shall mean the Takeout Incentive Program(s) approved by
CITIZENS and the Department pursuant to ss.627.351(6)(g)3, Florida Statutes, and
available to the Carrier on the Execution Date for removal of certain Policies
from the Personal Lines Account of CITIZENS.


                                       2


            t. "Takeout Bonus" shall mean those monies to which the Carrier is
eligible for removing Policies from CITIZENS pursuant to this Agreement.

            u. "Written Premium" shall mean the gross written premium of
CITIZENS on the Policies, less policy cancellation and return premiums, as of
the Assumption Date.

            Written Premium shall not include fees or surcharges invoiced for
collection by CITIZENS on the Policies for (i) Market Equalization Surcharges,
(ii) Tax-Exempt Surcharge, and (iii) the mandatory $2.00 per policy EMPA charge.

      II. Carrier and CITIZENS desire, pursuant to this Agreement, to have the
Carrier remove up to a maximum of 31,000 Policies by Assumption from CITIZENS
and offer at renewal the Carrier's Policy in accordance with the requirements of
this Agreement and the Program.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Parties hereto do covenant and agree as follows:

      WHEREAS, CITIZENS has adopted a Program pursuant to which Program the
Carrier has made application to CITIZENS to remove policies; and

      WHEREAS, CITIZENS finds the Carrier eligible to participate in the
Program.

      1. Agreement to Remove Policies.

            A. The Carrier and CITIZENS shall, prior to an Assumption Date,
agree upon those Policies eligible to be removed under the Program by the
Carrier on the Assumption Date and shall set forth those Policies by CITIZENS
policy number and expiration date on Exhibit A or any supplement thereto, which
Exhibit A or supplement shall be attached hereto and made a part hereof by
reference.

            B. Pursuant to this Agreement and the Assumption Procedures, the
Carrier shall remove by Assumption all of the Removed Policies set forth on
Exhibit A or supplements thereto, if available for removal on the Assumption
Date.

      2. Terms of Assumption.

            A. Liabilities:


                                       3


                  (i) The Carrier agrees to assume and pay one hundred percent
(100%) of the Aggregate Losses occurring on or after 12:01 A.M. Eastern Standard
Time on May 4, 2004 (the "Assumption Date") for which CITIZENS is or becomes
obligated under the approximately 3,000 Policies initially set forth in Exhibit
A.

                  (ii) The Carrier, in addition, agrees to assume and undertake
all other obligations ofCITIZENS with respect to the Policies in the manner
provided herein.

                  (iii) CITIZENS shall remain liable for all Aggregate Losses
for the Policies occurring prior to the Assumption Date, and the Carrier shall
have no responsibility with respect to such losses.

                  (iv) For the purposes of this Agreement, annual Emergency
Management Preparedness and Assistance Trust Fund Policy Surcharge ("EMPA")
charges, if any, applicable premium taxes and any remittance obligations related
to the Policies will be the sole responsibility of CITIZENS in the same manner
as if this Agreement did not exist, and CITIZENS agrees to pay all such charges,
taxes and obligations on a timely basis.

                  (v) The cost of any notice and ancillary documentation to
current CITIZENS policyholders to effectuate Assumption of the Policies shall be
borne equally by the Parties. The Carrier agrees that its portion of such cost
may be withheld from any Assumed Premium paid to Carrier by CITIZENS pursuant to
this Agreement or any amendments or addenda to this Agreement. In the event
CITIZENS, for whatever reason, does not withhold the Carrier's portion of such
cost from any Assumed Premium paid to Carrier, Carrier agrees to pay said sum to
CITIZENS within thirty (30) days of its receipt of a billing statement from
CITIZENS.

                  (vi) CITIZENS shall pay by wire transfer to the Carrier the
Assumed Premium multiplied by 1.000 minus the applicable Ceding Commission Rate
on or before the 20th day following the Assumption Date. Any subsequent amounts
due to or from CITIZENS as a result of the monthly remittance and bordereau
process shall be remitted to the appropriate Party net of Ceding Commission
within ten (10) days following the end of each month without interest.

            B. Servicing of Policies:

                  (i) The consideration for services to be performed by CITIZENS
on behalf of the Carrier is specifically encompassed in the Ceding Commission
Rate referenced in Exhibit B attached hereto.


                                       4


                  (ii) From an Assumption Date until expiration of the Policies,
CITIZENS shall continue to process endorsements and cancellations for Policies
which have not yet been replaced by the Carrier at renewal pursuant to
subsection (iii) below, and accordingly shall remain responsible for all agent
commissions and fees to CITIZENS servicing companies with respect to such
Policies.

                  (iii) Commencing on an Assumption Date, the Carrier shall
become responsible for offering and processing renewals with respect to the
Policies, utilizing its own approved rates and forms and for processing
endorsements to, and cancellations and renewals of, the Carrier's Policies. The
Carrier shall be responsible for all agent and brokerage commissions for the
Carrier's Policies, for all return premiums for cancellations of the Carrier's
Policies occurring after renewal, and for all fees to its servicing companies
accruing on or after the initial issuance of the Carrier's Policies. The Carrier
shall be entitled to one hundred percent (100%) of the premiums payable with
respect to the Carrier's Policies from date of renewal forward.

            C. Loss Payments and Settlements:

                  (i) Commencing on an Assumption Date, CITIZENS shall, with
respect to the Policies, service all claims for Aggregate Losses occurring prior
to the Assumption Date.

                  (ii) Servicing of claims for losses occurring on or after an
Assumption Date shall be the sole responsibility of the Carrier. CITIZENS shall
have no responsibility for payment of losses or loss adjustment expenses or for
the servicing of claims with respect to losses occurring under the Policies on
or after the Assumption Date.

                  (iii) CITIZENS agrees to abide by the loss settlements of the
Carrier and/or its claims administration contractor with respect to the
obligations assumed hereunder, such settlement to be considered as satisfactory
payment of loss. The Carrier undertakes to settle losses on Policies assumed
hereunder and to provide staffing for the adjustment of such losses in
accordance with CITIZENS Claims Manual and prudent insurance practice.

                  (iv) With regard to the Policies, CITIZENS agrees that it
shall give notice promptly to the Carrier of any claim by a third party or the
commencement of any legal proceedings against CITIZENS with respect to such
claim. The Carrier shall have the exclusive right to control the contest and
defense of any such claim or litigation and the result of any such proceeding
will be binding upon the parties hereto. The liability of the Carrier under the
Policies shall always follow that of CITIZENS, and any error or omission of
CITIZENS or its agents shall in no way relieve the Carrier of its liability or
obligations in respect of the matters affected by such errors or omissions, it
being understood and agreed that the Carrier shall follow and share the same
fortune as CITIZENS under all circumstances.


                                       5


                  (v) CITIZENS agrees to assign to the Carrier any and all
salvage and subrogation rights arising with respect to losses occurring on or
after an Assumption Date, which CITIZENS may have with respect to the Policies.

            D. Conditions to Closing:

      The following conditions must be met prior to an Assumption Date:

                  (i) Department approval of an Assumption by issuance of a
Consent Order, which Consent Order shall be attached hereto as Exhibit C.

                  (ii) The Carrier shall enter into a Confidentiality Agreement
with CITIZENS as such relates to the Policies. CITIZENS agrees to allow the
Carrier to make coverage verifications electronically with CITIZENS servicing
companies, subject to the Confidentially Agreement.

      3. Takeout Bonus.

      The following provisions shall be applicable if the Carrier has applied
for and qualifies for a Takeout Bonus for Removed Policies:

            A. The Carrier shall remove by Assumption the Policies set forth on
Exhibit A in accordance with this Agreement and the Assumption Procedures and
shall offer to issue and renew the Carrier's Policy for a period of three (3)
years subsequent to the expiration of the assumed Policy. During the aforenoted
period, the Carrier's renewals of a Carrier's Policy shall be at the Carrier's
approved rates and on substantially similar terms unless the Carrier's Policy is
cancelled by the Carrier for a lawful reason other than reduction of hurricane
exposure.

            B. Contemporaneously with the execution of this Agreement, the
parties shall negotiate, execute and deliver an Escrow Agreement establishing an
escrow account and Escrow Agent. The Escrow Agreement executed by the parties
hereto shall, among other matters, specify (i) the investment policy and (ii)
the terms and procedures by which the Carrier will be able to draw on the Escrow
Account for claim payments.


                                       6


            C. Once the Carrier removes at least 10,000 Policies in the
aggregate from CITIZENS under this Agreement, CITIZENS shall, within fifteen
(15) days after an Assumption Date, deposit with the Escrow Agent under the
Bonus Escrow Agreement a sum equal to the Written Premium for the Removed
Policies eligible for a Takeout Bonus times the relevant Takeout Bonus
percentage from Exhibit D. If necessary, CITIZENS shall also deposit any
additional Takeout Bonus amounts to reflect the total number of Removed Policies
eligible for a Takeout Bonus under this Agreement.

            D. The following rules will be used to adjust the amount of money
ultimately received by the Carrier under this Agreement:

                  (i) If the insured later voluntarily terminates the Carrier's
Policy or subsequently does not accept the Carrier's offer of the Carrier's
Policy, the Carrier will be entitled to retain the Takeout Bonus for that
policy. Cancellation of a Policy or a Carrier's Policy for nonpayment of premium
shall be deemed a voluntary termination by the insured. Failure of the insured
to accept the Carrier's offer of renewal, if such renewal is in accordance with
the terms of this Agreement, shall be deemed a voluntary termination by the
insured.

                  (ii) If the Carrier fails to offer to issue or renew, cancels
or non-renews a Carrier's Policy for any reason other than non-payment of
premium, the Carrier will forfeit its entitlement to a Takeout Bonus for that
Policy, and the bonus amount will be returned to CITIZENS from the Bonus Escrow
Account together with any investment income thereon.

                  (iii) All monies, if any, in the Escrow Account shall be
returned to CITIZENS at the time it is determined that the total number of
Policies with wind coverage removed, or to be removed, and eligible for a
Takeout Bonus by the Carrier under this Agreement will be less than Ten Thousand
(10,000).

            E. Thirty-six (36) months after the first Assumption Date, the
Carrier shall provide to CITIZENS an Independent Auditor's report performed in
accordance with instructions received from CITIZENS and containing all pertinent
data to verify the satisfactory completion of the Carrier's performance
hereunder. Prior to commencing work hereunder, the Independent Auditor shall be
approved by CITIZENS, which approval shall not be unreasonably withheld. All
expenses of the Independent Auditor shall be paid by the Carrier. Based upon the
report of the Independent Auditor and its own review, CITIZENS shall adjust the
number of policies for which payment of a Takeout Bonus pursuant to this
Agreement is due.


                                       7


            F. If the Carrier is not otherwise in material breach or default of
a material provision of this Agreement or any applicable provision of law, as
the Policies issued by the Carrier reach the end of the thirty-six (36) month
coverage period and any adjustment pursuant to 3.E. above has been completed,
CITIZENS shall instruct the Escrow Agent to transfer from the Bonus Escrow
Account to the Carrier an amount equal to the Takeout Bonus on the Removed
Policies reaching the end of the thirty-six (36) month coverage period or
otherwise due a bonus pursuant to the terms of this Agreement at such time. The
applicable Takeout Bonus shall be determined in accord with the Program
Requirements and Incentives in Exhibit D. The Carrier must meet all of the
requirements in a Takeout Incentive Program to qualify for the Takeout Bonus
associated with that Program.

            G. At the time the final Takeout Bonus amounts are paid the Carrier,
the Carrier shall also be paid any funds in the Escrow Account attributable as
investment income on the Takeout Bonus paid the Carrier.

      4. Policy Data. CITIZENS shall provide, or has provided, to the Carrier,
by electronic data transfer, or by such other means as is acceptable to the
Carrier, relevant information regarding the Policies. The first such
transmission of data shall be provided to the Carrier at the earliest possible
date convenient to the Carrier and CITIZENS and thereafter on a basis as agreed
to by the Carrier and CITIZENS until none of the Policies remain in CITIZENS.

      5. Department Oversight. CITIZENS shall provide a fully executed copy of
this Agreement to the Department. The Carrier shall respond to any requests for
information by the Department regarding the proposal or this Agreement. The
Carrier and CITIZENS are, and shall remain, subject to all applicable laws of
the State of Florida and the supervision, rules, regulations and orders of the
Department.

      6. Right of Audit. CITIZENS or its representatives, upon reasonable
advance written notice, shall be entitled to audit, at its own cost and expense,
the relevant books and records of the Carrier during normal business hours to
confirm the Carrier's compliance with the terms and conditions of this
Agreement.

      7. Indemnification. Carrier shall indemnify CITIZENS, its Board of
Governors, officers, agents and employees ("CITIZENS Indemnitees") against any
costs, expenses (including reasonable counsel fees and costs of litigation),
claims, demands, actions, losses or liabilities that CITIZENS Indemnitees may
suffer or that may be asserted or claimed against CITIZENS Indemnitees, caused
by or arising directly out of the negligent acts or omissions or any breach of
this Agreement by the Carrier in connection with this Agreement or the
Assumption of Policies from CITIZENS.


                                       8


      CITIZENS shall indemnify Carrier, its officers, directors, agents,
employees, subsidiaries and affiliates ("Carrier Indemnitees") against any
costs, expenses, (including reasonable counsel fees and costs of litigation),
claims, demands, actions, losses or liabilities that the Carrier Indemnitees may
suffer, caused by or arising directly out of the negligent acts or omissions of
CITIZENS in connection with this Agreement.

      8. Carrier's Continuing Status. The Carrier, during such period as it is
entitled to Takeout Bonuses pursuant to this Agreement, shall remain licensed
and authorized to transact property and casualty insurance business in the State
of Florida. Should the Carrier fail to maintain its authority and licensing to
conduct such business, or should the Carrier become the subject to an adverse
finding pursuant to Chapter 631, Florida Statutes, or any other order of the
Department or a court of competent jurisdiction that in any material form or
manner limits or constrains the ability of the Carrier to engage in the business
of property and casualty insurance, other than the initial Consent Order issued
by the Department in connection with this Agreement, such occurrence shall
constitute and be deemed a material breach and default of this Agreement by the
Carrier.

      9. Default, Curative Period and Remedies. Should any breach or default
occur concerning any material obligation, representation or undertaking as set
forth herein, the non-defaulting party shall give the defaulting party written
notice of the material breach or default. Failure of the defaulting party to
cure the material breach or default within fifteen (15) days of the receipt of
the written notice as herein provided shall constitute and be deemed a material
breach and default of this Agreement unless the material breach or default is
not capable of being cured within such period of time, and the defaulting party
has commenced good faith efforts to cure such material breach or default within
fifteen (15) days, and thereafter continues in good faith to diligently pursue
curing until the material breach or default is cured to the reasonable
satisfaction of the non-breaching party. Should the Carrier materially breach or
default in any obligation as set forth in this Agreement and not timely cure
such material default and breach as set forth in this paragraph, CITIZENS may
terminate this Agreement. Upon such a termination by CITIZENS this Agreement
shall be deemed as voided, and the Carrier shall lose all rights to any Takeout
Bonus pursuant to this Agreement. In addition to any rights and remedies set
forth in this Agreement, the non-defaulting party shall have all rights and
remedies available at law and/or equity, including, but not being limited to,
the right to specific performance, damages or injunctive relief.


                                       9


      Notwithstanding any breach of this Agreement, the Carrier shall remain
responsible for Removed Policies unless and until a judicial determination is
rendered relieving, altering or limiting Carrier's responsibility.

      10. Attorney's Fees. If either of the parties hereto shall bring a Court
action alleging material breach of this Agreement or seeking to enforce,
rescind, renounce, declare void or terminate this Agreement or any provisions
thereof, the prevailing party shall be entitled to recover all of its legal
expenses, including reasonable attorney's fees and costs (including attorney's
fees and costs for any appeals taken), and to have the same awarded as part of
the judgment in the proceeding in which such legal expenses and attorney's fees
and costs were incurred.

      11. Benefits. This Agreement shall be binding upon the parties, their
heirs, legal representatives, successors and assigns.

      12. Captions. The paragraph captions as to contents of the particular
paragraphs herein are inserted only for convenience and are in no way to be
construed as part of this Agreement or as a limitation of the scope of the
particular paragraph in which they are referred.

      13. Construction of Agreement. Words of a gender used in this Agreement
shall be held to include any other gender, and words in a singular number shall
be held to include the plural, when the sentence so requires.

      14. Entire Agreement. This Agreement contains all of the oral and/or
previously written agreements, representations, and arrangements between the
parties hereto concerning the Program, and all rights which the respective
parties may have had under any prior written or oral agreements are hereby
canceled and terminated, and all parties agree that there are no representations
or warranties other than those set forth herein.

      15. Florida Law. It is acknowledged that this Agreement was executed in
and shall be construed and governed in accordance with the laws of the State of
Florida and the rules, orders and regulations of the Department in effect at the
time of the execution of this Agreement.

      16. Insolvency. Notwithstanding any other provision to the contrary, in
the event of the insolvency of CITIZENS, the obligations assumed under this
Agreement shall be payable by the Carrier on the basis of the liability of the
Carrier for the business assumed hereunder, without diminution because of such
insolvency, directly to the payees under such Policies and in substitution for
the obligations of CITIZENS to such payees. The Carrier shall be given written
notice of the pendency of each claim or loss which may involve the
indemnification provided by this Agreement within a reasonable time after such
claim or loss is filed in the insolvency proceedings. The Carrier shall have the
right to investigate each such claim or loss and interpose at its own expense,
in the proceedings where the claim or loss is to be adjudicated, any defense
available to CITIZENS, its liquidator, receiver, or statutory successor. The
expense thus incurred by the Carrier shall be chargeable, subject to court
approval, against the insolvent CITIZENS as part of the expense of liquidation
to the extent of a proportionate share of the benefit which may accrue to
CITIZENS solely as a result of the defense undertaken by the Carrier.


                                       10


      Nothing contained in this section is intended to change the relationship
of the parties to this Agreement or to enlarge upon the rights and obligations
of either party hereunder except as provided herein, to wit, to pay or satisfy
the obligations of the statutory successor of CITIZENS on the basis of the
amount of liability determined in the liquidation or receivership proceeding
rather than on the basis of the actual amount of loss paid by the liquidator,
receiver or statutory successor to allowed claimants.

      17. Invalidation. Should any part, provision or term of this Agreement for
any reason be declared invalid, or should any term or performance under this
Agreement by either Party be held as a violation of law by a court of competent
jurisdiction or the Department, this Agreement shall terminate. Upon such
termination, if CITIZENS is required to take back any of the Policies removed by
the Carrier, the Carrier will not be entitled to any Takeout Bonus for such
Policies and the Carrier shall reimburse CITIZENS for all administrative and
legal costs and expenses incurred by CITIZENS in taking back the Policies. In
addition, upon a termination the Parties shall enter into an agreement
concerning, but not being limited to, an allocation of any unearned premium,
responsibility for incurred claims and such other matters as may be necessary to
effectuate the prompt and equitable return of the Policies.

      18. No Intermediary. The Carrier represents and warrants that it has not,
and CITIZENS represents and warrants that it has not, incurred an obligation to
make payment of any fees to any intermediary with respect to the obligations
afforded under this Agreement.

      19. Modification. No change or modification of this Agreement shall be
valid unless the same shall be in writing and signed by all of the parties
hereto and not disapproved by the Department.


                                       11


      20. Notices. Any and all notices, designations, consents, offers,
acceptances, or any other communications provided for herein shall be given in
writing, by hand delivery, by overnight carrier, by registered or certified
mail, or by facsimile transmission and shall be addressed as follows:

                  As to Carrier:    FEDERATED NATIONAL INSURANCE COMPANY
                                    P.O. Box 407193
                                    Fort Lauderdalae, Florida  33340

                                    Attn:    Chief Executive Officer
                                    Telefax: (954) 316-9201

                  As to CITIZENS:   CITIZENS PROPERTY INSURANCE CORPORATION
                                    101 North Monroe Street, Suite 1000
                                    Tallahassee, FL  32301

                                    Attn:    Executive Director
                                    Telefax: (850) 513-3900

      Notices sent by hand delivery shall be deemed delivered on the date of
hand delivery. Notices sent by overnight carrier shall be deemed delivered on
the next business day after being placed into the hands of the overnight
carrier. Notices sent by registered or certified mail shall be deemed delivered
on the third business day after being deposited into the post office. Notices
sent by facsimile transmission shall be deemed to be delivered on the day when
sent if sent prior to 4:30 p.m. (the time being determined by the time zone of
the recipient) otherwise they shall be deemed delivered on the next business
day.

      21. Parties Represented. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.

      22. Special Provisions:

            A. The parties shall coordinate the mailing of any documentation or
notices required by this Agreement.


                                       12


            B. The parties hereto acknowledge that, pursuant to the Program,
CITIZENS will use its sole judgment and discretion in implementing the
Assumption Procedures for participating Carriers.

            C. Should the parties fail to agree on the Removed Policies to be
set forth on Exhibit A, no obligation shall be created pursuant to this
Agreement.

            D. The Carrier and CITIZENS agree to allow the Carrier to supplement
Exhibit A from time to time with lists of additional CITIZENS Policies to be
removed from CITIZENS, but such additional Policies must be designated and
assumed by the Carrier not later than eighteen (18) months from the initial
Assumption Date. All Assumptions for each supplement to Exhibit A (e.g., Exhibit
A-1, A-2, etc.) shall be in accordance with the terms and provisions of this
Agreement and the Assumption Procedures. The Policies so identified in any such
supplement to Exhibit A shall be treated as Removed Policies as of the date of
their Assumption for the purposes of this Agreement. All such supplements to
this Agreement shall be executed in writing by the Parties to effectuate and
document such additional Assumptions.

            E. CITIZENS shall not enter into an agreement with any other insurer
for the removal of the Policies listed in Exhibit A and, further, shall not post
the Policies on an electronic bulletin board or on a list of policies published
for the industry for purposes of depopulation unless such Policies are not
removed by the Carrier in accordance with the terms and provisions of this
Agreement.

      IN WITNESS WHEREOF, the parties hereto have set their hands and seals as
of the day and year first above set forth.

WITNESSES:

                                       CITIZENS PROPERTY INSURANCE CORPORATION
                                       ("CITIZENS")


                                       BY:
---------------------------               -------------------------------------
                                          As its Executive Director

---------------------------
As to "CITIZENS"

                                       FEDERATED NATIONAL INSURANCE COMPANY
                                       ("Carrier")


                                       BY:
---------------------------               -------------------------------------
                                          As its Chief Executive Officer

---------------------------
As to the "Carrier"


                                       13


Exhibits:

      A.    Schedule of Policies
      B.    Ceding Commission Rate
      C.    Department Notification and Consent Order
      D.    Program Requirements and Incentives
      E.    Assumption Procedures


                                       14


                                    EXHIBIT B

                             CEDING COMMISSION RATE

      "Ceding Commission Rate" shall be set initially at .160, which is
multiplied by either the Initial Assumed Premium or the Assumed Premium, as
appropriate, to determine the amount owed (i.e., the Ceding Commission) by the
Carrier to CITIZENS for the expenses and services described in Section 2.A.(iv)
and Section 2.B.(ii) of this Agreement.

      As an additional incentive for a Carrier that removes a large number of
policies from the Personal Lines Account, CITIZENS agrees to reduce the Ceding
Commission Rate stated above according to the schedule below:

                             PERSONAL LINES ACCOUNT
           NUMBER OF POLICIES
       ELIGIBLE FOR A TAKEOUT BONUS              CEDING COMMISSION RATE
       ----------------------------              ----------------------
            LESS THAN 60,000                         REMAINS AT .160
            60,000 TO 74,999                         REDUCED TO .120
            75,000 TO 89,999                         REDUCED TO .090
             90,000 AND UP                           REDUCED TO .060

      At the time the number of Removed Policies qualifies for a reduced Ceding
Commission Rate, CITIZENS will recalculate the Ceding Commission due from the
Carrier and make such payment to the Carrier as is appropriate without interest.

      At the time the number of Removed Policies eligible for a Takeout Bonus is
determined for the purpose of releasing funds to the Carrier from the Escrow
Account, the final Ceding Commission Rate will also be determined. CITIZENS
shall pay such funds, if any, at that time that it owes the Carrier. If the
Carrier's previous Ceding Commission payments to CITIZENS are determined to be
less than the amount owed to CITIZENS based on the number of Removed Policies
actually eligible for a Takeout Bonus, the amount owed to CITIZENS shall be
deducted first from the investment earnings on the funds in the Escrow Account.
If this is insufficient to pay CITIZENS the amount owed, the Carrier shall pay
the remaining balance to CITIZENS within 10 days of the date CITIZENS provides
the Carrier with a statement showing the amount owed. CITIZENS will not
authorize the Escrow Agent to release bonus funds from the Escrow Account until
the Carrier has made the required payment to CITIZENS.`

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`EXHIBIT D

                        PROGRAM REQUIREMENTS & INCENTIVES

TAKEOUT INCENTIVE PROGRAM A

1.    The Carrier must remove a minimum of 10,000 Policies with wind coverage
      from the Personal Lines Account during the takeout contract period.

2.    Of the Policies with wind coverage removed from the Personal Lines
      Account, at least 40% must cover residential properties with HO2, HO3 or
      Dwelling Fire policies located in Miami-Dade, Broward or Palm Beach
      Counties.

3.    A Takeout Bonus will be paid at the rate of 12.5% of Written Premium for
      the Policies with wind coverage in coastal counties removed from the
      Personal Lines Account.

TAKEOUT INCENTIVE PROGRAM B

1.    The Carrier must remove a minimum of 30,000 Policies with wind coverage
      from the Personal Lines Account during the takeout contract period.

2.    Of the Policies with wind coverage removed from the Personal Lines
      Account, at least 60% must cover residential properties with HO2, HO3 and
      Dwelling Fire policies located in Miami-Dade, Broward or Palm Beach
      Counties.

3.    A Takeout Bonus will be paid at the rate of 15.0% of Written Premium for
      the Policies with wind coverage in coastal counties removed from the
      Personal Lines Account.

TAKEOUT INCENTIVE PROGRAM C

1.    The Carrier must remove a minimum of 50,000 Policies with wind coverage
      from the Personal Lines Account during the takeout contract period.

2.    Of the Policies with wind coverage removed from the Personal Lines
      Account, at least 80% must cover residential properties with HO2, HO3 and
      Dwelling Fire policies located in Miami-Dade, Broward or Palm Beach
      Counties.

3.    A Takeout Bonus at the rate of 17.5% of Written Premium will be paid for
      the Policies with wind coverage in coastal counties removed from the
      Personal Lines Account.



                                    EXHIBIT E

                        TAKEOUT OF POLICIES BY ASSUMPTION
                              UNDER CONSUMER CHOICE

                          PROCESS FOR REMOVING POLICIES

o     At any point in time, an Insurer may request, for purposes of
      depopulation, a data file of policies from Citizens. All policies not
      currently pending cancellation, not set for non-renewal or tagged for
      another insurer as described below, will be included in the data file.

o     Takeouts/Assumptions will only occur on the 1st of any given month (or
      other day so specified by Citizens to account for weekends and holidays).

o     Each Takeout will consist of paired Assumptions one month apart. The first
      Assumption is for Group A policies (the Initial Assumption) and the second
      is for Group B policies (the Final Assumption). (See below for Group
      definitions).

                               TIMELINE OF EVENTS

AT LEAST 45 DAYS BEFORE INITIAL ASSUMPTION

o     The Insurer must have obtained approval for the proposed Takeout from the
      Citizens Board and have an executed Consent Order from the Office of
      Insurance Regulation to proceed with the next steps in the assumption
      process.

45 DAYS BEFORE INITIAL ASSUMPTION

o     45 days prior to the specified Assumption date, the Insurer must execute
      an Assumption Agreement with Citizens and provide Citizens with a policy
      pre-selection file and a list of its Appointed Agents. As of the Execution
      Date, the Assumption Agreement will not have Exhibit A attached and no
      policies will be tagged at that time.

45 TO 30 DAYS BEFORE INITIAL ASSUMPTION

o     Citizens will review the policy pre-selection file and the agent
      appointment list to determine the status of each selected policy. Each
      policy will be examined to determine if it is still eligible for the
      Takeout (not cancelled or non-renewed), if it complies with the Blackout
      period (i.e., not renewing at any period from 15 days before the
      assumption to 62 days after the assumption), and if the policy was written
      by Agent with an appointment for the Insurer. Citizens will also determine
      that the assumption will result in a reduction of its probable maximum
      loss in the account from which the policies are being assumed.



IF ONLY ONE INSURER IS PARTICIPATING IN THE TAKEOUT, THE FOLLOWING PROVISIONS
APPLY:

      GROUP A (THE ASSUMABLE POLICIES)

            Policies where the Agent is appointed for the Insurer. The policies
            identified in Group A are eligible for immediate assumption. Because
            the agent for these policyholders is already appointed for the
            takeout insurer, the provisions of Section 627.3517 do not apply and
            the policy can be immediately assumed under the same procedures that
            have governed Takeouts prior to the passage of Consumer Choice.

      GROUP B(THE SOLICITED POLICIES)

            Policies where the Agent is not appointed for the Insurer. These
            policies are not immediately eligible for assumption. Before a
            policy in Group B can be assumed, the Insurer must either seek and
            obtain an agreement from the Agent to be appointed for the Insurer
            (which confers on that policy the same status as those in Group A),
            or directly solicit the Policyholder to obtain permission to assume
            the policy with the understanding that the insured will not be able
            to retain his or her current Agent.

IF MORE THAN ONE INSURER IS PARTICIPATING IN THE SAME MONTHLY TAKEOUT, THE
FOLLOWING PROVISIONS APPLY:

      GROUP A (THE ASSUMABLE POLICIES)

            1.    Policies where the Agent is appointed and the policy was only
                  selected by that Insurer.)

            2.    Policies where both Insurers selected the policy and the Agent
                  has an appointment for one Insurer and not the other.

            3.    Policies where both Insurers selected the policy and the Agent
                  has an appointment for both Insurers. These policies will be
                  divided as equally as possible between the Insurers using the
                  following method:

                  o     Group the policies by Form Type
                  o     Group the policies by County
                  o     Divide based on Total Exposure or Total Premium.



      GROUP B (THE SOLICITED POLICIES)

            1.    Policies where the Agent is not appointed for the Insurer and
                  the policy was selected only by that Insurer.

            2.    Policies where both Insurers selected the policy and the Agent
                  is not appointed for either Insurer. These policies will be
                  divided as equally as possible between the Insurers using the
                  following method:

                  o     Group the Policies by Agent

                  o     Divide the Agents based on Total Exposure or Total
                        Premium.

THE FOLLOWING PROVISIONS APPLY REGARDLESS OF THE NUMBER OF INSURERS
PARTICIPATING IN A MONTHLY TAKEOUT:

30 DAYS BEFORE INITIAL ASSUMPTION

o     On the first day of the month preceding the Initial Assumption, Citizens
      will distribute to the Insurer(s) in the Takeout (1) an Exhibit A which
      contains its Assumable Policies and (2) a separate list of its Solicited
      Policies. After the Insurer(s) agrees to Exhibit A and the Solicited
      Policies list, the policies reflected on Exhibit A and the Solicited
      Policies will be tagged for the appropriate Insurer(s) and will not be
      included in any depopulation data file until the end of the tagged period.
      (See below).

INITIAL ASSUMPTION (EXHIBIT A POLICIES ONLY)

o     On the Initial Assumption date, all Exhibit A policies eligible for
      assumption will be assumed by the assigned Insurer. The policies will be
      set for non-renewal by Citizens, and the affected policyholders will be
      sent a Notice of Nonrenewal and Assumption in accordance with prior
      takeout procedures, along with a Certificate of Assumption from the
      Insurer. The Insurer will be provided a data file with information about
      all of the policies that were successfully assumed. Any policies not
      assumed (for whatever reason) will be released from tagging and will be
      included in any future Insurer requested data file.



60 DAYS BEFORE FINAL ASSUMPTION (SOLICITED POLICIES ONLY)

o     The Solicited Policies, those that cannot be immediately assumed, are
      subject to direct solicitation by the Insurer. Citizens will send, at its
      own expense, a letter to each policyholder of a Solicited Policy to
      explain the solicitation, the proposed Takeout and the Insured's rights
      under the Consumer Choice Statute. A copy of this letter must also be
      included in any Insurer's solicitation materials. If requested, Citizens
      will also provide information about the policy's renewal rate (subject to
      future rate filings/increases) for use in the Insurer's solicitation
      materials. The cost of the solicitation by the Insurer will be borne
      solely by the Insurer.

60 DAYS TO 15 DAYS BEFORE FINAL ASSUMPTION (SOLICITED POLICIES ONLY)

o     During the period that policies are tagged, the Insurers may solicit the
      agents or the policyholders assigned to them as Solicited Policies. Any
      Insurer solicitation of a policyholder must include:

      o     A cover letter explaining that they have been selected to receive an
            offer of coverage from a takeout insurer; that to accept the offer,
            they may not retain their current agent;

      o     A copy of the original letter from Citizens concerning the Takeout
            (referenced above);

      o     Marketing material from the Insurer which compares rates (if
            requested) and coverages;

      o     A postcard for the policyholder (named insured) to return within 20
            days to exercise the option to accept the Takeout.

15 DAYS BEFORE FINAL ASSUMPTION (SOLICITED POLICIES ONLY)

o     The Insurer must deliver to Citizens a listing of all policies for which
      acceptance of the Takeout has been received or where an Agent appointment
      for the Insurer has been arranged. These policies will be reflected on a
      supplementary Exhibit A to the Assumption Agreement.

o     At this time, all policies originally designated as Solicited Policies,
      but which were not in the acceptance file will be untagged and will be
      included in any Insurer requested data file.



FINAL ASSUMPTION (SOLICITED POLICIES ONLY)

o     On the first of the month, all policies on the supplementary Exhibit A
      eligible for assumption will be assumed by the assigned Insurer. The
      policies will be set for non-renewal by Citizens, and the affected
      policyholders will be sent a Notice of Nonrenewal and Assumption in
      accordance with prior takeout procedures, along with a Certificate of
      Assumption from the Insurer. The Insurer will receive a data file with
      information about all of the policies that were successfully assumed. Any
      policy not assumed (for whatever reason) will be untagged and will be
      included in any future Insurer requested data file.`