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                                                                   EXHIBIT 10.13

                              AMENDED AND RESTATED
                               SECURITY AGREEMENT

      This AMENDED AND RESTATED SECURITY AGREEMENT ("Security Agreement") is
made as of this 26th day of January, 2004 by and among N.P. Premium Finance
Company, a Michigan corporation, and such other persons or entities which from
time to time become parties hereto (collectively, the "Debtors" and individually
each a "Debtor") and Comerica Bank, a Michigan banking corporation, as Agent for
and on behalf of the Banks (as defined below) ("Secured Party").

                                    RECITALS

      A. WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
dated as of January 26, 2004 (as amended or otherwise modified from time to
time, the "Credit Agreement"), among North Pointe Holdings Corporation
("Borrower"), each of the financial institutions party thereto (collectively,
the "Banks") and Secured Party, as Agent for the Banks, the Banks have agreed,
subject to the satisfaction of certain terms and conditions, to make Advances to
Borrower and the Term Loans (as such terms are defined in the Credit Agreement),
as provided therein; and

      B. WHEREAS, each of the Debtors has executed and delivered a guaranty (as
amended or otherwise modified from time to time, the "Guaranty") of the
obligations of the Borrower under the Credit Agreement; and

      C. WHEREAS, the obligations of the Borrower under the Credit Agreement and
the obligations of each other Debtor under the their respective guaranties are
to be secured pursuant to this Agreement.

      D. WHEREAS, N.P. Premium Finance Company executed and delivered to Agent a
Security Agreement dated July ____, 2003 ("Existing Security Agreement") and
Agent and N.P. Premium Finance Company desire to amend and restate the Existing
Security Agreement in its entirety and to add North Pointe Financial Services,
Inc. as a Debtor.

      NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and agreements hereinafter set forth, the parties hereto agree that the Existing
Security Agreement is amended and restated as follows:

      I. Creation of Security Interest

      As security for the Indebtedness (hereinafter defined), each Debtor hereby
pledges and grants to Secured Party, as Agent for and on behalf of Banks, a
security interest in the following described property of Debtor (the
"Collateral"):

            (a) all inventory, goods (including returned or repossessed goods
      and all goods the sale of which gives rise to accounts receivable,
      contract rights, chattel paper,

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      general intangibles or instruments), merchandise and other personal
      property, in each case (i) whether now owned or hereafter produced,
      manufactured or acquired by such Debtor which are held for sale or lease
      or are furnished or to be furnished under a contract of service or are raw
      materials, work in process or materials used or consumed or to be used or
      consumed in such Debtor's business, and (ii) wherever located;

            (b) all accounts; accounts receivable; contract rights; general
      intangibles; chattel paper and instruments (including without limitation
      instruments evidencing any obligation to such Debtor for payment for goods
      sold or leased or services rendered or otherwise); deposit accounts;
      documents; rights to payment evidenced by chattel paper, documents or
      instruments; letters of credit; letter of credit rights; supporting
      obligations; and the rights to payment for money or funds advanced or sold
      together with all payments thereon or thereunder; tax refunds; goodwill;
      licenses, permits and privileges; customer lists; rights of
      indemnification;

            (c) all machinery, equipment, furniture and other tangible personal
      property and fixtures of such Debtor, together with all accessions,
      additions, accessories, parts and equipment now or hereafter affixed
      thereto or used in connection therewith;

            (d) all patents, trademarks, copyrights and other intellectual
      property and proprietary rights;

            (e) all investment property of such Debtor; and

            (f) the balance from time to time in all bank and depository
      accounts of such Debtor and all amounts in any lockbox or in any
      collateral account, including all funds on deposit therein, all
      investments arising out of such funds, all claims thereunder or in
      connection therewith, and all cash, instruments, securities, rights and
      other property at any time and from time to time received, receivable, or
      otherwise distributed in respect of such accounts, such funds or such
      investments;

            (g) all Software (for purposes of this Agreement, "Software"
      consists of all (i) computer programs and supporting information provided
      in connection with a transaction relating to the program, and (ii)
      computer programs embedded in goods and any supporting information
      provided in connection with a transaction relating to the program whether
      or not the program is associated with the goods in such a manner that it
      customarily is considered part of the goods, and whether or not, by
      becoming the owner of the goods, a person acquires a right to use the
      program in connection with the goods, and whether or not the program is
      embedded in goods that consist solely of the medium in which the program
      is embedded);

whether any such property is now owned or hereafter acquired or existing by such
Debtor, and all records (including computer software) pertaining to the
foregoing, and all substitutions for, all proceeds and all products of the
foregoing, including insurance proceeds, to the fullest extent permitted by law,
subject in each case only to the Permitted Encumbrances. The pledge and grant of
a security interest in proceeds hereunder shall not be deemed to give such
Debtor any right to dispose of any of the Collateral, except in accordance with
the terms of the Credit Agreement.

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      II. Debtors' Obligations.

      A. Payment of Secured Indebtedness. The security interest created herein
by each Debtor is given as security for the discharge and performance of the
following obligations: all of such Debtor's and the Borrower's obligations
contained in or arising under or in connection with the Credit Agreement, any
Note, the Guaranty, any Interest Rate Protection Agreements, any other Loan
Document or any other document or instrument executed in connection therewith,
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due to become due, together with
interest thereon; and also as security for all other indebtedness and
liabilities, whether direct, indirect, absolute or contingent, owing by such
Debtor or the Borrower to the Banks in any manner and at any time, whether due
or hereafter to become due, now owing or that may hereafter be incurred by such
Debtor or the Borrower to or acquired by the Banks, and any judgments that may
hereafter be rendered on such indebtedness or any part thereof, with interest
according to the rates and terms specified, or as provided by law, and any and
all replacements, consolidations, amendments, renewals or extensions of the
foregoing (collectively herein called the "Indebtedness").

      B. Protection of Collateral. Each Debtor shall take any and all reasonable
steps required to protect the Collateral, and in pursuance thereof, each such
Debtor agrees that:

            (1) The Collateral will not be misused, wasted or allowed to
deteriorate, except for the ordinary wear and tear of its intended primary use
or to the extent no longer useful or necessary to such Debtor's business, and
will at all times be maintained in accordance with the applicable terms of the
Credit Agreement.

            (2) The Collateral described in Section I.(a) and (c) will be
insured with insurance coverage by financially sound and reputable insurers and
in such forms and amounts and against such risks as prudent business judgment
and then current practice would dictate for companies or professional
enterprises engaged in the same or a similar business and owning and operating
similar properties. In the case of all such insurance policies, each such Debtor
shall designate the Secured Party, on behalf of Banks, as mortgagee and loss
payee and such policies shall provide that any loss be payable to each such
Debtor and Secured Party, on behalf of Banks, as mortgagee and loss payee, as
their respective interests may appear. Further, upon the request of the Secured
Party acting at the request of the Banks, each such Debtor shall deliver copies
of all said policies, including all endorsements thereon and those required
hereunder, to Secured Party; and each such Debtor assigns to Secured Party, on
behalf of Banks, as additional security hereunder, all its rights to receive
proceeds of insurance with respect to the Collateral, subject to clause (i) of
this subsection II.B.(2). All such insurance shall, by its terms, provide that
no cancellation, lapse (including without limitation any lapse for non-payment
of premiums) or material change in coverage shall become effective until thirty
(30) days after receipt by Secured Party of written notice from the applicable
carrier. Each Debtor further shall provide Secured Party upon request with
evidence reasonably satisfactory to Secured Party that each such Debtor is at
all times in compliance with this paragraph. During the continuance of an Event
of Default, Secured Party may act as each such Debtor's attorney-in-fact in
obtaining, adjusting, settling and compromising such insurance and endorsing any
drafts. Upon default in this covenant, Secured Party may procure such insurance
and its costs therefor shall be charged to Borrower, payable on demand, with
interest at the highest rate set forth in the Credit Agreement and added to the

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Indebtedness secured hereby. The disposition of proceeds of any insurance on the
Collateral ("Insurance Proceeds") shall be governed by the following:

                  (i) provided that no Event of Default has occurred and is
      continuing hereunder, (a) if the amount of Insurance Proceeds in respect
      of any loss or casualty does not exceed Twenty Five Thousand Dollars
      ($25,000), such Debtor shall be entitled, in the event of such loss or
      casualty, to receive all such Insurance Proceeds and to apply the same
      toward the replacement of the Collateral affected thereby; and (b) if the
      amount of Insurance Proceeds in respect of any loss or casualty exceeds
      Twenty Five Thousand Dollars ($25,000), such Insurance Proceeds shall be
      paid to and received by Secured Party, for release to such Debtor for the
      replacement of the Collateral affected thereby or, upon written request of
      such Debtor (accompanied by reasonable supporting documentation), for such
      other use or purpose as approved by the Majority Banks, in their
      reasonable discretion, it being understood and agreed in connection with
      any release of funds under this subparagraph (B), that the Secured Party
      and Majority Banks may impose reasonable and customary conditions on the
      disbursement of such Insurance Proceeds; and

                  (ii) if an Event of Default has occurred or is continuing
      hereunder, all Insurance Proceeds in respect of any loss or casualty shall
      be paid to and received by the Secured Party, to be applied by the Secured
      Party against the Indebtedness and/or to be held by the Secured Party as
      cash collateral for the Indebtedness, as the Majority Banks may direct in
      their sole discretion and/or for replacement of the Collateral affected
      thereby, as the Majority Banks may direct in their sole discretion.

            (3) The Collateral is located in the premises set forth on Schedule
I, and will not be moved to premises other than those set forth on Schedule I,
and such other locations with respect to which each such Debtor shall have
executed and delivered to Secured Party all financing statements and other
documents and instruments necessary to perfect or continue the perfection of the
Secured Party's security interest in the Collateral. Subject to the applicable
terms of the Credit Agreement, upon request therefor by the Secured Party, each
such Debtor will inform the Secured Party in writing of the whereabouts of the
Collateral and Debtor will promptly arrange for any inspections requested by the
Secured Party, on behalf of Banks pursuant to the terms of the Credit Agreement;

            (4) Each such Debtor shall comply with all applicable laws, rules,
ordinances, regulations and orders of any governmental authority, whether
federal, state, local or foreign in effect from time to time with respect to the
Collateral, to the full extent required under the Credit Agreement.

            (5) Secured Party, on behalf of the Banks, may, subject to the
applicable terms of the Credit Agreement, examine and inspect the Collateral at
any time wherever located.

      C. Protection of Security Interest. Each Debtor agrees that:

            (1) Except as permitted by the Credit Agreement, it will not sell,
transfer, lease or otherwise dispose of any of the Collateral or any interest
therein or offer to do so (other

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than the sale or lease of inventory in the ordinary course of business or as
otherwise permitted by the Credit Agreement) without the prior written consent
of Secured Party, given at the written direction or with the written approval of
the requisite Banks, and will not create, incur, assume or suffer to exist any
mortgage, pledge, encumbrance, security interest, lien or charge of any kind
upon any of the Collateral (or any interest therein or portion thereof), other
than in favor of Secured Party, on behalf of the Banks and liens permitted under
the Credit Agreement.

            (2) It will, to the full extent required under the Credit Agreement,
pay all taxes including, without limitation, any maintenance fees payable on any
registered patents and any fees in connection with any required filings in
connection with any pending or registered trademarks, assessments, governmental
charges and levies upon the Collateral or for its use or operation.

            (3) It will sign and execute alone or with Secured Party any
financing statement or other document (including without limitation, filings
required in connection with any pending or registered trademark) or procure any
documents and pay all connected costs, necessary to protect the security
interest under this Security Agreement against the rights or interests of third
persons.

            (4) It will reimburse Secured Party for all reasonable costs,
including reasonable attorneys' fees, incurred for any action taken by Secured
Party to remedy an Event of Default of Debtor which Secured Party elects to
remedy pursuant to its rights under Paragraph IV hereof.

            (5) It will,

                  (i) subject to Section 6.5 of the Credit Agreement, allow
      Secured Party, or any Bank, to examine, audit and inspect such Debtor's
      books, accounts, and other records relating to the Collateral wherever
      located at all reasonable times during normal business hours, upon oral or
      written request of Secured Party, and to make and take way copies of any
      and all such books, accounts, records and ledgers;

                  (ii) punctually and properly perform all of its covenants and
      duties under any other security agreement, mortgage, collateral
      document, pledge agreement or contract of any kind now or hereafter
      existing as security for or in connection with payment of the
      Indebtedness, or any part thereof;

                  (iii) perform its obligations under and comply with the terms
      and provisions of the Credit Agreement and the other Loan Documents to
      which it is or may become a party;

                  (iv) keep, at the addresses designated on Schedule II and such
      additional addresses as may be provided from time to time for its records,
      all records concerning the Collateral, which records will be of such
      character as will enable Secured Party or its designees to determine at
      any time the status of the Collateral;

                  (v) give Secured Party not less than 30 days prior written
      notice of all contemplated changes in such Debtor's name, legal structure,
      location, jurisdiction of

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      formation, or chief executive office, or in the location of the Collateral
      or such Debtor's records concerning same and, prior to making any such
      changes, file or cause to be filed all financing statements or amendments
      or other documents or instruments determined by Secured Party to be
      necessary or appropriate to establish and maintain a valid first priority
      security interest in all the Collateral in accordance with the terms
      hereof;

                  (vi) promptly furnish Secured Party with any information in
      writing which Secured Party may reasonably request concerning the
      Collateral;

                  (vii) to the extent required under the Credit Agreement,
      promptly notify Secured Party of any material claim, action or proceeding
      affecting the Collateral and title therein, or in any part thereof, or the
      security interest created herein, and, at the request of the Secured
      Party, appear in and defend, at such Debtor's expense, any such action or
      proceeding;

                  (viii) promptly, after being requested by Secured Party, pay
      to Secured Party the amount of all reasonable expenses, including
      reasonable attorneys' fees and other legal expenses, incurred by Secured
      Party pursuant to and in accordance with the Credit Agreement in
      protecting and maintaining the Collateral or its rights hereunder, or in
      connection with any audit or inspection of the Collateral pursuant to the
      terms hereof, and in enforcing the security interest created herein;

                  (ix) allow Secured Party, upon and so long as there exists any
      Default or Event of Default, to correspond with its account debtors to
      confirm its accounts receivable and Obligors under any contracts;

                  (x) take such actions as Secured Party, in its sole
      discretion, deems necessary or appropriate to establish exclusive control
      (as defined in the UCC) over any Collateral of such nature that perfection
      of Secured Party's security interest may be established by control.

            (6) With respect to any Collateral of a kind requiring an additional
security agreement, financing statement, or other writing to perfect a security
interest therein in favor of Security Party, on behalf of Banks, such Debtor
will forthwith upon demand by Secured Party execute and deliver to Secured Party
on behalf of Banks, whatever documentation the Secured Party or the requisite
Banks shall reasonably deem necessary or proper for such purpose. Should any
covenant, duty or agreement of such Debtor fail to be performed in accordance
with its terms hereunder resulting in an Event of Default, Secured Party may,
but shall never be obligated to, perform or attempt to perform such covenant,
duty or agreement on behalf of such Debtor, and any amount expended by Secured
Party in such performance or attempted performance shall become part of the
Indebtedness, and, at the request of Secured Party, such Debtor agrees to pay
such amount to Secured Party upon demand at Secured Party's office in Detroit,
Michigan together with interest thereon at the highest rate at which interest
accrues on amounts after the same become due pursuant to the terms of the Credit
Agreement, from the date of such expenditure by Secured Party until paid. With
respect to any Collateral (other than goods) in which such Debtor acquires any
rights subsequent to the date hereof and which, under applicable law, a security
interest is or can be perfected by possession, upon request of the Secured Party
or

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the Majority Banks, such Debtor agrees to deliver possession of such Collateral
to Secured Party immediately upon its acquisition of rights therein.

            (7) It will hold the proceeds of any of the Collateral (including
accounts receivable and contracts) which is sold other than in the ordinary
course of such Debtor's business (or otherwise as permitted under the Credit
Agreement or this Agreement, subject to the terms thereof) in trust for Secured
Party on behalf of the Banks, will not commingle said proceeds with any other
funds, and, after and during the continuance of an Event of Default, will
deliver such proceeds to Secured Party immediately upon its request.

            (8) It will not, except as permitted under the Credit Agreement,
grant any rebate, refund, allowance or credit on any account receivable, or on
any amounts due under any accounts receivable, other than in the ordinary course
of business, without Secured Party's prior written consent.

            (9) If Secured Party, acting in its sole discretion, redelivers any
Collateral to such Debtor or such Debtor's designee for the purpose of (i) the
ultimate sale or exchange thereof, or (ii)presentation, collection, renewal, or
registration of transfer thereof, or (iii) loading, unloading, storing,
shipping, transshipping, manufacturing, processing or otherwise dealing
therewith preliminary to sale or exchange; such redelivery shall not constitute
a release of Secured Party's security interest therein or in the proceeds
thereof unless Secured Party, with the consent of the Banks, specifically so
agrees in writing. If such Debtor requests any such redelivery, such Debtor will
deliver with such request a duly executed financing statement in form and
substance satisfactory to Secured Party.

            (10) Subject to the applicable terms of the Credit Agreement, Debtor
shall at the direction of the Secured Party take any and all other steps
reasonably required under applicable law to perfect the lien and security
interest established hereby in favor of Secured Party, on behalf of the Banks,
including without limitation the execution, delivery and/or performance of
appropriate acknowledgments, governmental acknowledgments, registrations or
approvals, financing statements and other documents and instruments, and the
registration, recording and/or filing of such instruments with such Persons and
in such jurisdictions as necessary to perfect the security interest and lien
established hereby.

            (11) Secured Party or any agent of Secured Party may execute and
file in the name of and on behalf of such Debtor all financing statements or
other filings deemed necessary or desirable by Secured Party to evidence,
perfect or continue Secured Party's security interests in the Collateral.

            (12) Secured Party may take such actions in its own name or in such
Debtor's names as Secured Party, in its sole discretion, deems necessary or
appropriate to establish exclusive control (as defined in the UCC) over any
Collateral of such nature that perfection of Secured Party's security interest
may be established by control.

            (13) It will take any and all actions required or reasonably
requested by the Secured Party, from time to time, to (i) cause the Secured
Party to obtain exclusive control of any investment property owned by such
Debtor in a manner reasonably acceptable to the Secured

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Party and (ii) obtain from any issuers of investment property and such other
Persons, for the benefit of the Secured Party, written confirmation of the
Secured Party's control over such investment property. For purposes of this
Section C(13), the Secured Party shall have exclusive control of investment
property if (i) such investment property consists of certificated securities and
a Debtor delivers such certificated securities to the Secured Party (with
appropriate endorsements if such certificated securities are in registered
form); (ii) such investment property consists of uncertificated securities and
either (x) a Debtor causes the issuer to register the Debtor's pledge of the
investment property on the issuer's books and records or (y) the issuer thereof
agrees, pursuant to documentation in form and substance satisfactory to the
Secured Party, that it will comply with instructions originated by the Secured
Party without further consent by such Debtor; and (iii) such investment property
consists of security entitlements either (x) the Secured Party becomes the
entitlement holder thereof or (y) the appropriate securities intermediary
agrees, pursuant to the documentation in form and substance satisfactory to the
Secured Party, that it will comply with entitlement orders originated by the
Secured Party without further consent by any Debtor.

      III. Collection of Proceeds - Remittance Basis.

            (a) At any time upon the request of Secured Party, each Debtor shall
      at its sole expense maintain until the Agent acting in its sole discretion
      shall notify Debtors that the Indebtedness is no longer required to be on
      a Remittance Basis a United States post office lock box (the "Lock Box"),
      to which Secured Party shall have exclusive access, and to which Debtors
      shall have no access. Each Debtor expressly authorizes Secured Party, from
      time to time, to remove all contents from the Lock Box, for disposition in
      accordance with this Agreement. Each Debtor agrees to notify all account
      debtors and other parties obligated to it that all payments made on any
      account, invoice or other Collateral (other than payments by electronic
      funds) shall be remitted, for the credit of such Debtor, to the Lock Box,
      and each such Debtor shall include a like statement on all invoices.
      Payments made by electronic funds transfer shall be made directly to the
      Cash Collateral Account (defined below), and each such Debtor shall so
      instruct its account debtors and other parties obligated to it. Each
      Debtor shall execute all documents, authorizations and other agreements
      necessary to establish the Lock Box, and Secured Party's exclusive access
      thereto.

            (b) Any and all cash, checks, drafts and other instruments for the
      payment of money received by each Debtor at any time, in full or partial
      payment of any of the Collateral shall forthwith, upon receipt, be
      transmitted and delivered to Secured Party (properly endorsed, where
      required, so that such items may be collected by Secured Party). Any such
      items received by a Debtor shall not be commingled with any other of such
      Debtor's funds or property, but will be held separate and apart from such
      Debtor's own funds or property, and upon express trust for the benefit of
      Secured Party and the Banks until delivery is made to Secured Party.

            (c) All items or amounts which are remitted to the Lock Box or
      otherwise delivered by or for the benefit of a Debtor to Secured Party on
      account of partial or full payment of, or any other amount payable with
      respect to, any of the Collateral shall, at Secured Party' s option, (i)
      be applied when received first to the payment of the

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      Revolving Credit Advances and then the other Indebtedness, whether then
      due or not, or (ii) shall be deposited to the credit of a non-interest
      bearing deposit account in the name Comerica Bank, as Secured Party, for
      the benefit of the applicable Debtor (the "Cash Collateral Account") to be
      established by each Debtor with Secured Party pursuant to this paragraph,
      as security for payment of the Indebtedness, provided, however, prior to
      the occurrence of an Event of Default, collected funds in the Cash
      Collateral Account shall be applied to the payment of the Indebtedness
      each Business Day unless no Prime-based Advances of the Revolving Credit
      are then outstanding in which case such funds shall be held in the Cash
      Collateral Account until they can be applied to Prime-based Advances of
      the Revolving Credit or, at the option of Debtor, deposited to an interest
      bearing account maintained in the name of Debtor with Agent. No Debtor
      shall have any right whatsoever to withdraw any funds so deposited. Each
      Debtor further grants to Secured Party a first security interest in and
      lien on all funds on deposit in such account. To the extent collected
      funds remain at any time on deposit in the Cash Collateral Account after
      payment and discharge in full of the Indebtedness, Secured Party shall
      release such surplus collected funds to Debtor. Each Debtor hereby
      irrevocably authorizes and directs Secured Party to endorse all items
      received for deposit to the Cash Collateral Account, notwithstanding the
      inclusion on any such item of a restrictive notation, e.g., "paid in
      full", "balance of account", or other restriction.

            (d) Each Debtor agrees that neither Secured Party nor any Bank shall
      be liable for any loss or damage which Debtor suffer or may suffer as a
      result of Secured Party's processing of items or its exercise of any other
      rights or remedies under this Agreement, including without limitation
      indirect, special or consequential damages, loss of revenues or profits,
      or any claim, demand or action by any third party arising out of or in
      connection with the processing of items or the exercise of any other
      fights or remedies hereunder, except for direct damages which arise from
      Secured Party's or any Bank's gross negligence or willful misconduct. Each
      Debtor further agrees to indemnity and hold Secured Party and the Banks
      harmless from and against all such third party claims, demands or actions,
      including without limitation litigation costs and reasonable attorney
      fees, except with respect to such claims, demands and actions which arise
      from Secured Party's or any Bank's gross negligence or willful misconduct.

      IV. Default

      The terms "Default" and "Event of Default", as used herein, shall mean the
occurrence and continuance of a Default or an Event of Default, as the case may
be, under the Credit Agreement.

      V. Secured Party's Rights and Remedies.

      In addition to its rights and remedies under the Credit Agreement and the
other Loan Documents, and under applicable law, Secured Party shall have
available to it the following rights and remedies upon occurrence and during the
continuance of an Event of Default:

      A. Right to Discharge Debtor's Obligations. Secured Party may, with the
approval of the Majority Banks, discharge taxes, liens or security interests or
other encumbrances at any time

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levied or placed on the Collateral in violation of the terms hereof, whether
senior or junior to the security interest herein granted, may remedy or cure any
default of a Debtor under the terms of any lease, rental agreement, land
contract or other document which in any way pertains to or affects such Debtor's
title to or interest in any of the Collateral, may pay for insurance on the
Collateral, and may pay for the maintenance and preservation of the Collateral,
unless such Debtor is contesting in good faith such obligations, and such Debtor
agrees to reimburse Secured Party, on demand, for any payment made or any
expense incurred by Secured Party pursuant to the foregoing authorization, with
interest, which payments and expenses shall be secured by the Collateral.

      B. Remedies and Enforcement. Secured Party shall have and may exercise, at
the direction or with the approval of the Majority Banks, any and all rights of
enforcement and remedies afforded to a secured party under the UCC or other
applicable uniform commercial code (or other applicable law), to the full extent
permitted by applicable law, on the date of this Security Agreement or the date
of such Debtor's default, together with any and all other rights and remedies
otherwise provided and available to Secured Party by applicable law unless such
application would result in the invalidity or unenforceability of any provision
hereof, in which case the law of the state in which any of the Collateral is
located shall apply to the extent necessary to render such provision valid and
enforceable; and, in conjunction with, in addition to, or substitution for those
rights, Secured Party may, at the direction or with the approval of the Majority
Banks, or with respect to subparagraph (3) below), all of the Banks:

            (1) Enter upon such Debtor's premises to take possession of,
assemble, collect and/or dispose of the Collateral and, if Secured Party elects
to do, to apply any of the Collateral against any of the Indebtedness secured
hereby;

            (2) Require such Debtor to assemble the Collateral and make it
available at a place Secured Party designates to allow Secured Party to take
possession or dispose of the Collateral;

            (3) Waive any default, or remedy any default, without waiving its
rights and remedies upon default and without waiving any other prior or
subsequent default;

            (4) Without any notice to any Debtor, notify any parties obligated
on any of the Collateral to make payment to the Secured Party, on behalf of the
Banks, of any amounts due or to become due thereunder and enforce collection of
any of the Collateral by suit or otherwise and surrender, release or exchange
all or any part thereof, or compromise or extend or renew for any period
(whether or not longer than the original period) the indebtedness thereunder or
evidenced thereby. Upon request of the Secured Party, each Debtor will, at its
own expense, notify any parties obligated to such Debtor on any of the
Collateral to make payment to the Secured Party of any amounts due or to become
due thereunder, and indicate on all billings to such account debtors that their
accounts must be paid to or as directed by Secured Party. Each Debtor agrees
that neither Secured Party nor the Banks shall be liable for any loss or damage
which such Debtor suffers or may suffer as a result of Secured Party's
processing of items or its exercise of any other rights or remedies under this
Security Agreement, including without limitation indirect, special or
consequential damages, loss of revenues or profits, or any claim, demand or
action by any third party not related to or affiliated with such Debtor arising
out of or

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in connection with the processing of items (excluding only the claims of such
third parties in connection with the processing of items based solely upon the
gross negligence or willful misconduct of Secured Party) or the exercise of any
other rights or remedies hereunder. Each Debtor further agrees to indemnify and
hold Secured Party and the Banks harmless from and against all such third party
claims, demands or actions, including without limitation litigation costs and
reasonable attorneys' fees, excepting only those claims, demands and actions
arising solely as a result of the gross negligence or willful misconduct of
Secured Party or any of the Banks;

            (5) Appoint any officer or agent of Secured Party as a Debtor's true
and lawful proxy and attorney-in-fact, with power, upon the occurrence and
during the continuance of any Event of Default; to endorse such Debtor's name or
any of its officers or agents upon any notes, checks, drafts, money orders, or
other instruments of payment (including payments payable under any policy of
insurance on the Collateral) or Collateral that may come into possession of the
Secured Party in full or part payment of any amounts owing to the Banks; to sign
and endorse the name of such Debtor and/or any of its officers or agents upon
any invoice, freight or express bill, bill of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications and notices in
connection with accounts, and any instrument or document relating thereto or to
such Debtor's rights therein; to execute on behalf of such Debtor any financing
statements, amendments, subordinations or other filings pursuant to the Credit
Agreement, this Security Agreement or the other Loan Documents; each Debtor
hereby granting unto Secured Party on behalf of the Banks upon the occurrence
and during the continuance of an Event of Default, as the proxy and
attorney-in-fact of such Debtor, full power to do any and all things necessary
to be done in and about the premises as fully and effectually as such Debtor
might or could do, and hereby ratifying all that said proxy and attorney shall
lawfully do or cause to be done by virtue hereof. The proxy and power of
attorney described herein shall be deemed to be coupled with an interest and
shall be irrevocable for the entire term of the Credit Agreement, the Notes and
all transactions thereunder and thereafter as long as any Indebtedness or any of
the commitments to lend (whether optional or obligatory) remain outstanding. The
Secured Party shall have full power to collect, compromise, endorse, sell or
otherwise deal with the Collateral or proceeds thereof on behalf of the Banks in
its own name or in the name of such Debtor.

      C. Right of Sale.

            (1) Each Debtor agrees that upon the occurrence and continuance of
an Event of Default, Secured Party may, at its option, sell and dispose of the
Collateral at public or private sale without any previous demand of performance.
Each Debtor agrees that notice of such sale sent to such Debtor's address, as
set forth on the signature pages attached hereto, by certified or registered
mail sent at least five (5) Business Days prior to such sale, shall constitute
reasonable notice of sale. The foregoing shall not require notice if none is
necessary under applicable law. The proceeds of sale shall be applied in the
following order:

                  (i) to all reasonable costs and charges incurred by Secured
      Party in the taking and causing the removal and sale of said property,
      including such reasonable attorneys' fees as shall have been incurred by
      Secured Party;

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<PAGE>

                  (ii) to the Indebtedness, including without limitation all
      accrued interest thereon, premiums and make whole amounts, if any, in the
      order set forth in the Credit Agreement; and

                  (iii) any surplus of such proceeds remaining shall be paid to
      such Debtor, or to such other party who shall lawfully be entitled
      thereto.

      Each Debtor agrees that Secured Party shall be under no obligation to
accept any noncash proceeds in connection with any sale or disposition of
Collateral unless failure to do so would be commercially unreasonable. If
Secured Party agrees in its sole discretion to accept noncash proceeds (unless
the failure to do so would be commercially unreasonable), Secured Party may
ascribe any commercially reasonable value to such proceeds. Without limiting the
foregoing, Secured Party may apply any discount factor in determining the
present value of proceeds to be received in the future or may elect to apply
proceeds to be received in the future only as and when such proceeds are
actually received in cash by Bank.

            (2) At any sale or sales made pursuant to this Security Agreement or
in a suit to foreclose the same, the Collateral may be sold en masse or
separately, at the same or at different times, at the option of the Secured
Party or its assigns. Such sale may be public or private with notice as required
by the Uniform Commercial Code as then in effect in the state in which the
Collateral is located, and the Collateral need not be present at the time or
place of sale. At any such sale, the Secured Party may bid for and purchase any
of the property sold, notwithstanding that such sale is conducted by the Secured
Party or its attorneys, agents, or assigns. At any sale or other disposition of
Collateral pursuant to this Agreement, Bank disclaims all warranties which would
otherwise be given under the UCC, including without limit a disclaimer of any
warranty relating to title, possession, quiet enjoyment or the like, and Bank
may communicate these disclaimers to a purchaser at such disposition. This
disclaimer of warranties will not render the sale commercially unreasonable.

(3) The following shall be the basis for any finder of fact's determination of
the value of any Collateral which is the subject matter of a disposition giving
rise to a calculation of any surplus or deficiency under Section 9-615 (f) of
the UCC: (a) the Collateral which is the subject matter of the disposition shall
be valued in an "as is" condition as of the date of the disposition, without any
assumption or expectation that such Collateral will be repaired or improved in
any manner; (b) the valuation shall be based upon an assumption that the
transferee of such Collateral desires a resale of the Collateral for cash
promptly (but no later than 30 days) following the disposition; (c) all
reasonable closing costs customarily borne by the seller in commercial sales
transactions relating to property similar to such Collateral shall be deducted
including, without limitation, brokerage commissions, tax prorations, attorneys'
fees, whether inside or outside counsel is used, and marketing costs; (d) the
value of the Collateral which is the subject matter of the disposition shall be
further discounted to account for any estimated holding costs associated with
maintaining such Collateral pending sale (to the extent not accounted for in (c)
above), and other maintenance, operational and ownership expenses; and (e) any
expert opinion testimony given or considered in connection with a determination
of the value of such Collateral must be given by persons having at least 5 years
experience in appraising property similar to the Collateral and who have
conducted and prepared a complete written appraisal of such Collateral taking
into consideration the factors set forth above. The "value" of any such

                                       12

<PAGE>

Collateral shall be a factor in determining the amount of proceeds which would
have been realized in a disposition to a transferee other than a secured party,
a person related to a secured party or a secondary obligor under Section
9-615(f).

      D. Miscellaneous. Secured Party shall have the right at all times to
enforce the provisions of this Security Agreement, on behalf of Banks, in strict
accordance with the terms hereof, notwithstanding any conduct or custom on the
part of Secured Party or any of the Banks in refraining from so doing at any
time or times. The failure of Secured Party or any of the Banks at any time or
times to enforce its rights under said provisions strictly in accordance with
the same shall not be construed as having created a custom in any way or manner
contrary to the specific provisions of this Security Agreement or as having in
any way or manner modified the same. All rights and remedies of Secured Party
and Banks hereunder shall be cumulative and concurrent, and the exercise of one
right or remedy shall not be deemed a waiver or release of any other right or
remedy.

      VI. Representations, Warranties and Covenants of Debtors.

      Each Debtor represents and warrants, and, after the date hereof, covenants
so long as any of the Credit Agreement, the Notes or Letter of Credit Agreements
remain in effect other than with respect to contingent indemnification
obligations to the extent no claim has been asserted, that:

      A. Such Debtor is a registered organization under the laws of one of the
states comprising the United States and such Debtor is located (as determined
under the UCC) in the state under the laws of which it was organized, which is
set forth in Schedule II hereto;

      B. Each other location where Debtor maintains a place of business is set
forth on Schedule III;

      C. No financing statement covering the Collateral, or any part thereof,
has been or will be filed with any filing officer, except as permitted under the
Credit Agreement. No person, other than Secured Party, has possession or control
(as defined in the UCC) of any Collateral of such nature that perfection of a
security interest may be accomplished by control.

      D. No other agreement, pledge or assignment covering the Collateral, or
any part thereof, has been or will be made and no security interest, other than
the one created hereby or pursuant to security agreements and pledges previously
made in favor of Secured Party on behalf of the Banks, has or will be attached
or has been or will be perfected in the Collateral or in any part thereof,
except as permitted under the Credit Agreement.

      E. No material dispute, right of setoff, counterclaim or defenses exist
with respect to any part of the Collateral (excluding accounts, accounts
receivable and rights to payment for services rendered), except as permitted
under the Credit Agreement.

      F. At the time Secured Party's security interest attaches to any of the
Collateral or its proceeds, such Debtor will be the lawful owner thereof with
the right to transfer any interest therein, such Collateral is free and clear of
all liens other than the one created hereby or permitted by the Credit Agreement
and that such Debtor will make such further assurances to

                                       13

<PAGE>

prove its title to the Collateral as may be reasonably required, will keep such
Collateral free and clear of all liens other than the one created hereby and
liens permitted by the Credit Agreement, and will take such action to defend the
Collateral and its proceeds against the lawful claims and demands of all persons
whomsoever. The delivery at any time by such Debtor to Secured Party of
Collateral, or financing statements covering any Collateral shall constitute a
representation and warranty by such Debtor under this Security Agreement that,
with respect to such Collateral, and each item thereof, such Debtor is owner of
the Collateral and the matters heretofore warranted in this paragraph are true
and correct in all material respects.

      G. The representations and warranties contained in any of the Credit
Agreement and the Guaranty are incorporated by reference herein and are all made
as of the date hereof.

      VII. Mutual Agreements.

      Each Debtor and Secured Party mutually agree as follows:

      A. "Debtor" and "Secured Party" as used in this Security Agreement include
the successors and permitted assigns of those parties.

      B. To the extent permitted by applicable law, except as otherwise provided
herein, the law governing this Security Agreement shall be that of the State of
Michigan.

      C. This Security Agreement includes all amendments and supplements hereto
and all assignments hereof, provided, that such Debtor and Secured Party shall
not be bound by any amendment hereto unless such amendment is expressed in a
writing executed by each of them.

      D. All capitalized or other terms not specifically defined herein are used
as defined in the Credit Agreement. To the extent not inconsistent therewith,
all such terms shall also be conformity with the UCC or other applicable Uniform
Commercial Code.

      E. The security interest granted under this Security Agreement shall be a
continuing security interest in every respect (whether or not the outstanding
balance of the Indebtedness is from time to time temporarily reduced to zero)
and Secured Party's security interest in the Collateral as granted herein shall
continue in full force and effect for the entire duration that the Credit
Agreement remains in effect (other than to the extent in effect only with
respect to contingent indemnification obligations with respect to which no claim
has been asserted) and until all of the Indebtedness is repaid and discharged in
full, and no commitment (whether optional or obligatory) to extend any credit
under the Credit Agreement or any of the Notes remains outstanding.

      F. THE PARTIES HERETO ACKNOWLEDGE THAT THIS SECURITY AGREEMENT IS SUBJECT
TO THE MUTUAL WAIVER OF JURY TRIAL CONTAINED IN THE APPLICABLE PROVISIONS OF THE
CREDIT AGREEMENT AND THE GUARANTY, AS APPLICABLE.

      G. Each of the Debtors hereby irrevocably submits to the non-exclusive
jurisdiction of any United States Federal Court or Michigan state court sitting
in Detroit, Michigan in any action or proceeding arising out of or relating to
this Security Agreement and hereby irrevocably

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<PAGE>

agrees that all claims in respect of such action or proceeding may be heard and
determined in any such United States Federal Court or Michigan state court. Each
Debtor irrevocably consents to the service of any and all process in any such
action or proceeding brought in any court in or of the State of Michigan by the
delivery of copies of such process to such Debtor at its address specified in
Schedule II hereto or by certified mail directed to such address. Nothing in
this paragraph shall affect the right of the Banks and the Secured Party to
serve process in any other manner permitted by law or limit the right of the
Banks or the Secured Party (or any of them) to bring any such action or
proceeding against any of the Debtors or any of its or their property in the
courts of any other jurisdiction. Each of the Debtors hereby irrevocably waives
any objection to the laying of venue of any such suit or proceeding in the above
described courts.

                     [SIGNATURES FOLLOW ON SUCCEEDING PAGES]

                                       15

<PAGE>

      IN WITNESS WHEREOF, each of the undersigned Debtors and Secured Party have
executed this Security Agreement as of the day and year first above written.

                                       DEBTORS:

                                       N.P. PREMIUM FINANCE COMPANY

                                       By: /s/ James G. Petcoff
                                           -------------------------------------

                                       Its: President

                                       NORTH POINTE FINANCIAL SERVICES, INC.

                                       By: /s/ B. Matthew Petcoff
                                           -------------------------------------

                                       Its: ____________________________________

ACCEPTED BY SECURED PARTY:

COMERICA BANK, as Agent for the Banks

By: /s/ Andrew Roy
    ---------------------------------
           Andrew W. Roy
Its:       Vice President

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                                   Schedule I

                             Location of Collateral

Each Debtor's assets are located at 28819 Franklin Road, Southfield, Michigan
48034

<PAGE>

                                   Schedule II

                      Each Debtor's chief executive office,
                    principal place of business and location
                                 of organization

Each Debtor`s chief executive office and principal place of business is located
at 28819 Franklin Road, Southfield, Michigan 48034

<PAGE>

                                  Schedule III

                         Locations of Place of Business

28819 Franklin Road
Southfield, Michigan 48034