<PAGE>

                                                                   EXHIBIT 10.24

                       QUOTA SHARE REINSURANCE AGREEMENT

                                     AMONG

                    STATE NATIONAL INSURANCE COMPANY, INC.,

                                      AND

                         NORTH POINTE INSURANCE COMPANY

                                      AND

                     NORTH POINTE FINANCIAL SERVICES, INC.

                          EFFECTIVE: DECEMBER 1, 2003

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                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
Article                                                            Page
<S>                                                                <C>
         Preamble                                                   1

   1     Business Reinsured                                         1

   2     Original Conditions                                        2

   3     Exclusions                                                 2

   4     Commencement, Termination, Terms & Conditions              3

   5     Loss and Loss Adjustment Expense                           5

   6     Reports and Remittances                                    6

   7     Errors and Omissions                                       7

   8     Premium and Commission                                     8

   9     Access to Records                                          9

   10    Arbitration                                                9

   11    Assessments, Assignments, Fines and Penalties              10

   12    Premium Financing                                          11

   13    Insolvency                                                 11

   14    Alternate Payee                                            12

   15    Hold Harmless Provisions                                   12

   16    Loss in Excess of Policy Limits/ECO                        14

   17    Regulatory Matters                                         14

   18    The General Agent                                          15

   19    Reinsurer or General Agent or Transfer                     16

   20    Miscellaneous                                              16

   21    Loss and Unearned Premium Reserve Funding                  18

   22    Savings Clause                                             19
</TABLE>

<PAGE>

                       QUOTA SHARE REINSURANCE AGREEMENT

THIS QUOTA SHARE REINSURANCE AGREEMENT (this "Agreement") is made and entered
into as of December 1, 2003, by and among NORTH POINTE INSURANCE COMPANY, a
corporation organized under the laws of the State of Michigan ("Reinsurer"),
STATE NATIONAL INSURANCE COMPANY, INC., an insurance company organized under the
laws of the State of Texas ("Company"), and NORTH POINTE FINANCIAL SERVICES,
INC., a corporation organized under the laws of the State of Michigan ("General
Agent");

                                  WITNESSETH:

THAT, in consideration of the mutual covenants hereinafter contained and upon
the terms and conditions hereinbelow set forth, the parties hereto agree as
follows:

                                    PREAMBLE

It is understood that the Company, the Reinsurer and the General Agent
(hereinafter identified collectively as the "Parties") hereto wish to enter into
a reinsurance arrangement through which the General Agent will market and
produce insurance for bowling center proprietors in several states which
insurance will be written by the Company and reinsured by the Reinsurer (the
"Bowling Program"), and in which the Company is to bear no business, credit or
insurance risk whatsoever (save the risk of the Reinsurer's insolvency). The
Reinsurer shall hold the Company harmless and indemnify it for these and all
risks. The sole consideration provided by the Company, in exchange for the fees
as agreed to, is to permit the Policies (as hereinafter defined), which are
reinsured 100% under this Agreement to be issued in the name of the Company. All
provisions of this Agreement shall be interpreted so as to be in accord with
this Preamble.

                                   ARTICLE I
                               BUSINESS REINSURED

1.01 Effective as of the effective date of this Agreement, the Company obligates
itself to cede to the Reinsurer, and the Reinsurer obligates itself to accept,
100% of the Company's gross liability under all Bowling Program policies,
certificates, contracts, binders, agreements or other proposals or evidences of
insurance, new and renewal policies, binders, contracts of insurance and
endorsements (hereinafter called "Policies") issued by and on behalf of the
Company, in its sole discretion, as general liability, property, and
miscellaneous coverages during the term of this Agreement, produced by or
through the General Agent appointed by the Company at the request of the
Reinsurer as provided in Section 18.02 of this Agreement.

1.02 Subject to Section 15.05 hereof, the maximum policy limits for Policies are
as follows:

General Liability  $ 3,000,000
Property           $10,000,000

No coverage shall be bound or Policies issued unless Reinsurer has its own
reinsurance, acceptable to the Company, so that Reinsurer shall not have more
than a $1,000,000 net retention on any Policy. Reinsurer shall also require that
the documents evidencing such reinsurance contain clauses that name the Company
as an additional insured, enable the Company to be paid as an alternate payee
under the aforesaid reinsurance should Reinsurer

<PAGE>

become the subject of any conservation, liquidation or insolvency proceeding
and require that the Company be notified of any changes to aforesaid
reinsurance.

It is understood that the General Agent shall have the authority to bind the
Bowling Program's risks and shall not bind the Company to amounts in excess of
those stated above unless approved in writing by the Company on a case by case
basis.

                                   ARTICLE II
                              ORIGINAL CONDITIONS

2.01 Effective as of the effective date of this Agreement, the Company obligates
itself to cede to the Reinsurer, and the Reinsurer obligates itself to accept,
all of the Company's gross liability under all Policies issued by and on behalf
of the Company by the General Agent.

2.02 Business ceded hereunder shall include every original policy, rewrite,
renewal or extension (whether before or after the termination of this Agreement)
required by applicable statute, or by rule or regulation of any policy of
insurance ceded hereunder by the Company to the Reinsurer.

2.03 The liability of the Reinsurer shall commence obligatorily and
simultaneously with that of the Company as soon as the Company becomes liable,
and the premium on account of such liability shall be credited to the Reinsurer
from the original date of the Company's liability.

2.04 All reinsurance for which the Reinsurer shall be liable, by virtue of this
Agreement, shall be subject, in all respects, to the same rates, terms,
conditions, interpretations, waivers, the exact proportion of premiums paid to
the Company without any deduction for brokerage, and to the same modifications,
alterations and cancellations, as the respective insurance of the Company to
which such reinsurance relates, the true intent of this Agreement being that the
Reinsurer shall, in every case to which this Agreement applies and in the
proportion specified herein, follow the fortunes of the Company.

2.05 Nothing herein shall in any manner create any obligations, establish any
rights or create any direct right of action against the Reinsurer in favor of
any third party, or other person not party to this Agreement, or create any
privity of contract between the policyholders and the Reinsurer.

                                  ARTICLE III
                                   EXCLUSIONS

      With respect to the classes of business which the General Agent may be
authorized to produce under this Agreement, the General Agent will not solicit
or accept proposals or bind the Company for insurance coverage on the following
risks:

            (a) All business not specifically described as business covered
            under Article I of this Agreement.

                                       2
<PAGE>

                                   ARTICLE IV
                COMMENCEMENT, TERMINATION, TERMS AND CONDITIONS

4.01 The effective date of this Agreement is at 12:01 a.m. Central Standard
Time, on December 1, 2003. This Agreement shall remain continuously in force
until terminated according to the provisions set forth herein.

4.02 This Agreement may be terminated as follows:

            (a) By any Party hereto, by providing at least ninety (90) days
            written notice to the other Parties, such notice to be sent by
            certified mail, return receipt requested, postage prepaid;

            (b) Immediately by mutual consent of the Company and Reinsurer;

            (c) Immediately upon written notice by the Reinsurer or the Company
            in the event of the cancellation or non-renewal of the General
            Agent's license by the a department of insurance as to the authority
            to write business in that state;

            (d) By the Reinsurer after thirty (30) days written notice to the
            General Agent and Company of the General Agent's failure to pay to
            the Reinsurer all payments of premiums due hereunder, provided,
            however, that in the event such payment is received by the Reinsurer
            prior to the date of cancellation stated in the Reinsurer's written
            notice this Agreement shall not be so terminated and said written
            notice shall be of no further force or effect. If the Reinsurer
            receives such late premium within a ten (10) day period following
            receipt of such notice, the Reinsurer shall inform the Company and
            the General Agent of such receipt as soon as the premium is received
            and the termination of the Agreement for reason of default shall be
            rescinded;

            (e) Immediately, upon written notice by the Company, if the
            Reinsurer or General Agent is found to be insolvent by a State
            Insurance Department or court of competent jurisdiction, or is
            placed in supervision, conservation, rehabilitation, or liquidation,
            or has a receiver or supervisor appointed. By the Reinsurer, upon
            thirty (30) days written notice, if the Company or General Agent is
            found to be insolvent by a State Insurance Department or court of
            competent jurisdiction, or is placed in supervision, conservation,
            rehabilitation or liquidation, or has a receiver or supervisor
            appointed;

            (f) By the Company immediately and automatically without prior
            written notice should the Texas Department of Insurance or other
            regulatory agency of competent jurisdiction, require cancellation or
            disallow credit for this reinsurance;

            (g) After thirty (30) days written notice by any party in the event
            that the Company, the Reinsurer or the General Agent amalgamates
            with or passes under the control of any other company or corporation
            or changes a majority of its officers or board of directors during
            the term of this Agreement; or

            (h) As provided in Section 22.02 of this Agreement.

4.03 When this Agreement terminates for any reason, reinsurance hereunder shall
continue to apply to the business in force at the time and date of termination
until expiration or

                                       3
<PAGE>

cancellation of such business. It is understood that any Policies with effective
dates prior to the termination date but issued after the termination date are
covered under this Agreement. Additionally, the reinsurance hereunder shall
continue to apply as to Policies, which must be issued or renewed, as a matter
of state law or regulation or because a producing agent has not been timely
canceled, until the expiration dates on said Policies. The General Agent agrees
that, notwithstanding anything to the contrary, its appointment by the Company
to produce business terminates when this Agreement terminates unless the General
Agent's authority has been terminated earlier; except that the Company shall
provide the General Agent with the limited agency authority needed to service
the run-off of the business, e.q., issue, cancel, offer renewal where required
by law.

4.04 Upon termination of this Agreement, no party shall be relieved of or
released from any obligation created by or under this Agreement in relation to
payment, expenses, reports, accounting or handling, which relate to insurance
business reinsured under this Agreement. The Parties hereto expressly covenant
and agree that they will cooperate with each other in the handling of all such
run-off insurance business until all Policies have expired either by
cancellation or by terms of such Policies and all outstanding losses and loss
adjustment expenses have been settled. While by law and regulation, the Company
recognizes its primary obligations to its policyholders, the Reinsurer and
General Agent recognize that to the extent possible there shall be no cost to or
involvement by the Company in servicing this run-off. Upon termination of this
Agreement, the General Agent shall service the run-off of the business, and its
duties for such run-off shall include, but not be limited to, handling all
claims, and handling and servicing all policies through their natural
expiration, together with any policy renewals, required to be made by provisions
of applicable law, whether or not the effective date of such renewal is
subsequent to the effective date of cancellation of this Agreement. All costs
and expenses associated with the handling of such run-off business following the
cancellation or termination of this Agreement shall be borne solely by the
General Agent; however, the Reinsurer shall be ultimately responsible for the
run-off and shall pay any such costs and/or expenses if the General Agent does
not for any reason pay or cause to be paid such costs and expenses. If for any
reason the General Agent fails or is unable to service any such run-off business
(or any business while the Agreement is still in effect), including the payment
of claims, then consistent with this Agreement, the Reinsurer's obligation with
respect to such run-off business shall continue and the Reinsurer shall appoint
a successor to the General Agent, subject to the approval of the Company, to
administer and otherwise handle the run-off as provided herein. Such successor
shall perform all of the duties and obligations of the General Agent with
respect to servicing such run-off business, including the payment of claims. In
addition, the Company in its sole discretion may terminate the authority of the
General Agent or a successor thereto to handle such run-off business and the
Reinsurer shall then appoint a successor to handle the run-off, subject to the
Company's approval, at no cost to the Company.

4.05 In the event this Agreement is terminated, the Reinsurer shall remain
liable to and shall, immediately upon request, reimburse the Company for any
assessment made upon the Company. The Company shall likewise remain liable for,
and account to the Reinsurer for any recovery of such assessment, or any credit
allowed to it against its premium tax, applicable to the risks reinsured
hereunder.

4.06 The title and ownership of all undelivered Policies, books, supplies or
other property related to the reinsured business is in the name of the Company,
and upon termination these shall be delivered immediately by the Reinsurer
and/or General Agent to the Company, without compelling the Company to resort to
any legal proceedings to secure the aforesaid described property of the Company.

                                       4
<PAGE>

4.07 This Agreement provides for termination on a run-off basis. The relevant
provisions of the Agreement shall apply to the business being run-off and shall
survive the termination of this Agreement.

4.08 This Agreement may be terminated on a cut-off basis only upon the mutual
agreement of the Company and Reinsurer.

4.09 Upon termination of this Agreement, the Reinsurer shall ensure the General
Agent takes those actions necessary, including, but not limited to, sending
statutorily prescribed non-renewal notices to insureds in a timely manner to
effectuate the intent that there be no renewals or new policies (but for those
required by applicable law or regulation) after the termination of this
Agreement.

                                   ARTICLE V
                        LOSS AND LOSS ADJUSTMENT EXPENSE

5.01 All loss settlements made by the Company or the General Agent under the
terms of this Agreement, whether under strict policy conditions or by way of
compromise, shall be unconditionally binding upon the Reinsurer in proportion to
its participation, and the Reinsurer shall benefit proportionately in all
salvage and recoveries. The Reinsurer shall assume and be liable for and pay on
behalf of the Company, 100% of all losses incurred in connection with the risks
covered by this Agreement, including, but not limited to, judgments (including
interest thereon) and settlements in connection therewith. The Reinsurer shall
also be liable for 100% of and pay on behalf of the Company all costs, expenses,
and fees (including, but not limited to, attorney's fees) incurred by the
Company in connection with the investigation or settlement or contesting the
validity of claims or losses covered under this Agreement (this shall include
but, of course, is not limited to, costs, expenses and fees resulting from a
declaratory judgment or injunctive action brought by an insured or other
person).

5.02 The Reinsurer's 100% share of losses, expense and loss recovery shall be
carried into the monthly accounting for which provision is hereinafter made.

5.03 The Company hereby empowers the Reinsurer, and the Reinsurer may, in its
discretion, and under its supervision appoint the General Agent, to accept
notice of and investigate any claim arising under any of the Policies, to pay,
adjust, settle, resist or compromise any such claim, unless the Company
specifically directs to the contrary with respect to any individual claim. In
the latter event, the Reinsurer and/or General Agent shall follow the
instructions of the Company as respects such claim. All such loss settlements,
whether under strict policy conditions or by the way of compromise, shall be
unconditionally binding upon the Reinsurer. However, should the Company be
ordered or instructed by an applicable Department of Insurance or any other
regulatory agency of competent jurisdiction to take any action or refrain from
taking any action with regard to any claim, the Reinsurer shall be bound by and
shall follow the order or instructions of such regulatory agency as though
Reinsurer were the object of such order or instruction. The Reinsurer will
exercise the authority granted hereunder in good faith and toward the end of
paying any and all valid claims.

5.04 All records pertaining to claims arising under insurance policies issued on
behalf of the Company through or by the General Agent subject to this Agreement
shall be deemed to be jointly owned records of the Company and the Reinsurer,
and shall be made available to the Company or the Reinsurer or their respective
representatives or any duly appointed examiner

                                       5
<PAGE>

for any state within the United States; and these records shall be kept in the
State of Michigan or such other jurisdiction as may be required by applicable
state law or regulation. Notwithstanding the foregoing, the Company is
authorized to maintain duplicate working files of all such records outside the
State of Michigan. The Company, the Reinsurer and the General Agent each agree
that it will not destroy any such records in its possession without the prior
written approval of the other parties except that the Company shall not be
required to retain files longer than required by the guidelines set forth by any
applicable state department of insurance.

5.05 The Reinsurer shall, or shall cause the General Agent to, establish a
separate claim register or method of recording claims arising under the Policies
covered by this Agreement so that all claims may be segregated and identified
separate and apart from other records of the Reinsurer or General Agent, with
such claims register to identify each claim on an individual case basis both as
to identify the insured(s) and the claimant, the reserve for loss and adjusting
expense. Such claim register shall be kept in a manner whereby the Company can,
at any time, determine the status of any claim arising under Policies covered by
this Agreement. Such records shall reflect the amount of reserves established
for the individual claim and the date when such reserve was established, and if
closed, whether such claim was closed with or without payment, and if with
payment, the amount paid thereon.

                                   ARTICLE VI
                            REPORTS AND REMITTANCES

6.01 In lieu of the Company furnishing the Reinsurer with bordereaux showing the
particulars of all reinsurances ceded hereunder, the Reinsurer shall furnish or
cause to be furnished to the Company, within forty-five (45) days after the
close of each of the respective periods indicated below (on forms agreeable to
the Parties), with monthly, quarterly and annual reports showing the following
statistical data in respect to the business reinsured hereunder:

            (a) Monthly, with the data segregated by major classes.

                  (i)   Ceded premiums written.

                  (ii)  Ceded unearned premiums.

                  (iii) Ceded losses paid.

                  (iv)  Ceded adjustment expenses paid during this month.

                  (v)   Losses outstanding.

                  (vi)  Ceding commission due the Company.

                  (vii) Commission due the General Agent.

            (b) Annually, with the data segregated by major classes.

                  (i)   Annual summaries of net premiums written, net losses
                        paid, net adjusting expenses paid during the year in
                        such form so as to enable the Company to record such
                        data in its annual convention statement. Such
                        information is to be furnished not later than February
                        15th of the following year. In force and unearned
                        premium segregated as to advance premiums, premiums
                        running twelve (12) months or less from inception date
                        of policy, and premiums running more than twelve (12)
                        months from inception date of policy in such form as to
                        enable the Company to record such data in its convention
                        annual statement.

                                       6
<PAGE>

                  (ii)  Annual summaries of net premiums written by state
                        location in such form as to enable the Company to record
                        such premiums in its annual report to the Texas
                        Catastrophe Property Insurance Association.

            (c) Periodic, with data segregated by major lines.

                        Statistical or other data as may be requested from time
                        to time by regulatory authorities.

6.02 In order to facilitate the handling of the business reinsured under this
Agreement, the Reinsurer agrees to furnish the Company with any additional
reports necessary to provide the information needed by the Company to prepare
its monthly, quarterly and annual statements to regulatory authorities.

6.03 Within forty-five (45) days after the end of each month, the General Agent
shall remit to the Reinsurer the following:

            (a) Ceded net written premium during the month, less;

            (b) General Agent's commission thereon, less;

            (c) Paid losses and loss adjustment expenses paid, provided such
            losses and loss adjustment expenses have not been deducted on behalf
            of the Company in any previous monthly report.

The positive balance of (a) less (b) less (c) shall be remitted by the General
Agent with its report. Any balance shown to be due the Company shall be remitted
by the Reinsurer as promptly as possible after receipt and verification of the
General Agent's report.

                                  ARTICLE VII
                              ERRORS AND OMISSIONS

7.01 The Company shall not be prejudiced in any way by any omission through
clerical error, accident or oversight to cede to the Reinsurer any reinsurance
rightly falling under the terms of this Agreement, or by erroneous cancellation,
either partial or total, or any cession, or by omission to report, or by
erroneously reporting any losses, or by any other error or omission, but any
such error or omission shall be corrected immediately upon discovery.

7.02 Should the Company suffer any loss whatsoever, the Reinsurer shall assume
loss for its own account and save and hold the Company harmless therefor.

                                       7
<PAGE>

                                  ARTICLE VIII
                             PREMIUM AND COMMISSION

8.01 In consideration of the acceptance by the Reinsurer of one hundred percent
(100%) of the Company's liability on insurance business reinsured hereunder, the
Reinsurer is entitled to one hundred percent (100%) of the Net Premiums (as
hereinafter defined) received by the General Agent or the Reinsurer on Policies
reinsured less (i) the ceding fee allowed the Company pursuant to Section 8.02
hereof, (ii) the commission paid to the General Agent and (iii) premium taxes on
Policies subject to reinsurance hereunder. "Net Premiums" shall mean the gross
premiums (excluding policy fees) charged on all original and renewal Policies
written on behalf of the Company, less return premiums. Such amounts as provided
in Section 5.09 of the General Agency Agreement (as hereinafter defined) shall
be paid to the Reinsurer or received from the Reinsurer by the General Agent on
behalf of the Company. "Net Policy Fees" shall mean gross policy fees, if any,
charged on all original and renewal Policies written on behalf of the Company,
less return policy fees.

8.02 It is understood that the General Agent shall pay, and the Reinsurer shall
guarantee, the Company directly a fee within forty-five (45) days following the
end of each month, 7% of Net Premiums and Net Policy Fees, plus the amount of
assessments and state premium taxes as provided in this Article VIII. (The
ceding fee amount shall be computed on a calendar year basis based on premium
written in each annual period ended December 31st.) Notwithstanding anything
else contained herein to the contrary, regardless of the amount of Net Premiums,
the minimum ceding fee due the Company shall be $100,000 for each six-month
period during which the Agreement is in effect, plus the aforementioned
assessments and state premium taxes. This minimum ceding fee shall not be
affected by the amounts of Net Premiums written in other six-month periods and
shall not be reduced by reason of payments in excess of the minimum in other
periods. The minimum ceding fee for each period shall be paid within sixty (60)
days of the end of each period. For these purposes, a policy's entire premium
shall be applied to the period in which the policy is written.

8.03 The General Agent shall allow and pay within forty-five (45) days of the
end of each month to the Company an amount equal to the state premium tax on the
net written premiums reinsured hereunder for the past month. Should any
additional premium tax be assessed at any time on written premium reinsured
hereunder, the Reinsurer shall pay the Company such additional premium tax
within (fifteen) 15 days of being informed by the Company of such additional
premium tax. The Parties acknowledge that at the effective date of this
Agreement, the applicable Department of Insurance (or other state agency
responsible for collecting premium taxes) may require the payment of estimated
premium taxes in advance on a semiannual basis. The Reinsurer shall, therefore,
pay to the Company within five days prior to the due date of any such estimated
premium tax payment, the amount that would be due based upon the business
produced hereunder.

8.04 The Reinsurer hereby guarantees that the Company will receive the ceding
fee provided hereunder irrespective of any events, losses or developments for
the term of this Agreement. Such payment is not dependent upon the performance
of the General Agent, underwriting experience, loss experience, whether premium
is collected or not, or any other event foreseen or unforeseen by the parties at
the inception of this Agreement. The Reinsurer shall guarantee payment to the
Company of its ceding fee on all premiums reinsured hereunder (prior to
deduction of premiums, if any, ceded by the Company for inuring reinsurance),
and in addition guarantees those amounts described in Section 8.07 of this
Agreement and is directly

                                       8
<PAGE>
responsible for payment of the amount described in Article XI. The Company shall
allow return ceding fees on return premiums at the same rates.

8.05 The Reinsurer shall allow the General Agent a commission of 14.5% on all
premiums ceded to the Reinsurer hereunder. The General Agent shall allow the
Reinsurer return commission on return premiums at the same rate. This is an
obligation owing directly from the Reinsurer to the General Agent. The General
Agent shall not seek to recover from the Company, any commissions due and the
Reinsurer shall not seek to recover from the Company, any return commissions
due. No funds are due the General Agent from the Company.

8.06 It is expressly agreed that the commission allowed the General Agent
includes provision for premium taxes and ceding fees. General Agent shall pay to
the Company all premium taxes payable for policies subject to reinsurance
hereunder. In the event that the ceding fee and premium taxes are not so paid by
the General Agent within 60 days following the end of the month, the unpaid
balance shall be paid directly to the Company by the Reinsurer.

                                   ARTICLE IX
                               ACCESS TO RECORDS

      The Reinsurer or its duly appointed representatives shall have free access
at any and all reasonable times to such books and records of the Company or
General Agent, its departmental or branch offices, as shall reflect premium and
loss transactions of the Company and/or the business produced hereunder, for the
purpose of obtaining any and all information concerning this Agreement or the
subject matter thereof. Likewise, the Company or its duly appointed
representatives shall have free access at any and all reasonable times to such
books and records of the Reinsurer and/or General Agent, its departmental or
branch offices as shall reflect premium and loss transactions of the Company
and/or the business produced hereunder, for the purpose of obtaining any and all
information concerning this Agreement or the subject matter hereof.

                                   ARTICLE X
                                  ARBITRATION

10.01 As a condition precedent to any right of action hereunder, in the event of
any dispute or difference of opinion hereafter arising between the Company and
the Reinsurer with respect to this Agreement, or with respect to these Parties'
obligations hereunder, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to arbitration.

10.02 One arbiter (an "Arbiter") shall be chosen by the Company and one Arbiter
shall be chosen by the Reinsurer and an umpire (an "Umpire") shall be chosen by
the Arbiters, all of whom shall be active or retired disinterested executive
officers of property and casualty insurance or reinsurance companies.

10.03 In the event that a party fails to choose an Arbiter within thirty (30)
days following a written request by either party to the other to name an
Arbiter, the party who has chosen its Arbiter may choose the unchosen Arbiter.
Thereafter, the Arbiters shall choose an Umpire before entering upon
arbitration. If the Arbiters fail to agree upon the selection for the Umpire
within thirty (30) days following their appointment, each Arbiter shall name
three nominees, of whom the other shall decline two, and the decision shall be
made by drawing lots.


                                       9
<PAGE>
10.04 Each party shall present its case to the Arbiters and Umpire within a
reasonable amount of time after selection of the Umpire, unless the period is
extended by the Arbiters and the Umpire in writing and/or at a hearing in
Dallas, Texas. The Arbiters and Umpire shall consider this Agreement as an
honorable engagement, as well as a legal obligation, and they are relieved of
all judicial formalities and may abstain from following the strict rules of law
regarding entering of evidence. The decision in writing by a majority of the
Arbiters and Umpire when filed with the Parties shall be final and binding on
the parties. Judgment upon the final decision of the Arbiters and Umpire may be
entered in any court of competent jurisdiction.

10.05 In the event of a dispute between the Company and the Reinsurer concerning
this Agreement and the General Agency Agreement (regardless of whether either
party has claims against the General Agent), the entire dispute between the
Company and the Reinsurer shall be subject to arbitration as provided in this
Article X.

10.06 The costs of the arbitration, including the fees of the arbitrators and
the umpire, shall be borne equally unless the Arbiters and Umpire shall decide
otherwise.

10.07 This Agreement shall be interpreted under the laws of Texas and the
arbitration shall be governed and conducted according to the Texas General
Arbitration Act.

                                   ARTICLE XI
                 ASSESSMENTS, ASSIGNMENTS, FINES AND PENALTIES

11.01 The Reinsurer hereby assumes liability for any and all assessments and
assignments imposed as a result of Policies reinsured hereunder (whether before
or after the termination of this Agreement). The Reinsurer shall immediately
reimburse the Company for any assessments made against the Company pursuant to
those laws and regulations creating obligatory funds (including, but not limited
to, insurance guaranty and insolvency funds), pools, joint underwriting
associations, FAIR plans and similar plans. Amounts owed by the Reinsurer under
this Section shall be payable directly by the Reinsurer to the Company. The
Reinsurer shall be entitled to receive from the Company on or prior to the 31st
day of March of each year thereafter (or such date on which such premium taxes
are paid) a sum equal to the premium tax credit that is allowed to the Company
with respect to such assessments. The premium tax credit allowed the Reinsurer
hereunder is to be on a pro-rata and first-in, first-out basis. The Company
shall promptly return to the Reinsurer any amount of assessment refunded to or
credited to the Company.

11.02 This Agreement shall apply to risks assigned to the Company under any
assigned risk plan if, in the reasonable judgment of the Company, such risks
were assigned to the Company because of the business written and reinsured
hereunder.

11.03 The Reinsurer shall also pay promptly and directly to the Company any
fines, penalties and/or any other charge incurred by the Company as respects the
business reinsured hereunder arising out of the actions or inactions of the
General Agent unless such fines, penalties and/or any other charge was a direct
result of any willful misconduct on the part of the Company, which has been
finally determined by a court of competent jurisdiction after the exhaustion of
all appeals.

                                       10
<PAGE>

                                  ARTICLE XII
                               PREMIUM FINANCING

      With respect to Policies covered under the provisions of this Agreement,
if any premiums are financed, the General Agent shall receive and accept on
behalf of the Company all notices required by statute, contract or otherwise to
be given to the Company, including, without limitation, notices of the existence
of premium finance agreements or of cancellation of policies the premiums of
which are financed ("financed policies"). No producing agent or any other agent
shall be entitled to receive or accept any notice on behalf of the Company, and
the General Agent shall be responsible for and will indemnify and hold the
Company harmless from and against any and all liabilities, losses, claims,
damages and expenses incurred by reason of or arising out of any action taken or
inaction suffered as a result of receipt of any notice by any person, firm or
entity other than the General Agent or the Company. Notwithstanding any other
term or provision of this Agreement, the General Agent agrees to return and pay
over to any premium finance company (whether affiliated with the Company or not)
which has sent notice of cancellation of a financed policy to the General Agent,
on behalf of the Company, within thirty (30) days of receipt of such notice of
cancellation, any and all unearned commissions as of the date of cancellation,
together with any and all unearned premiums due any premium finance company. The
General Agent agrees to and does hereby relinquish any and all rights to any
unearned commissions for any such financed policy as of the date of
cancellation. The obligation of the General Agent to refund unearned commissions
and unearned premiums on a canceled financed policy shall survive the
termination or cancellation of this Agreement for so long as any policy written
under the terms of this Agreement remains in force. If the General Agent does
not fulfill its obligations to refund unearned commissions and unearned premiums
as provided in this Article XII and/or to indemnify the Company as provided in
this Article XII, then the Reinsurer shall pay the amount of the refund owed
and/or shall indemnify the Company even if the premium finance company is an
affiliate of the Company.

                                  ARTICLE XIII
                                   INSOLVENCY

13.01 In the event of insolvency of the Company, this reinsurance shall be
payable directly to the Company or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay
all or a portion of any claims.

13.02 It is agreed, however, that the liquidator, receiver, conservator or
statutory successor of the Company shall give written notice to the Reinsurer of
the pendency of a claim against the Company indicating the policy or bond
reinsured which claim would involve a possible liability on the part of the
Reinsurer within thirty (30) days after such claim is filed in the insolvency,
conservation or liquidated proceeding or in the receivership, and that during
the pendency of such claim, the Reinsurer may investigate such claims and
interpose, at its own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses that it may deem available to the Company
or its liquidator, receiver, conservator or statutory successor. The expense
thus incurred by the Reinsurer shall be chargeable, subject to the approval of
the Court, against the Company as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit which may accrue to
the Company solely as a result of the defense undertaken by the Reinsurer.

                                       11
<PAGE>

13.03 Where two or more reinsurers are involved in the same claim and a majority
in interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Agreement as though such
expense had been incurred by the Company.

13.04 It is further understood and agreed that, in the event of the insolvency
of the Company, the reinsurance under this Agreement shall be payable directly
by the Reinsurer to the Company or to its liquidator, receiver or statutory
successor, except (i) as provided by applicable law, (ii) where the Agreement
specifically provides another payee of such reinsurance in the event of the
insolvency of the Company and (iii) where the Reinsurer with the consent of the
direct insured or insureds has assumed such policy obligations of the Company as
direct obligations of the Reinsurer to the payees under such policies and in
substitution for the obligation of the Company to such payees.

                                  ARTICLE XIV
                                ALTERNATE PAYEE

14.01 As respects subject business assumed as reinsurance under this Agreement,
it is agreed that if the Company has a conservator, liquidator or receiver
appointed for it, or becomes the subject of any conservation, liquidation or
insolvency proceeding, and the General Agent exercises its option to require the
Company to permit all its liabilities under the Policies reinsured hereunder to
be assumed by another licensed insurer as is permitted pursuant to the General
Agency Agreement, such assuming insurer shall be substituted for the Company as
payee of any reinsurance recoverable hereunder in respect of losses under
Policies subject hereto, and the Reinsurer, shall make payment thereof directly
to the substituted insurer. In the event of assumption, the Company shall,
however, be entitled to any fronting fees and other sums owing hereunder with
respect to Policies originally issued on its behalf.

14.02 In the event that an assuming insurer is submitted for the Company under
Section 14.01, all the other provisions of this Agreement shall apply to the
substituted insurer in the same manner as if said insurer were substituted for
the Company as the reinsured party hereunder, and to the extent this Agreement
reinsures such substituted insurer, coverage hereunder shall be excluded as
respects the Company.

                                   ARTICLE XV
                            HOLD HARMLESS PROVISIONS

15.01 Notwithstanding anything else contained herein to the contrary, as
respects all matters related to this Agreement, in addition to those specific
provisions insulating the Company from specific risks hereunder, the Reinsurer
hereby covenants and agrees to reimburse and hold the Company harmless from and
against every claim, demand, liability, loss, damage, cost, charge, attorneys'
fees, expense, suit, order, judgment and adjudication of whatever kind or
character regarding (i) this Agreement and/or (ii) the business reinsured
hereunder (including, but not limited to, underwriting loss, credit loss, and/or
run-off expense and/or all legal fees and expenses incurred by the Company in
asserting its rights under this Agreement) whether or not such claim, demand,
loss, damage, cost, charge, attorneys' fees, expense, suit, order, judgment or
liability is within the terms of Policies written and reinsured hereunder. The
Reinsurer's obligation hereto relates to, but is not limited to the following:
all liability for agents' balances; return premiums and commissions; deceptive
trade practice liability; premiums, policy fees or other charges (whether
collected or not); costs, liability, damages, fees and/or expenses incurred by
the Company due to a lawsuit between the Reinsurer and/or the General Agent (any
dispute involving the Company and the Reinsurer is subject to arbitration); all
actions or

                                       12
<PAGE>

inactions by General Agent relating to this Agreement, any agreement with a
premium finance company or claims administrator, and/or all fees and/or
commissions owing to the General Agent under this and the aforementioned related
agreements.

15.02 The Company shall not be liable to the Reinsurer for premiums unless the
Company itself has actually received those premiums and wrongfully not remitted
them to the Reinsurer. The Reinsurer may not offset any balances on account of
losses, loss adjustment expenses or any other amounts due except as to premiums
actually received by the Company itself (as distinct from premiums not
collected, or premiums collected by the General Agent, or premium placed in the
premium trust account pursuant to the General Agency Agreement) which have
wrongfully not been transmitted to the Reinsurer.

15.03 If for any reason the General Agent fails or is unable to administer the
policies reinsured hereunder (whether the Agreement is still in effect or the
business is being run-off), (i) the Reinsurer shall appoint a party (acceptable
and approved by the Company) to administer the business and the Reinsurer shall
be responsible for 100% of the cost of said administration and (ii) the General
Agent will fully cooperate with the Company (or its designated representative)
in providing access to such of the General Agent's personnel, computer systems
or other assets or procedures as the Company may deem necessary to provide for
an orderly transition of the administration of the Policies reinsured hereunder.
If return premiums or other funds need to be returned to premium finance
companies, policyholders or sub-agents, the Reinsurer shall pay these amounts if
the successor or administrator does not.

15.04 The Reinsurer shall not sue, or seek arbitration, against the Company for
any acts of the General Agent for any monies which the General Agent owes unless
the Company has actually received those monies and has wrongfully not remitted
them to the Reinsurer; and the Reinsurer shall indemnify the Company for any
damages, liabilities and expenses incurred by reason of the General Agent's acts
or failure to act. The Company is not responsible for any commissions or other
monies payable to the General Agent in connection with this Agreement and the
General Agent shall not sue, or seek arbitration against, the Company for any
actions by, or debts owing from, the Reinsurer. The Reinsurer shall not seek to
recover from, or offset against, the Company any sums, whether premiums or other
monies, which the General Agent was unable or unwilling to remit to the Company
or the Reinsurer.

15.05 In the event the Reinsurer, or any agent appointed pursuant to this
Agreement, binds the Company for insurance coverage on insurance risks which are
in excess of the policy limits set forth in Article I, and/or are not within the
terms of business specified in Article I, and/or are not within the territory
specified in Article I, and/or are excluded under Article III, whether
intentional or not, the Reinsurer and General Agent will do such things and take
such actions as may be necessary to reduce the Company's exposure to such risks
and to hold the Company harmless against any liability or loss which may be
incurred by the Company in excess hereof. At the Company's request, the General
Agent in accordance with applicable law, and policy terms, shall cancel or not
renew any risk bound which is not in conformance with this Agreement. Any such
insurance coverage on insurance risks bound contrary to the limitations which
are in excess of the policy limits set forth in Article I, and/or are not within
the classes of business specified in Article I, and/or are not within the
territory specified in Article I, and/or are excluded under Article II, whether
intentional or not, shall be 100% reinsured and subject to this Agreement.

15.06 In furtherance of the protections afforded to the Company under this
Agreement, the Reinsurer expressly acknowledges that certain circumstances may
come to exist with respect to

                                       13
<PAGE>

the Policies reinsured hereunder that require adjustment to the timing of
Reinsurer remittances. If, in the sole discretion of the Company, an advance
payment or payments of the Reinsurer's obligations under this Agreement is
necessary to avoid irreparable harm to the Company (as, for example, in the
circumstance where the funds available in the premium trust account established
pursuant to Section 2.01 of the General Agency Agreement are insufficient to
provide for timely payment of claims), the Reinsurer shall make such payment or
payments promptly upon the Reinsurer's receipt of the Company's good faith
estimate or calculation of the necessity thereof.

15.07 When a claim is asserted or action commenced, including class actions
regardless of whether the class has been certified, relating in any way to the
Policies produced under this Agreement, the General Agent shall assume the
defense and associated costs and expenses thereof. The Company may elect,
however, at its sole discretion, on a case-by-case basis, to engage counsel
directly on its own behalf, and the expenses and costs related to such defense
shall be passed on to and paid by the General Agent within 60 days written
notice from the Company. In such cases where the claim or action relates to
business written by more than one agent of the Company, costs and expenses shall
be proportioned among applicable agents at the Company's sole discretion. Should
the General Agent fail to remit any amounts due to Company under this Section
15.07, then the Reinsurer shall pay such amounts within 60 days written notice
from the Company.

15.08 The Reinsurer will not reimburse and hold the Company harmless as to the
costs, liability, damages, fees and/or expenses caused by the Company's
negligent acts or omissions.

                                  ARTICLE XVI
                      LOSS IN EXCESS OF POLICY LIMITS/ECO

16.01 In the event the Company pays or is held liable to pay an amount of loss
in excess of its policy limit, but otherwise within the terms of its policy
(hereinafter called "loss in excess of policy limits") or any punitive,
exemplary, compensatory or consequential damages, other than loss in excess of
policy limits (hereinafter called "extra contractual obligations") because of
alleged or actual bad faith or negligence on its part in rejecting a settlement
within policy limits, or in discharging its duty to defend or prepare the
defense in the trial of an action against its policyholder, or in discharging
its duty to prepare or prosecute an appeal consequent upon such an action, or in
otherwise handling a claim under a policy subject to this Agreement, 100% of the
loss in excess of policy limits and/or 100% of the extra contractual obligations
shall be added to the Company's loss, if any, under the Policy involved, and the
sum thereof shall be reinsured 100% under this Agreement.

16.02 An extra contractual obligation shall be deemed to have occurred on the
same date as the loss covered or alleged to be covered under the Policy.

16.03 Notwithstanding anything stated herein, this Agreement shall not apply to
any loss incurred by the Company as a result of its own negligent act or
omission, or that of any officer or director or other agent (other than the
General Agent) of the Company.

                                  ARTICLE XVII
                               REGULATORY MATTERS

17.01 It is the Parties' understanding that any premiums which are overdue from
the General Agent to the Company may be deemed non-admitted assets. In
confirmation of the liabilities

                                       14
<PAGE>

assumed by the Reinsurer under this Agreement, the Reinsurer hereby assumes 100%
of all liability and responsibility for all premiums in the course of
collection.

17.02 The Reinsurer shall agree, at no cost to the Company, to take those
actions (including, but not limited to, modifications in how funds are handled
and how accounts are cleared, settled and the manner in which incurred losses
are accounted for) and agree to those arrangements necessary to ensure that the
Company suffers no adverse impact because of this reinsurance program and is in
compliance with any applicable laws of a state insurance department, insofar as
this reinsurance program is concerned.

                                 ARTICLE XVIII
                               THE GENERAL AGENT

18.01 The Company, the Reinsurer and the General Agent have entered into a
General Agency Agreement effective December 1, 2003 (the "General Agency
Agreement"), a complete copy of which is attached hereto as Exhibit "A" and
fully incorporated herein by this reference. The Reinsurer has selected the
General Agent to administer the business reinsured hereunder. While for
regulatory purposes, the General Agent will need to be appointed as the
Company's agent, it is recognized that the General Agent is acting on behalf of
the Reinsurer. The Company is making no evaluation of the General Agent's
qualification, has no obligation to furnish reports or statistics to the
Reinsurer, or to monitor the performance of the General Agent. The Company shall
file with the State all reports requested by the State based upon information
received from the General Agent and Reinsurer.

18.02 The Company will, at the request of the General Agent and the Reinsurer,
appoint producing agents to produce business through the General Agent. The
Company, in its sole discretion, may refuse to appoint any such agent; provided,
however, that such appointment shall not be unreasonably withheld. The General
Agent will not establish any sub-general agencies or any agencies with the
authority of a general agency. The Reinsurer shall hold the Company harmless
from and indemnify it for any damage, liability, claim, expense, cost or fees
(including attorneys' fees and expenses) of whatever kind or character caused
directly or indirectly by any action of or failure to act, by any such producing
agent.

18.03 The General Agent shall be responsible for the control of the producing
agents appointed by the Company at the request of and on behalf of the
Reinsurer, including compliance with state licensing laws and the financial
condition of such agents.

18.04 The Reinsurer shall guarantee payment to the Company of any amounts due
the Company from business produced by and/or policies issued by or through the
producing agents appointed by the Company at the request of and on behalf of the
General Agent and the Reinsurer. The Reinsurer and the General Agent shall be
solely responsible for notifying such agents of this Agreement and of any
termination hereof, and the Reinsurer shall be responsible for the consequences
of any failure to provide such notification.

18.05 The General Agent shall not sue, or seek arbitration, against the Company
for any acts of the Reinsurer and shall indemnify and hold the Company harmless
from and against any damages, liabilities and expenses incurred by reason of the
Reinsurer's acts or failures to act.

18.06 The Company shall conduct or have conducted the examinations of the
General Agent as provided in Section 5.13 of the General Agency Agreement. The
examinations provided for herein shall be at no cost to the Company, and the
Reinsurer shall indemnify and hold the

                                       15
<PAGE>

Company completely harmless as respects any liability, damage, charge, cost,
fine, or penalty, the Company may incur as a result of such examinations.

                                  ARTICLE XIX
                  REINSURER OR GENERAL AGENT SALE OR TRANSFER

      The Reinsurer or the General Agent agree to give the Company, 90 days
advance written notice of any sale or transfer of such party's business, or such
party's consolidation with a successor firm, in order that the Company may, in
its sole discretion:

            (a)   Assign this Agreement to the successor; or

            (b)   Enter into a new reinsurance agreement with the successor; or

            (c)   Terminate this Agreement as provided in Section 4.02(g) of
                  this Agreement.

                                   ARTICLE XX
                                 MISCELLANEOUS

20.01 This Agreement has been made and entered into in the State of Texas and
the Agreement shall be subject to and construed under the laws of the State of
Texas. This Agreement shall be deemed performable at the Company's
administrative office in Fort Worth, Texas, and it is agreed that the venue of
any controversy arising out of this Agreement, or any breach thereof, shall be
in Tarrant County, Texas.

20.02 All notices required to be given hereunder shall be deemed to have been
duly given by personally delivering such notice in writing or by mailing it,
Certified Mail, return receipt requested, with postage prepaid. Any Party may
change the address to which notices and other communications hereunder are to be
sent to such Party by giving the other Party written notice thereof in
accordance with this provision.

20.03 This Agreement shall be binding upon the Parties hereto, together with
their respective successors and permitted assigns. Neither the Reinsurer nor the
General Agent may assign any of its rights or obligations under this Agreement
without the prior written consent of the Company.

20.04 This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

20.05 This Agreement is the entire agreement between the parties and supersedes
any and all previous agreements, written or oral, and amendments thereto with
respect to the subject matter hereof.

20.06 This Agreement may be amended, modified or supplemented only by a written
instrument executed by all Parties hereto.

20.07 A waiver by the Company, Reinsurer or General Agent of any breach or
default by the other party under this Agreement shall not constitute a
continuing waiver or a waiver by the Company or the Reinsurer of any subsequent
act in breach or of default hereunder.

                                       16
<PAGE>

20.08 Headings used in this Agreement are for reference purposes only and shall
not be deemed a part of this Agreement.

20.09 The Parties hereto intend all provisions of this Agreement to be enforced
to the fullest extent permitted. Accordingly, should a court of competent
jurisdiction or arbitration panel determine that the scope of any provision is
too broad to be enforced as written, the Parties intend that the court or
arbitration panel should reform the provision to such narrower scope as it
determines to be enforceable under present or future law; such provision shall
be fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance.

20.10 This Agreement is not exclusive and the Company reserves the right to
appoint or contract with other reinsurers, agents and/or managing agents in the
territory covered by this Agreement. The General Agent and the Reinsurer reserve
the right to market their insurance products in this territory by means other
than this Agreement.

20.11 The Reinsurer or General Agent shall not insert any advertisement
respecting the Company or the business to be written under this Agreement in any
publication or issue any circular or paper referring to the Company or such
business without first obtaining the written consent of the Company, which
consent will not be unreasonably delayed or withheld. The Reinsurer and/or
General Agent shall establish and maintain records of any such advertising as
required by applicable statutes and regulations.

20.12 Policy cancellations at the Company's request will be made strictly
subject to requirements imposed by the Bowling Program's underwriting rules and
practices as filed, and in compliance with applicable statutes and regulations
and the applicable provisions contained in this Agreement and the pertinent
policy. When directed by the Company, the Reinsurer will cancel any and all
Policies produced by it for any reason the Company deems necessary.

20.13 This Agreement shall be interpreted in conformance with applicable Texas
law and regulation. If it is found or ordered by a court or regulatory body that
a term or provision of this Agreement does not conform to such law or regulation
then this Agreement shall be deemed to be amended and modified in accordance
with such law. However, where this Agreement is found not to comply with
applicable law or regulation, the Company may in its sole discretion terminate
this Agreement immediately and without prior notice.

20.14 The Company agrees that the Reinsurer shall have the right, with the
approval of the Company, to determine the rates and prepare the rate filing for
the Company to file during the term of this Agreement and during the term of the
run-off. The Reinsurer and General Agent understand and agree that no business
shall be produced, until a written approval of the applicable rate rules and
forms is received from the regulatory authority of competent jurisdiction.

20.15 The Reinsurer shall provide semi-annually to Company at Reinsurer's
expense, an independent actuary opinion, performed by Terrence O'Brien at Price
Waterhouse Cooper's Chicago office, attesting to the adequacy of loss reserves
established for losses incurred and outstanding on business produced hereunder.

                                       17
<PAGE>

                                  ARTICLE XXI
                   LOSS AND UNEARNED PREMIUM RESERVE FUNDING

21.01 The Reinsurer will secure its obligations under this Agreement, including
the obligations for unearned premiums reserves, if any, and reserves for losses
incurred but not reported and losses reported but unpaid, via a security fund
(via a security fund agreement in a form and content reasonably acceptable to
the Company).

            (a) At a minimum, the security fund must:

                  (i)   comply with the provisions of Texas Insurance Code, art
                        5.75-1(d)(3) and 28 Texas Administrative Code 57.610;
                        and;

                  (ii)  be issued by or held with a Qualified United States
                        Financial Institution (as defined by the foregoing
                        statute and regulation).

            (b) Company may draw the full amount of the security fund to
            satisfy, in whole or in part the obligations of reinsurer hereunder
            or, if:

                  (i)   Reinsurer fails to comply with the provisions of this
                        Article XXI; or

                  (ii)  the issuer of the security fund gives Company notice of
                        cancellation or non-renewal of the security fund.

21.02 Within 10 business days of the effective date of this Agreement, and
within 10 business days prior to the end of each calendar quarter thereafter,
Company shall provide Reinsurer with a good faith estimate of the expected sum
of Reinsurer's ceded outstanding Unearned Premium and Loss Reserves as of the
end of the forthcoming calendar quarter (the "Estimate"). The Reinsurer shall,
within two business days prior to the commencement of such forthcoming calendar
quarter, fund a security fund in an amount equivalent to 100% of the Estimate.

21.03 If at any time, based upon the monthly reporting provided to Company under
this Agreement, it shall be determined by the Company or Reinsurer that the
amount of the security fund may not be equivalent to 150% of Reinsurer's ceded
outstanding Unearned Premium and 140% of Reinsurer's ceded outstanding Loss
Reserves as of the end of the current calendar quarter (the "Revised Estimate"),
then upon written notice from Company, Reinsurer shall immediately, and no later
than thirty (30) days after receipt of such written notice, increase the amount
of the security fund to an amount equivalent to 100% of the Revised Estimate.
The Company shall at all times be in possession of a security fund equivalent to
150% of Reinsurer's anticipated ceded outstanding Unearned Premium and 140% of
Reinsurer's anticipated ceded outstanding Loss Reserves as of the end of the
current calendar quarter.

21.04 Should the amount of the security fund at the end of any calendar quarter
be greater than the amount required in this Article XXI, the Reinsurer shall be
entitled to reduce the amount of the security fund to an amount not less than
the amount required in this Article XXI. The Qualified United States Financial
Institution shall permit such reduction upon receipt by it of the Company's
written statement that Reinsurer is entitled to such reduction, which written
statement shall not be unreasonably withheld by Company.

21.05 For the purpose of this Article XXI, Unearned Premiums means, as of any
given date, the aggregate premium attributable to the unexpired coverage period
of all insurance policies produced under the Agreement, as determined in
accordance with generally accepted statutory accounting principles consistently
applied. For this purpose, premium shall be the written

                                       18
<PAGE>

premium charged on the insurance policy for the period such policy is in force
irrespective of the subsequent billing and collection of such premium.

21.06 For the purpose of this Article XXI, Loss Reserves means, as of any given
date, the reserve attributable to losses incurred but not reported and losses
reported but not paid with respect to the insurance policies produced under this
Agreement, and shall include provision for both allocated and unallocated loss
adjustment expense, in each instance as determined in accordance with generally
accepted accounting principles consistently applied.

                                  ARTICLE XXII
                                 SAVINGS CLAUSE

22.01 If any law or regulation of any Federal, State or local government of the
United States of America, or the ruling of officials having supervision over
insurance companies, should prohibit or render illegal this Agreement, or any
portion thereof, as to risks or properties located in the jurisdiction of such
authority, either the Company or the Reinsurer may upon written notice to the
other suspend or abrogate this Agreement insofar as it relates to risks or
properties located within such jurisdiction to such extent as may be necessary
to comply with such law, regulations or ruling. Such illegality shall in no way
affect any other portion thereof; provided, however, that the Reinsurer or the
Company may terminate or suspend this Agreement insofar as it relates to the
business to which such law or regulation may apply.

22.02 This Agreement shall be interpreted in accordance with the laws of the
State of Texas. All provisions of this Agreement are intended to be enforced to
the fullest extent permitted. Accordingly, should a court of competent
jurisdiction or arbitration panel determine that the scope of any provision is
too broad to be enforced as written, the Parties intend that the court or
arbitration panel should reform the provision to such narrower scope as it
determines to be enforceable under present or future law; such provision shall
be fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance; provided, however, that where this Agreement is so found not to
comply with applicable law or regulation, the Company may in it sole discretion
terminate this Agreement immediately without prior notice.

                                       19
<PAGE>

IN WITNESS WHEREOF, the Parties hereto by their respective duly authorized
representatives have executed this Agreement as of the date first above written.

                                        STATE NATIONAL INSURANCE COMPANY, INC.

                                        By: /s/ Wyatt Blackburn
                                            ------------------------------------
                                        Its: President
                                        Date: 12/1/02

                                        NORTH POINTE INSURANCE COMPANY

                                        By: /s/ B. Matthew Petcoff
                                            ------------------------------------
                                        Its: President
                                        Date: 11/20/03

                                        NORTH POINTE FINANCIAL SERVICES, INC.

                                        By: /s/ James G. Petcoff
                                            ------------------------------------
                                        Its: President
                                        Date: 11/20/03

                                       20