SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

                          Commission File Number 1-8538

                            WESTBRIDGE CAPITAL CORP.
             (Exact name of Registrant as specified in its Charter)

        DELAWARE                                        73-1165000
(State of Incorporation)                    (I.R.S. Employer Identification No.)

   777 MAIN STREET, FORT WORTH, TEXAS                               76102
(Address of Principal Executive Offices)                         (Zip Code)

                                  817-878-3300

              (Registrant's Telephone Number, including Area Code)

                                  800-437-8690

  (Registrant's Shareholder and Investor Relations Toll Free Telephone Number)

                                 NOT APPLICABLE

   (Former Name, Address and Former Fiscal Year, if changed since Last Report)

Indicate, by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO_____

Common Stock - Par Value $.10                6,044,994 Shares Outstanding
                                             at November 13, 1996

                                              1

<PAGE>

                                                                     FORM 10-Q

Company or group of companies for which report is filed:

                            WESTBRIDGE CAPITAL CORP.

This quarterly report, filed pursuant to Rule 13a-13 and 15d-13 of the General
Rules and Regulations under the Securities Exchange Act of 1934, consists of the
following information as specified in Form 10-Q: <TABLE> <CAPTION>

                                                                                       PAGE(S)

<S>                                                                                  <C>
PART I - FINANCIAL INFORMATION

        ITEM 1 - FINANCIAL STATEMENTS

          1.   Consolidated  Balance Sheets at September 30, 1996,  December 31,
               1995 and September 30, 1995.                                               3-4

          2.   Consolidated  Statement  of  Operations  for the  Three  and Nine
               Months Ended September 30, 1996 and 1995.                                    5

          3.   Consolidated  Statements  of Cash  Flows  for the  Three and Nine
               Months Ended September 30, 1996 and 1995.                                  6-7

          4.   Notes to Consolidated Financial Statements.                                8-9

        ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS                                                10-16


PART II - OTHER INFORMATION

        ITEM 1 - LEGAL PROCEEDINGS                                                         17

        ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                                          17

                                        2

<PAGE>

PART I  -  FINANCIAL INFORMATION

         ITEM 1 - FINANCIAL STATEMENTS

                            WESTBRIDGE CAPITAL CORP.
                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

                                     ASSETS


</TABLE>
<TABLE>
<CAPTION>

                                                  Sep 31    Dec 30,    Sep 30,
                                                   1996       1995       1995

                                                --------   --------   --------
                        (UNAUDITED) (AUDITED) (UNAUDITED)

<S>                                          <C>         <C>        <C>
Investments:

  Fixed Maturities:
    Available-for-sale, at market value

      (amortized cost $90,541, $83,160

      and $11,052)                              $ 91,022   $ 86,780   $ 11,571
    Held-to-maturity, at amortized cost
      (market value $0, $0, and $77,442)            --         --       76,026
  Equity securities, at market                     1,594        539        538
  Investment in Freedom Holding Company,

    on the equity basis                             --        6,173      6,086
  Mortgage loans on real estate                      671        639        654
  Investment real estate                            --          141        141
  Policy loans                                       271        285        282
  Short-term investments                           9,070     14,946      3,154
                                                --------   --------   --------
      Total Investments                          102,628    109,503     98,452

Cash                                               7,499      2,013        105
Accrued investment income                          1,589      1,711      1,546
Receivables from agents, net of allowance
  for doubtful accounts                           18,434     16,706     13,360
Deferred policy acquisition costs                 78,701     56,977     52,435
Leasehold improvements and equipment, at
  cost, net of accumulated depreciation and

  amortization                                     1,403      1,590      1,583
Other assets                                      14,348     12,499     11,826
                                                --------   --------   --------
      Total Assets                              $224,602   $200,999   $179,307
                                                ========   ========   ========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                        3

<PAGE>

                            WESTBRIDGE CAPITAL CORP.
                           CONSOLIDATED BALANCE SHEETS

                        (In thousands, except share data)

        LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                  September 30,       December 31,     September 30,
                                                       1996               1995               1995

                                                   (Unaudited)         (AUDITED)         (UNAUDITED)

<S>                                            <C>               <C>                <C>
Liabilities:

  Policy Liabilities and Accruals:

    Future policy benefits                      $        56,039    $        46,620    $        46,217
    Claims                                               39,935             39,063             37,755
                                                ---------------    ---------------    ---------------
                                                         95,974             85,683             83,972

Accumulated policyholders' funds                            379                373                367
Other liabilities                                        19,841             11,226             13,619
Deferred income taxes                                     7,732              5,841              2,814
Notes payable                                            16,220             15,807               --
Senior subordinated notes, net of unamortized
  discount, due 2002                                     19,328             19,264             19,244
                                                ---------------    ---------------    ---------------
    Total Liabilities                                   159,474            138,194            120,016
                                                ---------------    ---------------    ---------------
Redeemable Preferred Stock                               20,000             20,000             20,000
                                                ---------------    ---------------    ---------------

Stockholders' Equity:

  Common stock, ($.10 par value, 30,000,000
    shares authorized; 6,020,729, 5,992,458

    and 5,986,458 shares issued)                            602                599                599
  Capital in excess of par value                         29,184             29,208             29,124
  Unrealized appreciation of investments carried
    at market value, net of tax                             334              2,593                544
  Retained earnings                                      15,178             10,575              9,194
                                                ---------------    ---------------    ---------------
                                                         45,298             42,975             39,461
Less - Aggregate of shares held in treasury and investment by affiliate in
Westbridge Capital Corp. common stock (28,600 at September 30, 1996, December
31, 1995 and September 30, 1995),

at cost                                                    (170)              (170)              (170)
                                                ---------------    ---------------    ---------------
    Total Stockholders' Equity                           45,128             42,805             39,291
                                                ---------------    ---------------    ---------------
      Total Liabilities, Redeemable Preferred

        Stock and Stockholders' Equity          $       224,602    $       200,999    $       179,307
                                                ===============    ===============    ===============
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                        4

<PAGE>

                                   WESTBRIDGE CAPITAL CORP.
                             CONSOLIDATED STATEMENT OF OPERATIONS

                       (In thousands, except per share data, unaudited)

<TABLE>
<CAPTION>

                                         Three Months Ended           Nine Months Ended
                                            SEPTEMBER 30,                SEPTEMBER 30,

                                       ------------------------      ---------------------
                                            1996         1995          1996         1995
                                       ------------------------      ---------------------
<S>                                    <C>           <C>           <C>           <C>
Revenues:

   Premiums:

     First-year                           $16,059       $ 9,653       $ 46,939      $23,109
     Renewal                               24,629        20,901         68,199       64,255
                                           ------        ------       --------       ------
                                           40,688        30,554        115,138       87,364
   Net investment income                    2,283         1,722          6,590        5,306
   Fee and service income                   2,451           666          6,240        1,556
   Net realized gain (loss) on
     investments                              (28)           37            173          (35)
   Other income                               (11)           (1)            (6)           4
                                        ----------   ----------     ----------   ----------
                                           45,383        32,978        128,135       94,195
                                           ------       -------        -------       ------
Benefits, claims and expenses:

   Benefits and claims                     24,244        17,128         68,790       50,637
   Amortization of deferred policy
     acquisition costs                      6,221         2,789         16,576        8,737
   Commissions                              2,506         2,825          6,252        8,639
   General and administrative expenses      6,235         6,085         19,934       15,696
   Taxes, licenses and fees                 1,431           991          4,495        3,057
   Interest expense                         1,253           568          3,217        1,858
                                          -------      --------      ---------      -------
                                           41,890        30,386        119,264       88,624
                                           ------        ------        -------       ------
Income before income taxes, equity

   in earnings of Freedom Holding

   Company and extraordinary item           3,493         2,592          8,871        5,571
Provision for income taxes                  1,223           881          3,105        1,894
Equity in Freedom Holding Company               -            85             74          261
                                         --------      --------       --------      -------
Income before extraordinary item            2,270         1,796          5,840        3,938
Extraordinary loss from early
   extinguishment of debt                       -             -              -          407
                                         --------      --------     ----------      -------
        Net income                        $ 2,270       $ 1,796        $ 5,840      $ 3,531
                                           ======        ======         ======       ======

Preferred stock dividends                     412           413          1,237        1,238
                                          -------       -------         ------       ------
Income applicable to common stockholders  $ 1,858       $ 1,383        $ 4,603      $ 2,293
                                           ======        ======         ======       ======

Earnings per common share:
   Primary:

     Income before extraordinary item     $   .30       $   .23        $   .75     $    .47
     Extraordinary item                         -             -              -         (.07)
                                         --------      --------       --------      -------
        Net earnings                      $   .30       $    23        $   .75     $    .40
                                           ======        ======         ======      =======
   Fully diluted:

     Income before extraordinary item     $   .27       $   .21        $   .69     $    .49
     Extraordinary item                         -             -              -         (.05)
                                          -------      --------       --------      -------
        Net earnings                      $   .27       $   .21        $   .69     $    .44
                                           ======        ======         ======      =======

Weighted average shares outstanding:

     Primary                                6,138         6,063          6,119        5,756
     Fully diluted                          8,535         8,441          8,517        8,114
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                        5

<PAGE>

                            WESTBRIDGE CAPITAL CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                              Three Months Ended        Nine Months Ended
                                                                                 SEPTEMBER 30,             SEPTEMBER 30,

                                                                           -----------------------     ---------------------
                                                                              1996          1995        1996          1995
                                                                           -----------------------     ----------------------
<S>                                                                       <C>           <C>          <C>          <C>
 Cash Flows From Operating Activities:

   Income applicable to common stockholders                                 $   1,858    $   1,383    $   4,603    $   2,293
   Adjustments to reconcile net income to cash
     used for operating activities:

        Increase (decrease) in policy liabilities and accruals                  2,040         (688)       5,439       (2,308)
        Amortization of deferred policy acquisition costs                       6,221        2,789       16,576        8,737
        Increase (decrease) in deferred income taxes                            1,305         (512)       1,563         (417)
        Additions to deferred policy acquisition costs                        (12,661)      (9,010)     (34,539)     (20,518)
        Depreciation expense                                                      117          126          378          360
        (Increase) decrease in receivables from agents                          3,136       (2,210)         (52)      (6,007)
        Increase in other assets                                                2,505          557          233       (2,229)
        (Increase) decrease in other liabilities                               (3,352)       6,491       (2,197)       4,935
        Other, net                                                               (831)          81         (155)         148
                                                                            ---------    ---------    ---------    ---------
        Net Cash Provided By (Used For) Operating Activities                      338         (993)      (8,151)     (15,006)
                                                                            ---------    ---------    ---------    ---------
Cash Flows From Investing Activities:

   Acquisition of Freedom Holding Company                                        --           --         (3,970)        --
   Proceeds From Investments Sold:
     Fixed maturities, classified as held-to-maturity,

        called or matured                                                        --            873         --          1,392
     Fixed maturities, classified as available-for-sale,
        called or matured                                                       1,206           94        6,394          171
     Fixed maturities, classified as available-for-sale, sold6,857               --         37,320        3,939
     Short-term investments, sold or matured                                   74,056           84      130,055       10,614
     Other investments, sold or matured                                           299           86          554          124
   Cost of investments acquired                                               (84,847)        --       (165,280)      (7,424)
   Additions to leasehold improvements and equipment,
     net of retirements                                                           (17)        (133)        (191)        (728)
                                                                            ---------    ---------    ---------    ---------
        Net Cash Provided By (Used For) Investing Activities                   (2,446)       1,004        4,882        8,088
                                                                            ----------   ---------    ---------    ---------
Cash Flows From Financing Activities:

   Retirement of senior subordinated debentures, at par                          --           --           --        (25,000)
   Proceeds from reinsurance treaty                                             8,418         --          8,418         --
   Issuance of notes payable                                                    1,625         --          4,356         --
   Repayment of notes payable                                                  (3,998)        --         (3,998)        --
   Issuance of subordinated notes                                                --           --           --         19,200
   Issuance of common stock                                                       102          148          104       10,098
   Purchase and cancellation of common stock                                     (125)        (146)        (125)        (146)
                                                                            ---------    ---------    ---------    ---------
        Net Cash Provided By Financing Activities                               6,022            2        8,755        4,152
                                                                            ---------    ---------    ---------    ---------
        Increase (Decrease) In Cash During Period                               3,914           13        5,486       (2,766)
        Cash At Beginning Of Period                                             3,585           92        2,013        2,871
                                                                            ---------    ---------    ---------    ---------
        Cash At End Of Period                                               $   7,499    $     105    $   7,499    $     105
                                                                            =========    =========    =========    =========
Supplemental Disclosures Of Cash Flow Information:
   Cash Paid During The Periods For:

     Interest                                                               $   1,019    $     554    $   2,636    $   2,892
     Income taxes                                                           $    --              $       322$32    $     650

</TABLE>

The accompanying notes are an integral part of these financial statements.

                                        6

<PAGE>

                            WESTBRIDGE CAPITAL CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES

The Company purchased the remaining outstanding capital stock of an insurance
holding company that it did not already own, in the second quarter of 1996 for a
cash purchase price of $6.3 million. This purchase resulted in the Company
receiving assets and assuming liabilities as follows:

        Assets                                   $13,542,000
        Liabilities                             $  5,780,000

Adjustments to reconcile net income to cash used for operating activities in the
Company's Consolidated Statements of Cash Flows exclude increases relating to
the acquired assets and liabilities of Freedom Holding Company. Accordingly,
these adjustments do not correspond to the changes in the related line items on
the Company's Consolidated Balance Sheets.

The accompanying notes are an integral part of these financial statements.

                                        7

<PAGE>

                            WESTBRIDGE CAPITAL CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)

NOTE 1 - FINANCIAL STATEMENTS

The accompanying unaudited Consolidated Financial Statements for Westbridge
Capital Corp. ("Westbridge" and, together with its consolidated subsidiaries,
the "Company") have been prepared in accordance with the instructions to Form
10-Q and do not include all of the information and footnotes required by
generally accepted accounting principles ("GAAP") for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three- and nine-month periods ended
September 30, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. The financial statements should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.

NOTE 2 - COMMITMENTS AND CONTINGENCIES

In the normal course of their business operations, National Foundation Life
Insurance Company ("NFL"), National Financial Insurance Company ("NFIC"),
American Insurance Company of Texas ("AICT"), and Freedom Life Insurance Company
of America ("FLICA"), Westbridge's primary insurance subsidiaries, are involved
in various claims and other business related disputes. In the opinion of
management, the disposition of these matters will not affect the Company's
consolidated financial position.

NOTE 3 - EARNINGS PER SHARE

PRIMARY INCOME BEFORE EXTRAORDINARY ITEM. Calculated by dividing income before
extraordinary item, less preferred stock dividends, by primary weighted average
shares outstanding. Primary weighted average shares outstanding do not assume
the conversion to Common Stock of the Series A Preferred Stock.

FULLY DILUTED INCOME BEFORE EXTRAORDINARY ITEM. Calculated by dividing income
before extraordinary item by fully diluted weighted average shares outstanding.
The preferred stock dividend is not deducted from income for the fully diluted
calculation, but the fully diluted average shares outstanding number is larger.
The fully diluted calculation assumes the conversion of the Series A Preferred
Stock to Common Stock at the beginning of the period. Were such a conversion to
occur, (a) preferred dividends would not be paid, and are therefore not deducted
from earnings for the calculation and, (b) there would be a greater number of
shares of Common Stock outstanding as a result of the conversion.

At September 30, 1996, the Series A Preferred Stock was convertible to Common
Stock at a conversion price of $8.41, which would result in 2,378,120 additional
shares of Common Stock upon conversion.

NOTE 4 - ACQUISITION OF FREEDOM HOLDING COMPANY

On May 31, 1996, the Company completed the acquisition of the 60% of Freedom
Holding Company ("FHC") it did not already own. FHC is a holding company which
owns 100% of FLICA, a Mississippi domiciled insurer licensed in 34 states. FLICA
is the primary asset of FHC. The purchase price was $6.3 million in cash, and
was accounted for under the purchase method. Prior to the acquisition, the
Company accounted for its 40% investment in FHC using the equity method.
Beginning June 1, 1996, the results of operations of FHC have been reflected in
the Company's Consolidated Statements of Income and Cash Flows. The present
value of future profits associated with the purchase are being amortized in
relation to premium revenues over the remaining life of the business. At the
time of the acquisition, the Company, through an insurance subsidiary, reinsured
the majority of business underwritten by FLICA. The acquisition did not have a
material pro-forma impact on operations.

                                        8

<PAGE>

NOTE 5 - REINSURANCE AGREEMENT WITH REASSURANCE COMPANY OF HANNOVER

The Company, through NFL and FLICA, entered into a 90% Coinsurance Funds
Withheld Reinsurance Agreement (the "Agreement") effective July 1, 1996 on the
inforce Cancer, Heart and Intensive Care business. The Agreement provided an
initial ceding commission of $10.5 million, of which $8.4 million was received
in cash during the quarter, which is repaid, inclusive of interest at 12.5%, as
statutory profits emerge from the reinsured block of business. For the three
month period ended September 30, 1996, the repayment due approximated $1.0
million. The ceding allowance payable at September 30, 1996, totaled $9.5
million. The Company must maintain in trust, investments with a fair market
value equal to 90% of the active life reserves on the reinsured business, which
at September 30, 1996, approximated $14.6 million. Upon repayment of the initial
ceding commission, profits on the block of business will be shared on a 50/50
quota share basis. The Agreement is subject to recapture at anytime at the
option of the Company.

                                               9

<PAGE>

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

        AND RESULTS OF OPERATIONS

OVERVIEW AND COMPARABILITY OF PERIODS

Westbridge, through its subsidiaries and affiliated companies, principally
underwrites and sells specialized health insurance products to supplement
medical expense coverage usually provided by employers and government programs.
The Company's insurance subsidiaries and affiliates include the following:

      *       National Foundation Life Insurance Company ("NFL") - A
              wholly-owned subsidiary of the Company, which is engaged primarily
              in the sale of accident and health insurance.

      *       National Financial Insurance Company ("NFIC") and its wholly-owned
              subsidiary, American Insurance Company of Texas ("AICT") - These
              companies were acquired by the Company in April 1994. NFIC and
              AICT are engaged in the sale of new policies and the
              administration of blocks of insurance business that are similar to
              the business of NFL.

      *       Freedom Holding Company ("FHC") and its wholly-owned subsidiary,
              Freedom Life Insurance Company of America ("FLICA") - The Company
              held a 40% interest in FHC until May 1996, at which time the
              Company acquired the remaining 60% of FHC. FLICA is engaged
              primarily in the sale of Cancer and Specified Disease Products.

The Company's major product lines are Cancer and Specified Disease Products,
Medical Expense Products and Medicare Supplement Products. Cancer and Specified
Disease Products include policies designed to provide daily indemnity for
hospital confinement and convalescent care for treatment of specified diseases,
as well as "event specific" policies designed to provide daily indemnity for
confinement in an intensive care unit or to provide a fixed benefit in the case
of accidental death. Medical Expense Products include policies providing
reimbursement for various costs of medical and hospital care, catastrophic
nursing care and home health care. Medicare Supplement Products are designed to
reimburse for the expenses not covered by the Medicare program.

The Company also derives revenue through fee and service income from other
insurance related activities. The Company's primary marketing subsidiaries
include the following:

     *    LifeStyles Marketing Group, Inc. ("LMG") - LMG is an insurance
          marketing joint venture, which derives fee income in the form of
          commissions on sales of Medical Expense Products primarily for NFL but
          also for non-affiliated insurance carriers. LMG is 51% owned by the
          Company.

     *    Senior Benefits, LLC ("SBL") - SBL is an insurance marketing
          subsidiary, which derives fee income in the form of commissions on
          sales of Medicare Supplement Products for NFL. SBL was formed in
          November, 1993. The Company held a 50% ownership interest in SBL until
          June 1996, at which time the company exercised an option in the joint
          venture agreement to acquire the remaining 50% of SBL.

     *    American Senior Security Plans, LLC ("ASSP") - ASSP is an insurance
          marketing subsidiary, which derives fee income as commissions on sales
          of Medicare Supplement Products for NFIC. ASSP was formed in November
          1994. The Company held a 50% ownership interest in ASSP until April
          1996, at which time the Company acquired the remaining 50% of ASSP.

     *    Health Care-One  Insurance Agency,  Inc. ("HCO") - HCO is an insurance
          marketing  joint  venture,  which derives fee income as commissions on
          sales of HMO Products and PPO Products, for non- affiliated companies.
          HCO was formed in September  1995.  The Company  holds a 50% ownership
          interest in HCO.

                                       10

<PAGE>

The Company has purchased several significant blocks of business over the past
four years. Generally, as a result of the acquisition of policies in force, and
the transfer of assets and liabilities relating thereto, the Company receives
higher revenues in the form of premiums and net investment income, and
experiences higher expenses in the form of benefits and claims, amortization of
deferred policy acquisition costs ("DPAC"), commissions and general and
administrative expenses. The Company expects that the levels of premiums, net
investment income, net realized gains on investments, benefits and claims,
amortization of DPAC, commissions and general and administrative expenses
attributable to these acquired policies will continue to decline over time as
the acquired businesses run off.

The following table shows the premiums received by the Company through internal
sales and through acquisitions during the periods indicated.

<TABLE>
<CAPTION>

                                               Three Months Ended      Nine Months Ended
                                                  SEPTEMBER 30,          SEPTEMBER 30,

                                              ------------------      -------------------
                                                1996       1995        1996        1995
                                              ------------------      -------------------
<S>                                          <C>        <C>          <C>          <C>
      Company-Issued Policies:

         First-year premiums                  $16,050    $  9,292     $ 46,883     $22,748
         Renewal premiums                      14,314       9,251       36,488      27,022
                                               ------     -------      -------      ------
         Total Company-issued policies         30,364      18,543       83,371      49,770
                                               ------      ------      -------      ------

       Acquired Policies:

         American Integrity                     2,029       2,351        6,369       7,631
         Life and Health                          446         506        1,388       1,627
         Dixie National Life                      730         822        2,256       2,635
         FLICA                                  1,117           -        1,505           -
         NFIC and AICT                          6,002       8,332       20,249      25,701
                                              -------     -------     --------      ------
         Total acquired policies               10,324      12,011       31,767      37,594
                                               ------      ------     --------      ------

           Total Premiums                     $40,688     $30,554     $115,138     $87,364
                                               ======      ======      =======      ======
</TABLE>

RESULTS OF  OPERATIONS - THREE MONTHS AND NINE MONTHS ENDED  SEPTEMBER  30, 1996
COMPARED TO

SAME PERIODS ENDED SEPTEMBER 30, 1995

PREMIUMS. Premiums increased from $30.6 million to $40.7 million for the third
quarter of 1996, an increase of $10.1 million or 33%. This increase was
attributable to first-year and renewal premiums on Company-issued policies
increasing $6.8 million and $5.0 million or 73% and 54%, respectively, offset by
decreases in premiums from acquired policies of $1.7 million or 14%.

Premiums increased $27.7 million or 32%, for the first nine months of 1996, from
$87.4 million to $115.1 million. This increase is attributable to first-year and
renewal premiums on Company-issued policies increasing $24.1 million and $9.5
million or 106% and 35%, respectively, offset by decreases in premiums from
acquired policies of $5.8 million or 15%.

The increase in first-year premiums for the third quarter of 1996 was primarily
due to premiums on Companyissued policies increasing $6.5 million or 143%, for
Medical Expense Products and $1.0 million or 32% for Medicare Supplement
Products. These increases were offset, in part, by a decrease in first-year
premium of $1.1 million from products underwritten by FLICA, and reinsured by
NFL, prior to the purchase of FLICA by the Company.

The increase in first-year premiums for the first nine months of 1996 when
compared to the same period in 1995, was principally due to increases from
Company-issued policies of $20.4 million or 210% from Medical Expense Products,
and $5.2 million or 59% from Medicare Supplement Products. These increases were
offset, in part, by a decrease in first-year premiums of $1.9 million or 56%
from Cancer and Specified Disease Products reinsured with FLICA prior to the
purchase of FLICA by the Company.

                                       11

<PAGE>

Renewal premiums for the third quarter of 1996 increased primarily due to
Company-issued premiums increasing $1.7 million or 59% for Medical Expense
Products, $2.8 million or 184% for Medicare Supplement Products, and $0.6
million or 13% for Cancer and Specified Disease Products. These increases were
offset, in part, by a decrease in renewal premiums from acquired policies of
$1.3 million or 11%, comprised of a $1.1 million increase in premiums from
policies acquired in the recent purchase of FLICA, offset by a decrease in
premiums of $2.4 million from all other acquired blocks of business.

The increase in renewal premiums for the nine months ended September 30, 1996 is
primarily attributable to premiums on Company-issued policies increasing $2.3
million or 25% from Medical Expense Products, $5.6 million or 166% from Medicare
Supplement Products, and $1.5 million or 11% from Cancer and Specified Disease
Products. These increases were offset, in part, by decreased renewal premiums
from acquired policies of $5.5 million or 15%, comprised of a $1.4 million
increase in premiums from policies acquired in the recent purchase of FLICA,
offset by decreases in premiums of $6.9 million from all other acquired blocks
of business.

NET INVESTMENT INCOME. Net investment income increased $0.6 million or 35%, for
the third quarter of 1996 from $1.7 million to $2.3 million. The increase was
attributable to $0.3 million of interest charged on receivables from agents,
which was not present in the prior year period with the remaining increase due
to a combination of higher investment asset base and yield.

Net investment income increased $1.3 million or 25%, for the first nine months
of 1996 from $5.3 million to $6.6 million. The increase was attributable to $1.1
million of interest charged on receivables from agents, which was not present in
the prior year period.

FEE AND SERVICE INCOME. Fee and service income increased from $0.7 million to
$2.5 million in the third quarter of 1996, an increase of $1.8 million. The
increase is primarily due to $1.5 million of commission fees earned by HCO from
non-affiliated companies and an increase of $0.3 million in fees for
telemarketing services to non-affiliated companies. HCO began operations during
the fourth quarter of 1995. Sales of telemarketing services to non-affiliated
companies began during the third quarter of 1995.

Fee and service income increased $4.6 million for the first nine months of 1996
from $1.6 million to $6.2 million. The increase was primarily due to $3.5
million of commission fees from non-affiliated companies earned by HCO, which
began operations during the fourth quarter of 1995. Additionally, sales of
telemarketing services to non-affiliated companies, which began during the third
quarter of 1995, increased $1.0 million.

BENEFITS AND CLAIMS. Benefits and claims increased $7.1 million or 42%, from
$17.1 million to $24.2 million in the third quarter of 1996 when compared to the
third quarter of 1995. Reflective of the increase in premiums, benefits and
claims on Company-issued policies increased $4.0 million or 91%, for Medical
Expense Products, and $3.1 million or 76% for Medicare Supplement Products.
Additionally, benefits and claims from acquired policies of NFIC and AICT
increased $1.9 million this quarter due to a non-recurring decrease in claim
reserves of approximately $3.6 million during the third quarter of 1995. The
claim reserve decrease resulted from settlement administration to mitigate
benefits on Disability Income policies currently in benefit status. Excluding
the aforementioned claim reserve adjustment of 1995, benefits and claims expense
for the acquired NFIC and AICT products decreased $1.7 million in the third
quarter of 1996, compared to the comparable 1995 period. These increases were
offset, in part, by a decrease of $1.3 million related to products underwritten
by FLICA, principally Cancer and Specified Disease Products. The decrease is the
result of lower claim reserves due to favorable claim experience. Also, benefits
and claims decreased $0.4 million or 19%, on the block of business acquired from
American Integrity Insurance Company.

Benefits and claims increased from $50.6 million to $68.8 million in the first
nine months of 1996, an increase of $18.2 million or 36%. Consistent with the
increase in premiums, benefits and claims from Company-issued policies increased
$9.4 million or 100%, on Medical Expense Products, and $7.6 million or 76% on
Medicare Supplement Products. Increases from acquired business were $0.5 million
for the policies recently acquired through the FLICA purchase, and $2.0 million
for policies acquired in the NFIC and AICT acquisition. The increase in benefits
and claims from acquired policies of NFIC and AICT stems from a decrease of
approximately $3.6 million in claims reserves in the third quarter of 1995, due
to mitigation efforts on Disability Income Products

                                       12

<PAGE>

currently in benefit status. Excluding the aforementioned claim reserve
adjustment of 1995, benefits and claims expense for the acquired NFIC and AICT
products decreased $1.6 million for the first nine months of 1996, in relation
to the comparable 1995 period. Offsetting these increases, in part, were
decreases of $0.4 million on Company-issued policies for Cancer and Specified
Disease Products, primarily due to lower claim reserves as a result of favorable
claim experience, and $1.5 million or 24%, from Medicare Supplement Products
acquired from American Integrity Insurance Company.

COMMISSIONS. Commissions decreased $0.3 million or 11%, in the third quarter of
1996 from $2.8 million to $2.5 million. Before elimination of inter-company
revenue and expense in consolidation, commissions decreased $0.7 million or 28%,
in NFL and $0.2 million or 24%, in NFIC and AICT. Offsetting these decreases
were increases in commissions of $0.7 million or 54%, in LMG and $1.1 million in
HCO, which began operations in the fourth quarter of 1995. An increase of $0.8
million in commissions paid to LMG from NFL was eliminated in consolidation
along with an increase of $0.4 million in commissions paid to SBL by NFL.

For the first nine months of 1996, commissions decreased $2.3 million or 27%.
Before elimination of inter-company revenue and expense in consolidation,
commissions decreased $1.7 million or 24%, in NFL and $0.8 million or 33%, in
NFIC and AICT. Offsetting these decreases were increases in commissions of $2.6
million or 79%, in LMG and $2.3 million in HCO, which began operations in the
fourth quarter of 1995. An increase of $3.5 million in commissions paid to LMG
from NFL and $1.6 million in commissions paid to SBL from NFL were eliminated in
consolidation.

AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS ("DPAC"). Amortization of DPAC
increased from $2.8 million to $6.2 million in the third quarter of 1996, an
increase of $3.4 million or 121%. The increase is a reflection of the large
volume of new business sales over the last twelve months. Amortization related
to Company-issued NFL products, including products originally reinsured with
FLICA, increased $2.3 million or 124%. In addition, amortization related to
Company-issued NFIC and AICT products, increased $1.1 million and amortization
related to policies acquired in the recent purchase of FLICA, totaled $0.2
million.

Amortization of DPAC increased $7.9 million or 91%, from $8.7 million to $16.6
million for the first nine months of 1996. This increase is the result of the
increase in new business premiums during the last twelve months. Amortization of
DPAC from Company-issued products of NFL, including policies originally
reinsured with FLICA, increased $5.4 million or 96%, from $5.6 million to $11.0
million. Amortization of DPAC from Company-issued products of NFIC and AICT
increased $2.1 million, from $0.2 million to $2.3 million. Amortization of DPAC
on policies acquired from the recent acquisition of FLICA accounted for $0.3
million.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $0.1 million or 2%, from $6.1 million to $6.2 million in the third
quarter of 1996.

General and administrative expenses increased in the first nine months of 1996
from $15.7 million to $19.9 million, an increase of $4.2 million or 27% due to
expansion of marketing operations and policyholder count. Included in general
and administrative expenses for the nine months ended September 30, 1996 is
approximately $0.6 million of expenses related to the acquisition of the
remaining interest in ASSP and SBL.

TAXES, LICENSES AND FEES. Taxes, licenses and fees increased $0.4 million or
40%, from $1.0 million to $1.4 million in the third quarter of 1996. The
increase is primarily due to growth in premium revenues along with state levied
fees for examinations and guaranty fund assessments.

For the first nine months of 1996, taxes, licenses and fees increased $1.4
million or 45%, from $3.1 million to $4.5 million, again primarily as a result
of increases in premiums coupled with state levied fees for examinations and
guaranty fund assessments.

INTEREST EXPENSE. Interest expense increased in the third quarter of 1996 from
$0.6 million to $1.3 million, an increase of $0.7 million or 117%, due to
interest of $0.5 million associated with a revolving line of credit which was
not present in the comparable 1995 period, and $0.2 million of interest
associated with a reinsurance treaty that was effective July 1, 1996, see NOTE 5
to the Consolidated Financial Statements.

                                       13

<PAGE>

Interest expense increased during the first nine months of 1996 from $1.9
million to $3.2 million, an increase of $1.3 million or 68%. This increase is
primarily due to $1.1 million of interest associated with a revolving line of
credit which was not present in the comparable 1995 period, and $0.2 million of
interest associated with a reinsurance treaty which was also not present in the
comparable 1995 period, see NOTE 5 to the Consolidated Financial Statements.

PROVISION FOR INCOME TAXES. The provision for income taxes increased $0.3
million or 33%, from $0.9 million to $1.2 million in the third quarter of 1996
as a result of pre-tax income increasing $0.8 million.

The provision for income taxes increased $1.2 million or 63%, from $1.9 million
to $3.1 million for the first nine months of 1996. This increase is primarily
due to pre-tax income increasing $3.1 million.

FINANCIAL CONDITION - LIQUIDITY AND CAPITAL RESOURCES

WESTBRIDGE. Westbridge is a holding company which conducts its principal
operations through its insurance subsidiaries. Westbridge's primary assets
consist of the outstanding capital stock of NFL, NFIC, and FHC of which it is
the sole stockholder. AICT is a wholly-owned subsidiary of NFIC, and FHC owns
100% of FLICA. Westbridge's primary sources of funds are advances due and
dividends from marketing subsidiaries, principal and interest payments on a
surplus certificate issued by NFL to Westbridge, lease payments on fixed assets
and tax contributions under a tax sharing agreement between Westbridge and its
subsidiaries. Westbridge's obligations consist primarily of interest payments on
the Senior Subordinated Notes, dividends on the Series A Preferred Stock,
working capital requirements for its marketing subsidiaries, and taxes. The
Senior Subordinated Notes mature in March 2002 and the Series A Preferred Stock
is subject to mandatory redemption in April 2004.

Dividend payments from Westbridge's principal insurance subsidiaries, NFL, NFIC,
AICT and FLICA are regulated by the insurance laws of their domiciliary states.
NFL is domiciled in Delaware. Under the Delaware Insurance Code, an insurer
domiciled in Delaware may not declare or pay a dividend or other distribution
from any source other than "earned surplus" without the state insurance
commissioner's prior approval. NFIC and AICT are domiciled in Texas. An insurer
domiciled in Texas may pay dividends only out of "surplus profits arising from
its business." Moreover, insurers domiciled in either Delaware or Texas may not
pay "extraordinary dividends" without first providing the state insurance
commissioner with 30-days prior notice, during which time such commissioner may
disapprove the payment. FLICA is domiciled in Mississippi. Under Mississippi
Insurance Regulations, an insurer domiciled in Mississippi may pay dividends
limited to the lesser of 10% of statutory capital and surplus or 100% of
statutory net income for the preceding year, unless they obtain prior written
approval of the Commissioner.

As of December 31, 1995, NFL had negative earned surplus as a result of
historical losses. For the foreseeable future, NFL has agreed to seek the
approval of the Delaware Insurance Commissioner prior to making any dividend
payments. During 1996, AICT has the ability to pay to NFIC, without prior
regulatory approval, $835,000 in dividends, none of which has been paid. During
1996, NFIC has the ability to pay Westbridge, without prior regulatory approval,
$994,000 in dividends, none of which has been paid. FLICA is precluded from
making dividend payments in 1996 without prior approval from the Insurance
Commissioner due to net losses on a statutory basis in 1995.

Westbridge believes that its near-term cash requirements, including interest on
the Senior Subordinated Notes and dividend payments on the Series A Preferred
Stock will be met through operating cash flows, repayments of advances due,
dividends from marketing subsidiaries, and payments relating to the surplus
certificate.

INSURANCE SUBSIDIARIES. The primary sources of cash for the insurance
subsidiaries are premiums, income on investment assets and fee and service
income. Additional cash is periodically provided from the sale of short-term
investment assets and could, if necessary, be provided through the sale of
long-term investment assets. The insurance subsidiaries also receive cash from
the sale of agent receivables to Westbridge Funding Corporation ("WFC"), a
wholly-owned subsidiary of Westbridge, under a Receivables Purchase Agreement.
Discontinuance of such sales to WFC would result in reduced liquidity and
decreases in statutory capital and

                                       14

<PAGE>

surplus of the insurance subsidiaries. The insurance subsidiaries' primary uses
for cash are benefits and claims, commissions, general and administrative
expenses and taxes.

The insurance subsidiaries and other subsidiaries of Westbridge advance a
percentage of first-year commissions payable to agents for policies sold by such
agents. In order to finance these advances, Westbridge's wholly-owned subsidiary
WFC entered into a Credit Agreement dated as of December 28, 1995, with Fleet
National Bank (the "Credit Agreement") which provides WFC with a two-year $20.0
million revolving loan facility, the proceeds of which are used by WFC to
purchase receivables evidencing agent advances. WFC's obligations under the
Credit Agreement are secured by liens upon substantially all of WFC's assets. In
addition, through an agreement with Fleet National Bank dated December 28, 1995,
Westbridge has guaranteed WFC's obligations under the Credit Agreement and has
pledged all of the issued and outstanding shares of the capital stock of NFL,
NFIC and WFC as collateral for its guaranty. As of September 30, 1996 $15.2
million was outstanding under the Credit Agreement. The termination date of the
current agent receivable financing program is December 28, 1997.

Effective July 1, 1996, NFL and FLICA entered into a 90% Coinsurance Funds
Withheld Reinsurance Agreement which provided $8.4 million in cash, from ceding
commissions, and increased statutory surplus levels for the respective
companies. NFL and FLICA are obligated to repay the ceding commission, along
with related interest, from statutory profits on the business reinsured.

CONSOLIDATED. A significant portion of the Company's premiums for the
nine-months ended September 30, 1996 related to policies obtained through closed
blocks of insurance business including the NFIC and AICT acquisition. Renewal
premiums from these closed blocks of business will decline over time due to
policy run-off resulting from lapses and cancellations. In order to offset such
run-off, the Company must issue new policies through its existing general agency
networks or through new agency networks, or acquire additional policies.

Net cash used for operations was $8.2 million in the first nine months of 1996
and $15 million for the comparable 1995 period. The decrease in the amount of
net cash used for operations is the result of larger increases to cash inflows,
principally from premiums, relative to the increases in cash outflows,
principally from deferred policy acquisition costs associated with higher levels
of new business production in 1996, when compared to 1995. Additionally, initial
sales began moderating in the second quarter of 1996 thus allowing earned
commission to materially exceed new advances to agents and thereby reducing what
had been a negative cash flow in 1995.

Net cash provided by investing activities for the nine months ended September
30, 1996, totaled $4.9 million, compared to net cash provided by investing
activities of $8.1 million in the comparable 1995 period. Proceeds from
investment activity for the first nine months of both 1996 and 1995 were
utilized to fund operating cash outflows.

Net cash provided by financing activities was $8.8 million for the nine months
ended September 30, 1996, compared to $4.2 million for the prior year period.
The Company, through WFC, made net draws, including repayments of previous
amounts borrowed, of $0.4 on a $20.0 million revolving loan facility during the
first nine months of 1996. The loan facility is secured by receivables from
insurance agents and the outstanding balance totaled $15.2 million at September
30, 1996. The Company and WFC are subject to certain provisions and covenants
under the loan facility, including obtaining bank approval prior to paying any
dividend from WFC to Westbridge. This loan facility was not available to the
Company at September 30, 1995. Additional financing has been provided, through
NFL and FLICA, by a 90% Coinsurance Funds Withheld Reinsurance Agreement,
effective July 1, 1996. The reinsurance agreement grants an initial ceding
commission of $10.5 million, of which $8.4 million was received September 30,
1996. Quarterly repayment of the ceding commission, which totaled approximately
$1.0 million in the third quarter, along with interest at 12.5% per annum, will
be made from 90% of the statutory profits on the business reinsured. The Company
has given no representations or warranties to the reinsurer concerning the
future performance of the business reinsured. Subsequent to the repayment of the
ceding commission, profits will be shared on a 50/50 quota share basis. The
Company must maintain a trust comprised of investment assets with a market value
equal to 90% of the active life reserves on the business reinsured, which
approximated $14.6 million at September 30, 1996. The adequacy of the amount of
assets in trust will be reviewed quarterly and adjusted as needed. The
reinsurance agreement is subject to recapture at

                                       15

<PAGE>

any time at the option of the Company. For the comparable 1995 period, $29.1
million was provided by the issuance of 1,500,000 shares of Common Stock and
$20.0 million principal amount of Senior Subordinated Notes, due 2002. Also in
the first nine months of 1995, $25.0 million was disbursed to retire at par
value, prior to maturity, the 11.7% Senior Subordinated Debentures, due 1996.
The cash inflows from financing activities were utilized to fund operations for
the nine months ended September 30, 1996 and 1995.

The Company believes that its near-term cash requirements will be met through a
combination of operating, investing, and financing cash flows. The Company
anticipates that its longer-term cash requirements for the operation of the
business will also be met through a combination of operating, investing, and
financing cash flows. The Company has established an agent balance financing
facility which will be used to finance additional marketing growth, and has
consummated a reinsurance treaty that provides capital for operating needs along
with increased statutory surplus levels for NFL and FLICA. Additional capital
may be necessary to continue future growth. There can be no assurance that
opportunities for additional capital or for future growth will arise. In
addition, the ability of the Company to issue new policies will be limited by
risk based capital guidelines as enforced by various insurance regulators.

The Company had less than 3.2% of its fixed maturity investments held in
high-yield, unrated or less than investment grade corporate debt securities in
its investment portfolio as of September 30, 1996, and it is the Company's
policy not to invest more than 5% of its holdings in such assets. Changes in
interest rates may affect the market value of the Company's investment
portfolio.

                                       16

<PAGE>

PART II  - OTHER INFORMATION

         ITEM 1  LEGAL PROCEEDINGS

                 (See PART I - NOTE 2 to the Consolidated Financial Statements).

         ITEM 6  EXHIBITS AND REPORTS ON FORM 8-K

                 (a)  EXHIBITS

                    10.34-Reinsurance Agreement between National Foundation Life
                         Insurance  Company & Freedom Life Insurance  Company of
                         America and Reassurance Company of Hannover,  effective

                         July 1, 1996.

                    10.35-Pledge  Agreement  dated as of July 25,  1996  between
                         Westbridge Capital Corp. and Fleet National Bank.

                    10.36-Pledge  Agreement  dated as of July 25,  1996  between
                         Westbridge Capital Corp. and Fleet National Bank.

                 (b)  REPORTS ON FORM 8-K

                      No Form 8-K was required to be filed during the period.

                                       17

<PAGE>

                                                                       FORM 10-Q

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                                        WESTBRIDGE CAPITAL CORP.

                                                         /S/ PATRICK J. MITCHELL

                                                             Patrick J. Mitchell

                                       Executive Vice President, Chief Financial
                                                           Officer and Treasurer

                                      (On Behalf of the Registrant as authorized
                                     Principal Financial and Accounting Officer)

Dated at Fort Worth, Texas
November 14, 1996

                                       18

<PAGE>
                                                                   EXHIBIT 10.34

                              REINSURANCE AGREEMENT

                                     BETWEEN

                   NATIONAL FOUNDATION LIFE INSURANCE COMPANY

                                        &
                    FREEDOM LIFE INSURANCE COMPANY OF AMERICA

                                 777 Main Street
                             FORT WORTH, TEXAS 76109

           (Referred to collectively in this Agreement as the Company)

                                       AND

                         REASSURANCE COMPANY OF HANNOVER
                       800 N. Magnolia Avenue, Suite 1000

                             ORLANDO, FLORIDA 32803
                (Referred to in this Agreement as the Reinsurer)

                                                      COINSURANCE FUNDS WITHHELD

REVISED 10/14/96                                 FORMER REFERENCE NO: HA-9606-5M
                                                   NEW REFERENCE NO:  HA-9650-1F

<PAGE>

                                TABLE OF CONTENTS

                             Coinsurance Funds Withheld

        Article I            Reinsurance Definition

        Article II           Liability

        Article III          Plan and Amount of Reinsurance

        Article IV           Accounting and Payments

        Article V            Claims

        Article VI           General Provisions

        Article VII          Recapture

        Article VIII         Arbitration

        Article IX           Reinsurer's Right of Notice of Unusual Practices

        Article X            Treasury Regulation Section 1.848-2(g)(8)
                              Joint Election

        Article XI           Duration of Agreement

        Article XII          Insolvency

        Article XIII         Representations and Warranties

        Article XIV          Letters of Credit

        Article XV           Execution

        Schedule A           Business Reinsured

        Schedule B           Reinsurance Forms

        Schedule C           Experience Refund Calculation

        Schedule D           Expense Allowances

                                       (i)

<PAGE>

                            TABLE OF CONTENTS CONT'D

        Exhibit I            Security Agreement and Asset Trust Agreement

        Exhibit II           Investment Guidelines/Eligible Investments

        Appendix I           Projection Model

                                      (ii)

<PAGE>

                  TREATY SYNOPSIS OF COINSURANCE FUNDS WITHHELD

                              REINSURANCE AGREEMENT

                                     BETWEEN

                   NATIONAL FOUNDATION LIFE INSURANCE COMPANY

                                        &
                    FREEDOM LIFE INSURANCE COMPANY OF AMERICA

                                       AND

                         REASSURANCE COMPANY OF HANNOVER

        The Treaty document which follows details a Coinsurance Funds Withheld
Reinsurance Agreement (the "Agreement") between National Foundation Life
Insurance Company (NFL) & Freedom Life Insurance Company of America (FLICA),
NFL's wholly owned subsidiary, and the Reassurance Company of Hannover (RCH) to
be effective July 1, 1996. The Treaty provides NFL with a $10.5 million Initial
Ceding Allowance on the Company's inforce Cancer, Intensive Care and Heart
business as of the Effective Date. The reinsurance is on a 90/10 quota-share
basis on the Company's retained business with RCH accepting all of the inherent
morbidity risks on its 90%. Provisions of the treaty are in conformity with the
Life and Health Reinsurance Agreement Model Regulation and provide for the
repayment of the Initial Ceding Allowance out of the statutory profits on the
Business Reinsured. Other important aspects of the Agreement are as follows:

*       The form of the treaty is Quota Share Coinsurance Funds Withheld which
        implies under this Agreement that the Reinsurer has assumed all of the
        risks inherent on its proportionate share of the business to include (on
        a contingent basis) the adequacy of the active life reserves which are
        held in trust by the Company.

*       Accumulated profits in excess of the Initial Ceding Allowance will be
        shared on a 50/50 quota-share basis between the Companies and RCH once
        the Initial Ceding Allowance is repaid plus interest at the rate of 12
        1/2% per annum on the outstanding balance.

*       The Agreement is drafted to conform to reserve credit regulations:

        (a)    The renewal Expense Allowances are adequate to cover the
               Companies actual expenses, with respect to the Business
               Reinsured,

        (b)    the Companies cannot be deprived of surplus or assets except as
               contemplated in the regulations,

        (c)    there is no requirement for the Companies to reimburse RCH for
               negative experience under the Agreement, unless they exercise
               their right to recapture.

                                      (iii)

<PAGE>

       (d)     there  is no  provision  for  recapture,  other  than as
               specifically outlined in Article VII,

       (e)     all forms of risk related to the Business Reinsured are
               permanently transferred subject to the recapture provisions of

               Article VII,

       (f)     quarterly settlements are required, and ...

       (g)     there are no representations or warranties given concerning the
               future performance of the Business Reinsured.

*       RCH is an approved reinsurer in Delaware and Mississippi. However, a
        Letter of Credit (LOC) in the amount deemed necessary by the parties to
        this Agreement will be provided to allow the Company(ies) to take credit
        for statutory reserves in states where RCH is neither licensed nor
        approved.

                                      (iv)

<PAGE>

                      COINSURANCE FUNDS WITHHELD AGREEMENT

        This Coinsurance Funds Withheld Agreement (the "Agreement") is entered
into as of the date below written by and between the National Foundation Life
Insurance Company, a Delaware insurer, and Freedom Life Insurance Company of
America, a Mississippi insurer (collectively referred to herein as the
"Company"), and Reassurance Company of Hannover, a Florida reinsurer (the
"Reinsurer").

        The Company and the Reinsurer mutually agree to reinsure in accordance
with the terms and conditions set forth hereinafter. This Agreement is solely
between the Company and the Reinsurer, and performance of the obligations of
each party under this Agreement shall be rendered solely to the other party. In
no instance shall anyone other than the Company, or the Reinsurer (and/or their
duly appointed and mutually recognized successors or assigns) have any rights
under this Agreement.

        This Agreement with its attached Schedules and Exhibits shall constitute
the Entire Agreement between the parties with respect to the Business Reinsured
hereunder, and there are no understandings between the parties other than as
expressed in the Agreement. Any change or modification to the Agreement shall be
null and void unless made by an amendment which is signed by both parties.

                                     Page 1

<PAGE>

                                    ARTICLE I

                             REINSURANCE DEFINITION

        1.1 BUSINESS REINSURED. The Company agrees to cede to the Reinsurer on a
quota-share basis, and the Reinsurer agrees to assume from the Company, on a
Coinsurance Funds Withheld basis, 90% of the retained obligations of the Company
as specified in Schedule A, except as provided for under Section 1.2 hereof.
Under all circumstances the Reinsurer's liability hereunder shall not include
any amounts awarded in judgement against the Company, or any other person, firm,
corporation or entity by a court of competent jurisdiction in excess of the
policy benefit losses, whether in the form of punitive damages, attorneys fees,
costs of litigation, or other extracontractual liabilities.

        The Reinsurer's liability under this Agreement shall be limited to
indemnification of the Company.

        1.2 OTHER REINSURANCE COVERAGE. If there is applicable reinsurance on an
excess or other basis coincident with the Business Reinsured under this
Agreement, the Reinsurer's liability for such amounts shall be reduced to the
extent of the other benefits provided under those agreements. Termination and/or
recapture of any treaty(ies) directly impacting this Agreement will be subject
to mutual agreement prior to termination and/or recapture of those treaty(ies).
Other reinsurance inforce not impacting this Agreement is specifically excluded
from consideration.

                                                              ..END OF ARTICLE I

                                     Page 2

<PAGE>

                                   ARTICLE II

                                    LIABILITY

        The liability of the Reinsurer on any reinsurance under this Agreement
begins on July 1, 1996, the Effective Date. The liability of the Reinsurer will
continue in accordance with the terms and conditions of this Agreement, and will
end at the same time as that of the Company, or recapture, whichever is earlier.

                                                            ...END OF ARTICLE II

                                     Page 3

<PAGE>

                                   ARTICLE III

                         PLAN AND AMOUNT OF REINSURANCE

        3.1 The Health Business Reinsured hereunder and outlined in Schedule A
shall be on a Coinsurance Funds Withheld basis in a manner consistent with the
risks inherent in the policy forms ceded by the Company. Under the terms of the
Agreement the Reinsurer assumes all of the inherent risks of the Business
Reinsured. The assets backing the active life reserves are to be retained in
Trust by the Company, in accordance with the provisions of Exhibit I, subject to
the terms and conditions outlined in Article VI, paragraph 6.4, and the
provisions of Schedule C, as they impact the distribution of earnings thereon.
The Reinsurer's amount at risk shall be limited to the risks on those policies
retained by the Company as of the Effective Date and now ceded under this
Agreement.

        3.2 Reductions and terminations of the Company's policies, riders or
benefits shall reduce or terminate the amount reinsured under this Agreement in
a corresponding amount as of the same date, taking into account any changes in
Other Reinsurance Coverage as called for by pertinent treaty language.

        3.3 Reinstatement by the Company under its regular rules of policies,
riders or benefits which were reduced, terminated or lapsed, shall automatically
reinstate the reinsurance thereon for the amount that would have been in force
if the insurance had not been so reduced, terminated or lapsed.

                                                           ...END OF ARTICLE III

                                     Page 4

<PAGE>

                                   ARTICLE IV

                             ACCOUNTING AND PAYMENTS

        4.1 INITIAL REINSURANCE TRANSACTION. As a condition precedent to the
Company's and the Reinsurer's liability hereunder, the Company shall on, or
shortly after the execution date, transfer to the Reinsurer a net amount of
assets equal to 90% of the statutory unearned premium reserves and the Reinsurer
shall pay the Company an amount equal to the Initial Ceding Allowance contained
in Schedule D and as adjusted under paragraph 4.7. Such amounts shall be
reflective of the Effective Date of July 1, 1996.

        4.2 SUBSEQUENT REINSURANCE PREMIUMS. Amounts due subsequent to the
initial reinsurance transaction shall be paid to the Reinsurer when determined
in accordance with paragraph 4.3 below. If the amount of net reinsurance
premiums set forth on any statement is a negative amount, the Reinsurer shall
pay to the Company an amount equal to such negative amount within fifteen (15)
days after the Reinsurer's receipt from the Company of such a Statement.

        4.3 PAYMENT OF REINSURANCE. The accounting shall be on a calendar
quarter basis for all items. The initial accounting period shall run from the
Effective Date to the end of the first quarter in which the Effective Date
falls. The final accounting period shall run from the end of the preceding
calendar quarter end until the termination of this Agreement. Accounting reports
shall be submitted to the Reinsurer by the Company not later than 30 days after
the end of each accounting period. Such reports shall include information on the
amount of reinsurance premiums, commissions, expenses, claims, and any other
items required for NAIC statutory accounting on the policies reinsured for the
preceding accounting period. The monthly "premium and loss" report shall reflect
all transactions for the accounting period as stated above with the exception of
statutory reserves which shall be reported on a quarterly basis. Annual
accounting reports necessary to the filing of the Reinsurer's Annual Statement
blank and its Federal Income Tax return shall be submitted to the Reinsurer by
the Company at the request of the Reinsurer within 30 days after the end of a
calendar year. In addition, the Company shall provide, on a timely basis, an
Actuarial Certification satisfactory to the Reinsurer of the liability included
herein. This information will be supplied coincident with the annual accounting
information. The Company will also support any cash flow testing and/or other
regulatory requirements inherent in the assumption of these liabilities by the
Reinsurer.

        4.4 ASSOCIATED RIDERS. If any riders are reinsured under this Agreement,
premiums and their related commissions will be paid in accordance with the
Company's contractual obligations at the inception of this Agreement.

                                                         ARTICLE IV CONTINUES...

                                     Page 5

<PAGE>

        4.5 PAYMENTS. The payments due under this Agreement from the Company to
the Reinsurer, shall be a condition precedent to the liability of the Reinsurer.
The Reinsurer shall have the right to terminate the reinsurance on risks for
which payments are in default by giving ninety (90) days written notice of
termination to the Company. At the close of the last day of the ninety-day
notice period, all of the Reinsurer's liability for risks subject to the
termination notice, plus for the risk on which premiums went into default during
the ninety-day notice period, shall terminate and the Agreement shall be subject
to the terminal accounting provisions of Article VII.

        Notwithstanding termination of reinsurance as provided for by this
provision, the Company shall continue to be liable to the Reinsurer for all
unpaid premiums earned by the Reinsurer under this Agreement (see Section 7.3).

        The Company may reinstate such terminated reinsurance by paying in full,
prior to expiration of the ninety (90) day termination notice, all unpaid
premiums (with interest from the due date consistent with the provisions of
4.17) for the reinsurance which was in force prior to its termination. The
effective date of reinstatement shall be the day the Reinsurer receives all
required premiums. However, there shall be no reinstatement on any risk on which
the Company incurred a claim for insurance after the reinsurance terminated.

        4.6    PROCEDURE FOR PAYMENT.

          a)   FIRST  YEAR AND  RENEWAL  BUSINESS.  On or before  the  thirtieth
               (30th)  day after  --------------------------------  the close of
               each  quarter,  the  Company  will  submit  to  the  Reinsurer  a
               statement of account, substantially in accordance with Schedule B
               showing  the  premium(s)  due  on  reinsurance  effected  in  the
               preceding  month(s) and any other  pertinent data mutually agreed
               upon by the  parties  hereto.  If a  statement  shows  that a net
               reinsurance  balance  is due  the  Reinsurer,  the  Company  will
               include  with the  statement  a payment  for the  amount(s)  due.
               Likewise, should the statement show a net reinsurance balance due
               the  Company,  the  Reinsurer  shall  remit the amount due within
               fifteen (15) days after receipt of the statement.

          b)   ADJUSTMENTS. If any change is made to the Company's policy and/or
               rates that affects the reinsurance, the Company will provide
               written notice, on a form mutually agreed upon, to the Reinsurer.
               If an adjustment to the premium is to be made, and a refund is
               due the Company, it will be included as an adjustment to the
               regular quarterly statement prepared for the Reinsurer. Policy
               fees, if any, are not pro-rated or refunded on termination.

                                                         ARTICLE IV CONTINUES...

                                     Page 6

<PAGE>

        4.7 Placing Reinsurance in Effect. To effect reinsurance with respect to
policies in force on the Effective Date of this Agreement, the Company shall
settle with the Reinsurer on the date of execution of this Agreement the initial
reinsurance premium described in Section 4.8 hereunder. In addition, the Company
shall place in trust assets whose market value equals the statutory active life
reserves as of June 30, 1996 (the "Funds Withheld") held by the Company as of
the settlement date. The Company agrees to maintain a Trust Account in an amount
at least equal to the Funds Withheld which will be "trued-up" on a quarterly
basis coincident with the quarterly reporting. The account shall be governed by
a Trust Account in a form, and with a financial institution, acceptable to the
Reinsurer, and the Company attests that such assets in the Trust Account shall
be free and clear of any liens, security interests or adverse claims prior to
their deposit to the Trust Account.

Such Trust Agreement shall be maintained and funded by the Company according to
its terms during the life of this Treaty. If this condition is not met by the
Company on the dates specified, this Agreement shall be void as of its Effective
Date.

The Company shall be in default of the Trust Agreement if:

        (a)    it fails to make any required deposit as required by the
               Reinsurance Agreement or the Trust Agreement concerning the
               Authorized Investments in the Trust Account, or the Company
               unilaterally seeks to terminate the Trust Agreement without the
               prior written consent of the Reinsurer;

        (b)    it fails to perform any of its financial obligations under the
               Agreement, or to comply with the provisions of the Investment
               Guidelines of the Reinsurance Agreement as contained in Exhibit
               II, or...

        (c)    it fails to pay the Reinsurer any amount due and owing under the
               Reinsurance Agreement.

        The following remedies shall be available hereunder in the event that
the Reinsurer notifies the Trustee of the Trust Agreement and the Company in
writing that an event of default, as outlined above, has occurred and the
Company has not cured such default to the Reinsurer's satisfaction within twenty
(20) days of receiving notice of such default from the Reinsurer.

The remedies are as follows:

        (a)    The Reinsurer, at its sole discretion, may convert the form of
               reinsurance from coinsurance funds withheld to 100% coinsurance.
               If the Company fails to transfer assets with a market value equal
               to the active life reserves to the Reinsurer on or before the
               effective date of the conversion to coinsurance on the portion of
               the policies reinsured under the Reinsurance Agreement, the
               Reinsurer may require the

                                                         ARTICLE IV CONTINUES...

                                     Page 7

<PAGE>

               Trustee to apply to the Fund towards the satisfaction of such
               reserve obligation of the Company to the Reinsurer.

        (b)    The Reinsurer may in writing (i) require the Trustee to sell any
               or all of the assets in the Fund and pay all proceeds of such a
               sale to the Reinsurer, up to an amount having a market value
               equal to the active life reserves as of the date of transfer or,
               (ii) require the Trustee to transfer any or all of the assets in
               the Fund to the Reinsurer up to an amount having a market value
               equal to the active life reserves, or (iii) a combination of (i)
               and (ii).

        (c)    The Reinsurer shall ensure that the Trustee will not sell more
               assets in the fund than is necessary to pay the amount required
               hereunder, plus any amount necessary to pay estimated costs,
               charges, and fees of sale, or other similar amounts payable
               hereunder.

        (d)    The Trustee shall be authorized in writing by the Reinsurer to
               execute such documents and give such notices as may reasonably be
               necessary to conduct the sale and/or transfer of any assets
               necessary to comply with the Reinsurer's directions.

        (e)    Neither the Trustee nor the Company may bid, or become a
               purchaser at any asset sale, without the Reinsurer's prior
               approval.

        (f)    After deducting from the proceeds of the sale of assets the costs
               and expenses incurred in the conduct thereof,  including the fees
               and charges of the Trustee and  reasonable  attorney's  fees, the
               Reinsurer  shall  ensure  that  the  Trustee  shall  pay  to  the
               Reinsurer,  from the net sales  proceeds,  only amounts up to the
               amount owed by the Company to the  Reinsurer  equal to the active
               life reserves.  The Reinsurer  shall have the right to offset any
               deficiency  between  the amount owed and the amount paid to it by
               the Trustee  against its  obligations  to the Company  under this
               Reinsurance  Agreement,  or pursue any other remedy  necessary to
               collect such deficiency.

        (g)    The Reinsurer shall ensure that the Trustee, under the
               Reinsurer's direction, shall furnish the Company and the
               Reinsurer with an accounting of the disposition of all proceeds
               of asset sales, including the identity and amount of all expenses
               and fees, the identity of each recipient of the sale proceeds and
               the respective amounts paid; and the amount of proceeds payable
               to the Reinsurer after deduction of allowable expenses.

        Should the Company become subject to the terms of Article VI, paragraph
6.4, the nature of the Trust Agreement and the Experience Refund Calculation
contained in Schedule C will change

                                                         ARTICLE IV CONTINUES...

                                     Page 8

<PAGE>

as of that event as will amounts due as periodic settlement. This change in
Treaty form from Coinsurance Funds Withheld to Coinsurance will require an
amendment to the Treaty and the Trust Agreement to reflect the change in status
of the Asset Account and each party's obligations under the reconfigured
Agreement. The Reinsurer will thereafter credit interest earned on the trust
assets to the reinsurance accounting of the Agreement in an amount equal to the
actual net investment earnings on the assets in the Trust Account, including
capital gains and losses, adjusted for any changes in the Company's Interest
Maintenance Reserve (IMR). In addition, the change in the statutory active life
reserves will also be a part of the Experience Refund Calculation. Unless, and
until, the change in status occurs, the Company will retain the investment
earnings on the Funds Withheld Account and be responsible for the adequacy of
the active life reserves. Also, once the LCF as determined by Schedule C has
become zero, the interest on the assets and the change in reserves will revert
to the sole benefit of the Company and not be a part of the ongoing Experience
Refund accounting effective at the beginning of the quarter following the
reporting period in which the LCF becomes zero.

        The Company shall not change the method or assumptions used to calculate
the statutory active life reserves without the written consent of the Reinsurer,
unless an increase to such reserves shall be required by law or regulation.

        The initial premium described in Paragraph 4.8 below, shall be paid on a
net basis as an offset to the Initial Ceding Allowance granted in Schedule D.
The net settlement due as of the settlement date shall reflect interest accrued
from the Effective Date at a rate of 7% per annum. The amount due under this
Agreement from the Effective Date to the initial settlement date (if after the
Effective Date) shall include all amounts due under the accounting for Schedule
C, and shall be recognized by the Company as an amount owing under the
Agreement.

        4.8 PAYMENTS BY THE COMPANY: The initial reinsurance premium payable
pursuant to Section 4.7 above (if payable on or before the Effective Date) shall
be an amount equal to the Statutory Unearned Premium Reserves as of the
Effective Date.

        4.9 BENEFITS. The Reinsurer shall pay the Company its proportionate
share of the gross amounts of all benefits paid by the Company, but net of
benefits attributable to the portions of the policies reinsured hereunder which
are receivable under other reinsurance agreements with respect to the portions
of the policies reinsured hereunder.

        4.10 POLICY EXPENSE AND COMMISSION ALLOWANCES. The Reinsurer shall pay
the Company the Initial Ceding Allowance as defined in Schedule D. The Reinsurer
shall also pay its share of the Overhead Expense Allowances, Premium Taxes,
Trust Expenses and Commission Allowances as defined in Schedule D.

                                                         ARTICLE IV CONTINUES...

                                     Page 9

<PAGE>

        4.11 EXPERIENCE  REFUND.  The  Reinsurer  shall  be  obligated  to the
Company  under the  experience  refund  formula as  determined in accordance

with Schedule C.

        4.12 EXPENSES. The Reinsurer shall bear no part of the expenses incurred
in connection with the policies reinsured hereunder, except as otherwise
provided in Paragraph 4.10.

        4.13  ACCOUNTING FOR AMOUNTS DUE REINSURER OR COMPANY

               1)     Except as otherwise specifically provided herein, all
                      amounts due to be paid to either the Reinsurer or the
                      Company shall be determined on a net basis as of the last
                      day of each accounting period and shall be due and payable
                      as of such date. If such amounts cannot be determined as
                      of such date on an exact basis, such payments may be paid
                      on an estimated basis within thirty (30) days of the end
                      of the accounting period, if owed by the Company, and
                      within fifteen (15) days after receiving the accounting
                      reflecting the Negative Balance, if owed by the Reinsurer.
                      Any final adjustments are to be made within 3 months after
                      the end of such accounting period with provision for loss
                      of interest to the party affected.

               2)     Any payment which either the Company or the Reinsurer
                      shall be obligated to pay to the other may be paid net of
                      any amount which is then due and unpaid under this
                      Agreement. The Company and the Reinsurer shall each
                      reconcile the reinsurance transactions hereunder as
                      prescribed in Schedule B at the end of each calendar
                      quarter.

        4.14 ELECTRONIC DATA TRANSMISSION. If the Company chooses to report its
reinsurance transactions via electronic media, the Company shall consult with
the Reinsurer to determine the appropriate reporting format. Should the Company
subsequently desire to make changes in the data format or the code structure,
the Company shall communicate such changes to the Reinsurer prior to the use of
such changes in reports to the Reinsurer.

        4.15 OTHER ADJUSTMENTS. Other payment adjustments made in the normal
course of business will be shared between the Company and the Reinsurer in
proportion to the amount of liability of each at the time of issue. Exceptions
to normal operating procedures will be discussed with the Reinsurer prior to any
action being taken.

        4.16 CURRENCY. The reinsurance premiums and the reinsurance benefits
under this Agreement shall be payable in the lawful money of the United States.

                                                         ARTICLE IV CONTINUES...

                                     Page 10

<PAGE>

4.17 INTEREST ON LATE PAYMENTS. Subject to the reporting requirements of this
Agreement, should any payment not be made within the specified period, the party
to whom the payment is owed can elect to charge interest on such payment at the
rate of .75% per month.

                                                            ...END OF ARTICLE IV

                                     Page 11

<PAGE>

                                    ARTICLE V

                                     CLAIMS

SETTLEMENT OF CLAIMS

        5.1 Except as otherwise specifically set forth herein, the Reinsurer's
liability to the Company for the reinsurance benefits shall follow the Company's
liability for such amounts of benefits under the terms of its policies. The
Reinsurer shall only be liable for claims incurred after the Effective Date. The
claims incurral date used in establishing claim reserve liabilities shall be
determined in a manner consistent with that used by the Company immediately
prior to the Effective Date. Any change in such methodology shall be subject to
mutual agreement.

        5.2 The Company shall investigate and settle or defend all claims or
losses. If a contest or compromise results in a reduced claim settlement, then
the Company and the Reinsurer shall participate in proportion to their
respective net liabilities before the reduction.

        The Reinsurer will accept the good faith decision of the Company in
settling the claim and shall pay the reinsurance benefit amounts in effect when
the company settles with the claimant, including a proportionate share of any
interest paid to the claimant subject only to the limitations set forth below.

        If the Company, in good faith, pays benefits for alternative services or
goods in order to reduce long term claim exposure, then the Reinsurer will
participate proportionately in such benefits provided the Reinsurer has been
advised or consulted with in accordance with 5.3 and 5.4 below.

        5.3 The Reinsurer will reimburse the Company for its proportionate share
of reasonable legal expenses incurred in the defense of a claim only if the
Reinsurer has been informed in writing in advance of the Company's intent to
incur such expenses and the Reinsurer has agreed in writing to participate in
such expenses. If the Company proposes to defend a claim with respect to which
the Reinsurer does not agree to participate in the defense the Reinsurer shall
pay its proportionate share of the loss and the loss adjustment expenses
incurred prior to the Reinsurer's decision not to so participate. Such amounts
paid to the Company shall fully discharge the Reinsurer's obligation hereunder
with respect to such claim.

CONTESTED CLAIMS

        5.4 The Company will advise the Reinsurer in writing of any litigation
involving reinsurance under this Agreement, and may advise the Reinsurer of its
intention to deny a claim or associated claims, or contest policies reinsured
under this Agreement.

                                                          ARTICLE V CONTINUES...

                                     Page 12

<PAGE>

        5.5 "Extra-Contractual Obligations" shall mean any award made by a court
of competent jurisdiction against the Company which is not within the coverage
granted by any insurance or reinsurance contract made between the parties in
dispute.

        The Reinsurer shall have no liability with respect to Extra-Contractual
Obligations which shall include, but not be limited to, the following:

        (a)    any   assumption   of   liability   of  the  Company  by  way  of
               participation in any mutual scheme designed specifically to cover
               Extra-Contractual Obligations; or

        (b)    the fraud of a director, officer, employee, or duly appointed
               agent of the writing Company acting individually or collectively,
               or in collusion with an individual or corporation, or with any
               other organizations or party involved in the presentation,
               defense or settlement of any claim.

                                                              ..END OF ARTICLE V

                                     Page 13

<PAGE>

                                   ARTICLE VI

                               GENERAL PROVISIONS

        6.1 COMPANY FORMS AND RATES. The Company shall make available to the
Reinsurer on an as-needed basis, a copy of its applications, policy and rider
forms, premium and reserve tables (if any), and any and all other forms or
tables needed for proper handling of reinsurance under this Agreement. It will
advise the Reinsurer of any changes or new forms it may adopt.

        6.2 ADMINISTRATION BY THE COMPANY OF THE BUSINESS REINSURED. In return
for the payment of the Overhead Expense Allowances as set forth in Schedule D,
the Company agrees to perform all usual and customary servicing functions to
include, but not limited to, the following:

        1)     All usual and customary policy related customer services for the
               insureds, owners, beneficiaries, agents and/or other interested
               persons; including but not limited to, address changes,
               beneficiary changes, ownership changes, providing policy related
               information, reinstatements and providing duplicate policies. All
               such services provided shall meet or exceed standards of service
               deemed usual and customary in the insurance industry.

        2)     File maintenance and administration, including systems
               maintenance and administration.

        3)     Billing and collection of premiums.  All premiums collected on
               behalf of the Business Reinsured shall be held by the Company in
               a fiduciary capacity.

        4)     Maintenance of the Business Reinsured's financial data in such
               form, and communicated at such intervals to the Reinsurer, as
               outlined above (see Article I), so as to allow the Reinsurer to
               meet any and all reporting requirements it may have.

        5)     Payments of agents' commissions related to the Business
               Reinsured.  The Company shall be financially responsible for all
               such commissions due on premiums collected after the Effective
               Date.

        6)     The timely filing of rate increases to maintain the viability of
               the Business Reinsured. Both the Company and the Reinsurer
               mutually recognize that rate monitoring and filing for increases,
               where needed, are essential to maintaining the profitability of
               the Business Reinsured. The Company's customary practice has been
               to monitor the need for rate increases on a monthly basis.

                                                         ARTICLE VI CONTINUES...

                                     Page 14

<PAGE>

               The Reinsurer shall have the right to request that the Company
               file for rate increases should loss ratios justify such action.
               If the Company fails to file within 60 days of the Reinsurer's
               request, or fails to diligently pursue the granting of such
               increases with regulatory authorities, the Expense Allowances
               provided for under Schedule D shall be reduced according to the
               provisions of that treaty schedule. Such allowance reduction will
               be effective the first calendar quarter after the later of (a)
               the end of such 60 day period, or (b) 30 days after the Reinsurer
               notifies the Company that, in its opinion, such increases are not
               being diligently pursued. If the Company disagrees with the
               Reinsurer, and the parties are unable to amicably resolve their
               dispute on the handling of the actions to be taken, the Company
               shall be entitled to arbitrate the disagreement under Article
               VIII of the Treaty.

        In the event the Reinsurer considers that the Company has failed to
perform the usual and customary service functions outlined above, or has become
financially impaired to the point that regulatory supervision is imminent
(subject to the provisions below), the Reinsurer may secure other facilities to
perform such functions.

        The Reinsurer shall first provide the Company with written notice of its
intent to find an alternative service facility and its reasons for requesting
such a change. If the Company fails to remedy the situation within ninety (90)
days, then, and only then, shall the Reinsurer have the right to proceed with
the change to an alternate service facility.

        Should such a transfer occur, the Company shall surrender the service
function to the new carrier, or servicing center, and in turn aid in the
effective and efficient conversion of the servicing function to the new
facility. Once effected, the Company shall forfeit all right to future
compensation for such functions.

     6.3  REINSURANCE  CONDITIONS.  The  reinsurance  is  subject  to  the  same
limitations and conditions as the insurance under the policy or policies assumed

by the Company on which reinsurance is based.

     6.4 FORM OF THE AGREEMENT. While this Agreement is in effect, the Companies
party to this Agreement (collectively referred to herein as the "Company") shall
maintain for annual regulatory reporting purposes a minimum of 100% of Company
Action Level (CAL) risk based capital (RBC). Should either Company's RBC fall
below this required level, the form of this Agreement will change to
coinsurance, and the assets in the Trust Account shall transfer to the books of
the Reinsurer. The Trust Account will be amended as of the Effective Date of
such change to reflect that the Reinsurer is now the Grantor of the Trust.

                                                         ARTICLE VI CONTINUES...

                                     Page 15

<PAGE>

        The Company agrees to provide the Reinsurer with a quarterly calculation
of its RBC. Such quarterly analysis shall be subject to timely review and good
faith discussion by the Reinsurer and the Company so as to determine whether a
change in the form of the Reinsurance Agreement to a coinsurance basis is
warranted. If so, such change will become effective within 30 days of the
decision, and the Company will transfer to the account of the Reinsurer, assets,
and accrued interest thereon, at market value in an amount equal to the
statutory active life reserves held by the Company as of the date of transfer.
Coincident with this event, Schedule C of this Agreement will be amended to
incorporate the investment earnings and change in active life reserves into the
Experience Refund calculation. Likewise, the Trust Agreement will be amended to
reflect the revised disposition of the assets in the Trust Account.

        6.5 ERRORS AND OMISSIONS. It is understood and agreed that if
non-payment of premiums, within the time specified, or failure to comply with
any terms of this contract is shown to be unintentional, and the result of
misunderstanding or oversight on the part of either the Company or the
Reinsurer, both the Company and the Reinsurer shall be restored to the positions
they would have occupied had no such error or oversight occurred upon payment of
the overlooked amount.

        6.6 INSPECTION. The Reinsurer may inspect, at the Home Office of the
Company and at any reasonable time, the original papers and any other books or
documents relating to or affecting the reinsurance under the Reinsurance
Agreement.

        6.7 OFFSET PROVISION. Any debts or credits liquidated or unliquidated,
in favor of, or against, either the Reinsurer or the Company, with respect to
this Agreement only, shall be set-off, and only the balance shall be allowed or
paid.

        6.8 SEVERABILITY. In the event that any of the provisions herein
contained shall be declared or adjudicated invalid or unenforceable, such
declaration or adjudication shall in no manner affect or impair the validity or
the enforceability of the other and remaining provisions which shall remain in
full force and effect as though such invalid or unenforceable provisions or
clauses had not been herein included or made a part of this Agreement. The
Company and the Reinsurer agree to resolve the invalid or unenforceable
provision within 30 days after such declaration.

                                                            ...END OF ARTICLE VI

                                     Page 16

<PAGE>

                                   ARTICLE VII

                          RECAPTURE AND/OR TERMINATION

        7.1 RECAPTURE. Business Reinsured under this Agreement is eligible for
recapture. If the Company elects to exercise its recapture option, such
recapture is subject to the terms and conditions as outlined in the Experience
Refund provisions of Schedule C.

        7.2 OTHER RECAPTURE FOR FAILURE TO MAKE PAYMENT. Upon the failure by the
Reinsurer to pay the Company any Negative Amounts due the Company pursuant to
Section 4.2 hereof, the Company may, at its option and in its sole discretion
recapture the particular Reinsured Policies for which the Reinsurer has failed
to pay such Negative Amounts; provided, however, that the Company's option may
only be exercised by the Company by delivering to the Reinsurer thirty (30) days
prior written notice of the Company's intent to exercise the Company's option
and the Reinsurer shall be entitled to cure such nonpayment of any Negative
Amounts. Regardless of the Company's exercise of the Company's option, the
Reinsurer shall remain liable to the Company for all unpaid Negative Amounts due
to the Company hereunder.

        7.3  PAYMENTS UPON TERMINATION OF REINSURANCE FOR NONPAYMENT.

               1)     In the event that this Agreement or any portion of the
                      policies reinsured hereunder is terminated for nonpayment
                      by either party to this Agreement, pursuant to any
                      provision hereof, a terminal accounting and settlement
                      shall take place with respect to such terminated
                      reinsurance.

               2)     The terminal accounting date for any such termination
                      shall be the effective date of a notice of termination
                      given under this Agreement or such other date as shall be
                      mutually agreed to in writing.

               3)     The terminal accounting period shall be the period
                      commencing on the first day of the calendar quarter in
                      which any termination is effective and ending on the
                      terminal accounting date for such termination.

               4)     The terminal accounting and settlement shall involve a
                      calculation of the terminal unearned premium reserve
                      liability then held by the Reinsurer for the portion of
                      the policies reinsured hereunder, and a calculation of a
                      terminal experience refund, as described in paragraph 7
                      below. Each of these items shall be computed only with
                      respect to the portion of the policies reinsured hereunder
                      then being terminated.

                                                        ARTICLE VII CONTINUES...

                                     Page 17

<PAGE>

               5)     The Reinsurer shall pay as an amount allowed on surrender
                      to the Company an amount equal to the Reinsurer's share of
                      the appropriate reserves outstanding. Unearned Premium
                      Reserves will be determined on a statutory basis, whereas
                      active life and claim reserves will be determined on a
                      basis consistent with historical practices used by the
                      Company (see Article VI regarding change in Form of the
                      Agreement) on the day immediately prior to the terminal
                      accounting date with respect to the portion of the
                      reinsurance hereunder then being terminated.

               6)     The Reinsurer's liability for reserves on the reinsurance
                      being terminated hereunder, shall terminate on the
                      terminal accounting date, and the Reinsurer shall be
                      obligated to pay such amount to the Company net of the
                      amounts due the Reinsurer from the experience account.

               7)     A terminal experience refund shall be computed for the
                      terminal accounting period on the portion of the
                      reinsurance hereunder then being terminated. Such terminal
                      experience refund shall be computed in a manner consistent
                      with Schedule C. If the terminal experience refund is
                      positive, such positive amount shall be paid by the
                      Reinsurer to the Company. If the terminal experience is
                      negative, the absolute value of such negative amount shall
                      be paid by the Company to the Reinsurer. The Reinsurer may
                      offset any amount due it under this provision against the
                      reserve transfer required under 5)

                      above.

               8)     In the event that subsequent to the terminal accounting
                      and settlement as above provided, an adjustment is made
                      with respect to any amount taken into account pursuant to
                      Schedule C, a supplementary accounting shall take place
                      pursuant to Paragraph 4 of this section. Any amount owed
                      to the Reinsurer or the Company by reason of such
                      supplementary accounting shall be paid promptly upon the
                      completion thereof.

                                                           ...END OF ARTICLE VII

                                     Page 18

<PAGE>

                                  ARTICLE VIII

                                   ARBITRATION

        8.1 AGREEMENT. All differences between the Company and the Reinsurer on
which an agreement cannot be reached, will be decided by arbitration. The
arbitrators will determine the interpretation of the Agreement in accordance
with usual business and reinsurance practices, rather than by strict
technicalities.

        8.2 METHOD. Three arbitrators will decide any differences. They must be
active or retired officers of life insurance companies, or reinsurance
companies, employed by other than the two parties to the Agreement, or have been
previously so employed in such a capacity in an insurance or reinsurance
company. In no event may an employee - past or present - of either party or its
affiliates serve as an arbitrator.

        Each party will choose one member of the arbitration panel and, once
selected, these two members will choose the third member. If the two arbitration
panel members chosen fail to agree on the selection of the third member of the
panel, the choice will be left to the American Arbitration Association.

        Each Company will submit its case in writing to the arbitration panel
within one month of the date the panel is finally established, and the parties
to the Agreement are required to make their arbitrator nominee known to the
other party within 30 days of the announced dispute.

        It shall be the function of the arbitration panel to determine
settlement of the differences between the parties based on the evidence
presented, their experience and knowledge of the subject matter, and on the
basis of usual and customary practice rather than to act solely on the basis of
evidence as would be admissible in a court of law. The majority decision of the
panel will be deemed to be the decision of the panel. The Reinsurer and the
Company agree to accept the interpretation of the panel as binding upon both
parties to the Agreement.

        The costs of arbitration will be shared equally by the parties to the
Agreement, unless the arbitrators decide otherwise.

        The arbitration will be held at the times and places agreed upon by the
arbitrators and their decision shall be rendered within 45 days after they are
impanelled.

                                                         ... END OF ARTICLE VIII

                                     Page 19

<PAGE>

                                   ARTICLE IX

                REINSURER'S RIGHT OF NOTICE OF UNUSUAL PRACTICES

        9.1 In providing reinsurance facilities to the Company under this
Agreement, the Reinsurer has granted the Company considerable authority with
respect to binding power, reinstatements, claim settlements, and the general
administration of the reinsurance account. To facilitate transactions, the
Reinsurer has required the minimum amount of information and documentation
possible, reflecting its utmost faith and confidence in the Company. Where the
Company does engage in exceptional or uncustomary practices for the Company, the
Company agrees to advise the Reinsurer in writing, and receive a written
acceptance of, said practices from the Reinsurer before assigning any liability
to the Reinsurer with respect to any Business Reinsured affected by such
practices.

                                                            ...END OF ARTICLE IX

                                     Page 20

<PAGE>

                                   ARTICLE X

            TREASURY REGULATION SECTION 1.848-2(G)(8) JOINT ELECTION

        The Company and the Reinsurer hereby agree to the following pursuant to
Section 1.848- 2(g)(8) of the Income Tax Regulations issued December 1992, under
Section 848 of the Internal Revenue Code of 1986, as amended. This election
shall be effective for the taxable year ended December 31, 1996 and for all
subsequent taxable years for which this Agreement remains in effect unless such
election is terminated by mutual written agreement of the parties hereto with
the consent, if required, of the Commissioner of the Internal Revenue Service.

        10.1.  The term "party" will refer to either the Company or the
Reinsurer as appropriate.

        10.2. The terms used in this Article are defined by reference to
Treasury Regulation Section 1.848-2 in effect as of December 29, 1992. The term
"net consideration: will refer to either net consideration as defined in
Treasury Regulation Section 1.848-2(f).

        10.3. Both parties agree to identify this Agreement as one for which the
joint election under Treasury Regulation Section 1.848-2(g)(8) has been made in
a schedule attached to their respective federal income tax returns for the
taxable period ended December 31, 1996.

        10.4. The party with the positive net consideration for this Agreement
for each taxable year will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deductions limitation of
Section 848(c)(1).

        10.5. Both parties agree to exchange information pertaining to the
amount of net consideration under this Agreement each year to ensure consistency
or as otherwise required by the Internal Revenue Service.

        10.6. The Company will submit a schedule to the Reinsurer by July 1st of
each year of its calculation of the net consideration for the preceding calendar
year. This schedule of calculations will be accompanied by a statement signed by
an officer of the Company stating that the Company will report such net
consideration in its tax return for the preceding calendar year.

        10.7. The Reinsurer may contest such calculation by providing an
alternative calculation to the Company in writing within 30 days of the
Reinsurer's receipt of the Company's calculation. If the Reinsurer does not so
notify the Company, the Reinsurer will report the net consideration as
determined by the Company in the Reinsurer's tax return for the previous year.

                                                          ARTICLE X CONTINUES...

        10.8.  If the Reinsurer contests the Company's calculation of the net
consideration, the parties will act in good faith to reach an agreement as to
the correct amount within thirty (30) days

                                     Page 21

<PAGE>

of the date the Reinsurer submits its alternative calculation. If the Company
and the Reinsurer reach agreement on an amount of net consideration, each party
shall report such amount in their respective tax returns for the previous
calendar year.

                                                             ...END OF ARTICLE X

                                     Page 22

<PAGE>

                                   ARTICLE XI

                              DURATION OF AGREEMENT

        This Agreement is unlimited in duration, but may be amended in writing
by the mutual consent of the Company and the Reinsurer if signed by both
parties. Existing reinsurance will remain in force until termination of the
Company's policies on which the reinsurance is based, in accordance with the
terms of this Agreement.

        At the end of any accounting period, this Agreement shall automatically
terminate if none of the policies hereunder are in force. At such termination, a
final experience refund calculation shall be made; if the result is greater than
zero, the Reinsurer shall pay such amount to the Company, and if the result is
less than zero, no payment shall be made to the Reinsurer.

        The termination of the Agreement or of the reinsurance in effect under
this Agreement, pursuant to any provision hereof, shall not extend to, or affect
any of the rights or obligations of the Company and the Reinsurer applicable to
the period prior to the effective date of such termination. Such right or
obligation shall include, but not be limited to, the payment of any amount owed
by reason of supplementary accounting as set forth in Article VII, Paragraph 8.

                                                           ... END OF ARTICLE XI

                                     Page 23

<PAGE>

                                   ARTICLE XII

                                   INSOLVENCY

        12.1  INSOLVENCY OF THE COMPANY.

          a)   The portion of any risk or obligation  assumed by the  Reinsurer,
               when such portion is  ascertained,  shall be payable on demand of
               the  Company,  at the same time as the Company  shall pay its net
               retained  portion  of such risk or  obligation,  with  reasonable
               provision for  verification  before payment,  and the reinsurance
               shall be payable by the Reinsurer,  on the basis of the liability
               of the  Company  under  the  contract,  or  contracts,  reinsured
               without diminution because of the insolvency of the Company.

          b)   In  the  event  of  the  insolvency  and  the  appointment  of  a
               conservator,  liquidator or statutory  successor for the Company,
               such portion shall be payable to such conservator, liquidator, or
               statutory  successor,  immediately  upon demand,  with reasonable
               provision  for  verification,  on the  basis  of  claims  allowed
               against  the   insolvent   company  by  any  court  of  competent
               jurisdiction,  or by any  conservator,  liquidator,  or statutory
               successor of the Company, to allow such claims without diminution
               because  of  such   insolvency   or  because  such   conservator,
               liquidator,  or statutory  successor  has failed to pay all, or a
               portion, of any claims.

          c)   All expenses incurred by the Reinsurer under Section 12.1(b)
               hereof shall be borne and paid by the Company, subject to court
               approval, as part of the expense of insolvency proceedings,
               whether liquidation or rehabilitation. Any claim amounts which
               are reduced as a result of the Reinsurer's action under Section
               12.1(a) hereof shall be shared between the Reinsurer and the
               Company pro-rata.

          d)   Upon the Company's Insolvency, the Reinsurer, with the consent of
               the Receiver of the Company,  may designate a company  acceptable
               to the  Receiver to directly  assume the  reinsured  policies and
               acquire the Company's  rights under this  Agreement.  The reserve
               transfer to such company from the Company  which is party to this
               Agreement shall be reduced to reflect an Initial Ceding Allowance
               on the Company's share determined in a manner consistent with the
               Initial   Ceding   Allowance   originally   provided  under  this
               Agreement.


                                                        ARTICLE XII CONTINUES...

                                     Page 24

<PAGE>

               The reserve transfer shall be calculated to include any
               additional or claim reserves established by the Company on all
               the reinsured policies, as well as the unearned premium reserve
               on the Company's retained share of the reinsured policies. The
               reserve transfer and the Allowance shall be subject to mutual
               agreement by the Receiver and the Reinsurer.

        12.2  INSOLVENCY OF REINSURER

               a)   If the Reinsurer  shall,  during the term of this Agreement,
                    be unable to pay its debts as they become due, or the amount
                    of its liabilities  shall exceed the Value of its assets, or
                    the Reinsurer  shall  otherwise be deemed  insolvent,  and a
                    liquidator,   rehabilitator,  receiver  or  other  statutory
                    successor  be appointed  to the  Reinsurer,  the Company may
                    draw on the Letter of Credit  provided under Article XIV for
                    any amount due under this  Agreement plus an amount equal to
                    the  appropriate  reserves  (see Article VI) on the Business
                    Reinsured,  less any  outstanding  LCF as  determined  under
                    Schedule D.

























                                                           ...END OF ARTICLE XII

                                     Page 25

<PAGE>

                                  ARTICLE XIII

                         REPRESENTATIONS AND WARRANTIES

        THE COMPANY REPRESENTS AND WARRANTS TO THE REINSURER AS FOLLOWS:

        13.1 THE MACKEEN REPORT: The Company provided to Mr. Duncan MacKeen,
Consulting Actuary and principal of MacKeen & Hull, Inc. all information
requested for the purpose of preparing the Actuarial Analysis of the Company
upon which the Reinsurer relied in evaluating the block of Business Reinsured.
Such historical information represented true and correct copies of, or excerpts
from, the Company's books and records.

        Since such dates, there have been no material adverse changes to the
business, financial condition and/or other circumstances of, or involving the
business to be reinsured by the Company with the Reinsurer which would make such
provided information materially inaccurate. A complete and correct copy of the
MacKeen Report information has been provided to the Reinsurer.

        13.2 STATUTORY RESERVES: The Statutory Unearned Premium Reserves on the
Business Reinsured were approximately $2.1 million as of June 30, 1996, and this
amount is not anticipated to materially change as of the Effective Date or the
initial settlement date, whichever is later.

        13.3 PREMIUM INFORCE: The premium inforce on the Business Reinsured was
approximately $30.7 million as of June 30, 1996, and this amount is also not
anticipated to materially change as of the Effective Date, or the initial
settlement date, whichever is later.

                                                          ...END OF ARTICLE XIII

                                     Page 26

<PAGE>

                                   ARTICLE XIV

                                LETTERS OF CREDIT

14.1 To the extent that the Reinsurer is not an admitted reinsurer, and in order
for the Company to be able to take credit for statutory reserves for the portion
of policies reinsured hereunder, the Reinsurer hereby agrees to apply for and
secure delivery to the Company a clean, irrevocable, and unconditional Letter of
Credit in an amount at least equal to the Reinsurer's liability under this
Agreement.

The Letter of Credit shall be in such a form as will comply with applicable
regulations such that the Company would be able to take credit on its financial
statement filed with the appropriate State Insurance Departments for the
Business Reinsured hereunder. The terms and conditions of the Letter of Credit
shall comply with all requirements of said authorities, including but not
limited to, the following:

        The Letter of Credit shall be issued for an initial period of not less
        than one year and shall automatically extend for an additional period of
        at least one year at each and every expiry date, unless and until, the
        Company has received at least 30 days prior notice from the issuing bank
        (at least 60 days prior notice from a confirming bank) by certified
        mail, registered mail, or receipted hand delivery of its intention not
        to extend said Letter of Credit.

The Company and the Reinsurer agree that the Letters of Credit provided by the
Reinsurer pursuant to the provisions of this Agreement, may be drawn upon at any
time, notwithstanding any other provisions in this Agreement, and shall be
utilized by the Company, or its successors, in interest only for one or more of
the following:

        (i)           to reimburse the Company for the Reinsurer's share of
                      premiums returned to the owners of policies reinsured
                      under this Agreement on account of cancellations of such
                      policies.

        (ii)          to reimburse the Company for the Reinsurer's share of
                      surrenders and benefits or losses paid by the Company
                      under the terms and provisions of the policies reinsured
                      under this Agreement only if they have not already been
                      paid by the Reinsurer.

         (iii)        to fund an account with the Company in an amount at least
                      equal to the deduction, for reinsurance ceded, from the
                      Company's liabilities for policies ceded under this
                      Agreement. Such amount shall include, but not be limited
                      to reserves for claims and losses incurred, and unearned
                      premium reserves, and

                                                        ARTICLE XIV CONTINUES...

                                     Page 27

<PAGE>

        (iv)          to pay any other amounts the Company claims are due under
                      this Agreement.

The Company agrees to return to the Reinsurer any amounts withdrawn from such
Letters of Credit which are in excess of the actual amounts required for (i),
(ii) and (iii), or in the case of (iv), above, any amounts that are subsequently
determined not to be due.

All of the foregoing shall be applied without diminution because of insolvency
on the part of the Company or the Reinsurer.

                                                           ...END OF ARTICLE XIV

                                     Page 28

<PAGE>

                                   ARTICLE XV

                                    EXECUTION

In witness of the above, this Agreement is signed in duplicate at the dates and
places indicated, with an effective date of JULY 1, 1996.

NATIONAL FOUNDATION LIFE INSURANCE COMPANY

FORT WORTH, TEXAS

Date:

By:               /S/ PATRICK J. MITCHELL

Title:            S.V.P. & TREASURER

Witness:          /S/ DEBRA G. SHADE

FREEDOM LIFE INSURANCE COMPANY OF AMERICA

FORTH WORTH, TEXAS

Date:

By:               /S/ PATRICK J. MITCHELL

Title:            S.V.P. & TREASURER

Witness:          /S/ DEBRA G. SHADE

REASSURANCE COMPANY OF HANNOVER

ORLANDO, FLORIDA

Date:              SEPTEMBER 30, 1996

By:                /S/ CRAIG M. BALDWIN

Title:             V.P. & ACTUARY

Witness:            /S/ JEAN M. FAY

                                                            .. END OF ARTICLE XV

                                     Page 29

<PAGE>

                                   SCHEDULE A

                               BUSINESS REINSURED

The Business Reinsured under this Agreement shall be 90% (the Reinsurer's Share)
of the retained portion of the benefits payable on all policies, certificates,
riders and/or supplemental benefits and inforce as of the Effective Date, and as
outlined below.

<TABLE>
<CAPTION>

COMPANY        POLICY FORM          TYPE           DESCRIPTION

<S>            <C>                 <C>            <C>

NFL            1904                 CANCER         Cancer Scheduled
NFL            1910                 CANCER         Cancer Scheduled (Ark)
NFL            1911                 CANCER         Cancer Indemnity
NFL            1916                 CANCER         Cancer Schedule - Under Age 65 (Arkansas)
NFL            2000 CABH            CANCER         Beverly Hills Cancer and Other Dread Disease
NFL            CASH                 CANCER         Cancer, Accident, Stroke and Heart Attack
NFL            CC-90                CANCER         Cancer, Acc., Stroke and Heart Attack -Elkins
NFL            CC-90CV              CANCER         Cancer, Accident, Stroke and Heart Attack
NFL            CSD-89               CANCER         Cancer & Specified Disease Policy
NFL            CSD-92               CANCER         Cancer & Specified Disease Policy
NFL            ED3000               CANCER         Elkins Delux Cancer
NFL            ED4000-588           CANCER         Cancer & Specified Disease Policy
NFL            FDD-687              CANCER         Cancer & Specified Disease Policy
NFL            LSMCS-93             CANCER         Cancer & Specified Disease Policy
NFL            1902                 CANCER         Cancer Scheduled
NFL            1914-65              CANCER         Cancer Scheduled 65 and Older
NFL            EHI-88               CANCER         $100 Per Day Hospital Indemnity
NFL            EHIR-88              CANCER         $100 Per Day Hospital Indemnity
NFL            FHCB-87              CANCER         Hospital Confinement Rider
NFL            L-SAR 1/87           CANCER         Stroke/Accident Rider; $100 Per Day
NFL            PE CAN END           CANCER         Cancer Scheduled Endorsement
NFL            RFICU-87             CANCER         ICU Rider
NFL            RFLT-87              CANCER         First Occurrence Rider
NFL            RFO-89               CANCER         First Occurrence Rider
NFL            RFO-92               CANCER         First Occurrence Rider
NFL            RFRP-87              CANCER         Return Of Premium Rider
NFL            RFRP-89              CANCER         Return Of Premium Rider
NFL            RHCB-89              CANCER         Hospital Confinement Rider
NFL            RHS-93               CANCER         Heart Attack And Stroke Rider
NFL            RICU-89              CANCER         ICU Rider
NFL            RICU-92              CANCER         ICU Rider
NFL            RSA-88               CANCER         Heart Attack and Stroke Rider
NFL            RSHA-88              CANCER         Heart Attack and Stroke Rider
NFL            RSHA-92              CANCER         Heart Attack and Stroke Rider
</TABLE>

                                                         SCHEDULE A CONTINUES...

                                     Page 30

<PAGE>

<TABLE>
<CAPTION>

COMPANY       POLICY FORM          TYPE           DESCRIPTION

<S>                <C>             <C>            <C>

NFL            SHA-87 CA            CANCER         Heart Attack and Stroke Policy/Rider
NFL            SHA-89               CANCER         Heart Attack and Stroke Policy/Rider
NFL            ROPCAN               CANCER         Return Of Premium Rider For Cash Policy
NFL            NFL-1002-SC          CANCER         Hospital Intensive Care
NFL            NFL-1003-SC          CANCER         Cancer & Specified Disease Policy
NFL            NFL-1004-SC          CANCER         Cancer Treatment Policy
NFL            NFL-DDCR-4           CANCER         Dread Disease Benefit Rider
NFL            NFL-FOR-1            CANCER         First Occurrence Of Cancer Rider
NFL            NFL-RP-1             CANCER         Return Of Premium Rider
NFL            1909                 HEART          Heart Attack Indemnity
NFL            1913                 HEART          Heart Attack Scheduled
NFL            1915                 HEART          Heart Attack Scheduled
NFL            PE HA END            HEART          Heart Attack Indemnity Johnny Bench
NFL            HA 1917              HEART          Heart Attack Scheduled Endorsement
NFL            1912                 ICU            ICU Indemnity
NFL            1918 ARK             ICU            Arkansas Only ICU Policy
NFL            1918 11/85           ICU            ICU Policy - Other States Than Arkansas
DIXIE          CP-1-DDCR-4          CANCER         Dread Disease Benefit Rider
DIXIE          CP-1FOR-1            CANCER         First Occurrence Of Cancer Rider
DIXIE          CP-1001-SC           CANCER         Cancer Treatment Policy
DIXIE          CP-1001A-SC          CANCER         Cancer Treatment Policy
DIXIE          CP-1003-SC           CANCER         Cancer & Specified Disease Policy
DIXIE          CP-1004-SC           CANCER         Cancer Treatment Policy
DIXIE          CP-1005-SC           CANCER         Cancer Benefit Policy
DIXIE          IC-1001-SC           ICU            Hospital Intensive Care Unit
DIXIE          IC-1002-SC           ICU            Hospital Intensive Care Unit
DIXIE          ABP500-SC            CANCER         Accidental Death Benefit
DIXIE          RP-AH-1              CANCER         Return Of Premium Rider
PARAMONT       CC-90ACQ             CANCER         Cancer, Accident, Stroke and Heart Attack
FLIC           ADB                  FLIC 50%       Accidental Death Benefit
FLIC           CASH                 FLIC 50%       Cancer, Acc., Stroke and Heart Attack
FLIC           CASH 86              FLIC           Cancer, Acc., Stroke and Heart Attack Non-Reins.
FLIC           CSH 12P              FLIC 50%       Cancer, Stroke and Heart Attack - 12 Pay
FLIC           CSH LIFE             FLIC 50%       Cancer, Stroke and Heart Attack
FLIC           FDIA                 FLIC 50%       First Diagnosis Benefit Rider
FLIC           FDPL                 FLIC 50%       First Diagnosis Policy
FLIC           HIP                  FLIC 50%       Hospital Indemnity Policy
FLIC           HIP 12P APP1/93      FLIC 50%       Hospital Indemnity Policy -12 Pay
FLIC           FD ROP-95            FLIC 90%       Return Of Premium Rider For FD-95
FLIC           FD-95                FLIC 90%       Cancer First Diagnosis Policy
FLIC           GC1                  FLIC 50%       Cancer First Diagnosis Policy
FLIC           PLAN #C100           FLIC 90%       Cancer First Diagnosis Policy
</TABLE>

                                                         SCHEDULE A CONTINUES...

                                     Page 31

<PAGE>

<TABLE>
<CAPTION>

COMPANY       POLICY FORM          TYPE           DESCRIPTION

<S>           <C>                  <C>            <C>

FLIC           PLAN #C200           FLIC 90%       Cancer First Diagnosis Policy
FLIC           PLAN #C500           FLIC 90%       Cancer First Diagnosis Policy
FLIC           RTC-95               FLIC 90%       Radiation & Chemo Rider For FD-95 Policy
FLIC           HRT-4/94             FLIC 50%       First Diagnosis Heart
FLIC           SRV-95               FLIC           Cancer Survivor Policy
</TABLE>

                                                            ...END OF SCHEDULE A

                                     Page 32

<PAGE>

                                   SCHEDULE B

                                REINSURANCE FORMS

                                SCHEDULE B/PART A

                                 POLICY EXHIBIT

                 Reinsured under coinsurance with the Reinsurer

                                                                 Number of

                                                                 POLICIES

        Beginning of Period

        Less Lapses During the Period =

        In Force at the End of Period

                                                         SCHEDULE B CONTINUES...

                                     Page 33

<PAGE>

                                SCHEDULE B/PART B

                        SUMMARY OF MONETARY TRANSACTIONS

INITIAL ACCOUNTING PERIOD

        1.     DUE REINSURER

               Unearned Premium Reserves

        2.     DUE THE COMPANY

               Initial Ceding Allowance

               Due REINSURER/COMPANY = 1 less 2

SUBSEQUENT ACCOUNTING PERIODS

        3.     DUE REINSURER

                 Premiums Incurred During The Period(= paid + chg in due & adv.)

                 Additional Consideration Equal To Increase In Active Life
                 Reserve Less Experience Refund

        4.     DUE REINSURED

                  Benefits Incurred During The Period (= paid + chg in accr.
                      claims)

                  Commission Allowances
                  Overhead Expense Allowances
                  Premium Taxes
                  Trust Maintenance Expenses

                  Funds Withheld Adjustment, defined as (i) - (ii), where:
                      (i)   =Funds Withheld at the end of the period
                      (ii)  =Funds Withheld at the beginning of the period

               DUE REINSURER - total of 3. less total of 4.

                                                            ...END OF SCHEDULE B

                                     Page 34

<PAGE>

                                   SCHEDULE C

                          EXPERIENCE REFUND CALCULATION

At the end of each quarter, an experience refund will be calculated on the
Business Reinsured. If positive, this experience refund will be payable to the
Company by the Reinsurer. Should the Company elect to exercise its recapture
option, the Company shall be liable for repayment of the then outstanding LBF as
defined below, in addition to an amount sufficient to assure the Reinsurer of a
15% return per annum on its investment from the Effective Date, with such
calculation to include $75,000 of acquisition expenses. The calculation will
also include a provision for target surplus in the amount of 200% of the
statutorily recognized Authorized Control Level RBC. The RBC shall be deemed to
be equal to 8% of the higher of a) the prior year's premium collected, or b) the
premium inforce at the end of the year, or the date of termination, whichever is
applicable.

Define the following for the Business Reinsured:

     P    = Premiums collected, plus the change in due and advance premiums,
          during the quarter, and experience refunds under other reinsurance
          treaties, net of any reinsurance premiums for the Reinsurer's Share of
          the Business Reinsured

     I    = Net Investment income, to be based on the Reinsurer's quarterly net
          portfolio rate, shall include any realized capital gains or losses,
          increased or decreased by any decrease or increase to an allocated
          share of the Interest Maintenance Reserve (IMR) arising from the
          realized gains or losses reflected in the accounting for the rate
          applied in this Agreement to the beginning unearned premium and claim
          reserves held for the Business Reinsured.

     R    = Statutory  Unearned Premium Reserve and Claim Reserve  increases for
          the quarter

     B    = Policyholder Benefits paid during the quarter, net of any
          reinsurance benefits recovered under other reinsurance treaties for
          the subject block of business

     C    = Commission allowances incurred during the quarter

     A    = Overhead Expense Allowances incurred during the quarter

     T    = Premium Taxes

     M    = Trust Maintenance Expenses

     LBF  = Loss Brought Forward from prior quarter end

(Note: The initial value for LBF will be the Initial Ceding Allowance as set
forth in Schedule D increased by $75,000.)

                                                         SCHEDULE C CONTINUES...

                                     Page 35

<PAGE>

Then:

     N    = Net gain during the quarter = P + I - R - B - C - A - T - M

     ER   = Experience Refund for the quarter, defined as: = 50%[N - {1.125.25 x
          LBF}] , but not less than zero, and...

     LCF  = Loss Carried Forward from current quarter end (= LBF for next
          quarter), defined as: = {1.125.25 x LBF} - N, but not less than zero.

                                                            ...END OF SCHEDULE C

                                     Page 36

<PAGE>

                                   SCHEDULE D

                               EXPENSE ALLOWANCES

        THE INITIAL CEDING ALLOWANCE shall be $10,500,000.

        THE COMMISSION ALLOWANCES shall be the contractual commissions actually
paid on the policies reinsured consistent with the commission scales described
for the business contained in the MacKeen Report.

        THE EXPENSE ALLOWANCES: In conjunction with the quarterly accounting, a
proportionate share of the following allowances will be credited to the Company
at the start of each quarter in the premium/claim calculation based on the
number of policies and/or certificates inforce and/or applicable premium at the
start of the quarter.

        Expense Allowances are as follows:

        Overhead Expense Allowance                Collected Premium     15%
        Premium Taxes                             Collected Premium       3%
        Trust Maintenance Expenses                As Incurred

        The Commission Allowances, Overhead Expense Allowances, Trust
Maintenance Expenses, and Premium Taxes shall be adjusted pro-rata to reflect
the Reinsurer's proportionate share of the Business Reinsured. In addition,
should the LBF as defined in Schedule C at the end of 30 treaty months be
greater than 110% of that projected (see attached Appendix I), or not be zero at
the end of 60 treaty months, the above Maintenance Expense percentage will be
reduced annually by 2% as of the next quarterly reporting period for each
calendar year following. Such reduction shall not reduce the Maintenance Expense
allowance below 8%.

        When the LBF is equal to zero, the full Maintenance Expense allowance
will be payable, unless the Experience Refund calculation again results in an
LBF. Should such an event occur the Maintenance Expense allowance will revert to
the previously reduced amount level as of the next quarterly reporting period,
and remain so until the LBF is again equal to zero.

        In the event that the reduction provisions of Paragraph 6.2, 6) become
effective, the Maintenance Expense allowance shall be cumulatively reduced 2%
per annum as of the next quarterly reporting period, but not below 8%, until the
requirements of paragraph 6.2, 6) are met, after which the full Maintenance
Expense allowance shall be restored, subject to the provisions of the above
paragraphs.

                                                            ...END OF SCHEDULE D

                                     Page 37

<PAGE>

                                    EXHIBIT I

                    ---------------------------------------

                             SECURITY AGREEMENT AND
                              ASSET TRUST AGREEMENT

                     --------------------------------------

                                     BETWEEN

                   NATIONAL FOUNDATION LIFE INSURANCE COMPANY

                                        &
                    FREEDOM LIFE INSURANCE COMPANY OF AMERICA

                                       OF

                                FORT WORTH, TEXAS

                                       AND

                         REASSURANCE COMPANY OF HANNOVER

                                       OF

                                ORLANDO, FLORIDA

                                       AND

                               FLEET NATIONAL BANK

                                   AS TRUSTEE

                                     Page 38

<PAGE>

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                                PAGE

<S>           <C>                                                              <C>
RECITALS                                                                         40

Section 1      Deposit of Assets to the Trust Account                            41

Section 2      Withdrawal of Assets from the Trust Account                       41

Section 3      Redemption, Investment and Substitution of Assets                 42

Section 4      The Income Account                                                43

Section 5      Right to Vote Assets                                              44

Section 6      Additional Rights and Duties of the Trustees                      44

Section 7      The Trustee's Compensation, Expenses and Indemnification          45

Section 8      Resignation of the Trustee                                        46

Section 9      Termination of the Trust Account                                  46

Section 10     Definitions                                                       47

Section 11     Notices                                                           47

Section 12     General Provisions                                                48

Section 13     Execution                                                         50

EXHIBIT A      Fee Schedule                                                      51

EXHIBIT B      NFL and FLICA Trust Account Assets                                52
</TABLE>


                                     Page 39

<PAGE>

                             SECURITY AGREEMENT AND

                              ASSET TRUST AGREEMENT

        SECURITY AGREEMENT AND ASSET TRUST AGREEMENT, dated as of September 30,
1996 (the "Agreement"), among National Foundation Life Insurance Company, an
insurance company organized and existing under the laws of the state of
Delaware, and Freedom Life Insurance Company of America, an insurance company
organized and existing under the laws of the state of Mississippi, (collectively
referred to herein as the "Company"), and Reassurance Company of Hannover, an
insurance company organized and existing under the laws of Florida (the
"Reinsurer"), and Fleet National Bank, a banking corporation and a member of the
Federal Reserve System (the "Trustee"). (The Company, the Reinsurer and the
Trustee are hereinafter each sometimes referred to individually as a "Party" and
collectively as the "Parties").

                                   WITNESSETH:

        WHEREAS, the Company and the Reinsurer have entered into a reinsurance
agreement ("Reinsurance Agreement"), effective July 1, 1996, which requires the
establishment of a trust account; and

        WHEREAS, the Trustee is a member of the Federal Reserve System which is
not the Parent, a Subsidiary or an Affiliate of the Company or the Reinsurer and
which has been granted authority to operate with fiduciary powers; and

        WHEREAS, the Company desires to segregate certain of its assets in a
trust account by transferring to the Trustee for deposit to two separate trust
accounts (collectively referred to herein as the "Trust Accounts". One account
will contain the assets of National Foundation Life Insurance, the "NFL Trust
Accounts", the second being for the assets of Freedom Life Insurance Company of
America, the "FLICA Trust Account"), and

        WHEREAS, the Trustee has agreed to act as Trustee hereunder, and to hold
such assets in trust in the Trust Account for the benefit of the Company as
owner of the reversionary interest in the Assets and to create and grant a
security interest in those Assets in favor of the Reinsurer in order to secure
the Company's obligations to the Reinsurer under the Reinsurance Agreement; and

        WHEREAS, this Agreement is made for the purpose of setting forth the
duties and powers of the Trustee with respect to the Trust Account.

        NOW, THEREFORE, for and in consideration of the premises and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Parties hereby agree as follows:

                                     Page 40

<PAGE>

                SECTION 1: DEPOSIT OF ASSETS TO THE TRUST ACCOUNT

1.1 The Company shall establish a trust account designated as the NFL Trust
Account and a trust account designated as the FLICA Trust Account. The assets in
each of the NFL Trust Account and the FLICA Trust Account, and any investment
held as part of each Trust Account, shall be held and administered as a trust by
the Trustee solely for the benefit of the Company and as security for the
Reinsurer under the Reinsurance Agreement. The Trust Account shall be subject to
withdrawal solely as provided herein.

1.2 Within 30 days of the execution of this Agreement, the Company shall
transfer to the Trustee for deposit into each of the NFL Trust Account and the
FLICA Trust Account, the assets as required in the Reinsurance Agreement, and
may transfer to the Trustee, for deposit to the Trust Accounts, such other
assets as it may from time to time desire (each of such assets actually received
into each of the trust accounts is herein referred to individually as an "Asset"
and all of such Assets collectively are referred to as the "Assets"). The Assets
shall consist only of Eligible Investments as defined in Exhibit II of the
Reinsurance Agreement. The Trustee shall have no responsibility for determining
whether any Asset is an Eligible Investment. (Attached as Exhibit B is a list of
the assets to be transferred into the NFL and FLICA Trust Accounts.)

1.3 This Agreement is a security agreement under the Uniform Commercial Code
("UCC") as enacted and in effect in the State of Florida, and this Agreement
shall be governed by and construed in accordance with the laws of the State of
Florida to the extent it relates to the UCC. The Company hereby grants a
security interest in the Assets, and any proceeds thereof, to the Reinsurer, as
security for the Company's obligations under the Reinsurance Agreement. The
Assets in which the security interest in favor of the Reinsurer is granted shall
be held by the Trustee, as bailee and custodian for the Reinsurer, as secured
party, and for the benefit of the Company as owner of the Assets. UCC-1
financing statements shall be executed by the Company and any other necessary
party or parties and shall be filed by the Reinsurer in the manner specified by
law or as the Reinsurer may reasonably request. To the extent permitted by law,
the Company authorizes the Reinsurer to file one or more financing statements
with respect to the Assets signed only by the Reinsurer or the Trustee, as the
case may be, and to file a carbon, photograph or other reproduction of this
Agreement or of any financing statement. The Company and the Trustee shall
comply with directions from the Reinsurer which the Reinsurer certifies comply
with UCC requirements to create, preserve, perfect and validate the Reinsurer's
security interest hereunder and the first lien priority thereof and to enable
the Reinsurer to exercise and enforce its rights, remedies, privileges and
powers hereunder and under the UCC as enacted and in effect in the state of
Florida; and non-compliance with applicable UCC requirements shall not limit or
impair such rights, remedies, privileges and powers of the Reinsurer.

             SECTION 2: WITHDRAWAL OF ASSETS FROM THE TRUST ACCOUNT

2.1 The Company shall have the right, at any time and from time to time, to
withdraw from the Trust Accounts, upon written notice to the Trustee, any Assets
in excess of the Assets required to be held in each of the NFL Trust Account and
the FLICA Trust Account by the Reinsurance Agreement. Such notice shall identify
the Assets to be delivered from each of the NFL Trust Account and the FLICA
Trust Account. The Company may receive the excess Assets itself, or may
designate a third party (the "Designee") to whom such excess Assets shall be
delivered. The

                                     Page 41

<PAGE>

Company need present no statement or document in addition to a prior written
notice ordering a withdrawal of such excess Assets, which written notice shall
designate the specific Assets which are to be withdrawn and the Trustee is
entitled to treat any such designated Assets as excess Assets which may be
withdrawn; said right of withdrawal or any other provision of this Agreement is
not subject to any conditions or qualifications not contained in this Agreement.
Upon receipt of such notice the Trustee shall without further inquiry, and
pursuant to the written direction of the Company deliver physical custody of
such Assets as are designated in the notice to or for the account of the
Company, or such Designee as specified; provided, however, if the Reinsurer has
given written notice to the Trustee that the Company has not paid any amount due
and owing by the Company to the Reinsurer under the terms of the Reinsurance
Agreement, and such claim(s) remain(s) unresolved, the Trustee shall not deliver
assets except to the extent that the asset's value exceeds such claim.

2.2 If the Company has failed to pay any amount due and owing by the Company to
the Reinsurer under the terms of the Reinsurance Agreement, the Reinsurer will
present evidence of this to the Trustee in writing and either, (a) require the
Trustee to sell any or all of the Assets in either the NFL Trust Account or the
FLICA Trust Account, as so identified in the Reinsurer's notice, and pay all net
proceeds of such sale to the Reinsurer up to an amount ([the Amount Owed]),
designated by the Reinsurer to be equal to the amount owed by the Company; (b)
require the Trustee to transfer any or all of the Assets identified by the
Reinsurer to the Reinsurer (to be held by the Reinsurer subject to its security
interest granted hereunder) up to an amount such that the fair market value of
the transferred assets at the close of business on the second Business Day
preceding the transfer shall equal the Amount Owed, or; (c) require the Trustee
to perform a combination of the preceding. The Trustee need not require any
additional evidence of the Amount Owed and without making additional inquiry
shall comply with the requirements set forth in said notices whether or not a
default has actually occurred. The Trustee shall be held harmless in complying
with the directions of the Reinsurer under the order to pay the Reinsurer the
proceeds necessary to settle the Amount Owed, and is under no obligation to
determine the validity of the evidence provided. The Trustee shall furnish the
Company and the Reinsurer with an accounting of the disposition of all proceeds
of sale, including the identity and amount of all expenses and fees, the
identity of each recipient of sale proceeds and the respective amounts paid; and
the amount of proceeds payable to the Reinsurer after deduction of fees and
expenses. In addition to the rights and remedies specifically delineated in this
Section, the Reinsurer shall have all of the rights and remedies granted to a
secured party under the UCC as enacted and in effect in the State of Florida.

2.3 Other than as provided in Section 2 and Section 3 of this Agreement, the
Trustee shall allow no substitution or withdrawal of any Asset from either the
NFL Trust Account or the FLICA Trust Account. The fair market value of the
assets will be determined by Conseco Capital Management ("CCM").

                      SECTION 3: REDEMPTION, INVESTMENT AND
                             SUBSTITUTION OF ASSETS

3.1 The Trustee shall surrender for payment all maturing Assets and all Assets
called for redemption and deposit the proceeds of any such payment to the trust
account to which the Asset is credited.

                                     Page 42

<PAGE>

3.2 From time to time, at the written order and direction of the Company, the
Trustee shall invest, purchase, sell or exchange Assets in the Trust Account in
Eligible Securities as directed in writing by the Company. If any funds are
uninvested and no instructions concerning their investment have been received,
the Trustee shall invest the same in an interest bearing money market account
with the Trustee's banking division. The Trustee shall be entitled to rely on
the written investment instructions from the Company and the Trustee shall have
no duty to monitor the Company's compliance with investment policy set forth in
Exhibit II attached hereto, including, but not limited to, determining whether
the investment is an Eligible Investment. Furthermore, the Trustee shall have no
responsibility for the Company's failure to comply with the attached Investment
Guidelines.

3.3 From time to time, at the written order of the Company, the Trustee may
accept substitutions of Eligible Investments (as defined in Exhibit II of the
Reinsurance Agreement) for other Eligible Investments held in the Trust
Accounts.

3.4 Any instruction or order concerning such investments or substitutions of
securities shall be referred to herein as an "Investment Order". The Trustee
shall execute Investment Orders and settle securities transactions by the agent
or broker designated by the Company.

3.5 The Trustee shall have no duty to make investment recommendations concerning
the Assets or to determine whether they are "Eligible Investments", and shall
have the absolute right to regard as "Eligible Investments" any Assets which are
designated in an Investment Order for purchase or receipt by the Trustee for so
long as the Trustee continues to hold the same hereunder, whether or not they
are in fact "Eligible Investments".

3.6 The Trustee shall have no duty to give notice or take other action if the
value of the Assets falls below the value required by the Reinsurance Agreement
or by any other agreement between the Company and the Reinsurer.

3.7 The Company and the Reinsurer acknowledge that the Trustee shall not be
responsible for any losses in value from investments made pursuant to the
written direction of the Company.

                          SECTION 4: THE INCOME ACCOUNT

4.1 All payments of interest and dividends actually received in respect of
Assets in the Trust Account shall be deposited by the Trustee in the separate
accounts established and maintained by the Company (the "Income Account"). The
timing and amounts of these deposits by the Trustee will be at the written
direction of the Company. The Company shall have the right to withdraw funds
from the Income Account at any time. Amounts withdrawn from the NFL Trust
Account will be deposited into the NFL Income Account. Amounts withdrawn from
the FLICA Trust Account will be deposited into the FLICA Income Account.

                                     Page 43

<PAGE>

                         SECTION 5: RIGHT TO VOTE ASSETS

5.1 The Trustee shall forward all annual and interim stockholder reports and all
proxies and proxy materials relating to the Assets in the Trust Account to the
Company. The Company shall have the full and unqualified right to vote any
Assets in the Trust Account.

             SECTION 6: ADDITIONAL RIGHTS AND DUTIES OF THE TRUSTEE

6.1 The Trustee shall notify the Company and the Reinsurer in writing of each
deposit to, or withdrawal from, the Trust Account via monthly transaction
statements.

6.2 Before accepting any Asset for deposit to the Trust Account, the Trustee
shall determine that such Asset (i) has been transferred to the Trustee or its
designated custodian with any necessary endorsement in favor of the Trustee as
Trustee in the case of instruments and other physical certificates, or has been
issued or registered in the name of the Trustee or its designated custodian in
the case of any other type of Asset; (ii) such Asset has been identified on the
pertinent books and records of the Trustee as being held as bailee and custodian
for the Reinsurer as secured party, and as Trustee for the benefit of the
Company as the owner of the reversionary interest in the Assets; and (iii) such
Asset has been deposited with, transferred to, or issued or registered in the
name of the Trustee, or its designated custodian, recognizing the security
interest in favor of the Reinsurer hereunder and the interest of the Company as
the owner of the reversionary interest in the Assets in the event that this
Agreement is terminated pursuant to Section 9 hereof.

6.3 The Trustee shall receive all Assets and cause them to be held in a safe
place in the United States.

6.4 The Trustee shall accept, open and immediately forward to the Company all
mail directed to the Company in care of the Trustee.

6.5 The Trustee shall furnish to the Company and the Reinsurer a statement of
all Assets in the NFL Trust Account and the FLICA Trust Account upon the
inception of such trust accounts, and a monthly statement will provided
thereafter. The monthly statement shall include a transaction statement listing
each deposit to, or withdrawal from, either or both of the NFL Trust Account and
the FLICA Trust Account.

6.6 Upon the request of the Company or the Reinsurer, the Trustee shall promptly
permit the parties, their respective agents, employees, independent auditors and
insurance department examiners to examine, audit, excerpt, transcribe and copy,
during the Trustee's normal business hours, any books, documents, papers and
records relating to the NFL Trust Account and the FLICA Trust Account, or the
Assets.

6.7 The Trustee is authorized to follow and rely upon all instructions given by
officers named in incumbency certificates furnished to the Trustee from time to
time by the Company and the Reinsurer, and by attorneys-in-fact acting under
written authority furnished to the Trustee by the Company, including, without
limitation, instructions given by letter, facsimile transmission, telegram,
teletype, cablegram or electronic media, if the Trustee believes such
instructions, and any

                                     Page 44

<PAGE>

related incumbency certificate or written authorization to be genuine and to
have been signed, sent or presented by the proper party or parties. The Trustee
shall not incur any liability to anyone resulting from actions taken by the
Trustee in reliance in good faith on such instructions. The Trustee shall not
incur any liability in executing instructions (i) from an attorney-in-fact prior
to receipt by it of notice of the revocation of the written authority of the
attorney-in-fact or (ii) from any officer of the Company named in an incumbency
certificate delivered hereunder prior to receipt by it of a more current
certificate.

6.8 The duties and obligations of the Trustee shall only be such as are
specifically set forth in this Agreement, as it may from time to time be
amended, and no implied duties or obligations shall be read into this Agreement
against the Trustee. The Trustee shall only be liable for its own gross
negligence, willful misconduct or lack of good faith.

6.9 The Trustee is not a party to the Reinsurance Agreement or any other
agreement between the Company and the Reinsurer and shall not be deemed to be
responsible for the Company, the Reinsurer or the Trustee complying with any
provisions of any such Agreement, of any provisions of the Florida Insurance
Code, or of other provisions of Florida law pertaining to any such Agreements.
Any references herein to any such Agreement(s) between the Company and the
Reinsurer, or to such law, shall not be deemed to impose any additional
responsibilities or obligations on the Trustee.

6.10 The Trustee may confer with counsel of its own choice in relation to
matters arising under this Agreement and shall have full and complete
authorization from the other Parties hereunder for any action taken or suffered
by it under this Agreement or under any transaction contemplated hereby in good
faith and in accordance with the opinion of such counsel, and the reasonable
fees of such counsel shall be an expense payable under Section 7.2 hereof.

                 SECTION 7: THE TRUSTEE'S COMPENSATION, EXPENSES
                               AND INDEMNIFICATION

7.1 The Company shall pay the Trustee, as compensation for its services under
this Agreement, a fee as set forth in Exhibit A and as such Exhibit may from
time to time be amended.

7.2 The Company shall pay or reimburse the Trustee for all of the Trustee's
expenses and disbursements in connection with its duties under this Agreement
(including reasonable attorney's fees and expenses), except any such expense or
disbursement as may arise from the Trustee's gross negligence, willful
misconduct or lack of good faith.

7.3 The Company also hereby indemnifies the Trustee for, and holds it harmless
against, any loss, liability, costs or expenses (including attorney's fees and
expenses) incurred or made without gross negligence, willful misconduct or lack
of good faith on the part of the Trustee, arising out of, or in connection with,
the performance of its obligations in accordance with the provisions of this
Agreement, including any loss, liability, costs or expenses arising out of, or
in connection with, the status of the Trustee and its nominee as the holder of
record of the Assets. The Company hereby acknowledges that the foregoing
indemnities shall survive the resignation of the Trustee or the termination of
this Agreement.

                                     Page 45

<PAGE>

7.4 The Company and the Reinsurer agree that the Trustee may charge the Assets
for any expenses not reimbursed promptly by the Company, or any indemnification
not paid, as provided in this Section 7, and the Trustee shall have a lien on
the Assets securing payment thereof.

                      SECTION 8: RESIGNATION OF THE TRUSTEE

8.1 The Trustee may resign at any time by giving not less than 90 days' prior
written notice thereof to the Company and the Reinsurer, such resignation to
become effective on the acceptance of appointment by a successor trustee and the
transfer to such successor trustee of all Assets in the Trust Account in
accordance with paragraph 8.2. If no successor Trustee shall have accepted such
appointment within 90 days from the time notice is given, the Trustee may at any
time thereafter either liquidate the Assets and pay the cash into court, paying
all expenses thereof from the Assets, or petition a court of competent
jurisdiction for the appointment of a successor trustee.

8.2 Upon receipt of the Trustee's notice of resignation, the Company shall
appoint a successor trustee. Any successor trustee shall be a bank that is a
member of the Federal Reserve System and shall not be a Parent, a Subsidiary or
an Affiliate of the Company or the Reinsurer. Upon the acceptance of the
appointment as trustee hereunder by a successor trustee and the transfer to such
successor trustee of all Assets in the Trust Account, the resignation of the
Trustee shall become effective. Thereupon, such successor trustee shall succeed
to and become vested with all the rights, powers, privileges and duties of the
previous Trustee, and the previous Trustee shall be discharged from any future
duties and obligations under this Agreement.

                   SECTION 9: TERMINATION OF THE TRUST ACCOUNT

9.1 The Trust Account and this Agreement may be terminated after (a) the Company
and the Reinsurer have given the Trustee written notice of their intention to
terminate the Trust Account (the "Notice of Intention"), and (b) the Trustee has
given the Company and the Reinsurer the written notice specified in paragraph
9.2. The Notice of Intention shall specify the date on which the notifying Party
intends the Trust Account to terminate (the "Proposed Date").

9.2 Within 10 Business Days following receipt by the Trustee of the Notice of
Intention, the Trustee shall give written notification (the "Termination
Notice") to the Company and the Reinsurer of the date (the "Termination Date")
on which the Trust Account shall terminate. The Termination Date shall be (a)
the Proposed Date (or if not a Business Day, the next Business Day thereafter),
if the Proposed Date is at least 30 days, but no more than 45 days, subsequent
to the date the Termination Notice is given: (b) 30 days subsequent to the date
the Termination Notice is given (or if not a Business Day, the next Business Day
thereafter), if the Proposed Date is fewer than 30 days subsequent to the date
the Termination Notice is given; or (c) 45 days subsequent to the date the
Termination Notice is given (or if not a Business Day, the next Business Day
thereafter), if the Proposed Date is more than 45 days subsequent to the date
the Termination Notice is given.

9.3     This Agreement automatically terminates upon the termination of the
Reinsurance Agreement.

                                     Page 46

<PAGE>

9.4 On the Termination Date, the Trustee shall transfer to the Company any
Assets remaining in the Trust Accounts, at which time all liability of the
Trustee with respect to such Assets shall cease.

                             SECTION 10: DEFINITIONS

Except as the context shall otherwise require, the following terms shall have
the following meanings for all purposes of this Agreement (the definitions to be
applicable to both the singular and the plural forms of each term defined if
both such forms of such terms are used in this Agreement):

10.1 The term "Affiliate" with respect to any corporation shall mean a
corporation which directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, such corporation.
The term "control" (including the related terms "controlled by" and "under
common control with") shall mean the ownership, directly or indirectly, of more
than fifty percent (50%) of the voting stock of a corporation.

10.2 The term "Business Day" shall mean any day on which the offices of the
Trustee are open for business.

10.3 The term "person" shall mean and include an individual, a corporation, a
partnership, an association, a trust, an unincorporated organization or a
government or political subdivision thereof.

10.4 The term "Parent" shall mean any institution that, directly or indirectly,
controls another institution.

10.5 The term "Subsidiary" shall mean an institution controlled, directly or
indirectly, by another institution.

                               SECTION 11: NOTICES

11.1 Unless otherwise provided in this Agreement, all notices, directions,
requests, demands, acknowledgments and other communications required or
permitted to be given or made under the terms hereof shall be in writing and
shall be deemed to have been duly given or made (a) (i) when delivered
personally, (ii) when made or given by prepaid telex, telegraph or telecopier,
or (iii) in the case of mail delivery, upon the expiration of three (3) days
after any such notice, direction, request, demand, acknowledgment or any other
communication shall have been deposited in the United States mail for
transmission by first class mail, postage prepaid, or upon receipt thereof,
whichever shall first occur, (provided, however, that no notice to the Trustee
shall be effective until it is actually received by the officer named below as
the person attending to its duties) and (b) when addressed as follows:

        If to the Company:

        Mr. Patrick Mitchell

        National Foundation Life Insurance Company &
        Freedom Life Insurance Company of America
        777 Main Street

        Fort Worth, Texas 76109

                                     Page 47

<PAGE>

        If to the Reinsurer:

        Mr. Dennis D. Braziel
        Reassurance Company of Hannover
        800 North Magnolia Avenue

        Suite 1000
        Orlando, FL  32803

        If to the Trustee:

        Fleet National Bank
        Attn: Corporate Trust Department
        One Federal Street

        MAOF-3101

        Boston, Massachusetts 02110-2010
        Fax #: (617) 346-5501

        Each Party may from time to time designate a different address for
notices, directions, requests, demands, acknowledgments and other communications
by giving written notice of such change to the other Parties. All notices,
directions, requests, demands, acknowledgments and other communications relating
to the termination of the Trust Account shall be in writing and may not be made
or given by prepaid telex, telegraph or telecopier.

                         SECTION 12: GENERAL PROVISIONS

12.1    Governing Law.  Except as provided for in Section 1.3, this Agreement 
shall be subject to and governed by the laws of the State of New York.

12.2 Successors and Assigns. No Party may assign this Agreement or any of its
rights or obligations hereunder, whether by merger, consolidation, sale of all
or substantially all of its assets, liquidation, dissolution or otherwise,
except as expressly permitted by Section 8 of this Agreement.

12.3 Severability. In the event that any provision of this Agreement shall be
declared invalid or unenforceable by any regulatory body or court having
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remaining portions of this Agreement.

12.4 Entire Agreement. This Agreement constitutes the entire Trust agreement
among the Parties, and there are no understandings or agreements, conditions or
qualifications relative to this Agreement which are not fully expressed in this
Agreement.

12.5 Amendments. This Agreement may be modified or otherwise amended, and the
observance of any term of this Agreement may be waived, if such modification,
amendment or waiver is in writing and signed by all of the Parties.

                                     Page 48

<PAGE>

12.6 Headings. The headings of the Sections and the Table of Contents have been
inserted for convenience of reference only, and shall not be deemed to
constitute a part of this Agreement.

                                     Page 49

<PAGE>

                              SECTION 13: EXECUTION

13.1 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall constitute an original, but
such counterparts together shall constitute one and the same Agreement.

        IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed and delivered by their respective officers thereunto duly authorized as
the date first above written.

                      NATIONAL FOUNDATION LIFE INSURANCE COMPANY
                      FEDERAL TAX ID #: 73-1187572

                             By:     /S/ PATRICK J. MITCHELL

                                    Name

                                     S.V.P. & TREASURER

                                    Title

                      FREEDOM LIFE INSURANCE COMPANY OF AMERICA
                      FEDERAL TAX ID #: 61-1080236

                             By:     /S/ PATRICK J. MITCHELL

                                    Name

                               S.V.P. & TREASURER

                                    Title

                      REASSURANCE COMPANY OF HANNOVER
                      FEDERAL TAX ID #:  59-285-9797

                             By:     /S/ DENNIS D. BRAZIEL

                                    Name

                        SENIOR VICE PRESIDENT & TREASURER

                                    Title

                      FLEET NATIONAL BANK

                             As Trustee

                             By:     /S/ CHI MA

                                    Name

                            ASSISTANT VICE PRESIDENT

                                    Title

                                           Page 50

<PAGE>

                                    EXHIBIT A

                                  FEE SCHEDULE

        Acceptance Fee:                                 $2,500
        Annual Administration Fee:

               Freedom (FLICA Trust Account)              $3,000
               National (NFL Trust Account)               $5,500

        Investment Fees:

               Sweep Fees                                 40 Basis Points
               Direct Investments (Purchases/Sale)        $25 per investment
               Substitutions                              $25 per security

        Wire Fees:                                        $15 per wire
        Distribution Fee:                                 $50 per distribution

                                     Page 51

<PAGE>

                                   EXHIBIT II

                                INVESTMENT POLICY

I.      GENERAL

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

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

II.     OBJECTIVES

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

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

        2.     The maturity of the investments should be matched with the
               expected future liquidity needs in order to avoid realized
               capital losses.

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

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

III.    INVESTMENT RESTRICTIONS

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

        2.     All investment transactions must be reviewed, approved and
               ratified by the Company on a quarterly basis.

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

                                     Page 52

<PAGE>

        4.     Investments will be denominated in US-$ only.  Investments in
               foreign currencies or in debt instruments located outside the
               United States require the prior written approval of the
               Reinsurer.

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

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

        7.     It is recognized by the Company and the Reinsurer that the
               Investment Guidelines pertain to a mix of assets characteristic
               of the Reinsurer's aggregate portfolio and are intended as an
               overall guide to investment. The Company and the Reinsurer agree
               to consult on the mix of assets to assure that the portfolio
               associated with this Treaty is in reasonable compliance with the
               Reinsurer's aggregate portfolio guidelines.

IV.     PORTFOLIO GUIDELINES

        1.     DURATION

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

        2.     CONVEXITY

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

        3.     CREDIT

               Overall portfolio credit quality must be equal to or greater than
               Aa2/AA. Individual securities must be rated at least investment
               grade (Baa3/BBB) with no more than 10% overall permitted in the
               BBB (NAIC 2) category. At least 40% of the portfolio must be
               invested in U.S. Government, U.S. Government guaranteed or U.S.
               Government Agency issues with at least 20% invested in U.S.

               Treasury securities.

               An exception to this shall be the convertible securities which
               shall have a minimum average quality of BBB- and up to 25% of the
               allocation may be rated BB or NAIC3.

                                     Page 53

<PAGE>

        4.     LIQUIDITY

               At least 50% of the portfolio must be invested in highly liquid
               securities defined as follows:

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

V.      DIVERSIFICATION

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

               *      U.S. Government Agency Debentures

               *      Mortgage Backed Securities (CMOs and pass-through pools
                      combined)

               *      Corporate Bonds

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

               *      Municipal Bonds
               *      Private Placement Bonds

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

               *      Preferred Stocks
               *      Asset Backed Securities

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

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

               *      Certificates of Deposit
               *      Money Market Funds
               *      Commercial Paper (A1/P1 rated)
               *      Repurchase Agreements
               *      Time Deposits

                                     Page 54

<PAGE>

VI.     EXECUTION OF PORTFOLIO TRANSACTIONS

        The management of the Company is hereby vested with the authority to
        execute purchases and sales of investments within the objectives and
        restrictions referenced herein. The management of the Company is
        responsible for monitoring the existing security holdings, for
        implementing proper internal control procedures and for accurate
        recording of all investment transactions.

VII.    PERFORMANCE MEASUREMENTS

        The yield on the invested portfolio should be targeted to exceed a
minimum of 6%.

                                     Page 55

<PAGE>
                                                                   EXHIBIT 10.35

                                PLEDGE AGREEMENT

        This PLEDGE AGREEMENT dated as of July 25, 1996 (this "Pledge
Agreement") is between WESTBRIDGE CAPITAL CORP., a Delaware corporation
("Pledgor"), and FLEET NATIONAL BANK, a national banking association, formerly
known as Fleet National Bank of Connecticut ("Pledgee"). Except as otherwise
defined herein, all terms used herein and defined in the Credit Agreement dated
as of December 28, 1995 between Westbridge Funding Corporation ("WFC") and
Pledgee, as amended from time to time (as so amended, the "Credit Agreement"),
shall have the meaning assigned to them therein.

                                    RECITALS:

        1. Pledgor owns, on and as of the date on which this Pledge Agreement is
executed and delivered, 100% of the issued and outstanding shares of the capital
stock of WFC, a Delaware corporation, which shares (including any certificates
and/or other tangible evidences thereof) are more specifically described in
ATTACHMENT A hereto.

        2. Pursuant to the Credit Agreement, the Pledgee has agreed, on certain
terms and conditions to make one or more revolving loans to WFC in an aggregate
principal amount not to exceed $20,000,000 (the "Revolving Loans"), which
Revolving Loans are evidenced by a single promissory note in favor of the
Pledgee in the principal amount of $20,000,000 (the "Revolving Note"), due and
payable in accordance with the terms of the Credit Agreement.

        3. Pursuant to the Guaranty Agreement dated as of December 28, 1995 by
Pledgor in favor of the Pledgee (said Guaranty Agreement as currently in effect
and as from time to time amended, modified or supplemented being herein called
the "Financing Agreement"), Pledgor has (i) guaranteed the full and punctual
payment and performance by WFC of its obligations under the Credit Agreement and
the Revolving Note and (ii) agreed to execute and deliver this Pledge Agreement.

        NOW, THEREFORE, in consideration of such financing and for other good
and valuable consideration, receipt of which is hereby acknowledged, Pledgor and
Pledgee agree as follows:

        1. PLEDGE AND DELIVERY. (a) To secure the prompt and complete payment
and performance when due of the Obligations (as defined in Section 1(b) hereof),
Pledgor hereby pledges, assigns and delivers to Pledgee, and grants Pledgee a
continuing security interest in, all of the following property and rights and
interests in property (all such property, rights and interests being hereinafter
collectively called the "Pledged Collateral"):

               (i) all issued and outstanding shares of the capital stock of WFC
(the "Pledged Subsidiary") described in ATTACHMENT A hereto, and any additional
shares of the capital stock of any

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class or series of the Pledged Subsidiary which Pledgor may at any time and from
time to time hereafter purchase or otherwise acquire, together with the
certificates and/or other instruments or writings representing them (such
shares, certificates and other writings being hereinafter collectively called
the "Pledged Shares");

               (ii) (A) all shares and other securities and all warrants, rights
and options (such shares, securities, warrants, rights and options together with
the certificates and/or other instruments or writings representing them being
hereinafter collectively called the "Additional Pledged Securities") and (B) all
money and other property, at any time and from time to time received or
receivable by or distributed or distributable to Pledgor from the issuer of any
or all of the Pledged Shares (whether in the ordinary course of such issuer's
business or representing or resulting from cash or stock dividends, stock splits
or reclassifications, the recapitalization, reorganization, merger,
consolidation, disposition of assets, liquidation or dissolution of such issuer,
the exercise by Pledgor of warrants, rights or options, or any other action or
cause) in exchange or substitution for or otherwise in respect of any or all of
the Pledged Shares or earlier-issued Additional Pledged Securities; and

               (iii)  all proceeds of any or all of the foregoing.

        (b) As used herein, the term "Obligations" shall mean all indebtedness,
liabilities and obligations of any kind of Pledgor to Pledgee (whether directly
as principal or maker or indirectly as guarantor, surety, endorser or
otherwise), now or hereafter existing, due or to become due, howsoever incurred,
arising or evidenced, whether of principal or interest or payment or
performance, and all obligations of the Pledgee now or hereafter existing under
this Pledge Agreement.

        (c) Prior to the execution and delivery hereof by Pledgee, Pledgor shall
have delivered to Pledgee, and Pledgee by such execution and delivery shall
acknowledge its prior receipt of, the certificate(s) and/or other instruments
and documents evidencing all of the Pledged Shares, Additional Pledged
Securities and all other items of the Pledged Collateral then owned by Pledgor.
Pledgor agrees that it shall immediately deliver to Pledgee any and all of the
Pledged Shares, Additional Pledged Securities and other Pledged Collateral
(including any and all certificates and/or other instruments or documents
representing each item thereof) which it acquires in any way at any time after
such execution and delivery. Upon delivery to Pledgee, each item of the Pledged
Collateral shall be accompanied by, as appropriate, (i) undated, duly executed
stock powers endorsed by Pledgor either in blank or to Pledgee in a manner which
Pledgee deems satisfactory, and/or (ii) such other instruments or documents as
Pledgee shall reasonably request.

     2.  PLEDGOR'S  REPRESENTATIONS,   WARRANTIES  AND  COVENANTS.  (a)  Pledgor
represents and warrants that: (i) Pledgor has the right,  power and authority to
execute, deliver and perform this

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                                        3

Pledge Agreement and to pledge, assign, deliver, transfer and grant a security
interest in the Pledged Collateral; (ii) this Pledge Agreement constitutes the
legal, valid and binding obligation of Pledgor, enforceable against Pledgor in
accordance with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law); (iii) Pledgor has good title to
all of the Pledged Shares and is the legal record and beneficial owner of each
of the Pledged Shares (and will have good title to and be the legal record and
beneficial owner of each other item of Pledged Collateral, including any
Additional Pledged Securities), free and clear of all encumbrances except
Pledgee's security interest hereunder; (iv) each of the Pledged Shares and
Additional Pledged Securities is, or will be when acquired by Pledgor and
pledged hereunder, duly and validly issued and fully paid and non-assessable,
and there are no restrictions on the transfer of any thereof other than such
restrictions as appear on the certificates or other instruments or writings
representing them, or as are referred to in clause (ii) above or otherwise may
be imposed under applicable law; (v) no action other than the delivery of each
item of the Pledged Collateral to, and its continued possession by, Pledgee or
any of its agents or nominees is necessary to maintain a perfected,
first-priority security interest in such item in favor of Pledgee; and (vi) no
authorizations, approvals or consents of, and no filings or registrations with,
any governmental or regulatory authority or agency are necessary for the
execution, delivery or performance by the Pledgor of this Pledge Agreement or
for the validity or enforceability hereof.

        (b) Pledgor covenants and agrees that it will at its expense (i) defend
both its own rights and interests and Pledgee's rights and security interest in
and to the Pledged Collateral against the claims and demands of all other
persons and (ii) execute and deliver to Pledgee such further conveyances,
agreements, assignments, instruments and other writings, and take such further
action, as Pledgee may request in order to obtain the full benefit of this
Pledge Agreement, the Pledged Collateral, and the rights, powers and remedies
granted to Pledgee hereunder. Pledgor further covenants and agrees that until
all Obligations have been satisfied and this Pledge Agreement has been
terminated, Pledgor will not without Pledgee's prior written consent sell,
assign, transfer, exchange or otherwise temporarily or permanently dispose of
any item of the Pledged Collateral, or offer or contract to do so, and will not
without such consent create, incur, assume or permit to exist any security
interest, pledge, claim or other charge or encumbrance on or with respect to any
such item other than the security interest granted to Pledgee hereunder.

        3. NAMES IN WHICH PLEDGED SHARES AND ADDITIONAL PLEDGED SECURITIES MAY
BE REGISTERED. Upon the occurrence of any Pledgor Default (as defined in Section
9 hereof), Pledgee shall be entitled to hold any or all of the Pledged Shares
and Additional Pledged Securities in its own name, the name(s) of one or more of
its nominees or the name of Pledgor endorsed or assigned in blank or in favor of
Pledgee. With respect to any of the Pledged Shares and/or Additional Pledged
Securities which Pledgee wishes to hold in its own name or the name of any
nominee in accordance with this Section 3, Pledgee (acting in its own name and
capacity or as Pledgor's attorney-in-fact

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                                        4

pursuant to the power of attorney granted to Pledgee in Section 5 hereof) may
have such Pledged Shares and Additional Pledged Securities registered
accordingly on the books of the issuer(s) thereof, and Pledgor shall cooperate
fully with Pledgee in causing such issuer(s) to effect such transfer and
registration.

        4. VOTING RIGHTS; DISTRIBUTIONS, ETC. (a) Subject to Section 4(c),
Pledgor shall be entitled to exercise any and all voting and/or consensual
rights and powers accruing to an owner of the Pledged Shares and Additional
Pledged Securities for any purpose not inconsistent with (A) the provisions of
this Pledge Agreement and the Financing Agreement and (B) the preservation of
the value of and Pledgee's security interest in the Pledged Collateral.

        (b) Subject to Section 4(c), Pledgor shall be entitled to receive and
retain all cash dividends, interest and other cash distributions payable in
respect of the Pledged Collateral to the extent that such distributions are
permitted by law.

        (c) Upon the occurrence and during the continuance of a Pledgor Default,
Pledgor may thereafter continue to exercise any and all voting and consensual
rights and powers until such time as Pledgee shall notify Pledgor in writing
that Pledgee intends to assume and, exercise the same, and all powers described
in Section 4(b) to receive the dividends, interest and other cash distributions
described in such Section shall cease, and all such rights shall thereupon
become vested in Pledgee.

        (d) Upon the occurrence and during the continuance of a Pledgor Default,
Pledgee may, in its own name and capacity or as Pledgor's attorney-in-fact,
collect, receive, endorse and deposit all Additional Pledged Securities, money,
cash proceeds, instruments and any and all other property which is or may at any
time become payable in respect of any or all of the Pledged Collateral and which
Pledgee is or may become entitled to receive under subsection (a) or (b) of this
Section 4. All such property so received by Pledgee may be retained by Pledgee
as additional Pledged Collateral, and (i) all money and other cash proceeds so
received may be applied by Pledgee to payment of the Obligations in such order
as Pledgee may elect, whether or not a Pledgor Default shall then be continuing,
and (ii) during the continuance of a Pledgor Default, all other property so
received may be sold or otherwise disposed of by Pledgee as provided in Section
10 hereof and the proceeds thereof applied as also provided in such Section 10.
Any and all money and other property received by Pledgor contrary to the
provisions of this Section 4 shall be held by Pledgor in trust for Pledgee,
shall be segregated by Pledgor from Pledgor's other funds and property and shall
promptly be delivered to Pledgee in exactly the form received by Pledgor, except
for any necessary endorsements.

     5. PLEDGEE APPOINTED AS PLEDGOR'S ATTORNEY-IN-FACT. Pledgor hereby appoints
Pledgee as Pledgor's attorney-in-fact with full power in Pledgor's place and
stead, in Pledgor's name or its own name and at Pledgor's expense, to execute,
endorse and deliver any and all agreements, assignments, pledges, instruments
and any other writings, and to take any and all other actions,

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                                        5

which Pledgee may deem necessary or desirable to carry out the terms and effect
the purposes of this Pledge Agreement and to exercise fully its rights and
remedies hereunder. Pledgee may delegate any or all of such power to any of its
officers, directors, employees, agents, nominees, stockholders and other
representatives (hereinafter collectively called "Representatives") and to have
any such Representative(s) exercise any such delegated power as substitute(s)
for Pledgee. Pledgor hereby ratifies all that Pledgee and all such
Representatives shall lawfully and properly do or cause to be done under this
power of attorney, which power is coupled with an interest and shall be
irrevocable until all Obligations have been satisfied and this Pledge Agreement
has been terminated. So long as no Pledgor Default (as defined in Section 9
hereof) has occurred, Pledgee agrees to give Pledgor five (5) business days
prior notice of its intention to exercise the power of attorney granted hereby.

        6. PLEDGEE'S RIGHTS TO PERFORM FOR PLEDGOR. If Pledgor shall at any time
fail to perform or comply with any of its covenants and agreements hereunder,
Pledgee may (but shall not be required or obligated to) take such action, in its
own name and capacity or as Pledgor's attorney-in-fact, as Pledgee shall deem
necessary or desirable to effect such performance or compliance.

        7. REASONABLE CARE OF PLEDGED COLLATERAL. Pledgee shall be deemed to
have used reasonable care in the custody and preservation of the Pledged
Collateral in its possession to the extent it accords such Pledged Collateral
treatment which is substantially equal to that which Pledgee accords its own
property of like kind; PROVIDED, HOWEVER, that Pledgee shall have no obligation,
regardless of whether it takes any such action with respect to its own property,
(i) to ascertain or take action with respect to calls, tenders, conversions,
exchanges, maturities or other matters involving or affecting any item(s) of
such Pledged Collateral (whether or not Pledgee has actual or constructive
knowledge of any such matters), unless reasonably requested by Pledgor to do so,
or (ii) to take action to preserve rights against prior or other parties.

        8. LIMITATION OF PLEDGEE'S LIABILITY; REIMBURSEMENT OF EXPENSES AND
INDEMNIFICATION. (a) Pledgor agrees that Pledgee shall have no obligation to
take, or refrain from taking, any action with respect to the Pledged Collateral
or Pledgor's rights and interests therein except for (i) the preservation and
return of the Pledged Collateral in its possession as and to the extent
provided, respectively, in Sections 7 and 14 hereof, (ii) the execution and
delivery to Pledgor of certain instruments and other writings imposed by law and
(iii) compliance with insurance regulatory requirements, if any. Pledgor further
agrees that neither Pledgee nor any of its Representatives shall have any
liability to Pledgor, or to any person claiming rights against Pledgee by,
through or under Pledgor, in any way arising out of or in connection with
Pledgee's or any such Representative's administration of this Pledge Agreement
or its exercise of any of its rights, power and remedies hereunder except for
(i) Pledgee's or any such Representative's failure to take as and when required
any of the actions referenced in the first sentence of this Section 8(a) or to
account to Pledgor for those amounts of money and other property -- and only for
those amounts -- which it actually

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receives in connection with such administration or exercise and which it is
required to pay over to Pledgor or apply to the Obligations under any other
provision hereof, (ii) its failure to exercise reasonable care as and to the
extent required in Section 7 hereof or (iii) its negligence or willful
misconduct.

        (b) Pledgor shall pay or reimburse Pledgee on demand for all costs and
expenses (including without limitation reasonable attorneys' fees and legal
expenses) paid or incurred by Pledgee in connection with (i) any amendment of
this Pledge Agreement and (ii) the exercise and enforcement of any of Pledgee's
rights, powers and remedies hereunder, including without limitation its right to
perform Pledgor's covenants and agreements hereunder to the extent Pledgor fails
to do so. Pledgor further agrees to indemnify, defend and hold harmless Pledgee,
its Representatives, successors and assigns from and against any and all
liabilities, claims, actions, losses, damages, taxes, penalties, fines, costs
and expenses (including reasonable attorneys' fees and legal expenses) which in
any way arise out of or in connection with any of the actions or matters with
respect to which Pledgor has a payment or reimbursement obligation under this
Section 8; PROVIDED, HOWEVER, that Pledgor shall have no obligation to indemnify
Pledgee or any such Representative, successor or assign against any liabilities,
claims, etc., resulting from such party's negligence or willful misconduct or
its failure to exercise reasonable care as and to the extent required in Section
7 hereof. Until any reimbursement of costs or expenses or any indemnity payment
required under this Section 8 is received by Pledgee in cash or immediately
available funds, the amount thereof shall bear interest at the rate specified in
the Credit Agreement for delinquent payments, and such amount and such interest
shall constitute part of the Obligations secured by the Pledged Collateral.

     9. PLEDGOR  DEFAULTS.  The following shall constitute a "Pledgor  Default":
(i) Pledgor  fails to perform or comply with any of its  covenants or agreements
hereunder;  or (ii) a default or event of  default  occurs  under the  Financing
Agreement.

        10. REMEDIES. (a) If a Pledgor Default has occurred and is continuing,
Pledgee may at any time and from time to time exercise any and all rights and
remedies available to it (i) hereunder and under the Financing Agreement and any
other agreement or instrument then in effect between Pledgor and Pledgee and
relating to the Obligations, including without limitation those rights and
remedies set out in subsections (b) through (f) of this Section 10, and (ii) as
a secured party under the Uniform Commercial Code as then in effect in the State
of Connecticut (the "Code") and under any other applicable law or rule of law or
equity. Should Pledgee elect to proceed by action at law or in equity to
foreclose its security interest in and sell any or all of the Pledged
Collateral, Pledgor waives (to the extent permitted by law) any rights it may
then have in connection therewith to require Pledgee to post bonds, sureties or
collateral security or to demand possession of any such Pledged Collateral
pending judgment therein.

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        (b) To the extent permitted by federal and state securities laws,
Pledgee may sell, assign, transfer, endorse and deliver all or, from time to
time any part, of the Pledged Collateral at public or private sale, over the
counter or at any broker's board or securities exchange, for cash, on credit or
in exchange for other property, for immediate or future delivery, without
advertisement or notice (except as provided in this subsection), and for such
price and on such terms as Pledgee deems appropriate, PROVIDED only that all
aspects of any such disposition are commercially reasonable within the
requirements of Section 42a-9-504 of the Code, as defined and supplemented by
the standards and agreements set forth herein. Pledgor agrees that to the extent
notice of the time and place of any such public sale, or of the time after which
Pledgee intends to make any such private sale or other disposition, is required
under the Code, such notice shall be deemed commercially reasonable if
transmitted by any of the means described in the Financing Agreement not less
than fifteen (15) days prior thereto. Pledgee shall not be obligated to effect
any sale of any or all of the Pledged Collateral, whether or not notice thereof
has been given, and may adjourn any public or private sale from time to time by
announcement at the time and place fixed for such sale, and such sale may be
held without further notice at the time and place to which it was so adjourned.

        (c) At any such private or public sale, Pledgee shall be entitled to bid
for and/or purchase the Pledged Collateral then being sold and may pay the price
thereof by credit against the Obligations then outstanding. Any purchaser of any
item(s) of the Pledged Collateral (including Pledgee) shall take such item(s)
free from any right or claim of Pledgor, and Pledgor hereby waives, to the
extent permitted by the Code and other applicable law, all rights of redemption
and/or to any stay, exemption or appraisal which Pledgor now has or may
hereafter acquire.

        (d) Pledgor agrees and acknowledges that requiring the issuer(s) of the
securities included in the Pledged Collateral to register such securities under
applicable provisions of federal and state securities laws would not be
practicable and therefore could not be deemed commercially reasonable. Pledgor
further agrees and acknowledges that in order to comply with applicable federal
and state securities laws without effecting such registration, Pledgee may be
required: (i) to sell or otherwise dispose of any or all of the Pledged
Collateral at one or more private rather than public sales and (ii) to limit the
prospective purchasers at such sale(s) to persons who will represent and agree
that they are purchasing the securities they intend to acquire for their own
account for investment and not with a view to the distribution or sale thereof,
and who will be compelled to accept stringent restrictions on their ability to
dispose of such securities. Accordingly, Pledgor agrees that: (i) Pledgee shall
not incur any liability to Pledgor by reason of the fact that the price obtained
for any or all the Pledged Collateral at such private sale(s) to investors
restricted as provided above may be less than the price which might be obtained
therefor at a public sale or unrestricted private sale and (iii) any and all
private sales shall be deemed commercially reasonable even if (A) the amount
received is less than the then-outstanding amount of the Obligations and/or (b)
even if Pledgee accepts the first offer received or does not offer all or any
part of the Pledged Collateral to more than one prospective

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                                        8

purchaser, unless the sale in question is conducted in bad faith or in a manner
manifestly unreasonable for sales of that type.

        (e) In case of any sale by the Pledgee of any item(s) of the Pledged
Collateral on credit or for future delivery, such item(s) may be retained by the
Pledgee until the selling price is paid by the purchaser(s) thereof, but the
Pledgee shall incur no liability in case of failure of the purchaser to take up
and pay for such item(s). In case of any such failure, such item(s) may be sold
again upon notice, to the extent required by law, as provided in subsection (b)
of this Section 10.

        (f) The proceeds of the sale or other disposition of the Pledged
Collateral shall be applied first, to that part of the Obligations consisting of
Pledgee's expenses (including without limitation reasonable attorneys' fees and
legal expenses) in preparing for disposition and disposing of the Pledged
Collateral and, to the extent not previously reimbursed by Pledgor and
exercising and enforcing its rights, powers and remedies hereunder, and second,
to the satisfaction of the then outstanding amount of Pledgor's indebtedness
under the Financing Agreement and of all other Obligations then remaining
unpaid. Pledgee shall account to Pledgor for any surplus and Pledgor shall be
liable to Pledgee for any deficiency.

        11. AMENDMENTS, ETC. No provision of this Pledge Agreement may be
amended, modified, supplemented or waived, and no consent to any departure
therefrom by Pledgor may be given, except by a writing duly executed and
delivered by the parties hereto, and any such amendment, modification,
supplement or waiver shall be effective only as and to the extent provided
therein.

        12. CUMULATIVE REMEDIES; NO WAIVERS BY PLEDGEE. All rights, powers and
remedies of Pledgee (i) under this Pledge Agreement and the Financing Agreement
and under any other agreements, instruments and other writings now or hereafter
existing between Pledgor and Pledgee and relating to the Obligations, and (ii)
under the Code and other applicable law, are cumulative and except as otherwise
provided by law or in such agreements may be exercised concurrently or in any
order of succession. Pledgee's failure to exercise or delay in exercising any of
such rights, powers and remedies shall not constitute or imply a waiver thereof,
nor shall Pledgee's single or partial exercise of any such right, power or
remedy preclude its other or further exercise thereof, or the exercise of any
other right, power or remedy. Pledgee's cure of any Pledgor Default shall not
constitute a waiver thereof, and its waiver of one Pledgor Default shall not
constitute a waiver of any subsequent Pledgor Default.

     13. PLEDGOR'S  WAIVERS.  Pledgor agrees that Pledgee's security interest in
the Pledged  Collateral  shall be absolute and  unconditional  regardless of the
existence or occurrence of, and expressly  waives any defense or discharge which
might otherwise arise from, any of the following:

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                                        9

                (i) any lack of validity or enforceability of this Pledge
Agreement, the Financing Agreement, the Credit Agreement or any other agreement
or instrument relating hereto or thereto or otherwise relating to the
Obligations;

                (ii) any change in the time, manner or place of payment of, or
in any other terms of, any or all of the Obligations, or any other amendment or
waiver of, or any consent to departure from, this Pledge Agreement or the
Financing Agreement, the Credit Agreement or any other agreement, instrument or
other writing now or hereafter existing between Pledgor and Pledgee and relating
to the Obligations;

               (iii) any exchange, release or non-perfection of any other
collateral, or any release, amendment or waiver of, or consent to departure from
any guaranty, for any or all of the Obligations;

                (iv) Pledgee's resort, during the continuation of a Pledgor
Default, to any or all of the Pledged Collateral for payment of all or part of
the Obligations prior to proceeding against any other collateral or any other
party primarily or secondarily liable for payment thereof; or

                (v) to the extent permitted by law, any other circumstance which
might otherwise constitute a defense available to, or a discharge of, Pledgor in
respect of the Obligations or this Pledge Agreement.

        14. TERMINATION; RELEASE OF PLEDGED COLLATERAL. This Pledge Agreement
and the security interest granted hereunder shall terminate on the date on which
all Obligations have been fully satisfied. Pledgee shall thereupon reassign and
redeliver (or cause to be reassigned and redelivered) to Pledgor or such
person(s) as Pledgor shall designate, against due execution and delivery by
Pledgor or such person(s) of a receipt therefor satisfactory to Pledgee in form
and substance, such items of the Pledged Collateral (if any) as are then held by
Pledgee or its Representatives, together with appropriate instruments of
reassignment and release. Any such reassignment shall be without recourse to or
warranty by Pledgee or any such Representative and at the expense of Pledgor.

     15. NOTICES. All notices, requests, directions, consents, waivers and other
communications  hereunder  shall be in writing and shall be  transmitted  by the
means and to the addresses from time to time specified in the Financing
Agreement.

        16. BINDING AGREEMENT; ASSIGNMENT. This Pledge Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that Pledgor shall not assign or
otherwise transfer any of its obligations, rights or interests hereunder without
the prior written consent of Pledgee.

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        17. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut. Wherever
possible each provision of this Pledge Agreement shall be construed in such
manner as to be valid and enforceable under applicable law, but if any provision
hereof shall be deemed invalid or unenforceable to any extent in any
jurisdiction, such provision shall be ineffective only to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remainder of such provision or any of the other provisions hereof, and any
such invalidity or unenforceability in one jurisdiction shall not render such
provision ineffective in any other jurisdiction.

        18. JURISDICTION; IMMUNITIES. (a) The Pledgor hereby irrevocably submits
to the jurisdiction of any Connecticut State or United States Federal court
sitting in Connecticut over any action or proceeding arising out of or relating
to this Pledge Agreement, and the Pledgor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such Connecticut State or Federal court. The Pledgor irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to the Pledgor at its address specified in Section 7.4
of the Financing Agreement. The Pledgor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The Pledgor further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of forum non
conveniens. The Pledgor further agrees that any action or proceeding brought
against the Pledgee shall be brought only in Connecticut State or United States
Federal courts sitting in Connecticut.

        (b) Nothing in this Section 18 shall affect the right of the Pledgee to
serve legal process in any other manner permitted by law or affect the right of
the Pledgee to bring any action or proceeding against the Pledgor or its
Property in the courts of any other jurisdictions.

        19. TITLES; COUNTERPARTS. Section titles are for convenience only and
shall not define, limit, amplify, supplement or otherwise modify or affect the
substance or intent of this Pledge Agreement or any provision hereof. This
Pledge Agreement may be executed in two(2) or more counterparts, each of which
shall when executed by both parties be deemed to be an original but all of which
together shall constitute one and the same agreement.

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        IN WITNESS WHEREOF, each of the parties hereto has caused this Pledge
Agreement to be duly executed by its respective authorized officer as of the
date first above written.

                                                   WESTBRIDGE CAPITAL CORP.

                                                   By: /S/ PATRICK J. MITCHELL

                                                  Name: Patrick J. Mitchell
                                                  Title: Chief Financial Officer

                                                   FLEET NATIONAL BANK

                                                   By: /S/ ANSON HARRIS

                                                 Name: Anson Harris
                                                 Title: Assistant Vice President

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                                                                    ATTACHMENT A

                          ISSUED AND OUTSTANDING SHARES

                                OF CAPITAL STOCK

NAME OF ISSUER           NO. OF SHARES              CERTIFICATE NO.(S)

Westbridge Funding          50                             2
  Corporation





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                                                                   EXHIBIT 10.36

                                PLEDGE AGREEMENT

        This PLEDGE AGREEMENT dated as of July 25, 1996 (this "Pledge
Agreement") is between WESTBRIDGE CAPITAL CORP., a Delaware corporation
("Pledgor"), and FLEET NATIONAL BANK, a national banking association, formerly
known as Fleet National Bank of Connecticut ("Pledgee"). Except as otherwise
defined herein, all terms used herein and defined in the Credit Agreement dated
as of December 28, 1995 between Westbridge Funding Corporation ("WFC") and
Pledgee, as amended from time to time (as so amended, the "Credit Agreement"),
shall have the meaning assigned to them therein.

                                    RECITALS:

        1. Pledgor owns, on and as of the date on which this Pledge Agreement is
executed and delivered, 100% of the issued and outstanding shares of the capital
stock of National Foundation Life Insurance Company, a Delaware corporation
("NFL"), which shares (including any certificates and/or other tangible
evidences thereof) are more specifically described in ATTACHMENT A hereto.

        2. Pursuant to the Credit Agreement, the Pledgee has agreed, on certain
terms and conditions to make one or more revolving loans to WFC in an aggregate
principal amount not to exceed $20,000,000 (the "Revolving Loans"), which
Revolving Loans are evidenced by a single promissory note in favor of the
Pledgee in the principal amount of $20,000,000 (the "Revolving Note"), due and
payable in accordance with the terms of the Credit Agreement.

        3. Pursuant to the Guaranty Agreement dated as of December 28, 1995 by
Pledgor in favor of the Pledgee (said Guaranty Agreement as currently in effect
and as from time to time amended, modified or supplemented being herein called
the "Financing Agreement"), Pledgor has (i) guaranteed the full and punctual
payment and performance by WFC of its obligations under the Credit Agreement and
the Revolving Note and (ii) agreed to execute and deliver this Pledge Agreement,
subject to receipt of all required regulatory approvals, which approvals now
have been received.

        NOW, THEREFORE, in consideration of such financing and for other good
and valuable consideration, receipt of which is hereby acknowledged, Pledgor and
Pledgee agree as follows:

        1. PLEDGE AND DELIVERY. (a) To secure the prompt and complete payment
and performance when due of the Obligations (as defined in Section 1(b) hereof),
Pledgor hereby pledges, assigns and delivers to Pledgee, and grants Pledgee a
continuing security interest in, all of the following property and rights and
interests in property (all such property, rights and interests being hereinafter
collectively called the "Pledged Collateral"):

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               (i) all issued and outstanding shares of the capital stock of NFL
(the "Pledged Subsidiary") described in ATTACHMENT A hereto, and any additional
shares of the capital stock of any class or series of the Pledged Subsidiary
which Pledgor may at any time and from time to time hereafter purchase or
otherwise acquire, together with the certificates and/or other instruments or
writings representing them (such shares, certificates and other writings being
hereinafter collectively called the "Pledged Shares");

               (ii) (A) all shares and other securities and all warrants, rights
and options (such shares, securities, warrants, rights and options together with
the certificates and/or other instruments or writings representing them being
hereinafter collectively called the "Additional Pledged Securities") and (B) all
money and other property, at any time and from time to time received or
receivable by or distributed or distributable to Pledgor from the issuer of any
or all of the Pledged Shares (whether in the ordinary course of such issuer's
business or representing or resulting from cash or stock dividends, stock splits
or reclassifications, the recapitalization, reorganization, merger,
consolidation, disposition of assets, liquidation or dissolution of such issuer,
the exercise by Pledgor of warrants, rights or options, or any other action or
cause) in exchange or substitution for or otherwise in respect of any or all of
the Pledged Shares or earlier-issued Additional Pledged Securities; and

               (iii)  all proceeds of any or all of the foregoing.

        (b) As used herein, the term "Obligations" shall mean all indebtedness,
liabilities and obligations of any kind of Pledgor to Pledgee (whether directly
as principal or maker or indirectly as guarantor, surety, endorser or
otherwise), now or hereafter existing, due or to become due, howsoever incurred,
arising or evidenced, whether of principal or interest or payment or
performance, and all obligations of the Pledgee now or hereafter existing under
this Pledge Agreement.

        (c) Prior to the execution and delivery hereof by Pledgee, Pledgor shall
have delivered to Pledgee, and Pledgee by such execution and delivery shall
acknowledge its prior receipt of, the certificate(s) and/or other instruments
and documents evidencing all of the Pledged Shares, Additional Pledged
Securities and all other items of the Pledged Collateral then owned by Pledgor.
Pledgor agrees that it shall immediately deliver to Pledgee any and all of the
Pledged Shares, Additional Pledged Securities and other Pledged Collateral
(including any and all certificates and/or other instruments or documents
representing each item thereof) which it acquires in any way at any time after
such execution and delivery. Upon delivery to Pledgee, each item of the Pledged
Collateral shall be accompanied by, as appropriate, (i) undated, duly executed
stock powers endorsed by Pledgor either in blank or to Pledgee in a manner which
Pledgee deems satisfactory, and/or (ii) such other instruments or documents as
Pledgee shall reasonably request.

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     2. PLEDGOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) Pledgor
represents and warrants that: (i) Pledgor has the right, power and authority to
execute, deliver and perform this Pledge Agreement and to pledge, assign,
deliver, transfer and grant a security interest in the Pledged Collateral; (ii)
this Pledge Agreement constitutes the legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and subject to any limitation that may restrict Pledgee from
selling, voting or exercising control over NFL without obtaining approval of the
Insurance Commissioner; (iii) Pledgor has good title to all of the Pledged
Shares and is the legal record and beneficial owner of each of the Pledged
Shares (and will have good title to and be the legal record and beneficial owner
of each other item of Pledged Collateral, including any Additional Pledged
Securities), free and clear of all encumbrances except Pledgee's security
interest hereunder; (iv) each of the Pledged Shares and Additional Pledged
Securities is, or will be when acquired by Pledgor and pledged hereunder, duly
and validly issued and fully paid and non-assessable, and there are no
restrictions on the transfer of any thereof other than such restrictions as
appear on the certificates or other instruments or writings representing them,
or as are referred to in clause (ii) above or otherwise may be imposed under
applicable law; (v) no action other than the delivery of each item of the
Pledged Collateral to, and its continued possession by, Pledgee or any of its
agents or nominees is necessary to maintain a perfected, first-priority security
interest in such item in favor of Pledgee; and (vi) no authorizations, approvals
or consents of, and no filings or registrations with, any governmental or
regulatory authority or agency are necessary for the execution, delivery or
performance by the Pledgor of this Pledge Agreement or for the validity or
enforceability hereof except those which have already been obtained and remain
in full force and effect.

        (b) Pledgor covenants and agrees that it will at its expense (i) defend
both its own rights and interests and Pledgee's rights and security interest in
and to the Pledged Collateral against the claims and demands of all other
persons and (ii) execute and deliver to Pledgee such further conveyances,
agreements, assignments, instruments and other writings, and take such further
action, as Pledgee may request in order to obtain the full benefit of this
Pledge Agreement, the Pledged Collateral, and the rights, powers and remedies
granted to Pledgee hereunder. Pledgor further covenants and agrees that until
all Obligations have been satisfied and this Pledge Agreement has been
terminated, Pledgor will not without Pledgee's prior written consent sell,
assign, transfer, exchange or otherwise temporarily or permanently dispose of
any item of the Pledged Collateral, or offer or contract to do so, and will not
without such consent create, incur, assume or permit to exist any security
interest, pledge, claim or other charge or encumbrance on or with respect to any
such item other than the security interest granted to Pledgee hereunder.

     3. NAMES IN WHICH PLEDGED SHARES AND ADDITIONAL  PLEDGED  SECURITIES MAY BE
REGISTERED.  Upon the occurrence of any Pledgor Default (as defined in Section 9
hereof), Pledgee

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                                        4

shall be entitled to hold any or all of the Pledged Shares and Additional
Pledged Securities in its own name, the name(s) of one or more of its nominees
or the name of Pledgor endorsed or assigned in blank or in favor of Pledgee.
With respect to any of the Pledged Shares and/or Additional Pledged Securities
which Pledgee wishes to hold in its own name or the name of any nominee in
accordance with this Section 3, Pledgee (acting in its own name and capacity or
as Pledgor's attorney-in-fact pursuant to the power of attorney granted to
Pledgee in Section 5 hereof) may have such Pledged Shares and Additional Pledged
Securities registered accordingly on the books of the issuer(s) thereof, and
Pledgor shall cooperate fully with Pledgee in causing such issuer(s) to effect
such transfer and registration.

        4. VOTING RIGHTS; DISTRIBUTIONS, ETC. (a) Subject to Section 4(c),
Pledgor shall be entitled to exercise any and all voting and/or consensual
rights and powers accruing to an owner of the Pledged Shares and Additional
Pledged Securities for any purpose not inconsistent with (A) the provisions of
this Pledge Agreement and the Financing Agreement and applicable insurance and
other law and (B) the preservation of the value of and Pledgee's security
interest in the Pledged Collateral.

        (b) Subject to Section 4(c), Pledgor shall be entitled to receive and
retain all cash dividends, interest and other cash distributions payable in
respect of the Pledged Collateral to the extent that such distributions are
permitted by law.

        (c) Upon the occurrence and during the continuance of a Pledgor Default,
Pledgor may thereafter continue to exercise any and all voting and consensual
rights and powers until such time as Pledgee shall notify Pledgor in writing
that Pledgee intends to assume and, subject to Section 15, exercise the same,
and all powers described in Section 4(b) to receive the dividends, interest and
other cash distributions described in such Section shall cease, and all such
rights shall thereupon become vested in Pledgee.

        (d) Upon the occurrence and during the continuance of a Pledgor Default
and subject to Section 15, Pledgee may, in its own name and capacity or as
Pledgor's attorney-in-fact, collect, receive, endorse and deposit all Additional
Pledged Securities, money, cash proceeds, instruments and any and all other
property which is or may at any time become payable in respect of any or all of
the Pledged Collateral and which Pledgee is or may become entitled to receive
under subsection (a) or (b) of this Section 4. All such property so received by
Pledgee may be retained by Pledgee as additional Pledged Collateral, and (i) all
money and other cash proceeds so received may be applied by Pledgee to payment
of the Obligations in such order as Pledgee may elect, whether or not a Pledgor
Default shall then be continuing, and (ii) during the continuance of a Pledgor
Default, all other property so received may be sold or otherwise disposed of by
Pledgee as provided in Section 10 hereof and the proceeds thereof applied as
also provided in such Section 10. Any and all money and other property received
by Pledgor contrary to the provisions of this Section 4 shall be held by

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                                        5

Pledgor in trust for Pledgee, shall be segregated by Pledgor from Pledgor's
other funds and property and shall promptly be delivered to Pledgee in exactly
the form received by Pledgor, except for any necessary endorsements.

        5. PLEDGEE APPOINTED AS PLEDGOR'S ATTORNEY-IN-FACT. Subject to Section
15, Pledgor hereby appoints Pledgee as Pledgor's attorney-in-fact with full
power in Pledgor's place and stead, in Pledgor's name or its own name and at
Pledgor's expense, to execute, endorse and deliver any and all agreements,
assignments, pledges, instruments and any other writings, and to take any and
all other actions, which Pledgee may deem necessary or desirable to carry out
the terms and effect the purposes of this Pledge Agreement and to exercise fully
its rights and remedies hereunder. Pledgee may delegate any or all of such power
to any of its officers, directors, employees, agents, nominees, stockholders and
other representatives (hereinafter collectively called "Representatives") and to
have any such Representative(s) exercise any such delegated power as
substitute(s) for Pledgee. Pledgor hereby ratifies all that Pledgee and all such
Representatives shall lawfully and properly do or cause to be done under this
power of attorney, which power is coupled with an interest and shall be
irrevocable until all Obligations have been satisfied and this Pledge Agreement
has been terminated. So long as no Pledgor Default (as defined in Section 9
hereof) has occurred, Pledgee agrees to give Pledgor five (5) business days
prior notice of its intention to exercise the power of attorney granted hereby.

        6. PLEDGEE'S RIGHTS TO PERFORM FOR PLEDGOR. If Pledgor shall at any time
fail to perform or comply with any of its covenants and agreements hereunder,
Pledgee may (but shall not be required or obligated to) take such action, in its
own name and capacity or as Pledgor's attorney-in-fact, as Pledgee shall deem
necessary or desirable to effect such performance or compliance.

        7. REASONABLE CARE OF PLEDGED COLLATERAL. Pledgee shall be deemed to
have used reasonable care in the custody and preservation of the Pledged
Collateral in its possession to the extent it accords such Pledged Collateral
treatment which is substantially equal to that which Pledgee accords its own
property of like kind; PROVIDED, HOWEVER, that Pledgee shall have no obligation,
regardless of whether it takes any such action with respect to its own property,
(i) to ascertain or take action with respect to calls, tenders, conversions,
exchanges, maturities or other matters involving or affecting any item(s) of
such Pledged Collateral (whether or not Pledgee has actual or constructive
knowledge of any such matters), unless reasonably requested by Pledgor to do so,
or (ii) to take action to preserve rights against prior or other parties.

        8. LIMITATION OF PLEDGEE'S LIABILITY; REIMBURSEMENT OF EXPENSES AND
INDEMNIFICATION. (a) Pledgor agrees that Pledgee shall have no obligation to
take, or refrain from taking, any action with respect to the Pledged Collateral
or Pledgor's rights and interests therein except for (i) the preservation and
return of the Pledged Collateral in its possession as and to the extent
provided, respectively, in Sections 7 and 14 hereof, (ii) the execution and
delivery to Pledgor of certain

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instruments and other writings imposed by law and (iii) compliance with
insurance regulatory requirements, if any, described in Section 15. Pledgor
further agrees that neither Pledgee nor any of its Representatives shall have
any liability to Pledgor, or to any person claiming rights against Pledgee by,
through or under Pledgor, in any way arising out of or in connection with
Pledgee's or any such Representative's administration of this Pledge Agreement
or its exercise of any of its rights, power and remedies hereunder except for
(i) Pledgee's or any such Representative's failure to take as and when required
any of the actions referenced in the first sentence of this Section 8(a) or to
account to Pledgor for those amounts of money and other property -- and only for
those amounts -which it actually receives in connection with such administration
or exercise and which it is required to pay over to Pledgor or apply to the
Obligations under any other provision hereof, (ii) its failure to exercise
reasonable care as and to the extent required in Section 7 hereof or (iii) its
negligence or willful misconduct.

        (b) Pledgor shall pay or reimburse Pledgee on demand for all costs and
expenses (including without limitation reasonable attorneys' fees and legal
expenses) paid or incurred by Pledgee in connection with (i) any amendment of
this Pledge Agreement and (ii) the exercise and enforcement of any of Pledgee's
rights, powers and remedies hereunder, including without limitation its right to
perform Pledgor's covenants and agreements hereunder to the extent Pledgor fails
to do so. Pledgor further agrees to indemnify, defend and hold harmless Pledgee,
its Representatives, successors and assigns from and against any and all
liabilities, claims, actions, losses, damages, taxes, penalties, fines, costs
and expenses (including reasonable attorneys' fees and legal expenses) which in
any way arise out of or in connection with any of the actions or matters with
respect to which Pledgor has a payment or reimbursement obligation under this
Section 8; PROVIDED, HOWEVER, that Pledgor shall have no obligation to indemnify
Pledgee or any such Representative, successor or assign against any liabilities,
claims, etc., resulting from such party's negligence or willful misconduct or
its failure to exercise reasonable care as and to the extent required in Section
7 hereof. Until any reimbursement of costs or expenses or any indemnity payment
required under this Section 8 is received by Pledgee in cash or immediately
available funds, the amount thereof shall bear interest at the rate specified in
the Credit Agreement for delinquent payments, and such amount and such interest
shall constitute part of the Obligations secured by the Pledged Collateral.

     9. PLEDGOR  DEFAULTS.  The following shall constitute a "Pledgor  Default":
(i) Pledgor  fails to perform or comply with any of its  covenants or agreements
hereunder; or (ii) a default or event of default occurs under the Financing
Agreement.

        10. REMEDIES. (a) If a Pledgor Default has occurred and is continuing,
Pledgee may at any time and from time to time exercise any and all rights and
remedies available to it (i) hereunder and under the Financing Agreement and any
other agreement or instrument then in effect between Pledgor and Pledgee and
relating to the Obligations, including without limitation those rights and
remedies set out in subsections (b) through (f) of this Section 10, and (ii) as
a secured party under

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the Uniform Commercial Code as then in effect in the State of Connecticut (the
"Code") and under any other applicable law or rule of law or equity. Should
Pledgee elect to proceed by action at law or in equity to foreclose its security
interest in and sell any or all of the Pledged Collateral, Pledgor waives (to
the extent permitted by law) any rights it may then have in connection therewith
to require Pledgee to post bonds, sureties or collateral security or to demand
possession of any such Pledged Collateral pending judgment therein.

        (b) Subject to Section 15 and to the extent permitted by federal and
state securities laws, Pledgee may sell, assign, transfer, endorse and deliver
all or, from time to time any part, of the Pledged Collateral at public or
private sale, over the counter or at any broker's board or securities exchange,
for cash, on credit or in exchange for other property, for immediate or future
delivery, without advertisement or notice (except as provided in this
subsection), and for such price and on such terms as Pledgee deems appropriate,
PROVIDED only that all aspects of any such disposition are commercially
reasonable within the requirements of Section 42a-9-504 of the Code, as defined
and supplemented by the standards and agreements set forth herein. Pledgor
agrees that to the extent notice of the time and place of any such public sale,
or of the time after which Pledgee intends to make any such private sale or
other disposition, is required under the Code, such notice shall be deemed
commercially reasonable if transmitted by any of the means described in the
Financing Agreement not less than fifteen (15) days prior thereto. Pledgee shall
not be obligated to effect any sale of any or all of the Pledged Collateral,
whether or not notice thereof has been given, and may adjourn any public or
private sale from time to time by announcement at the time and place fixed for
such sale, and such sale may be held without further notice at the time and
place to which it was so adjourned.

        (c) At any such private or public sale, subject to Section 15, Pledgee
shall be entitled to bid for and/or purchase the Pledged Collateral then being
sold and may pay the price thereof by credit against the Obligations then
outstanding. Any purchaser of any item(s) of the Pledged Collateral (including
Pledgee) shall take such item(s) free from any right or claim of Pledgor, and
Pledgor hereby waives, to the extent permitted by the Code and other applicable
law, all rights of redemption and/or to any stay, exemption or appraisal which
Pledgor now has or may hereafter acquire.

        (d) Pledgor agrees and acknowledges that requiring the issuer(s) of the
securities included in the Pledged Collateral to register such securities under
applicable provisions of federal and state securities laws would not be
practicable and therefore could not be deemed commercially reasonable. Pledgor
further agrees and acknowledges that in order to comply with applicable federal
and state securities laws without effecting such registration, Pledgee may be
required: (i) to sell or otherwise dispose of any or all of the Pledged
Collateral at one or more private rather than public sales and (ii) to limit the
prospective purchasers at such sale(s) to persons who will represent and agree
that they are purchasing the securities they intend to acquire for their own
account for investment and not with

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a view to the distribution or sale thereof, and who will be compelled to accept
stringent restrictions on their ability to dispose of such securities.
Accordingly, Pledgor agrees that: (i) Pledgee shall not incur any liability to
Pledgor by reason of the fact that the price obtained for any or all the Pledged
Collateral at such private sale(s) to investors restricted as provided above may
be less than the price which might be obtained therefor at a public sale or
unrestricted private sale and (iii) any and all private sales shall be deemed
commercially reasonable even if (A) the amount received is less than the
then-outstanding amount of the Obligations and/or (b) even if Pledgee accepts
the first offer received or does not offer all or any part of the Pledged
Collateral to more than one prospective purchaser, unless the sale in question
is conducted in bad faith or in a manner manifestly unreasonable for sales of
that type.

        (e) In case of any sale by the Pledgee of any item(s) of the Pledged
Collateral on credit or for future delivery, such item(s) may be retained by the
Pledgee until the selling price is paid by the purchaser(s) thereof, but the
Pledgee shall incur no liability in case of failure of the purchaser to take up
and pay for such item(s). In case of any such failure, such item(s) may be sold
again upon notice, to the extent required by law, as provided in subsection (b)
of this Section 10.

        (f) The proceeds of the sale or other disposition of the Pledged
Collateral shall be applied first, to that part of the Obligations consisting of
Pledgee's expenses (including without limitation reasonable attorneys' fees and
legal expenses) in preparing for disposition and disposing of the Pledged
Collateral and, to the extent not previously reimbursed by Pledgor and
exercising and enforcing its rights, powers and remedies hereunder, and second,
to the satisfaction of the then outstanding amount of Pledgor's indebtedness
under the Financing Agreement and of all other Obligations then remaining
unpaid. Pledgee shall account to Pledgor for any surplus and Pledgor shall be
liable to Pledgee for any deficiency.

        11. AMENDMENTS, ETC. No provision of this Pledge Agreement may be
amended, modified, supplemented or waived, and no consent to any departure
therefrom by Pledgor may be given, except by a writing duly executed and
delivered by the parties hereto, and any such amendment, modification,
supplement or waiver shall be effective only as and to the extent provided
therein.

        12. CUMULATIVE REMEDIES; NO WAIVERS BY PLEDGEE. All rights, powers and
remedies of Pledgee (i) under this Pledge Agreement and the Financing Agreement
and under any other agreements, instruments and other writings now or hereafter
existing between Pledgor and Pledgee and relating to the Obligations, and (ii)
under the Code and other applicable law, are cumulative and except as otherwise
provided by law or in such agreements may be exercised concurrently or in any
order of succession. Pledgee's failure to exercise or delay in exercising any of
such rights, powers and remedies shall not constitute or imply a waiver thereof,
nor shall Pledgee's single or partial exercise of any such right, power or
remedy preclude its other or further exercise thereof, or the

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exercise of any other right, power or remedy. Pledgee's cure of any Pledgor
Default shall not constitute a waiver thereof, and its waiver of one Pledgor
Default shall not constitute a waiver of any subsequent Pledgor Default.

     13. PLEDGOR'S  WAIVERS.  Pledgor agrees that Pledgee's security interest in
the Pledged  Collateral  shall be absolute and  unconditional  regardless of the
existence or occurrence of, and expressly  waives any defense or discharge which
might otherwise arise from, any of the following:

                (i) any lack of validity or enforceability of this Pledge
Agreement, the Financing Agreement, the Credit Agreement or any other agreement
or instrument relating hereto or thereto or otherwise relating to the
Obligations;

                (ii) any change in the time, manner or place of payment of, or
in any other terms of, any or all of the Obligations, or any other amendment or
waiver of, or any consent to departure from, this Pledge Agreement or the
Financing Agreement, the Credit Agreement or any other agreement, instrument or
other writing now or hereafter existing between Pledgor and Pledgee and relating
to the Obligations;

               (iii) any exchange, release or non-perfection of any other
collateral, or any release, amendment or waiver of, or consent to departure from
any guaranty, for any or all of the Obligations;

                (iv) Pledgee's resort, during the continuation of a Pledgor
Default, to any or all of the Pledged Collateral for payment of all or part of
the Obligations prior to proceeding against any other collateral or any other
party primarily or secondarily liable for payment thereof; or

                (v) to the extent permitted by law, any other circumstance which
might otherwise constitute a defense available to, or a discharge of, Pledgor in
respect of the Obligations or this Pledge Agreement.

        14. TERMINATION; RELEASE OF PLEDGED COLLATERAL. This Pledge Agreement
and the security interest granted hereunder shall terminate on the date on which
all Obligations have been fully satisfied. Pledgee shall thereupon reassign and
redeliver (or cause to be reassigned and redelivered) to Pledgor or such
person(s) as Pledgor shall designate, against due execution and delivery by
Pledgor or such person(s) of a receipt therefor satisfactory to Pledgee in form
and substance, such items of the Pledged Collateral (if any) as are then held by
Pledgee or its Representatives, together with appropriate instruments of
reassignment and release. Any such reassignment shall be without recourse to or
warranty by Pledgee or any such Representative and at the expense of Pledgor.

     15. INSURANCE REGULATORY REQUIREMENTS. Anything in this Pledge Agreement to
the  contrary  notwithstanding,  Pledgee may not  exercise  any of the rights or
powers described in Sections

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4, 5 and 10 hereof or otherwise foreclose upon or sell the Pledged Shares or the
Additional Pledged Securities, unless and until the Pledgee (and, in the cases
of a sale of the Pledged Shares or the Additional Pledged Securities, the
purchaser thereof) has complied, to the extent legally required, with all filing
requirements of all applicable laws of Delaware regulating the acquisition of
voting securities or control of any insurance company, and the acquisition of
the Pledged Collateral and the Additional Pledged Securities and control of NFL
by the Pledgee hereunder (or by the purchaser in any such sale) has, to the
extent legally required, been duly approved in accordance with all applicable
Delaware statutory and regulatory requirements and any other applicable laws.

     16. NOTICES. All notices, requests, directions, consents, waivers and other
communications  hereunder  shall be in writing and shall be  transmitted  by the
means and to the addresses from time to time specified in the Financing
Agreement.

        17. BINDING AGREEMENT; ASSIGNMENT. This Pledge Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that Pledgor shall not assign or
otherwise transfer any of its obligations, rights or interests hereunder without
the prior written consent of Pledgee.

        18. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the laws of the State of Connecticut. Wherever
possible each provision of this Pledge Agreement shall be construed in such
manner as to be valid and enforceable under applicable law, but if any provision
hereof shall be deemed invalid or unenforceable to any extent in any
jurisdiction, such provision shall be ineffective only to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remainder of such provision or any of the other provisions hereof, and any
such invalidity or unenforceability in one jurisdiction shall not render such
provision ineffective in any other jurisdiction.

        19. JURISDICTION; IMMUNITIES. (a) The Pledgor hereby irrevocably submits
to the jurisdiction of any Connecticut State or United States Federal court
sitting in Connecticut over any action or proceeding arising out of or relating
to this Pledge Agreement, and the Pledgor hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
such Connecticut State or Federal court. The Pledgor irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing
of copies of such process to the Pledgor at its address specified in Section 7.4
of the Financing Agreement. The Pledgor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
The Pledgor further waives any objection to venue in such State and any
objection to an action or proceeding in such State on the basis of forum non
conveniens. The Pledgor further agrees that any action or proceeding brought
against the Pledgee shall be brought only in Connecticut State or United States
Federal courts sitting in Connecticut.

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        (b) Nothing in this Section 19 shall affect the right of the Pledgee to
serve legal process in any other manner permitted by law or affect the right of
the Pledgee to bring any action or proceeding against the Pledgor or its
Property in the courts of any other jurisdictions.

        20. TITLES; COUNTERPARTS. Section titles are for convenience only and
shall not define, limit, amplify, supplement or otherwise modify or affect the
substance or intent of this Pledge Agreement or any provision hereof. This
Pledge Agreement may be executed in two(2) or more counterparts, each of which
shall when executed by both parties be deemed to be an original but all of which
together shall constitute one and the same agreement.

        IN WITNESS WHEREOF, each of the parties hereto has caused this Pledge
Agreement to be duly executed by its respective authorized officer as of the
date first above written.

                                                   WESTBRIDGE CAPITAL CORP.

                                                   By: /S/ PATRICK J. MITCHELL

                                                       Name: Patrick J. Mitchell
                                                  Title: Chief Financial Officer

                                                   FLEET NATIONAL BANK

                                                   By: /S/ ANSON HARRIS

                                                              Name: Anson Harris

                                                 Title: Assistant Vice President

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                                                                    ATTACHMENT A

                                 ISSUED AND OUTSTANDING SHARES

                                       OF CAPITAL STOCK

NAME OF ISSUER                  NO. OF SHARES             CERTIFICATE NO.(S)

National Foundation Life          2,000,000                      1
 Insurance Company





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