<PAGE>   1
                                                                  Exhibit 10.1


                                                                 Conformed Copy



                              GOVERNANCE AGREEMENT
                         TERMINATION AND MUTUAL RELEASE


                  THIS TERMINATION AND MUTUAL RELEASE (this "Mutual Release") is
made as of the 15th day of April, 1997, by and among Trygg-Hansa AB (formerly
Trygg-Hansa SPP Holding AB), a corporation organized under the laws of Sweden
("THAB"), Trygg-Hansa Omsesidig Livforsakring, a corporation organized under the
laws of Sweden ("THL"), Trygg-Hansa Holding B.V., a corporation organized under
the laws of Sweden ("THH"), Centre Reinsurance (Bermuda) Limited, a corporation
organized under the laws of Bermuda ("Centre Re"), and Zurich Home Investments
Limited, a corporation organized under the laws of Bermuda ("Zurich")
(collectively, the "Parties", and each, individually, a "Party").

                  WHEREAS, the Parties, either directly or as successors in
interest, are parties to the Governance Agreement, dated as of December 22, 1993
(the "Governance Agreement"), by and among THAB, THL, Industrial Mutual
Insurance Company, a corporation organized under the laws of Finland ("IMI"),
International Insurance Investors, L.P., a limited partnership organized under
the laws of Bermuda ("III"), Centre Re and the Trustees of the Estate of Bernice
Pauahi Bishop (the "Bishop Estate") which agreement regulated certain aspects of
the Parties' investment in Home Holdings Inc., a corporation organized under the
laws of the State of Delaware (the "Company");

                  WHEREAS, IMI, III and the Bishop Estate, and any of their
respective assignees and successors, no longer beneficially own any shares of
any class of stock of the Company; and

                  WHEREAS, the Parties desire to terminate the Governance
Agreement in order to effectuate the purposes and intent of the Securityholders'
Agreement, dated June 12, 1995, by and among the Company, ZCI Investments
Limited, a corporation organized under the laws of Bermuda and predecessor of
Zurich, Insurance Partners Advisors, L.P., a limited partnership organized under
the laws of Delaware, and THAB (the "Securityholders' Agreement").
<PAGE>   2
                  NOW THEREFORE, in consideration of the covenants and mutual
promises contained herein, the Parties hereby agree as follows:

                  (1) The Parties hereby acknowledge and agree that the
Governance Agreement is terminated in all respects and that the Parties are
fully, completely, irrevocably and forever discharged from any and all
obligations set forth therein, pursuant thereto or arising therefrom.

                  (2) As material inducement for each Party to enter into this
Mutual Release, each of the Parties knowingly, voluntarily and irrevocably (a)
releases, acquits and forever discharges each Party from, (b) covenants not to
sue any other Party with respect to, and (c) waives any rights with respect to
any and all charges, complaints, claims, liabilities, obligations, promises,
agreements, controversies, damages, actions, causes of action, suits, rights,
demands, costs, losses, debts and expenses of any nature whatsoever, known or
unknown, suspected or unsuspected, foreseen or unforeseen, matured or unmatured,
which from the beginning of the world up to and including the date hereof,
exist, have existed, or may arise from any matter whatsoever under the
Governance Agreement, which such Party ever had, now has, or at any time
hereafter may have, own or hold against any other Party. Nothing herein shall
release any Party from any of its obligations under this Mutual Release.

                  (3) This Mutual Release constitutes the sole and complete
understanding of the Parties with respect to the subject matter hereof. The
Parties represent to each other that in executing this Mutual Release, they do
not rely and have not relied upon any representation or statement not set forth
herein made by any other Party, including such other Party's agents,
representatives or attorneys, with regard to the subject matter, basis or effect
of this Mutual Release.

                  (4) The terms and conditions of this Mutual Release shall
inure to the benefit of and be binding upon the respective past, present and
future successors, assigns, administrators or heirs (as applicable) of each
Party (collectively, the "Party Assignees"), and any and all past, present and
future directors, officers, shareholders, managers, agents, representatives,
advisors, consultants, employees, subsidiaries, administrators or heirs (as
applicable) of the Party or Party Assignees and their respective past, present
and future successors, assigns, affiliates or heirs (as applicable).

                                      -2-
<PAGE>   3
                  (5) No amendment, modification or alteration of the terms and
provisions of this Mutual Release shall be binding unless the same shall be in
writing and duly executed by the Parties. No waiver of any of the provisions of
this Mutual Release shall be deemed to or shall constitute a waiver of any other
provision hereof. No delay on the part of any Party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof.

                  (6) This Mutual Release shall be governed by, and construed
and enforced under the laws of the State of New York, without regard to conflict
of laws rules thereof. Each Party hereby irrevocably and unconditionally
consents to submit to the exclusive jurisdiction of the courts of the State of
New York and of the United States of America, in each case located in the County
of New York, for any litigation arising out of or relating to this Mutual
Release (and agrees not to commence any litigation relating thereto except in
such courts), and further agrees that service of any process, summons, notice or
document by United States registered mail to its respective address set forth in
this Mutual Release shall be effective service of process for any litigation
brought against it in any such court. Each Party hereby irrevocably and
unconditionally waives any objection to the laying of venue of any litigation
arising out of this Mutual Release in the courts of the State of New York, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such litigation brought in any such court has
been brought in an inconvenient forum.

                  (7) In the event that any one or more of the provisions of
this Mutual Release is held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions will not in
any way be affected or impaired thereby. If any one or more of the provisions
contained in this Mutual Release is held to be excessively broad as to duration,
scope, activity or subject, such provision shall be construed by limiting and
reducing it so as to be enforceable to the maximum extent compatible with
applicable law.

                  (8) All notices and other communications hereunder shall be in
writing and shall be deemed effec or given upon (a) electronic confirmation when
sent by facsimile transmission, (b) confirmed delivery by a recognized courier
service or an affidavit of the messenger when delivered by hand, or (c) the
expiration of seven (7) calendar days after the day when mailed by certified or
registered mail, postage prepaid, addressed to the following addresses (or at
such other address for a Party as shall be specified by like notice):

                                      -3-
<PAGE>   4
                  (a)      If to THAB, THL or THH,

                           TRYGG-HANSA AB
                           Fleminggatan 18
                           S-106 26 Stockholm
                           Sweden
                           Attention:  Mr. Zaid O.B. Pedersen
                           Telephone:  46-8-693-10-00
                           Facsimile:  46-8-650-93-67

                  (b)      If to Centre Re or Zurich,

                           Zurich Home Investments Limited
                           Cumberland House
                           One Victoria Street
                           Hamilton, Bermuda HMHK
                           Attention:  President
                           Telephone:  (809) 295-8501
                           Facsimile:  (809) 295-3705

                  In each case above, with
                  copies to the Company,

                           Home Holdings Inc.
                           c/o The Home Insurance Company
                           59 Maiden Lane
                           New York, New York 10038
                           Attention:  General Counsel
                           Telephone:  (212) 530-6600
                           Facsimile:  (212) 530-3413

                                      -4-
<PAGE>   5
                  (9) This Mutual Release may be executed in counterparts, each
of which shall for all purposes be deemed to be an original and all of which
shall constitute the same instrument.

                  IN WITNESS WHEREOF, the undersigned have duly executed this
Mutual Release as of the date first written above.


                                    TRYGG-HANSA AB (formerly
                                    TRYGG-HANSA SPP HOLDING AB)


                                    By:            /s/ Zaid Pedersen
                                            ------------------------------
                                            Name:  Zaid Pedersen
                                            Title: Chief Financial Officer


                                    TRYGG-HANSA OMSESIDIG LIVFORSAKRING


                                    By:            /s/ Lars Lonnborg
                                            ------------------------------
                                            Name:  Lars Lonnborg
                                            Title: President


                                    TRYGG-HANSA HOLDING B.V.


                                    By:            /s/ Jan Bruneheim
                                            ------------------------------
                                            Name:  Jan Bruneheim
                                            Title: Director

                                      -5-
<PAGE>   6
                                    CENTRE REINSURANCE (BERMUDA) LIMITED


                                    By:            /s/ Andrea Hodson
                                            ------------------------------
                                            Name:  Andrea Hodson
                                            Title: Secretary


                                    ZURICH HOME INVESTMENTS LIMITED


                                    By:            /s/ Roger Thompson
                                            ------------------------------
                                            Name:  Roger Thompson
                                            Title: Vice President

                                      -6-