Rector
              &
                Associates, Inc.Insurance
                Regulatory Consulting
            Columbus
                Office
              Direct
                Dial: 614-224-6210
              Email:nrector@rector.associates.com
              www.rector.com







March
      31,
      2006







James
      E.
      Bowser


Executive
      Vice President & COO


Federated
      Investors Insurance Company


1585
      Bethel Road


Suite
      100


Columbus,
      OH 43220





Dear
      Jim:





Thank
      you
      for the opportunity to assist you with the feasibility study that Federated
      Investors Insurance Company (“FIIC”) proposes to prepare. Rector &
Associates, Inc. (“R&A”) believes it is important to address certain
      matters, in writing, at the outset of this engagement:




Scope
      of Our Engagement .
      At this
      time, you have asked us and CAB Consulting Services, LTD. (“CAB”) to assist you
      with preparing a feasibility study for establishing two captive insurers to
      be
      domiciled in Washington, D.C. As our relationship develops, we anticipate that
      we will be providing you with additional consulting services on other matters
      from time to time as you request and as we agree.




Billing
      Terms .
      You
      have agreed to pay fees for our consulting services. As part of our engagement,
      you have provided us with a $30,000 refundable retainer to be applied toward
      our
      fees and those of CAB. If amounts from the retainer remain following the
      completion of our work, then R&A will
      refund the remaining amount to FIIC. If R&A anticipates that its and CAB’s
      aggregate fees for its services, including expenses, will exceed $30,000,
      R&A willinform FIIC and receive an additional retainer amount before
      R&A or CAB performs any additional services.




In
      most
      instances, our fees will be the applicable hourly rates of our consulting staff
      multiplied by the number of hours incurred, rounded up or down to the nearest
      five or twenty-five dollar increment. However, occasionally this amount might
      yield a fee that is inappropriate (either too high or too low) when compared
      to
      the work performed. In that event, R&A may decide to adjust the fee, as
      appropriate.


General
                        Office
                      172
                        East State Street, Suite 305
                      Columbus,
                        OH 43215
                      (614)
                        224-6200 - Fax: (614) 224-6283
                    21717
                        West 98thStreet
                      Lawrence,
                        KS 66220
                      (913)
                        782-4658
                      Fax
                        (913) 782-4658
                    724
                        Lafayette Avenue, #4
                      Cincinnati,
                        OH 45220
                      (513)
                        861-1976
                      Fax
                        (513) 861-1976




In
      addition to our fees, you have also agreed to pay expenses we incur on your
      behalf. These expenses may include, but are not limited to, the following
      examples: duplicating and binding of documents; telecopier, fax, and long
      distance telephone calls, messengers, couriers and postal services; and travel
      expenses, including, where appropriate, meals, transportation, lodging and
      other
      business expenses.




You
      have
      agreed to pay invoices we submit to you within thirty (30) days of receipt.
      All
      invoices remaining unpaid for more than (30) days are subject to an interest
      charge at the rate of ten percent (10%) per annum.




Conflicts .
      As you
      know, R&A performs consulting services for many other companies and
      individuals. It is possible that during the time that we are performing
      consulting services for you, some of our present or future clients may have
      disputes or transactions with you. You agree that we have continue to perform
      consulting services or may undertake in the future to perform consulting
      services for existing or new clients in any matter that is not substantially
      related to our work for you, even if the interests of such clients in those
      other matters are advers to your interests.




Limitation
      of Liability .
      R&A
      will perform all services in accordance with applicable standards. The parties
      agree that R&A shall not be liable to FIIC or to any person affiliated with
      it in any way (collectively, the “Group”), whether in tort, contract or
      otherwise, for any damages in excess of three times the professional fees paid
      to R&A with respect to the type of incidental or consequential damages. The
      foregoing limitations shall not apply in the event of the intentional fraud
      or
      willful misconduct of R&A.




No
      Legal Services, Advice or Opinions .
      I want
      to remind you that R&A provides consulting services only, so that we will
      not provide legal services in connection with this project or any future
      project.




Disputes .
      In the
      event of any dispute arising out of or relating to the engagement of R&A by
      FIIC, the parties agree that the dispute will be resolved by final and binding
      arbitration under the Commercial Arbitration Rules of the American Arbitration
      Association. The arbitration shall take place before a panel of three
      arbitrators. Within 30 days of the commencement of the arbitration, each party
      shall designate in writing a single neutral and independent arbitrator. The
      two
      arbitrators designated by the parties shall then select a third arbitrator.
      The
      arbitrators shall have a background in either insurance, actuarial science
      or
      law. The arbitrators shall have the authority to permit limited discovery,
      including depositions, prior to the arbitration hearing, and such discovery
      shall be conducted consistent with the Federal Rules of Civil Procedure. The
      arbitrators shall have no power or authority to award punitive or exemplary
      damages. The arbitrators may, in their discretion, award the cost of the
      arbitration, including reasonable attorney fees, to the prevailing party. Any
      award made may be confirmed in any court having jurisdiction. Any arbitration
      shall be confidential, and except as required by law, neither party may disclose
      the content or results of any arbitration hereunder without the prior written
      consent of the other parties, except that disclosure is permitted to a party’s
      auditors and legal advisors.




Choice
      of Law .
      The
      construction, interpretation, and enforcement of this Agreement shall be
      governed by the substantive law of the state of Ohio without regard to its
      conflict of laws provisions. In the event any provision of this Agreement is
      unenforceable as a matter of law, the remaining provisions will stay in full
      force and effect.




Please
      indicate your acceptance of this Agreement by signing in the space provided
      below and returning a copy to me. Thank you for the opportunity to assist you
      with this project. We look forward to working with you.




Very
      truly
      yours,


/s/
      Neil K.
      Rector


Neil
      K.
      Rector


President




AGREED
      AND ACCEPTED:




FEDERATED
      INVESTORS INSURANCE COMPANY




By:  /s/James
      E. Bowser


Name:  James
      E.
      Bowser


Title:  COO/EVP


Date:  May
      31,
      2006