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                         FIRST CENTRAL INSURANCE COMPANY

                          COMMERCIAL UMBRELLA LIABILITY
                         QUOTA SHARE AND EXCESS OF LOSS
                          REINSURANCE AGREEMENT AR 6245
                               1994 AGREEMENT YEAR





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          COMMERCIAL UMBRELLA LIABILITY QUOTA SHARE AND EXCESS OF LOSS
                              REINSURANCE AGREEMENT

                                                               ARTICLE    PAGE
                                                               -------    ----
COVERAGE                                                           I       2
TERM AND CANCELLATION                                             II       3
TERRITORY                                                        III       4
EXCLUSIONS                                                        IV       4
DEFINITIONS                                                        V      11
OTHER REINSURANCE                                                 VI      13
EXTRA CONTRACTUAL OBLIGATIONS                                             13
AND EXCESS LIMITS LIABILITY                                      VII
REPORTS AND REMITTANCES                                         VIII      14
RESERVES AND FUNDING                                              IX      15
LOSS NOTICES AND SETTLEMENTS                                       X      17
OFF SET                                                           XI      18
SALVAGE AND SUBROGATION                                          XII      18
WARRANTY                                                        XIII      19
DELAYS, ERRORS, OR OMISSIONS                                     XIV      19
AMENDMENTS                                                        XV      20
ACCESS TO RECORDS                                                XVI      20
INSOLVENCY                                                      XVII      20
ARBITRATION                                                    XVIII      21
SEVERABILITY                                                     IXX      23
TAXES                                                             XX      23
CURRENCY                                                         XXI      23
SERVICE OF SUIT                                                 XXII      24
AGENCY                                                         XXIII      25
INTERMEDIARY                                                    XXIV      25

                                                               ARTICLE    PAGE
                                                               -------    ----

EXHIBIT A (QUOTA SHARE)
  LIMIT OF LIABILITY                                               1      27
  REINSURANCE PREMIUM AND
  CEDING COMMISSION                                                2      27

EXHIBIT B (EXCESS OF LOSS)                                         1      28
  RETENTION AND LIMIT
  REINSURANCE PREMIUM AND
  CEDING COMMISSION                                                2      28





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                      COMMERCIAL LIABILITY QUOTA SHARE AND

                 EXCESS OF LOSS RETENTION REINSURANCE AGREEMENT

         THIS  AGREEMENT is made and entered into by and between  FIRST  CENTRAL
INSURANCE  COMPANY,  LYNBROOK,  NEW  YORK,  and any  other  companies  owned  or
controlled by First Central Insurance Company (hereinafter called the "Company")
of  the  one  part,  and  CONTINENTAL  CASUALTY   COMPANY,   CHICAGO,   ILLINOIS
(hereinafter called the "Reinsurer") of the other part.

         WITNESSETH:

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

                                    ARTICLE 1

COVERAGE

         The Reinsurer  will  indemnify  the Company,  subject to the limits set
forth in the Exhibits  attached hereto,  in respect to losses that may accrue to
the Company under all policies classified by the Company as:

                          COMMERCIAL UMBRELLA LIABILITY

         All  reinsurance for which the Reinsurer will be obligated by virtue of
this  Agreement  will be  subject  to the  same  terms  and  conditions,  rates,
interpretations,  waivers,  modifications,  and  alterations  as the  respective
policies of the Company to which this Agreement applies.  Nothing herein will in
any  manner  create  any   obligations  or  establish  any  rights  against  the
Reinsurance  in favor of any third  parties or any  persons  not parties to this
Agreement except as provided in the Insolvency Article.


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                                   ARTICLE II

                             TERMS AND CANCELLATION

         This Agreement will apply to all losses  occurring on or after December
1, 1994 12:01 a.m.  standard  time (as  defined in the  Company's  policies)  on
policies  written or renewed with  effective  dates on or after December 1, 1994
12:01  a.m.  standard  time,  and will  remain in full  force and  effect  until
canceled as hereinafter provided.

         This  Agreement  may be  canceled  (or  the  Reinsurer's  participation
reduced)  any December 1 by either party giving at least 90 days prior notice by
certified  or  registered  mail to the other  party.  During any such  period of
notice the Reinsurer will remain bound by the terms of this Agreement.

         In  the  event  this   Agreement  is  canceled   (or  the   Reinsurer's
participation  reduced) in accordance  with the  aforementioned  procedure,  the
Reinsurer  will remain  liable for all losses under polices in force until their
expiration  or renewal  dates,  whichever  come first,  but in no event will the
Reinsurer's  liability  extend for a run-off  period  longer than 12 months plus
extensions  and odd  time  not to  exceed  18  months  in all  from  the date of
cancellation.  The Reinsurer will return immediately,  on a pro rata basis as of
the date its liability  ceases,  the unearned premium less ceding  commission on
those policies that remain in force beyond the run-off period, if any.

         Alternatively,  the  Company  may  elect  to  cancel  (or  reduce)  the
Reinsurer's liability on a cut-off basis as of the date of cancellation, and the
Reinsurer will not be liable for any losses occurring (or the percentage thereof
equal to the amount of participation reduction) on or after


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the  cancellation  date and will return  immediately to the Company the unearned
premium less ceding  commission as of that date,  computed on a monthly pro rata
basis.

         Notwithstanding  the other provisions in this Article, in the event the
Company's policies are written in jurisdiction where  cancellation,  renewal, or
nonrenewal is regulated by the insurance  authorities,  and the Company is bound
by such regulations and statutes of said jurisdiction or a jurisdicial decision,
the Reinsurer  will remain liable on any such policies in force at  cancellation
date of this  Agreement (and will receive the premium  therefor)  until the date
each  expires or until the first  renewal  date when the  Company  can  lawfully
nonrenew said policies, whichever occurs first. If, however, the Company intends
to hold the  business  net and for its own  account,  or has  other  reinsurance
agreements  that would apply to such business,  the Reinsurer will not be liable
for longer than the run-off period set forth above.

         Notwithstanding  the cancellation of this Agreement (or the Reinsurer's
participation) as hereinabove provided, its provisions will continue to apply to
all  unfinished   business  hereunder  to  the  end  that  all  obligations  and
liabilities  incurred  by each  party  hereunder  will be  fully  performed  and
discharged.

                                   ARTICLE III

TERRITORY

         The  territorial  scope  of  this  Agreement  will  follow  that of the
Company's policies.


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                                   ARTICLE IV

EXCLUSIONS

         No reinsurance indemnity will be afforded under this Agreement for:

         A.       Liability  assumed  by the  Company  under  any form of treaty
                  reinsurance; however, local agency reinsurance accepted in the
                  normal course of business and/or  policies  written by another
                  carrier at the  Company's  request and  reinsured  100% by the
                  Company will not be excluded hereunder.

         B.       Property business.

         C.       Accident and health insurance.

         D.       Financial guarantee coverage.

         E.       War  risk,  bombardment,  invasion,  insurrection,  rebellion,
                  revolution,  military or usurped  power,  or  confiscation  by
                  order of any government or public authority, as excluded under
                  a reinsured policy containing a standard war exclusion clause.

         F.       All  business  derived from any Pool,  Association  (including
                  Joint Underwriting Association), Syndicate, Exchange, Plan, or
                  other   facility   directly  as  a  member,   subscriber,   or
                  participant or indirectly by way of reinsurance.

         G.       Loss or liability  excluded by the Insolvency  Funds Exclusion
                  Clause attached to the Agreement.

         H.       Loss or liability  excluded by the "Nuclear Incident Exclusion
                  Clause  --   Liability  --   Reinsurance"   attached  to  this
                  Agreement,  or  as  may  be  revised  hereafter by the Lloyd's
                  Underwriters' Non-Maine Association.

         I.       Policies  issued by the Company to  insurance  or  reinsurance
                  companies  (each  hereafter  referred to as  "insurer")  which
                  provides  insurance  against  liability of the insurer for any
                  damages  resulting from alleged or actual tortious  conduct by
                  the insurer in the  handling of claims made against any of its
                  policyholders or in the handling of any other business matters
                  with any of its policyholders.

         J.       "Bodily  injury,"  "personal  injury,"  or  "property  damage"
                  arising out of:

                  1.       Inhaling,  ingesting,  or prolonged physical exposure
                           to asbestos or goods or product containing  asbestos;
                           or


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                  2.       The use of asbestos in constructing or  manufacturing
                           any good, products, or structure; or

                  3.       The removal of asbestos  from any good,  product,  or
                           structure; or

                  4.       The manufacture, transportation, storage, disposal of
                           asbestos or goods or products containing asbestos.

                           The  coverage  afforded  by this  Agreement  does not
                           apply to payment for the  investigation or defense of
                           any loss,  injury or  damage  or any cost,  fine,  or
                           penalty or for any expense,  claim or suit related to
                           this Exclusion.

         K.       As  respects  General  Liability,  all loss  and/or  liability
                  accruing to the Company as a result of:

                  1.       Bodily injury or property  damage  arising out of the
                           actual, alleged, or threatened discharge, release, or
                           escape of pollutants:

                           (a)      at  or  from  premises   owned,   rented  or
                                    occupied by the named insured;

                           (b)      at or from any site or  location  used by or
                                    for the  named  insured  or  others  for the
                                    handling, storage, disposal,  processing, or
                                    treatment of waste;

                           (c)      which are at any time transported,  handled,
                                    stored,  treated  disposed  of, or processed
                                    as, waste by or for the named insured or any
                                    person or  organization  form whom the named
                                    insured may be legally responsible; or

                           (d)      at or from any site or location on which the
                                    named   insured   or  any   contractors   of
                                    subcontractors     working    directly    or
                                    indirectly  on behalf  of the named  insured
                                    are preforming operations:

                                    (i)     if the  pollutants are brought on or
                                            to   the   site   or   location   in
                                            connection with such operations; or

                                    (ii)    if the  operations  are to test for,
                                            monitor, clean up, remove,  contain,
                                            treat,  detoxify,  or neutralize the
                                            pollutants;

                  2.       Any  loss,   cost  or  expense  arising  out  of  any
                           governmental  direction  or  request  that the  named
                           insured test for, monitor, clean up, remove, contain,
                           treat, detoxify, or neutralize pollutants.


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                           "Pollutants"  means any solid,  liquid,  gaseous,  or
                           thermal  irritant or  contaminant,  including  smoke,
                           vapor, soot, fumes, acids,  alkalis,  chemicals,  and
                           waste.  Waste  includes  materials  to  be  recycled,
                           reconditioned, or reclaimed

                           Subparagraphs  1(a) and 1(d)(i) above do not apply to
                           bodily  injury  or  property  damage  caused by heat,
                           smoke,  or fumes from hostile  fire.  As used in this
                           Exclusion,  a hostile  fire  means  one that  becomes
                           uncontrollable  or  breaks  out  from  where  it  was
                           intended to be.

         L.       Products recall.

         M.       Pharmaceutical manufacturers.

         N.       Claims made coverage on policies issued by the Company, except
                  claims made coverage  written in  conjunction  with  Employees
                  Benefit coverage for commercial package business.

         O.       Retroactive liability coverage.

         P.       Professional Liability other than:

                  1.       Nurses;
                  2.       Morticians;

                  3.       Beauty Shop and Barber Shop;
                  4.       Funeral Directors Professional Liability.
                  5.       Incidental Medical Malpractice for school districts;
                  6.       Druggists,   except  chain  stores  with  5  or  more
                           locations;
                  7.       Optometrists;
                  8.       Hearing aid suppliers.

         Q.       Directors' and Officers' Liability.

         R.       Employers Liability under the Federal Employers Liability Act,
                  United States  Longshoremen's and Harbor Workers' Compensation
                  Act or Jones Act.

         S.       Errors and Omissions insurance.

         T.       Workers Compensation and Occupational  Disease;  however, this
                  Exclusion will not apply to Employers Liability.

         U.       Fidelity, Surety, or Forgery.

         V.       Ocean Marine, except pleasure craft under 50 feet in length.


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         W.       Kidnap,  ransom and/or extortion coverage,  except as respects
                  dishonest  and  fraudulent  acts by employees of the uninsured
                  under Fidelity bonds.

         X.       Fiduciary  Liability  arising  from  the  Employee  Retirement
                  Income Security Act of 1974, or amendments thereto.

         Y.       Single event/special coverage.

         Z.       Securities Act Liability Insurance (S.E.C. Liability).

         AA.      Blood banks.

         BB.      Sexual abuse or sexual misconduct.

         CC.      Professional trucking companies.

         DD.      Automobile   Liability   with  respect  to  any  vehicle  used
                  principally as:

                  1.       Taxis;

                  2.       Vehicles used for racing;

                  3.       Ambulances  in towns having a population  of 10,00 or
                           more, except ambulances when used as funeral cars;

                  4.       Fire  trucks  and  police  emergency  trucks in towns
                           having a population of 10,000 or more;

                  5.       Newspaper  delivery in towns having a  population  of
                           25,000 or more.

                  6.       Vehicles  engaged in  transporting  and  distributing
                           fireworks,  fuses,  nitroglycerine,   explosives  and
                           ammunition.

         EE.      General Liability (Other Liability) with respect to:

                  1.       Concerns  engaged in the demolition of vessels or the
                           demolition  of buildings  more than three  stories in
                           height;

                  2.       Product  Liability for risks covering the manufacture
                           and  wholesale  distribution  of drugs and  chemical,
                           beauty  parlor  preparations,   beauty  preparations,
                           aviation parts, volatile oils, insecticides, tobacco,
                           and animal feed (other than custom  blending of grain
                           without chemical  additives);  however this Exclusion
                           applies  only when the risks are involved in both the
                           manufacture  and wholesale  distribution of the above
                           items;


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                  3.       Advertisers',    Broadcasters',    and   Telecasters'
                           Liability;  however,  this  Exclusion  applies to any
                           Personal Injury Liability;

                  4.       Railroad  operations,   including  street,  railways,
                           except side tract agreement coverages;

                  5.       Aircraft or airports  as  respects  coverage  for all
                           liability arising out of the ownership,  maintenance,
                           or use of any aircraft or flight operations;

                  6.       Tunnel construction more than 50 feet in length;

                  7.       Bridge,  tunnel,  dam or  reservoir  construction  or
                           operation;

                  8.       Amusement parks or amusement devices;

                  9.       All mining operations;

                  10.      Onshore and offshore gas and oil drilling operations;

                  11.      Manufacture,     production,     refining,    storage
                           distribution,   or   transportation   of  natural  or
                           artificial fuel gas,  butane,  propane,  or liquefied
                           petroleum   gases  or   gasoline,   except   gasoline
                           distribution   in   rural   areas   or   where   such
                           distribution presents less than 25% or total revenue;

                  12.      Manufacture  of  fireworks,  fuses,   nitroglycerine,
                           celluloid, and pyroxlin;

                  13.      Manufacture of any explosive  substance  intended for
                           use as an  explosive  (Note:  "Explosive"  as used in
                           this Article means any substance manufactured for the
                           express purpose of exploding as  differentiated  from
                           other  commodities  used  industrially  and which are
                           only fortuitously  explosive,  such as gasoline, fuel
                           gases, and dye-stuff);

                  14.      Manufacture  of any product (other than fireworks and
                           fuses)  in  which  any  explosive   substance  is  an
                           ingredient;

                  15.      Loading  of  any  such   explosive   substance   into
                           containers for use as explosive  objects,  propellant
                           charges,  or detonating  devices,  and the incidental
                           storage thereof;

                  16.      Handling,  transportation,  or storage (or any one or
                           more of them) of  fireworks,  fuses,  nitroglycerine,
                           explosives, ammunition, or ammonium nitrate;


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                  17.      Municipalities  or  governmental  entities  having  a
                           population of 10,000 or more;

                  18.      State  or  governmental  agencies,  unless  the  Riot
                           Exclusion Endorsement is attached;

                  19.      Stevedoring;

                  20.      Gas or electric utilities,  including municipal risks
                           operating these utilities;

                  21.      Banks and other  financial  institutions,  unless the
                           policy  contains  a standard  Financial  Institutions
                           Endorsement;

                  22.      Boiler  manufacturing,   installation,   or  service;
                           however,  this  Exclusion  does not apply to plumbing
                           contractors;

                  23.      Community television or cable television operations;

                  24.      Elevator   or  hoist   manufacturing,   installation,
                           inspection, or repair;

                  25.      Inspection  services,  claims  services,  and  rating
                           bureaus;

                  26.      Logging and lumbering risks, except lumberyards;

                  27.      Warehousing  and bailee  operation,  including  Motor
                           Trust Cargo and terminal risks,  unless liability for
                           personal  injury in the insured's care,  custody,  or
                           control is  excluded  from the  Company's  Commercial
                           Umbrella Liability policy;

                  28.      Security   and  alarm   installations   and  service;
                           however, this Exclusion does not apply to locksmiths;

                  29.      Ski lodges, lifts, cable cars and tows;

                  30.      Sprinkler    and    fire    suppression     equipment
                           manufacturing, installation, inspection, and repair;

                  31.      School  boards or school  districts  having a student
                           population of 10,000 or more;

                  32.      Any watercraft exceeding 50 feet in length.


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         Notwithstanding the foregoing,  the exclusions J. and K. will not apply
where a legal action and/or legal order  modifies  application of such exclusion
under the reinsured policy. Additionally,  the Company will notify the Reinsurer
if application of either of said exclusions under the original primary policy is
being modified by any legal action and/or court order.

         Furthermore,  exclusions  DD.  and EE.  will  not  apply  if the  risks
excluded  are  only  incidental  to the  regular  operations  of a risk  covered
hereunder, that is, they are 10% or less of an insured's gross receipts.

         Any  reinsurance  falling  within  the  scope  of  one or  more  of the
exclusions set forth in DD. and EE. that is specially  accepted by the Reinsurer
from the Company will be covered under this Agreement and will be subject to the
terms hereof, except as such terms will be modified by the special acceptance.

         If the Company is bound,  without  the  knowledge  and  contrary to the
instructions  of  the  Company's  supervisory  underwriting  personnel,  on  any
business  falling within the scope of exclusions P. through EE., the reinsurance
coverage  provided  hereunder  will apply to such  business,  but only until the
Company can effect  cancellation  of such coverage in accordance  with either a)
the cancellation  provisions in its policy;  or b) the  cancellation  provisions
required by the insurance  regulatory  authorities having  jurisdiction over the
policy,  whichever allows for the greater length of time, but in no event beyond
12 months plus odd time (not  exceeding 15 months in all) from  discovery of the
risk by the Company.


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                                    ARTICLE V

DEFINITIONS

         "Policies" as used in this Agreement will mean all policies, contracts,
binders, or agreements of insurance or reinsurance,  whether written or oral, as
intended to be covered hereunder.

         "Renewed" as used in this  Agreement  will include those  policies,  if
any, issued for more than one year as of their next annual anniversary or annual
installment date.

         "Occurrence" as used in this Agreement, unless otherwise defined in the
policies  reinsured  hereunder,  will mean each and  every  disaster,  casualty,
accident,  or loss or  series of  disasters,  casualties,  accidents,  or losses
arising out of one event.  Without limiting the generality of the foregoing,  as
respects  coverage  written  with an  aggregate  limit of  liability on a policy
period  basis,  concurrence  will be  further  held to mean all  insured  losses
subject  to the  application  of the same  aggregate  limit  in the same  policy
period.  Such  "occurrence"  will be deemed to have taken place on the effective
date of said policy period.

         "Loss"  as  used  in  this  Agreement  will  mean  the  amount  of  any
settlement,  award, or judgment paid by the Company or for which the Company has
become liable to pay  (including  interest  accrued  prior to final  judgment if
included  as  part  of  loss  on  reinsured  policies)  after  deduction  of all
recoveries, salvages, and subrogation, and inuring reinsurance whether recovered
or not.  Loss will not include  loss  expense,  unless loss  expense is included
within the limit of liability on the policies reinsured hereunder.

         "Loss  expense"  as used in  this  Agreement  will  mean  all  expenses
incurred by the Company in the investigation,  appraisal, adjustment, litigation
and/or defense of claims under


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policies reinsured hereunder,  including court costs,  interest accrued prior to
final  judgment  if  included  as part of expense  or  reinsured  policies,  and
interest accrued after final judgment,  but excluding  internal office expenses,
salaries, per diem, and other remuneration of regular Company employees.

         "Net  written  premium" as used in this  Agreement  will mean the gross
written premium of the Company for the classes of business  reinsured  hereunder
as specified in the Coverage  Article,  less returned premium for  cancellations
and  reductions,  and less  premium  for  reinsurance  as set forth in the Other
Reinsurance Article.

                                   ARTICLE VI

OTHER REINSURANCE

         The Company may purchase facultative reinsurance on any subject risk it
deems  advisable,  and the  premium  for that  portion of the  Company's  policy
reinsured elsewhere will be deducted from the gross subject premium hereunder.

                                   ARTICLE VII

EXTRA CONTRACTUAL OBLIGATIONS AND EXCESS LIMITS LIABILITY

         This  Agreement  will  extend to cover any losses  arising  from claims
related extra contractual obligations and/or excess limits liability.

         "Extra  contractual  obligations"  as used in this  Agreement will mean
those liabilities not covered under any other provision of this Agreement, which
arise  from the  handling  of any  claim or  business  covered  hereunder;  such
liabilities  arising  because of, but not limited to, the following:  failure to
settle  within the  policy  limit,  by reason of  alleged or actual  negligence,
fraud,  or bad faith in rejecting an offer of  settlement,  in  the  preparation
of the defense, in the trial of any action against the insured or reinsured,  or
in the preparation or prosecution of an


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appeal  consequent  upon  such  action.  In no event  will  coverage  for  extra
contractual  obligations  be provided  under this  Agreement  to the extent such
coverage is not permitted under New York law.

         "Excess  limits  liability" as used in this Agreement will mean damages
payable  in  excess  of the  policy  limit  as a result  of  alleged  or  actual
negligence,  fraud,  or bad  faith in  failing  to  settle  and/or  rejecting  a
settlement  within the policy limit, in the  preparation of the defense,  in the
trial of any action against the insured or reinsured,  or in the  preparation or
prosecution of an appeal consequent upon such action. Excess limits liability is
any amount for which the Company would have been contractually liable to pay had
it not been for the limits of the reinsured policy.

         There  will  be no  recovery  hereunder  where  the  extra  contractual
obligation or excess limits  liability has been incurred due to fraud  committed
by a member of the board of  directors  or a corporate  officer of the  Company,
acting individually, collectively, or in collusion with a member of the board of
directors,  a  corporate  officer,  or  a  partner  of  any  other  corporation,
partnership, or organization involved in the defense or settlement of a claim on
behalf of the Company.

         The date on which any extra contractual obligation and/or excess limits
liability is incurred by the Company will be deemed, in all circumstances, to be
the date of the  original  loss.  Nothing in this  Article  will be construed to
create a separate or distinct  loss apart from the  original  covered  loss that
gave rise to the extra  contractual  obligations  and/or excess limits liability
discussed in the preceding paragraphs.  As respects Exhibit A (Quota Share), the
Reinsurer's  liability for extra  contractual  obligations  and/or excess limits
liability will not exceed


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its pro rata share of an additional  policy cession limit. As respects Exhibit B
(Excess of Loss), the Reinsurer's  liability for extra  contractual  obligations
and/or  excess  limits  liability  will be in  addition  to the  indemnification
coverage  set forth int he  Retention  and Limit  Section,  but the  Reinsurer's
additional  liability as respects extra  contractual  obligations  and/or excess
limits  liability will not exceed an additional  policy cession limit,  plus its
proportionate share of loss expense connected therewith.

                                  ARTICLE VIII

REPORTS AND REMITTANCES

         Within 30 days after the close of each month,  the Company will furnish
the Reinsurer with a report  summarizing  the gross premium,  premium ceded less
return  premium  and  commission,  monies  recovered,  and net  balance  due the
Reinsurer. Amounts due the Reinsurer will be remitted with said report.

         In  addition,  the Company will  furnish the  Reinsurer  with a monthly
statement  showing the unearned  premium,  the total  reserves  for  outstanding
losses including loss expense,  and such other information as may be required by
the Reinsurer for completion of its NAIC annual statements.

                                   ARTICLE IX

RESERVES AND FUNDING

         (This Article is only  applicable if the Reinsurer  cannot  qualify for
         credit by each  governmental  authority  having  jurisdiction  over the
         Company's reserves.)

         As regards  policies  issued by the Company  coming within the scope of
this  Agreement,  the  Company  agrees  that,  when it files with the  Insurance
Department or sets up on its books reserves for losses  (including loss and loss
expense paid by the Company but not recovered from


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the Reinsurer, loss and loss expense reported and outstanding,  and an allowance
for IBNR as  determined by the Company)  and/or  unearned  premium,  which it is
required by law to set up, it will forward to the Reinsurer a statement  showing
the  proportion of such reserves  applicable to it. The Reinsurer  hereby agrees
that it will fund such  reserves  by cash  advances,  Trust  Agreements,  escrow
accounts for the benefit of the  Company,  Letters of Credit,  or a  combination
thereof. The Reinsurer will have the option of determining the method of funding
referred to above  provided it is acceptable  to the Company and the  applicable
regulatory authorities.

         If the Reinsurer's choice of funding is or includes a Letter of Credit,
it will apply for and secure  delivery to the  Company of a clean,  irrevocable,
unconditional  Letter of Credit,  dated on or before  December 31 of the year in
which the request is made,  issued by a member of the Federal  Reserve System or
any  bank  approved  for  use by  the  NAIC  Securities  Valuation  Office,  and
containing provisions acceptable to the insurance regulatory  authorities having
jurisdiction  over the Company's  reserves in an amount equal to the Reinsurer's
proportion of said reserves. The Letter of Credit will be issued for a period of
not less than one year, and will be automatically extended for one year from its
date of  expiration  or any future  expiration  date unless 30 days prior to any
expiration  date the issuing bank notifies the Company be  registered  mail that
the issuing  bank elects not to consider  the Letter of Credit  extended for any
additional  period.  An issuing bank, not a member of the Federal Reserve System
or not  chartered in the state of domicile of the Company,  will provide 60 days
notice to the Company prior to any expiration in the event of nonextension.

         Notwithstanding any other provisions of this Agreement,  the Company or
its  court-appointed  successor  in  interest  may draw upon the cash  advances,
Trust Agreements, escrow


                                       16




<PAGE>

<PAGE>



accounts and/or Letters of Credit at any time without  diminution because of the
insolvency  of the Company or of the  Reinsurer for one or more of the following
purposes only:

         A.       To reimburse the Company for the Reinsurer's share of unearned
                  premium  on  policies   reinsured   hereunder  on  account  of
                  cancellations of such policies.

         B.       To pay the  Reinsurer's  share or to reimburse the Company for
                  the Reinsurer's share of any loss reinsured by this Agreement,
                  which has not been otherwise paid.

         C.       To make  refund  of any sum in  excess  of the  actual  amount
                  required  to  pay  the  Reinsurer's  share  of  any  liability
                  reinsured by this Agreement.

         D.       In the event of  nonextension of Letters of Credit as provided
                  for above, to establish  deposits of the Reinsurer's  share of
                  reserves  for  losses  and/or  unearned   premium  under  this
                  Agreement.

         E.       To pay any other amounts the Company claims are due under this
                  Agreement.

         The issuing bank will have no  responsibility  whatsoever in connection
with the  propriety of  withdrawals  made by the Company or the  disposition  of
funds withdrawn,  except to ensure that withdrawals are made only upon the order
of properly authorized representatives of the Company.

         At  annual  intervals,  or more  frequently  as agreed  but never  more
frequently  than  semi-annually,  the  Company  will  prepare and forward to the
Reinsurer a statement  to reflect the  Reinsurer's  share of reserves for losses
and/or unearned  premium.  If the statement shows that the Reinsurer's  share of
such  reserves  exceeds the  balance  available  through  cash  advances,  Trust
Agreements,  escrow  accounts and/or Letters of Credit as of the statement date,
then the Reinsurer will,  within 30 days after receipt of notice os such excess,
make an adjustment to increase the amount available.  If, however, the statement
shows  that the  Reinsurer's  share of such  reserves  is less than the  balance
available through the chosen method of funding as of the statement date,


                                       17




<PAGE>

<PAGE>



then the Company will,  within 30 days after receipt of written request from the
Reinsurer, release such excess by making the appropriate adjustment.

                                    ARTICLE X

LOSS NOTICES AND SETTLEMENTS

         The Company will advise the  Reinsurer  promptly of all losses that, in
the opinion of the Company,  may involve the Reinsurer  under this Agreement and
of all subsequent  developments  pertaining  thereto that may materially  affect
them as well.  Inadvertent  omission in dispatching the  aforementioned  notices
will in no way affect the  obligation  of the  Reinsurer  under this  Agreement,
provided  the Company  informs the  Reinsurer  of such  omission  promptly  upon
discovery.

         The  Company  will  have the  right to  settle  all  claims  under  its
policies. The settlements, provided they are within the terms of this Agreement,
will  be  unconditionally   binding  on  the  Reinsurer  in  proportion  to  its
participation in this Agreement.  When so requested,  however,  the Company will
afford the  Reinsurer,  at the  Reinsurer's  own expense,  an  opportunity to be
associated  with the Company in the defense of any claim,  suit,  or  proceeding
involving  this  Agreement,  and the Company and the Reinsurer will cooperate in
every  respect  in such  defense.  Amounts  due  the  Company  hereunder  in the
settlement of loss and loss expense will be payable by the Reinsurer immediately
upon being furnished by the Company with reasonable  evidence of the amount paid
or to be paid as respectively set forth in the Limit of Liability Section and in
the Retention and Limit Section of the Exhibits.


                                       18




<PAGE>

<PAGE>



                                   ARTICLE XI

OFFSET

         The Company and the Reinsurer hereunder will be entitled to deduct from
amounts due the other party under this Agreement any amounts due itself from the
other  party under this  Agreement.  In the event of the  insolvency  of a party
hereto, however,  offsets will only be allowed in accordance with the provisions
of Section 7427 of the Insurance Law of the sate of New York.

                                   ARTICLE XII

SALVAGE AND SUBROGATION

         The  Reinsurer  will be  credited  with  its  share of  salvage  and/or
subrogation in respect of claims and settlements under this Agreement,  less its
share of  recovery  expense.  Unless  the  Company  and  Reinsurer  agree to the
contrary,  the Company will enforce its right to salvage and/or  subrogation and
will prosecute all claims  arising out of such right.  Should the Company refuse
or neglect  to  enforce  this  right,  the  Reinsurer  is hereby  empowered  and
authorized to institute appropriate action in the name of the Company.

         Amounts  recovered from salvage and/or  subrogation will always be used
to reimburse the excess  reinsurer  (and the Company,  should it carry a portion
excess  coverage  net) before being used in any way to reimburse the Company and
the Reinsurer  hereon,  who will share pro data in any remainder.  If the amount
recovered exceeds the recovery expense, such expense will be borne by each party
in proportion to its benefit from the recovery.  If the recovery expense exceeds
the amount recovered, the amount recovered (if any) will be applied to the


                                       19




<PAGE>

<PAGE>



reimbursement  of recovery  expense and the  remaining  expense will be borne by
each party in  proportion  to its  liability  for the loss before  recovery  was
attempted.

                                  ARTICLE XIII

WARRANTY

         It is hereby  warranted  that the maximum policy limits on the policies
reinsured by this Agreement will be $2,000,000.  Should the Company wish to cede
policies having limits in excess of $2,000,000 to this Agreement, prior approval
of the Reinsurer will be required.

                                   ARTICLE XIV

DELAYS, ERRORS, OR OMISSIONS

         Inadvertent  delays,  errors, or omissions made in connection with this
Agreement or any  transaction  hereunder  will not relieve either party from any
liability  that would have  attached  had such delay,  error,  or  omission  not
occurred,  provided  always that such error or omissions  rectified  immediately
upon  discovery.  The liability of the Reinsurer under this Agreement will in no
event exceed the respective  limits specified in the Limit of Liability  Section
and in the Retention and Limit Section of the Exhibits, nor will the Reinsurer's
liability  be  extended  to cover any risks,  perils,  or  classes of  insurance
excluded herein except as set forth in the Exclusions Article.

                                   ARTICLE XV

AMENDMENTS

         This  Agreement  may be  altered  or  amended  in any of its  terms and
conditions by mutual consent of the Company and the Reinsurer by addenda hereto,
which will then constitute a part of this Agreement.


                                       20




<PAGE>

<PAGE>



                                   ARTICLE XVI

ACCESS TO RECORDS

         Provided  the Company  received  prior  notice,  the  Reinsurer  or its
designated  representatives  will have the right to  inspect  at any  reasonable
time, all records of the Company that pertain in any way to this Agreement.

                                  ARTICLE XVII

INSOLVENCY

         (If more than one  reinsured  Company is  referenced in the Preamble to
this Agreement, this Article will apply severally to each such Company.)

         In the event of the Company's  insolvency,  the reinsurance afforded by
this  Agreement  will be payable by the  Reinsurer on the basis of the Company's
liability  under  the  policies  reinsured  without  diminution  because  of the
Company's  insolvency  or because  its  liquidator,  receiver,  conservator,  or
statutory  successor  has failed to pay all or a portion of any claims,  subject
however  to the  right  of the  Reinsurer  to  offset  against  such  funds  due
hereunder,  any sums that may be  payable  to it by said  insolvent  Company  in
accordance  with the  Offset  Article.  The  reinsurance  will be payable by the
Reinsurer directly to the Company,  its liquidator,  receiver,  conservator,  or
statutory  successor  except  (a) where  this  Agreement  specifically  provides
another payee of such  reinsurance in the event of the Company's  insolvency and
(b) where the Reinsurer,  with the consent of the direct insured or insured, has
assumed such policy  obligations of the Company as direct  obligations of itself
to the payees under such policies in substitution  for the Company's  obligation
to such  payees.  Then,  and in that event  only,  the  Company,  with the prior
approval  by the  Superintendent  of  Insurance  of the state of New York of the
Certificate of


                                       21




<PAGE>

<PAGE>



Assumption on New York risks,  is entirely  released from its obligation and the
Reinsurer will pay any loss directly to payees under such policies.

         The Company's liquidator, receiver, conservator, or statutory successor
will give written  notice of the pendency of a claim  against the Company  under
the policies reinsured within a reasonable time after such claim is filed in the
insolvency  proceeding.  During the pendency of such claim,  the  Reinsurer  may
investigate  said claim and interpose in the proceeding where the claim is to be
adjudicated,  at its own expense,  any defense that it may deem available to the
Company, its liquidator,  receiver,  conservator,  or statutory  successor.  The
expense thus incurred by the Reinsurer  will be chargeable  against the Company,
subject  to  court  approval,  as  part  of  the  expenses  of  conservation  or
liquidation  to the extent that such  proportionate  share of the  benefit  will
accrue  to the  Company  solely  as a result of the  defense  undertaken  by the
Reinsurer.

                                  ARTICLE XIII

ARBITRATION

         As a condition precedent to any right of action hereunder,  any dispute
arising  out of the  interpretation,  performance  or breach of this  Agreement,
illuding the formation or validity thereof,  will be submitted for decision to a
panel of three arbitrators. Notice requesting arbitration will be in wilting and
sent certified or registered mail, return receipt requested.

         One  arbitrator  will be chosen by each  party and the two  arbitrators
will, before  instituting the hearing,  choose an impartial third arbitrator who
will  preside at the hearing.  If either  party fails to appoint its  arbitrator
within 30 days after being  requested  to do so by the other  party,  the latter
after 10 days notice by certified or registered  mail of its intention to do so,
may appoint the second arbitrator.


                                       22




<PAGE>

<PAGE>



         If the two  arbitrators  are unable to agree upon the third  arbitrator
within 30 days of their appointment,  the third arbitrator will be selected from
a list of six  individuals  (three named by each  arbitrator)  by a judge of the
federal district court having  jurisdiction  over the geographical area in which
the  arbitration is to take place,  or if the federal court declines to act, the
state court having general jurisdiction in such area.

         All  arbitrators  will be  disinterested  active  or  former  executive
officers of  insurance or  reinsurance  companies  or  underwriters  at Lloyd's,
London.

         Within 30 days after  notice of  appointment  of all  arbitrators,  the
panel will meet and determine  timely periods for briefs,  discovery  procedures
and schedules for hearings.

         The panel will be relieved of all  judicial  formality  and will not be
bound by the strict rules of  procedure  and  evidence.  Unless the panel agrees
otherwise,  arbitration will take place in Lynbrook, New York, but the venue may
be  changed  when  deemed  by  the  panel  to be in  the  best  interest  of the
arbitration  proceeding.  Insofar as the arbitration  panel looks to substantive
law, it will consider the law of the State of New york.  The decision of any two
arbitrators  when  rendered in writing will be final and  binding.  The panel is
empowered to grant interim relief as it may deem appropriate.

         The panel will make its decision considering the custom and practice of
the  applicable  insurance  and  reinsurance  business  as  promptly as possible
following  the  termination  of the  hearings.  Judgment  upon the  award may be
entered in any court having jurisdiction thereof.

         Each party will bear the expense of its own arbitrator and will jointly
and  equally  bear with the other  party the cost of the third  arbitrator.  The
remaining  costs of the  arbitration  will be allocated by the panel.  The panel
may, at its discretion, award such further costs and


                                       23




<PAGE>

<PAGE>



expenses as it  considers  appropriate,  including  but not limited to attorneys
fees, to the extent permitted by law.

                                   ARTICLE XIX

SEVERABILITY

         If any  provision  of  this  Agreement  will  be  rendered  illegal  or
unenforceable  by the laws,  regulations  or public  policy of any state,,  such
provision  will be considered  void in such state,  but this will not affect the
validity or  enforceability  of any other  provision  of this  Agreement  or the
enforceability of such provision in any other jurisdiction.

                                   ARTICLE XX

TAXES

         The Company will pay all taxes on premiums reported to the Reinsurer on
this Agreement.

                                   ARTICLE XXI

CURRENCY

         The sign "S" in this  Agreement  refers  to United  States of  American
Dollars. Therefore,  premiums due the Reinsurer and loss payment due the Company
hereunder will be in United States of America Dollars.

                                  ARTICLE XXII

SERVICE OF SUIT

         (This Article  applies if the Reinsurer is  unauthorized  in any state,
         territory,  or  district  of the  United  States  of  America  that has
         jurisdiction  over the  Company  and in which a  subject  suit has been
         instituted.  This Article is not intended to conflict  with or override
         the parties'  obligation to arbitrate their disputes in accordance with
         the Arbitration Article.)


                                       24




<PAGE>

<PAGE>



         In the  event  the  Reinsurer  fails  to pay  any  amount  claimed  due
hereunder,  the  Reinsurer,  at the request of the  Company,  will submit to the
jurisdiction of a court of competent  jurisdiction  within the United States and
will comply with all  requirements  necessary  to give that court  jurisdiction.
Nothing in this Article  constitutes  or should be  understood  to  constitute a
waiver of the Reinsurer's  right to commence an action in any court of competent
jurisdiction  in the  United  States,  to remove  an  action to a United  States
District Court, or to seek a transfer of a case to another court as permitted by
the laws of the United States or of any state in the United  States.  Service of
process in such suit may be made upon Mendes and Mount, 750 Seventh Avenue,  New
York, New York 10019-6829, or another party specifically designated below:

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


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


         In any suit instituted  against it upon this  Agreement,  the Reinsurer
will abide by the final decision of such court or of any appellate  court in the
event of an appeal.

         The above  named are  authorized  and  directed  to accept  service  of
process on behalf of the  Reinsurer  in any such suit and/or upon the request of
the Company to give a written  undertaking to the Company that they will enter a
general  appearance  upon the  Reinsurer's  behalf in the  event  such a suit is
instituted.

         Further, pursuant to any statue of any state, territory, or district of
the United States that makes provision therefor, the Reinsurer hereby designates
the  Superintendent,  Commissioner,  or Director of Insurance  or other  officer
specified  for that purpose in the statute (or his  successor or  successors  in
office) as its true and lawful attorney upon whom may be served any lawful


                                       25




<PAGE>

<PAGE>



process in any action,  suit, or  proceeding  instituted b y or on behalf of the
Company or any beneficiary,  hereunder arising out of this Agreement, and hereby
designates  the above named as the person to whom the said officer is authorized
to mail such process or a true copy thereof.

                                  ARTICLE XXIII

AGENCY

         For purposes of sending and receiving  notices and payments required by
this Agreement,  the reinsured Company that is set forth in the Preamble to this
Agreement will be deemed the agent of all other reinsured  Companies  referenced
in the Preamble.  In no event, however, will any reinsured Company be deemed the
agent of another with respect to the terms of the Insolvency Article.

                                  ARTICLE XXIII

INTERMEDIARY

         Aon Re Inc. is hereby  recognized as the Intermediary  negotiating this
Agreement for all business hereunder.  Correspondence regarding Agreement terms,
including   provisional   notice  of  cancellation  (if  applicable),   will  be
transmitted  through Aon Re Inc.,  Metro Center,  One Station  Place,  Stamford,
Connecticut  06902. All statements for premiums,  return premiums,  commissions,
taxes, losses, loss expense,  salvages, and loss settlements will be transmitted
through Aon Re Inc., 123 North Wacker Drive,  Chicago,  Illinois 60606. Payments
by the Company to Aon Re Inc. will be deemed payment to the Reinsurer.  Payments
by the  Reinsurer to Aon Re Inc.  will be deemed  payment to the Company only to
the extent that such payments are actually received by the Company.


                                       26




<PAGE>

<PAGE>



3 IN WITNESS  WHEREOF,  the parties  hereto have  caused  this  Agreement  to be
executed in duplicate by their duly authorized representatives.

Signed at LYNBROOK, NEW YORK

                         FIRST CENTRAL INSURANCE COMPANY

Signature:  /s/                              Title: Exec. V.P.
          -----------------------------             ---------------------------

Attest:    /s/                               Date:  12/8/95
          -----------------------------             ---------------------------

Signed at CHICAGO, ILLINOIS

                          CONTINENTAL CASUALTY COMPANY

Signature:  /s/                              Title: Group Vice President
          -----------------------------             ---------------------------

Attest:     /s/                              Date:  January 3, 1996
          -----------------------------             ---------------------------


                                       27




<PAGE>

<PAGE>



                                    EXHIBIT A
                                  (Quota Share)

                                    SECTION I

LIMIT OF LIABILITY

         The Company will cede to the Reinsurer,  and the Reinsurer will accept,
a 90% quota share participation in respect to all business written or renewed by
the Company with an effective  date on or after the inception of this  Agreement
and specified in the Coverage  Article.  The limit of liability to the Reinsurer
will not exceed $900,000 each and every  occurrence,  and in the aggregate where
applicable, each and every policy, plus its proportionate share of loss expense.
Should any loss involve this  reinsurance,  the obligation of the Reinsurer will
be immediately  and  automatically  reinstated as to any subsequent loss for the
full amount of reinsurance as set forth above.

         The  Reinsurer  will bear its pro rata  share of all loss  expenses  in
addition  to its limit of  liability  set forth  above  unless  loss  expense is
included within the limit of liability of the reinsured policies.

                                    SECTION 2

REINSURANCE PREMIUM AND CEDING COMMISSION

         The Company will cede to the Reinsurer its  proportionate  share of the
net written premium  allocated to the first $1,000,000 of each policy written or
renewed with an effective date on or after the inception of the Agreement,  less
the ceding commission set forth below.

         The Reinsurer will allow the Company a flat ceding commission of 25% on
the net written premium ceded.  The commission will include premium taxes of all
kinds,  local board  assessments,  and all other expenses and charges whatsoever
based on the premium for business ceded under this Agreement.


                                       28




<PAGE>

<PAGE>



                                    EXHIBIT B
                                (Excess of Loss)

                                    SECTION I

RETENTION AND LIMIT

         No claim will be made hereunder  unless the Company has first sustained
a loss of  $1,000,000  each and every  occurrence,  and in the  aggregate  where
applicable,  each and every  policy,  inclusive of  recoveries  from  underlying
Exhibit A. The Reinsurer  will then indemnify the Company for the amount of loss
in excess of $1,000,000  each and every  occurrence,  and in the aggregate where
applicable,  each and every policy. The limit of liability to the Reinsurer will
not exceed  $1,00,000  each and every  occurrence,  and in the  aggregate  where
applicable, each and every policy, plus its proportionate share of loss expense.
Should any loss involve this  reinsurance,  the obligation of the Reinsurer will
be immediately  and  automatically  reinstated as to any subsequent loss for the
full amount of reinsurance as set forth above.

         Loss expense,  where incurred in connection with claims  involving this
reinsurance,  and not included  within the limit of  liability of the  reinsured
policies,  will  be  apportioned  between  the  Company  and  the  Reinsurer  in
proportion to their  respective  interests as finally  determined in addition to
the  retention  and limit set forth  above.  However,  in the event a verdict or
judgment is reduced by an appeal or a settlement, subsequent to the entry of the
judgment is reversed outright,  the loss expense incurred in securing such final
reduction or reversal  will be prorated  between the Reinsure and the Company in
the  proportion  that each  benefits  from such  reduction or reversal,  and the
expenses incurred up to the time of the original verdict or judgment will be (a)
prorated in proportion to each party's interest in such verdict or judgment,  or
(b) added to the Company's  loss when the terms and  conditions of the Company's
policies reinsured hereunder include loss expense as part of the policy limit.

                                    SECTION 2

REINSURANCE  PREMIUM AND CEDING COMMISSION

         The Company  will pay the  Reinsurer  100% of the net  written  premium
allocated to limits in excess of the first  $1,000,000 of each policy written or
renewed with an effective date on or after the inception of this Agreement, less
the ceding commission set forth below.

         The Reinsurer will allow the Company a flat ceding commission of 25% on
the net written premium ceded.  The commission will include premium taxes of all
kinds,  local board  assessments,  and all other expenses and charges whatsoever
based on the premium for business ceded under this Agreement.


                                       29




<PAGE>

<PAGE>



                       INSOLVENCY FUNDS EXCLUSIONS CLAUSE

This  Agreement  excludes  all  liability  of the Company  arising by  contract,
operation of law, or otherwise,  from its  participation or membership,  whether
voluntary or involuntary, in any insolvency fund. "Insolvency fund" includes any
guaranty fund, plan, pool,  association  fund  or other  arrangement,  howsoever
denominated,  established,  or governed that  provides for any  assessment of or
payment or assumption by the Company of part or all of any claim,  debt, charge,
fee, or other obligation of an insurer, or its successors or assigns,  which has
been declared by any competent authority to be insolvent,  or which is otherwise
deemed unable to meet any claim, debt, charge, fee, or other obligation in whole
or in part.





<PAGE>

<PAGE>



U.S.A.

           NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE

           (Approved by Lloyd's Underwriters' Non-Marine Association)
         (1) This reinsurance  does not cover any loss or liability  accruing to
the Reassured as a member of, or subscriber  to, any  association of insurers or
reinsurer formed for the purpose of covering nuclear energy risks or as a direct
or indirect reinsurer of any such member, subscriber or association.
         (2) Without in any way  restricting  the  operation of paragraph (1) of
this  Clause  it is  understood  and  agreed  that  for  all  purposes  of  this
reinsurance  all the  original  policies  of the  Reassured  (new,  renewal  and
replacement)  of the classes  specified in Clause II of this  paragraph (2) from
the time specified in clause iii in this paragraph (2) shall be deemed following
provisions (specified as the limited exclusion provision).
         Limited Exclusion Provision:
        I.        It is  agreed  that  the  policy  does  not  apply  under  any
                  liability coverage.
                  to     {     injury, sickness, disease, death or destruction
                         {     bodily injury or property damage
         with respect to which an insured under the policy is  also  an  insured
         under a  nuclear  energy  liability  policy issued  by  Nuclear  Energy
         Liability   Insurance  Association,  Mutual  Atomic   Energy  Liability
         Underwriters  or Nuclear  Insurance  Association  of Canada,  or  would
         be an  insured  under  any  such  policy  but for its termination  upon
         exhaustion of its limit of liability.
         II.      Family   Automobile   Policies   (liability   only),   Special
                  Automobile Policies (private passenger automobiles,  liability
                  only).  Farmers  Comprehensive   PersonaL  Liability  Policies
                  (liability only).  Comprehensive  Personal  Liability policies
                  (liability  only) or  policies  of a similar  nature;  and the
                  liability  portion of  combination  forms  related to the four
                  classes of policies  stated above,  such as the  Comprehensive
                  Dwelling  Policy  and  the  applicable   types  of  Homeowners
                  Policies.
         III.     The inception dates and thereafter of all original policies as
                  described in II above,  whether new,  renewal or  replacement,
                  being policies which either
                           (a) become effective on or after 1st May, 1960, or
                           (b) become effective before that date and contain the
                  Limited  Exclusion  Provision  set forth above;  provided this
                  paragraph  (2) shall not be  applicable  to Family  Automobile
                  Policies,   Special  Automobile   Policies,   or  policies  or
                  combination  policies  of a  similar  nature,  issued  by  the
                  Reassured on New York risks,  until 90 days following approval
                  of  the  Limited  Exclusion  Provision  by  the   Governmental
                  Authority having jurisdiction thereof.
         (3) Except  for those  classes of  policies  specified  in Clause II of
paragraph (2) and without in any way  restricting the operation of paragraph (1)
of this  clause,  it is  understood  and agreed  that for all  purposes  of this
reinsurance the original  liability  policies of the Reassured (new, renewal and
replacement) affording the following coverage:
                  Owners,   Landlords   and   Tenants   Liability,   Contractual
                  Liability, Elevator Liability, Owners or





<PAGE>

<PAGE>



                  Contractors   (including   railroad)   Protective   Liability,
                  Manufacturers and Contractors  Liability,  Product  Liability,
                  Professional   and    Malpractice   Liability,    Storekeepers
                  Liability,  Garage Liability,  Automobile Liability (including
                  Massachusetts Motor Vehicle or Garage Liability)
shall be  deemed  to  include,  with  respect  to such  overages,  from the time
specified in Clause V of this paragraph (3), the following provision  (specified
in the Broad Exclusion Provision):

         BROAD  EXCLUSION  PROVISION.*
         It is agreed that the policy does not apply:

         I.       Under any Liability Coverage,      {injury, sickness, disease,
                                                to    death or destruction
                                                     {bodily  injury or property
                                                      damage

                           (a)      with  respect to which an insured  under the
                                    policy  is also an  insured  under a nuclear
                                    energy  liability  policy  issued by Nuclear
                                    Energy  Liability   Insurance   Association,
                                    Mutual Atomic Energy Liability  Underwriters
                                    or Nuclear Insurance  Association of Canada,
                                    or would be an insured under any such policy
                                    but for its  termination  upon exhaustion of
                                    its limit of liability; or

                           (b)      resulting  from the hazardous  properties of
                                    nuclear  material  and with respect to which
                                    (1) any person or  organization  is required
                                    to maintain financial protection pursuant to
                                    the Atomic  Energy  Act of 1954,  or any law
                                    amendatory  thereof, or (2) the insured is,m
                                    or had this policy not been issued would be,
                                    entitled to indemnity from the United States
                                    of America, or any agency thereof, under any
                                    agreement  entered into by the Untied States
                                    of America, or any agency thereof,  with any
                                    person or organization.

         II.     Under any Medical Payments Coverage, or under any Supplementary
                 Payments Provision
                                   {immediate  medical  or  surgical  relief  to
                 relating to       expenses incurred with

                                   {respect to first aid

                                   {bodily injury,  sickness,  disease  or death
                 to                 resulting from the hazardous

                                   {properties of nuclear bodily injury

                  material  and  arising  out  of  the  operation  of a  nuclear
                  facility by any person or organization.

         III.     Under any Liability Coverage, to  {injury, sickness,  disease,
                                                     death or destruction
                                                     bodily injury or property
                                                     damage





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                 resulting from the hazardous properties of nuclear material, if

                  (a)      the nuclear  material (1) is at any nuclear  facility
                           owned by, or  operated by or on behalf of, an insured
                           or (2) has been discharged or dispersed therefrom;
                  (b)      the nuclear  material is  contained  in spent fuel or
                           waste  at  any   time   possessed,   handled,   used,
                           processed,  stored,  transported or disposed of by or
                           on behalf of an insured; or
                  (c)      the injury,  sickness,  disease, death or destruction
                           bodily  injury or property  damage arising out of the
                           furnishing by an  insured  of  services,   materials,
                           parts or equipment in  connection  with the planning,
                           construction,  maintenance,  operation  or use of any
                           nuclear  facility,  but if such  facility  is located
                           within the United States of America, its territories,
                           or possessions of Canada.
                           this  exclusion  (c) applies only
                           to      injury to or destruction of property at such
                                   nuclear facility
                                   proper  damage  to  such nuclear facility and
                                   any property thereat.

IV.      As used in this endorsement:
         "hazardous  properties"  include,   radioactive,   toxic  or  explosive
         properties:  "nuclear material" means source material,  special nuclear
         material or byproduct  material:  "source  material",  "special nuclear
         material", and "byproduct material" have the meanings given them in the
         Atomic  Energy  Act of 1954 or in any law  amendatory  thereof:  "spent
         fuel" means any fuel element or fuel component,  solid or liquid, which
         has been used or exposed to  radiation  in a nuclear  reactor:  "waste"
         means any waste  material  (1)  containing  byproduct  material and (2)
         resulting  from the  operation  by any  person or  organization  of any
         nuclear  facility  included  within the definition of nuclear  facility
         under paragraph (a) or (b) thereof: "nuclear facility" means
                  (a)      any nuclear reactor,
                  (b)      any  equipment  or  device  designed  or used for (1)
                           separating the isotopes of uranium or plutonium,  (2)
                           processing or utilizing  spent fuel, or (3) handling,
                           processing or packaging waste.
                  (c)      any  equipment  or  devise  used for the  processing,
                           fabricating or alloying of special  nuclear  material
                           if at any time the total  amount of such  material in
                           the custody of the insured at the premises where such
                           equipment  or  devise  is  located   consists  of  or
                           contains  more than 25 grams of  plutonium or uranium
                           233 or any  combination  thereof,  or more  than  250
                           grams of uranium 235.
                  (d)      any structure,  basin, excavation,  premises or place
                           prepared  or used  for the  storage  or  disposal  of
                           waste.
         and  includes the site on which any of the  foregoing  is located,  all
         operations  conducted  on such  site  and all  premises  used  for such
         operations: "nuclear reactor" means any





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         apparatus   designed   or  used  to  sustain   nuclear   fission  in  a
         self-supporting  chain  reaction  or to  contain  a  critical  mass  of
         fissionable  material:  With  respect  to injury to or  destruction  of
         property, the word "injury" or "destruction" "property damage" includes
         all forms of radioactive contamination of property.

V.       The inception dates and thereafter of all original  policies  affording
         coverages  specified in this  paragraph  (3),  whether new,  renewal or
         replacement, being policies which become effective on or after lst May,
         1960, provided this paragraph (3) shall not be applicable to

                           (i)     Garage and Automobile  Policies issued by the
                                   Reassured on New York risks. or

                           (ii)     statutory liability insurance required under
                                    Chapter 90,  General Laws of  Massachusetts,
                                    until  90  days  following  approval  of the
                                    Broad    Exclusion    Provision    by    the
                                    Governmental Authority having

                                    jurisdiction thereof.

         (4)      Without in any way  restricting the operation of paragraph (1)
                  of this Clause,  it is understood  and agreed that  paragraphs
                  (2) and (3) above are not  applicable  to  original  liability
                  policies of the  Reassured  in Canada and that with respect to
                  such  policies  this  Clause  shall be deemed to  include  the
                  Nuclear Energy Liability  Exclusion  Provisions adopted by the
                  Canadian   Underwriters'   Association   or  the   Independent
                  Insurance Conference of Canada.

--------------------------------------------------------------------------------
         *NOTE. The words printed in italics in the Limited Exclusion  Provision
and in the Broad  Exclusion  Provision  shall apply only in relation to original
liability  policies  which  include a  Limited  Exclusion  Provision  or a Broad
Exclusion Provision containing those words.

21/9/67

N.M.A. 1590





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         NUCLEAR INCIDENT EXCLUSION CLAUSE-LIABILITY-REINSURANCE-CANADA

         1.       This Agreement  does not cover any loss or liability  accruing
                  to  the  Reinsured  as a  member  of  or  subscriber  to,  any
                  association  of insurers or reinsurers  formed for the purpose
                  of covering  nuclear  energy  risks or as a direct or indirect
                  reinsurer of any such member, subscriber or association.

         2.       Without in any way restricting the operation of paragraph 1 of
                  this  clause  it is  agreed  that  for  all  purposes  of this
                  Agreement  all  the  original   liability   contracts  of  the
                  Reinsured,   whether  new,  renewal  or  replacement,  of  the
                  following classes, namely,

                  Personal Liability,
                  Farmers' Liability,
                  Storekeepers Liability.

                  which become  effective on or after 31st December 1984,  shall
                  be  deemed  to  include,   from  their   inception  dates  and
                  thereafter, the following provisions -

                  Limited Exclusion Provision.

                  This Policy does not apply to bodily injury or property damage
                  with  respect  to which the  Insured is also  insured  under a
                  contract of nuclear energy  liability  insurance  (whether the
                  Insured is unnamed in such  contract  and whether or not it is
                  legally  enforceable  by the  Insured)  issued by the  Nuclear
                  Insurance  Association of Canada or any other group or pool of
                  insurers or would be an Insured  under any such policy but for
                  its termination upon exhaustion of its limits of liability.

                  With respect to property,  loss of use of such property  shall
                  be deemed to be property damage.

         3.       Without in any way restricting the operation of paragraph 1 of
                  this  clause  it is  agreed  that  for  all  purposes  of this
                  Agreement  all  the  original   liability   contracts  of  the
                  Reinsured,  whether new, renewal or replacement,  of any class
                  whatsoever (other than Personal Liability, Farmers' Liability,
                  Storekeepers'  Liability or Automobile  Liability  contracts),
                  which become  effective on or after 31st December 1984,  shall
                  be  deemed  to  include   from  their   inception   dates  and
                  thereafter, the following provision: -

                  Broad Exclusion Provision

                  It is agreed that this Policy does not apply:

                  (a)     To  liability  imposed by or arising under the Nuclear
                          Liability Act; nor





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                  (b)      to bodily  injury or property  damage with respect to
                           which an Insured  under this  policy is also  insured
                           under  a  contract   of  nuclear   energy   liability
                           insurance  (whether  the  Insured  is unnamed in such
                           contract and whether or not it is legally enforceable
                           by  the  Insured)  issued  by the  Nuclear  Insurance
                           Association  of Canada or any other  insurer or group
                           or pool of insurers or would be an Insured  under any
                           such policy but for its  termination  upon exhaustion
                           of its limit of liability; nor

                  (c)      to  bodily  injury  or  property   damage   resulting
                           directly or indirectly from the nuclear energy hazard
                           arising from:

                           (i)     the ownership, maintenance,  operation or use
                                   of a nuclear  facility  by or on behalf of an
                                   Insured;

                           (ii)    the  furnishing  by an Insured  of  services,
                                   materials,  parts or equipment in  connection
                                   with the planning, construction, maintenance,
                                   operation or use of any nuclear facility; and

                           (iii)   the possession,  consumption,  use, handling,
                                   disposal  or  transportation  of  fissionable
                                   substances,  or of other radioactive material
                                   (except  radioactive  isotopes,  away  from a
                                   nuclear  facility,  which  have  reached  the
                                   final stage of fabrication so as to be usable
                                   for any  scientific,  medical,  agricultural,
                                   commercial  or  industrial   purpose)   used,
                                   distributed, handled or sold by an Insured.

                           As used in this Policy:

                  1.       The  term   "nuclear   energy   hazard"   means   the
                           radioactive,  toxic,  explosive,  or other  hazardous
                           properties of radioactive material;

                  2.       The  term   "radioactive   material"  means  uranium,
                           thorium,   plutonium,   neptunium,  their  respective
                           derivatives  and compounds,  radioactive  isotopes of
                           other  elements  and any  other  substances  that the
                           Atomic  Energy  Control  Board  may,  by  regulation,
                           designate as being prescribed  substances  capable of
                           releasing  atomic energy,  or as being  requisite for
                           the production, use or application of atomic energy;

                  3.       The term "nuclear facility" means:

                           (a)      any  apparatus  designed  or used to sustain
                                    nuclear fission in a  self-supporting  chain
                                    reaction  or to contain a  critical  mass of
                                    plutonium, thorium and uranium or any one or
                                    more of them;





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                           (b)      any equipment or device designed or used for
                                    (i)  separating  the isotopes of  plutonium,
                                    thorium  and  uranium  or any one or more of
                                    them,  (ii)  processing  or utilizing  spent
                                    fuel,  or  (iii)  handling,   processing  or
                                    packaging waste;

                           (c)      any   equipment   or  device  used  for  the
                                    processing,   fabricating   or  alloying  of
                                    plutonium,  thorium or uranium  enriched  in
                                    the  isotope  uranium  233 or in the isotope
                                    uranium  235,  or any one or more of them if
                                    at  any  time  the  total   amount  of  such
                                    material  in the  custody of the  Insured at
                                    the premises  where such equipment or device
                                    is located consists of or contains more than
                                    25 grams of  plutonium or uranium 233 or any
                                    combination  thereof, or more than 250 grams
                                    of uranium 235;

                           (d)      any structure,  basin, excavation,  premises
                                    or place prepared or used for the storage or
                                    disposal of waste radioactive material;

                           and includes  the site on which any of the  foregoing
                           is located,  together with all  operations  conducted
                           thereon and all premises used for such operations.

                  4.       The term "fissionable substance" means any prescribed
                           substance  that is, or from which can be obtained,  a
                           substance  capable  of  releasing  atomic  energy  by
                           nuclear fission.

                  5.       With  respect  to  property,  loss  of  use  of  such
                           property shall be deemed to be property damage.






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