<PAGE>   1
                                  EXHIBIT 10.39

Automobile Leasing Residual Value Excess of Loss Reinsurance Agreement effective
January 1, 1997, together with Second Casualty Excess of Loss Reinsurance
Agreement effective January 1, 1997.
<PAGE>   2
                                     SUMMARY
                                       AND
                                AGREEMENT WORDING
                                       FOR

                   PHILADELPHIA INDEMNITY INSURANCE COMPANY
                        AUTOMOBILE LEASING RESIDUAL VALUE
                      EXCESS OF LOSS REINSURANCE AGREEMENT
                           EFFECTIVE: JANUARY 1, 1997

                                     

                                    
<PAGE>   3
                                   SUMMARY OF
                        AUTOMOBILE LEASING RESIDUAL VALUE
                      EXCESS OF LOSS REINSURANCE AGREEMENT


<TABLE>
<CAPTION>
<S>                              <C>                                                          <C>
REINSURED COMPANY:               PHILADELPHIA INSURANCE COMPANY and/or                        (PREAMBLE)
                                 PHILADELPHIA INDEMNITY INSURANCE COMPANY,
                                 both of Bala Cynwyd, Pennsylvania (hereinafter
                                 together called the "Company").

BUSINESS REINSURED:              Policies classified by the Company as Auto-                  ARTICLE 1
                                 mobile Leasing Residual Value, that insure
                                 leases enrolled prior to 12:01 a.m., Eastern
                                 Standard Time, January 1, 1997.

ACCOUNT BASIS:                   Losses occurring

COVER:                           $9,613,818 (being 60% of GNEPI) Ultimate Net                 ARTICLE 2
                                 Loss in the aggregate in respect of the term
                                 of this Agreement, excess of $16,023,030 (being
                                 100% of GNEPI) Ultimate Net Loss in the
                                 aggregate in respect of the term of this
                                 Agreement.

TERM:                            This Agreement shall become effective at 12:01               ARTICLE 3
                                 a.m., Eastern Standard Time, January 1, 1997,
                                 and shall remain in full force and effect until
                                 all Policies covered hereunder have expired.

TERRITORY:                       Per original Policies.                                       ARTICLE 4

EXCLUSIONS:                      Per Agreement wording.                                       ARTICLE 5

PREMIUM:                         The Company will pay the Reinsurer a premium of              ARTICLE 6
                                 $500,000 for the term of this Agreement, to be
                                 paid in full at inception.

DEFINITIONS:                     Ultimate Net Loss (Includes allocated loss                   ARTICLE 7
                                   adjustment expense and 100% of Extra Contractual
                                   Obligations.) For all purposes of this Agreement,
                                   a loss is deemed to occur on the expiration date
                                   of the lease.

                                 Policy (Defined as coverage on an individual lease,
                                   rather than a master policy. Lease extensions
                                   to be part of the original Policy.)

                                 Gross Net Earned Premium Income

CLAUSES:                         Net Retained Lines                                           ARTICLE   8
                                 Currency - U.S. Dollar                                       ARTICLE   9
                                 Loss Funding                                                 ARTICLE  10
                                 Taxes (Reinsurers pay FET as applicable)                     ARTICLE  11
                                 Notice of Loss and Loss Settlements                          ARTICLE  12
                                 Extra Contractual Obligations                                ARTICLE  13
                                 Delay, Omission or Error                                     ARTICLE  14
                                 Inspection                                                   ARTICLE  15
</TABLE>

                                                                          Page A
                                     
                                   
<PAGE>   4
<TABLE>
<CAPTION>
<S>                              <C>                                                          <C>
                                 Arbitration                                                  ARTICLE 16
                                 Service of Suit                                              ARTICLE 17
                                 Insolvency                                                   ARTICLE 18
                                 Sedgwick Re Intermediary Clause                              ARTICLE 19

PARTICIPATION:                                                                                ARTICLE 20

REGULATION 98:                   Premium and loss payments made to Sedgwick Re
                                 shall be deposited in a Premium and Loss Account in
                                 accordance with Section 32.3(a)(1) of Regulation 98
                                 of the New York Insurance Department. The parties
                                 hereto consent to withdrawals from said Account in
                                 accordance with Section 32.3(a)(3) of the Regulation,
                                 including interest and Federal Excise Tax.

INFORMATION:                     Gross Net Earned Premium Income subject to this
                                 Agreement:         $16,023,030.
</TABLE>

                                                                          Page B
 
<PAGE>   5
                        AUTOMOBILE LEASING RESIDUAL VALUE
                      EXCESS OF LOSS REINSURANCE AGREEMENT


This Agreement is made and entered into by and between PHILADELPHIA INSURANCE
COMPANY, and PHILADELPHIA INDEMNITY INSURANCE COMPANY, both of Bala Cynwyd,
Pennsylvania (hereinafter together called the "Company") and the Reinsurer
specifically identified on the signature page of this Agreement (hereinafter
called the "Reinsurer").

                                    ARTICLE 1

BUSINESS REINSURED
This Agreement is to indemnify the Company in respect of the net excess
liability as a result of any loss or losses which may occur during the term of
this Agreement under any Policies that insure leases enrolled prior to 12:01
a.m., Eastern Standard Time, January 1, 1997, and classified by the Company as
Automobile Leasing Residual Value Business, subject to the terms and conditions
herein contained.

                                    ARTICLE 2

COVER
The Reinsurer will be liable in the aggregate in respect of the term of this
Agreement for the Ultimate Net Loss over and above an initial Ultimate Net Loss
of $16,023,030 (being 100% of Gross Net Earned Premium Income), subject to a
limit of liability to the Reinsurer of $9,613,818 (being 60% of Gross Net Earned
Premium Income) in the aggregate in respect of the term of this Agreement.

                                    ARTICLE 3

TERM
This Agreement shall become effective at 12:01 a.m., Eastern Standard Time,
January 1, 1997, and shall remain in full force and effect until all Policies
covered hereunder have expired.

                                    ARTICLE 4

TERRITORY
This Agreement will cover wherever the Company's original Policies cover.

                                                                          Page 1
<PAGE>   6
                                    ARTICLE 5

EXCLUSIONS

This Agreement does not cover:

A.       Policies on leases incepting before 12:01 a.m., Eastern Standard Time,
         January 1, 1994.

B.       Business excluded by the attached Nuclear Incident Exclusion Clauses:

         1.       Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  U.S.A., No. 08-31.1.

         2.       Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  Canada, No. 08-32.1.

         3.       Nuclear Incident Exclusion Clause - Physical Damage -
                  Reinsurance - U.S.A., No. 08-33.

         4.       Nuclear Incident Exclusion Clause - Physical Damage -
                  Reinsurance - Canada, No. 08-34.2.

C.       Pools, Associations and Syndicates.

D.       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
         guarantee fund, insolvency fund, plan, pool, association, fund or other
         arrangement, howsoever denominated, established or governed, which
         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.

E.       Leases enrolled under Policies PHRV100082-1, PHRV100082-2 and
         PHRV100013.

                                    ARTICLE 6

PREMIUM
The Company will pay the Reinsurer a premium of $500,000 for the term of this
Agreement, to be paid in full at inception.

Within 90 days after the end of each calendar year, the Company will furnish the
Reinsurer with any information which the Reinsurer may require to prepare its
Annual Statement which is reasonably available to the Company.

                                                                          Page 2
<PAGE>   7
                                    ARTICLE 7

DEFINITIONS

A.       The term "Ultimate Net Loss" as used in this Agreement shall mean the
         actual loss paid by the Company or for which the Company becomes liable
         to pay, such loss to include 100% of any Extra Contractual Obligation
         (and expense) as defined in the EXTRA CONTRACTUAL OBLIGATIONS ARTICLE,
         expenses of litigation and interest, and all other loss expense of the
         Company including subrogation, salvage, and recovery expenses (office
         expenses and salaries of officials and employees not classified as loss
         adjusters are not chargeable as expenses for purposes of this
         paragraph), but salvages and all recoveries, including recoveries under
         all reinsurances which inure to the benefit of this Agreement (whether
         recovered or not), shall be first deducted from such loss to arrive at
         the amount of liability attaching hereunder.

         All salvages, recoveries or payments recovered or received subsequent
         to loss settlement hereunder shall be applied as if recovered or
         received prior to the aforesaid settlement, and all necessary
         adjustments shall be made by the parties hereto.

         For purposes of this definition, the phrase "becomes liable to pay"
         shall mean the existence of a judgment which the Company does not
         intend to appeal, or a release has been obtained by the Company, or the
         Company has accepted a proof of loss.

         Nothing in this clause shall be construed to mean that losses are not
         recoverable hereunder until the Company's Ultimate Net Loss has been
         ascertained.

         For all purposes of this Agreement, a loss is deemed to occur on the
         expiration date of the lease.

B.       The term "Policy" as used in this Agreement shall mean any binder,
         policy, or contract of insurance or reinsurance issued, accepted or
         held covered provisionally or otherwise, by or on behalf of the
         Company. For purposes of this Agreement, "Policy" refers to coverage on
         an individual lease, rather than a master policy. Lease extensions are
         deemed to be part of the original Policy.

C.       The term "Gross Net Earned Premium Income" as used in this Agreement
         shall mean gross earned premium income on business the subject of this
         Agreement less earned premium income paid for reinsurances, recoveries
         under which would inure to the benefit of this Agreement.

                                    ARTICLE 8
NET RETAINED LINES


This Agreement applies only to that portion of any insurances or reinsurances
covered by this Agreement which the Company retains net for its own account, and
in calculating the amount of any loss hereunder and also in computing the amount
in excess of which this Agreement attaches, only loss or losses in respect of
that portion of any insurances or reinsurances which the Company retains net for
its own account shall be included, it being understood and agreed that the
amount of the Reinsurer's liability hereunder in respect of any loss or losses
shall not be increased by reason of the inability of the Company to collect from
any other reinsurers, whether specific or general, any amounts

                                                                          Page 3
<PAGE>   8
which may have become due from them whether such inability arises from the
insolvency of such other reinsurers or otherwise.

                                    ARTICLE 9

CURRENCY

The currency to be used for all purposes of this Agreement shall be United
States of America currency.

                                   ARTICLE 10

LOSS FUNDING

With respect to losses, funding will be in accordance with the attached Loss
Funding Clause No. 1301.2.

                                   ARTICLE 11

TAXES

The Company will be liable for taxes (except Federal Excise Tax) on premiums
reported to the Reinsurer hereunder.

Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at
Lloyd's, London and other Reinsurers exempt from the Federal Excise Tax, who are
domiciled outside the United States of America.

The Reinsurer has agreed to allow for the purpose of paying the Federal Excise
Tax 1% of the premium payable hereon to the extent such premium is subject to
Federal Excise Tax.

In the event of any return of premium becoming due hereunder, the Reinsurer will
deduct 1% from the amount of the return, and the Company or its agent should
take steps to recover the Tax from the U.S. Government.


                                   ARTICLE 12

NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company will advise the Reinsurer promptly of all claims which in the
opinion of the Company may involve the Reinsurer and of all subsequent
developments on these claims which may materially affect the position of the
Reinsurer.

The Reinsurer agrees to abide by the loss settlements of the Company, provided
that retroactive extension of Policy terms or coverages made voluntarily by the
Company and not in response to court decisions (whether such court decision is
against the Company or other companies affording the same or similar coverages)
will not be covered under this Agreement.

                                                                          Page 4
<PAGE>   9
When so requested the Company will afford the Reinsurer an opportunity to be
associated with the Company, at the expense of the Reinsurer, in the defense of
any claim or suit or proceeding involving this reinsurance and the Company will
cooperate in every respect in the defense of such claim, suit or proceeding.

The Reinsurer will pay its share of loss settlements immediately upon receipt of
proof of loss from the Company.


                                   ARTICLE 13

EXTRA CONTRACTUAL OBLIGATIONS

This Agreement shall protect the Company, subject to the Reinsurer's limit of
liability appearing in the COVER ARTICLE of this Agreement, where the loss
includes any Extra Contractual Obligations as provided for in the definition of
Ultimate Net Loss. "Extra Contractual Obligations" are defined as those
liabilities not covered under any other provision of this Agreement and which
arise from handling of any claim on business covered hereunder, such liabilities
arising because of, but not limited to, the following: failure by the Company to
settle within the Policy limit, or by reason of alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of any action against its insured or in the
preparation or prosecution of an appeal consequent upon such action.

The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original loss.

However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.

                                   ARTICLE 14

DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery.

                                   ARTICLE 15

INSPECTION

The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect, through its authorized
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith.

                                                                          Page 5

                                    
<PAGE>   10
                                   ARTICLE 16

ARBITRATION

Any irreconcilable dispute between the parties to this Agreement will be
arbitrated in Bala Cynwyd, Pennsylvania in accordance with the attached
Arbitration Clause No. 22-01.1.

                                   ARTICLE 17

SERVICE OF SUIT

The attached Service of Suit Clause No. 20-01.5 - U.S.A. will apply to this
Agreement.

                                   ARTICLE 18

INSOLVENCY

In the event of the insolvency of the Company, reinsurance under this Agreement
shall be payable by the Reinsurer on the basis of the liability of the Company
under Policy or Policies reinsured without diminution because of the insolvency
of the Company, to the Company or to its liquidator, receiver or statutory
successor, except as provided by Section 4118(a) of the New York Insurance Law
or except when the Agreement specifically provides another payee of such
reinsurance in the event of the insolvency of the Company and when the Reinsurer
with the consent of the direct insured or insureds has assumed such Policy
obligations of the Company as direct obligations of the Reinsurer to the payees
under such Policies and in substitution for the obligations of the Company to
such payees.

It is agreed, however, that the liquidator or receiver or statutory successor of
the insolvent Company shall give written notice to the Reinsurer of the pendency
of a claim against the insolvent Company on the Policy or Policies reinsured
within a reasonable time after such claim is filed in the insolvency proceeding
and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding when such claim is to
be adjudicated, any defense or defenses which it may deem available to the
Company or its liquidator or receiver or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to court approval,
against the insolvent Company as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to the Company
solely as a result of the defense undertaken by the Reinsurer.

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

Should the Company go into liquidation or should a receiver be appointed, the
Reinsurer shall be entitled to deduct from any sums which may be due or may
become due to the Company under this reinsurance Agreement any sums which are
due to the Reinsurer by the Company under this reinsurance Agreement and which
are payable at a fixed or stated date as well as any other sums due the
Reinsurer which are permitted to be offset under applicable law.

In the event of the insolvency of any company or companies included in the
designation of "Company," this clause will apply only to the insolvent company
or companies.

                                                                          Page 6

                                     
<PAGE>   11
                                   ARTICLE 19

INTERMEDIARY

Sedgwick Re, Inc. is hereby recognized as the Intermediary negotiating this
Agreement for all business hereunder. All communications, including notices,
premiums, return premiums, commissions, taxes, losses, loss adjustment expenses,
salvages and loss settlements relating thereto shall be transmitted to the
Reinsurer or the Company through Sedgwick Re, Inc., 1501 Fourth Avenue, Suite
1400, Seattle, Washington 98101. Payments by the Company to the Intermediary
shall be deemed to constitute payment to the Reinsurer. Payments by the
Reinsurer to the Intermediary shall be deemed only to constitute payment to the
Company to the extent that such payments are actually received by the Company.

                                                                          Page 7

<PAGE>   12
                                   ARTICLE 20


PARTICIPATION:             AUTOMOBILE LEASING RESIDUAL VALUE
                           EXCESS OF LOSS REINSURANCE AGREEMENT
                           EFFECTIVE: January 1, 1997

This Agreement obligates the Reinsurer for _____________% of the interests and
liabilities set forth under this Agreement.

The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.

IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:


                            PARTICIPATING REINSURERS

<TABLE>
<CAPTION>
<S>                                                                 <C>
   Constitution Reinsurance Corporation                                10.00%
   Sedgwick Re Limited
    GIO Insurance Ltd., Trading as GIO Reinsurance                     20.00%
   Everest Reinsurance Company                                         70,00%
                                                                       ------
   TOTAL:                                                             100.00%
</TABLE>

Upon completion of Reinsurers' signing, fully executed signature pages will be
forwarded to you for the completion of your file.

                                                                          Page 8
<PAGE>   13
                                   ARTICLE 20

PARTICIPATION:             AUTOMOBILE LEASING RESIDUAL VALUE
                           EXCESS OF LOSS REINSURANCE AGRE
                           EFFECTIVE: January 1, 1997

This Agreement obligates the Reinsurer for 10.00% of the interests and
liabilities set forth under this Agreement.

The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.

IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:

In New York, New York, this 6th day of May, 1997.


                                            CONSTITUTION REINSURANCE CORPORATION
                                            New York, New York


                                                 By /s/ Thomas C. Bredahl
                                            ----------------------------------
                                                       (signature)

                                                    Thomas C. Bredahl
                                            ----------------------------------
                                                          (name)

                                                      Vice President
                                            ----------------------------------
                                                         (title)

                                                                          Page 8
<PAGE>   14
                                   ARTICLE 20

PARTICIPATION:             AUTOMOBILE LEASING RESIDUAL VALUE
                           EXCESS OF LOSS REINSURANCE AGRE
                           EFFECTIVE: January 1, 1997

This Agreement obligates the Reinsurer for 20.00% of the interests and
liabilities set forth under this Agreement.

The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.

IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:

In Sydney, Australia, this 10th day of April, 1997.


                                            GIO INSURANCE LTD.  ACN 052 179 647
                                            Trading as GIO REINSURANCE
                                            Sydney, Australia

                                                                          
                                               By /s/ Annie Chong    Ref PT 314
                                              ---------------------------------
                                                        (signature)

                                                       Annie Chong
                                            -----------------------------------
                                                          (name)


                                                 Senior Contract Manager
                                            -----------------------------------
                                                         (title)

                                                                          Page 8
<PAGE>   15
                                   ARTICLE 20

PARTICIPATION:             AUTOMOBILE LEASING RESIDUAL VALUE
                           EXCESS OF LOSS REINSURANCE AGRE
                           EFFECTIVE: January 1, 1997

This Agreement obligates the Reinsurer for 70.00% of the interests and
liabilities set forth under this Agreement.

The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.

IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:

In Newark, New Jersey, this 11th day of April, 1997.


                                            EVEREST REINSURANCE COMPANY
                                            Dover, Delaware


                                            By /s/ MAI Huang
                                              ---------------------------------
                                                       (signature)


                                            -----------------------------------
                                                          (name)


                                                            VP
                                            -----------------------------------
                                                          (title)

                                                                          Page 8
<PAGE>   16
and in Bala Cynwyd, Pennsylvania, this day of                          , 1997.


                                       PHILADELPHIA INSURANCE COMPANY
                                       PHILADELPHIA INDEMNITY INSURANCE COMPANY


                                       By /s/ Christopher J. Maguire
                                         --------------------------------------
                                                     (signature)


                                                  Christopher J. Maguire
                                       ----------------------------------------
                                                        (name)     

                                                     VP Underwriting
                                       ----------------------------------------
                                                         (title)



                        AUTOMOBILE LEASING RESIDUAL VALUE
                      EXCESS OF LOSS REINSURANCE AGREEMENT



                                    issued to

                         PHILADELPHIA INSURANCE COMPANY
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY

                                                                          Page 9
<PAGE>   17
NUCLEAR INCIDENT EXCLUSION CLAUSE -- LIABILITY -- REINSURANCE -- U.S.A.


(Wherever the word "Reassured" appears in this clause, it shall be deemed to
read "Reassured," "Reinsured," "Company," or whatever other word is employed
throughout the text of the reinsurance agreement to which this clause is
attached to designate the company or companies reinsured.)

     (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
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 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 to include the following
provision (specified as the Limited Exclusion Provision):

LIMITED EXCLUSION PROVISION.*

      I. It is agreed that the policy does not apply under any liability 
         coverage,

              injury, sickness, disease, death or destruction
         to
              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 out 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 coverages:

            Owners, Landlords and Tenants Liability, Contractual Liability,
            Elevator Liability, Owners or 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 coverages, from the time
specified in Clause V of this paragraph (3), the following provision (specified
as the Broad Exclusion Provision):

     BROAD EXCLUSION PROVISION.*

     It is agreed that the policy does not apply:

                       injury, sickness, disease, death or destruction
     I. Under any Liability
        Coverage, to
                        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, 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 United States of
             America, or any agency thereof; with any person or organization.

     II. Under any Medical Payments Coverage, or under any Supplementary
         Payments Provision relating

                        immediate medical or surgical relief
             to
                        first aid,
      
             to expenses incurred with respect

                                                                  Page 1
<PAGE>   18
           (- bodily injury, sickness, disease or death    
     to    (                                                             
           (- bodily injury
     resulting from the hazardous properties of nuclear material and
     arising out of the operation of a nuclear facility by any person or
     organization.

II.  Under any Liability Coverage, to (-  injury, sickness, disease death or
                                      (   destruction
                                      (-  bodily injury or property damage
     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
         arises 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 or Canada, this exclusion (c) applies
         only

         to (- injury to or destruction of property at such nuclear facility.
            (- property 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 other than tailings or
       wastes produced by the extraction or concentration of uranium or thorium
       from any ore processed primarily for its source material content, and (2)
       resulting from the operation by any person or organization of any nuclear
       facility included under the first two paragraphs of the definition of
       nuclear facility; "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 device 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 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,

      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 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 includes all forms of radioactive contamination
      of property.

      "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 1st 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.
-----------------------------------------------------------------------------

 

 

                                                                 Page 2
<PAGE>   19
      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA


     1.   This Agreement does not cover any loss or liability accruing to the
Company 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 Company, 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 provision:

     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 Company, 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 of:

     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

          (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 form 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 useable 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;

               (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.
<PAGE>   20
  NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE - U.S.A.

     1. This Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any
Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.

     2. Without in any way restricting the operation of paragraph (1) of this
Clause, this Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:

            I. Nuclear reactor power plants including all auxiliary property on
               the site, or

           II. Any other nuclear reactor installation, including laboratories
               handling radioactive materials in connection with reactor
               installations, and "critical facilities" as such, or

          III. Installations for fabricating complete fuel elements or for
               processing substantial quantities of "special nuclear material,"
               and for reprocessing, salvaging, chemically separating, storing
               or disposing of "spent" nuclear fuel or waste materials, or

           IV. Installations other than those listed in paragraph (2) III above
               using substantial quantities of radioactive isotopes or other
               products of nuclear fission.

     3. Without in any way restricting the operations of paragraphs (1) and (2)
hereof, this Contract does not cover any loss or liability by radioactive
contamination accruing to the Reassured, directly or indirectly, and whether as
Insurer or Reinsurer, from any insurance on property which is on the same site
as a nuclear reactor power plant or other nuclear installation and which
normally would be insured therewith except that this paragraph (3) shall not
operate

           (a) where the Reassured does not have knowledge of such nuclear
               reactor power plant or nuclear installation, or

           (b) where said insurance contains a provision excluding coverage for
               damage to property caused by or resulting from radioactive
               contamination, however caused. However on and after 1st January
               1960 this sub-paragraph (b) shall only apply provided the said
               radioactive contamination exclusion provision has been approved
               by the Governmental Authority having jurisdiction thereof.

     4. Without in any way restricting the operations of paragraphs (1), (2)
and (3) hereof, this Contract does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or indirectly,
and whether as Insurer or Reinsurer, when such radioactive contamination is a
named hazard specifically insured against.

     5. It is understood and agreed that this Clause shall not extend to risks
using radioactive isotopes in any form where the nuclear exposure is not
considered by the Reassured to be the primary hazard.

     6. The term "special nuclear material" shall have the meaning given it in
the Atomic Energy Act of 1954 or by any law amendatory thereof.

     7. The Reassured to be sole judge of what constitutes:

           (a) substantial quantities, and

           (b) the extent of installation, plant or site.

Note. Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

           (a) all policies issued by the Reassured on or before 31st December
               1957 shall be free from the application of the other provisions
               of this Clause until expiry date or 31st December 1960 whichever
               first occurs whereupon all the provisions of this Clause shall
               apply,

           (b) with respect to any risk located in Canada policies issued by the
               Reassured on or before 31st December 1958 shall be free from the
               application of the other provisions of this Clause until expiry
               date or 31st December 1960 whichever first occurs whereupon all
               the provisions of this Clause shall apply.
<PAGE>   21
                       NUCLEAR INCIDENT EXCLUSION CLAUSE
                     PHYSICAL DAMAGE - REINSURANCE - CANADA
          
     1.   This Agreement does not cover any loss or liability accruing to the
Company directly or indirectly, and whether as Insurer or Reinsurer, from any
Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.

     2.   Without in any way restricting the operation of paragraph 1 of this
clause, this Agreement does not cover any loss or liability accruing to the
Company, directly or indirectly, and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:

          (a) nuclear reactor power plants including all auxiliary property on
              the site, or

          (b) any other nuclear reactor installation, including laboratories
              handling radioactive materials in connection with reactor
              installations, and critical facilities as such, or 

          (c) installations for fabricating complete fuel elements or for
              processing substantial quantities of prescribed substances, and
              for reprocessing, salvaging, chemically separating, storing or
              disposing of spent nuclear fuel or waste materials, or

          (d) installations other than those listed in (c) above using
              substantial quantities of radioactive isotopes or other products
              of nuclear fission.

     3.   Without in any way restricting the operation of paragraphs 1 and 2 of
this clause, this Agreement does not cover any loss or liability by radioactive
contamination accruing to the Company, directly or indirectly, and whether as
Insurer or Reinsurer, from any insurance on property which is on the same site
as a nuclear reactor power plant or other nuclear installation and which
normally would be insured therewith, except that this paragraph 3 shall not
operate:

          (a)  where the Company does not have knowledge of such nuclear reactor
               power plant or nuclear installation, or

          (b)  where the said insurance contains a provision excluding coverage
               for damage to property caused by or resulting from radioactive
               contamination, however caused.

     4.   Without in any way restricting the operation of paragraphs 1, 2, and 3
of this clause, this Agreement does not cover any loss or liability by
radioactive contamination accruing to the Company, directly or indirectly, and
whether as Insurer or Reinsurer, when such radioactive contamination is a named
hazard specifically insured against.

     5.   This clause shall not extend to risks using radioactive isotopes in
any form where the nuclear exposure in not considered by the Company to be the
primary hazard.

     6.   The term "prescribed substances" shall have the meaning given to it
by the Atomic Energy Control Act R.S.C. 1985 (c), A-16 or by any law amendatory
thereof.

     7.   Company to be sole judge of what constitutes: 

          (a) substantial quantities, and

          (b) the extent of installation, plant or site.

     8.   Without in any way restricting the operation of paragraphs 1,2,3 and 4
of this clause, this Agreement does not cover any loss or liability accruing to
the Company, directly or indirectly, and whether as Insurer or Reinsurer caused:

          (a) by any nuclear incident as defined in the Nuclear Liability Act or
              any other nuclear liability act, law or statute, or any law
              amendatory thereof or nuclear explosion, except for ensuing loss
              or damage which results directly from fire, lightening or
              explosion of natural, coal or manufactured gas;

          (b) by contamination by radioactive material.



Note:    Without in any way restricting the operation of paragraphs 1, 2, 3 and 
         4 of this clause, paragraph 8 of this clause shall only apply to all
         original contracts of the Company whether new, renewal or replacement
         which become effective on or after December 31, 1992.

<PAGE>   22
                                  LOSS FUNDING

This clause is only applicable to those Reinsurers who cannot qualify for credit
by the State having jurisdiction over the Company's loss reserves.

As regards policies or bonds issued by the Company coming within the scope of
this Agreement, the Company agrees that when it shall file with the insurance
department or set up on its books reserves for losses covered hereunder which it
shall be required to set up by law it will forward to the Reinsurer a statement
showing the proportion of such loss reserves which is applicable to them.

The Reinsurer hereby agrees that it will apply for and secure delivery to the
Company a clear irrevocable and unconditional Letter of Credit issued by a bank
chosen by the Reinsurer and acceptable to the appropriate insurance authorities,
in an amount equal to the Reinsurer's proportion of the loss reserves in respect
of known outstanding losses that have been reported to the Reinsurer and
allocated loss expenses relating thereto as shown in the statement prepared by
the Company. Under no circumstances shall any amount relating to reserves in
respect of losses or loss expenses Incurred But Not Reported be included in the
amount of the Letter of Credit.

The Letter of Credit shall be "Evergreen" and shall be issued for a period of
not less than one year, and shall be automatically extended for one year from
its date of expiration or any future expiration date unless thirty (30) days
prior to any expiration date, the bank shall notify the Company by certified or
registered mail that it elects not to consider the Letter of Credit extended for
any additional period.

The Company, or its successors in interest, undertakes to use and apply any
amounts which it may draw upon such Credit pursuant to the terms of the
Agreement under which the Letter of Credit is held, and for the following
purposes only:

      (a) To pay the Reinsurer's share or to reimburse the Company for the
          Reinsurer's share of any liability for loss reinsured by this
          Agreement, the payment of which has been agreed by the Reinsurer and
          which has not otherwise been paid.

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

      (c) In the event of expiration of the Letter of Credit as provided for
          above, to establish deposit of the Reinsurer's share of known and
          reported outstanding losses and allocated expenses relating thereto
          under this Agreement. Such cash deposit shall be held in an interest
          bearing account separate from the Company's other assets, and interest
          thereon shall accrue to the benefit of the Reinsurer. It is understood
          and agreed that this procedure will be implemented only in exceptional
          circumstances and that, if it is implemented, the Company will ensure
          that a rate of interest is obtained for the Reinsurers on such a
          deposit account that is at least equal to the rate which would be paid
          by Citibank N.A. in New York, and further that the Company will
          account to the Reinsurers on an annual basis for all interest accruing
          on the cash deposit account for the benefit of the Reinsurer.

The bank chosen for the issuance of the Letter of Credit shall 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
semiannually, the Company shall prepare a specific statement, for the sole
purpose of amending the Letter of Credit, of the Reinsurer's share of known and
reported outstanding losses and allocated expenses relating thereto. If the
statement shows that the Reinsurer's share of such losses and allocated loss
expenses exceeds the balance of credit as of the statement date, the Reinsurer
shall, within thirty (30) days after receipt of notice of such excess, secure
delivery to the Company of an amendment of the Letter of Credit increasing the
amount of credit by the amount of such difference. If, however, the statement
shows that the Reinsurer's share of known and reported outstanding losses plus
allocated loss expenses relating thereto is less than the balance of credit as
of the statement date, the Company shall, within thirty (30) days after receipt
of written request from the Reinsurer, release such excess credit by agreeing to
secure an amendment to the Letter of Credit reducing the amount of credit
available by the amount of such excess credit.

NOTE: -- Wherever used herein the terms:

         "Company" shall be understood to mean "Company," "Reinsured,"
         "Reassured" or whatever other term is used in the attached reinsurance
         agreement to designate the reinsured company. "Agreement" shall be
         understood to mean "Contract," "Agreement," "Policy" or whatever other
         term is used to designate the attached reinsurance document. "State"
         shall be understood to mean the state, province or Federal authority
         having jurisdiction over the Company's loss reserves.
<PAGE>   23
                               ARBITRATION CLAUSE


As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Agreement will be submitted for decision to
a board of arbitration composed of two arbitrators and an umpire.

Arbitration shall be initiated by the delivery of a written notice of demand
for arbitration by one party to the other within a reasonable time after the
dispute has arisen.

The members of the board of arbitration shall be active or retired
disinterested officials of insurance or reinsurance companies, or Underwriters
at Lloyd's, London, not under the control or management of either party to this
Agreement. Each party shall appoint its arbitrator and the two arbitrators
shall choose an umpire before instituting the hearing. If the respondent fails
to appoint its arbitrator within four weeks after being requested to do so by
the claimant, the latter shall also appoint the second arbitrator. If the two
arbitrators fail to agree upon the appointment of an umpire within four weeks
after their nominations, each of them shall name three, of whom the other shall
decline two, and the decision shall be made by drawing lots.

The claimant shall submit its initial brief within 45 days from appointment of
the umpire. The respondent shall submit its brief within 45 days thereafter and
the claimant may submit a reply brief within 30 days after filing of the
respondent's brief.

The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which evidence may be introduced without
following strict rules of evidence but in which cross-examination and rebuttal
shall be allowed. The board shall make its decision within 60 days following
the termination of the hearings unless the parties consent to an extension. The
majority decision of the board shall be final and binding upon all parties to
the proceeding. Judgment may be entered upon the award of the board in any
court having jurisdiction.

Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire. The remaining
costs of the arbitration proceedings shall be allocated by the board.

Note:- Wherever used herein, the term "Company" shall be understood to mean
       "Reinsured," "Reassured" or whatever other term is used in the attached
       Agreement to designate the reinsured company. The term "Agreement" shall
       be understood to mean "Contract," "Policy" or whatever other term is used
       to designate the attached reinsurance document.

<PAGE>   24
                                SERVICE OF SUIT

This Clause applies only to a reinsurer domiciled outside the United States of
America or should the Company be authorized to do business in the State of New
York, a reinsurer unauthorized in New York as respects suits instituted in New
York.

It is agreed that in the event of the failure of the Reinsurer hereon to pay
any amount claimed to be due hereunder, the Reinsurer hereon, at the request of
the Company, will submit to the jurisdiction of a court of competent
jurisdiction within the United States. Nothing in this Clause 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.

It is further agreed that service of process in such suit may be made upon
Messrs. Mendes & Mount, 750 Seventh Avenue, New York, New York 10019-6829 and
that in any suit instituted against the Reinsurer 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 shall be
instituted.

Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereon 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 process in any action, suit or proceeding instituted by 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.

Note: - Wherever used herein the terms:

     "Company" shall be understood to mean "Company," "Reinsured," "Reassured"
     or whatever other term is used in the attached reinsurance Agreement to
     designate the reinsured company. "Agreement" shall be understood to mean
     "Contract," "Agreement," "Policy" or whatever other term is used to
     designate the attached reinsurance document.
<PAGE>   25
                                ENDORSEMENT NO. 1


Attaching to and forming part of the AUTOMOBILE LEASING RESIDUAL VALUE EXCESS OF
LOSS REINSURANCE AGREEMENT between PHILADELPHIA INSURANCE COMPANY, and
PHILADELPHIA INDEMNITY INSURANCE COMPANY, both of Bala Cynwyd, Pennsylvania
(hereinafter together called the "Company") and the Reinsurer specifically
identified below (hereinafter called the "Reinsurer").

IT IS AGREED, effective 12:01 a.m., Eastern Standard Time, January 1, 1997, that
the following changes are made in this Agreement:

1.      ARTICLE 3 - TERM, will read as follows and not as heretofore:

        TERM

        This Agreement shall become effective at 12:01 a.m., Eastern Standard
        Time, January 1, 1997, and shall remain in full force and effect until
        all leases under all Policies covered hereunder have expired.

2.      ARTICLE 5 - EXCLUSIONS, exclusion A. will read as follows and not as
        heretofore:

        A.       Policies on leases enrolled before 12:01 a.m., Eastern
                 Standard Time, January 1, 1994.


ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.


IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Endorsement as of the following dates:

                            PARTICIPATING REINSURERS

         Constitution Reinsurance Corporation
         Sedgwick Re Limited
         GIO Insurance Ltd., Trading as GIO Reinsurance
         Everest Reinsurance Company

Upon completion of Reinsurers' signing, fully executed signature pages will be
forwarded to you for the completion of your file.








                                                                         Page 1 
<PAGE>   26
                                ENDORSEMENT NO. 1


Attaching to and forming part of the AUTOMOBILE LEASING RESIDUAL VALUE EXCESS OF
LOSS REINSURANCE AGREEMENT between PHILADELPHIA INSURANCE COMPANY, and
PHILADELPHIA INDEMNITY INSURANCE COMPANY, both of Bala Cynwyd, Pennsylvania
(hereinafter together called the "Company") and the Reinsurer specifically
identified below (hereinafter called the "Reinsurer").

IT IS AGREED, effective 12:01 a.m., Eastern Standard Time, January 1, 1997, that
the following changes are made in this Agreement:

1.       ARTICLE 3 - TERM, will read as follows and not as heretofore:

         TERM

         This Agreement shall become effective at 12:01 a.m., Eastern Standard
         Time, January 1, 1997, and shall remain in full force and effect until
         all leases under all Policies covered hereunder have expired.

2.       ARTICLE 5 - EXCLUSIONS, exclusion A. will read as follows and not as
         heretofore:

         A.       Policies on leases enrolled before 12:01 a.m., Eastern
                  Standard Time, January 1, 1994.


ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.


IN WITNESS WHEREOF, the parties hereto, by their authorized representatives, 
have executed this Endorsement as of the following dates:
In New York, New York, this 26th day of September, 1997.

                                       CONSTITUTION REINSURANCE CORPORATION
                                       New York, New York


                                       By /s/ Thomas C. Bredahl
                                         ---------------------------------------
                                                       (signature)

                                                     Thomas C. Bredahl
                                       -----------------------------------------
                                                         (name)

                                                       Vice President
                                       -----------------------------------------
                                                         (title)



                                                                          Page 1
<PAGE>   27
                                ENDORSEMENT NO. 1


Attaching to and forming part of the AUTOMOBILE LEASING RESIDUAL VALUE EXCESS OF
LOSS REINSURANCE AGREEMENT between PHILADELPHIA INSURANCE COMPANY, and
PHILADELPHIA INDEMNITY INSURANCE COMPANY, both of Bala Cynwyd, Pennsylvania
(hereinafter together called the "Company") and the Reinsurer specifically
identified below (hereinafter called the "Reinsurer").

IT IS AGREED, effective 12:01 a.m., Eastern Standard Time, January 1, 1997, that
the following changes are made in this Agreement:

1.       ARTICLE 3 - TERM, will read as follows and not as heretofore:

         TERM

         This Agreement shall become effective at 12:01 a.m., Eastern Standard
         Time, January 1, 1997, and shall remain in full force and effect until
         all leases under all Policies covered hereunder have expired.

2.       ARTICLE 5 - EXCLUSIONS, exclusion A. will read as follows and not as
         heretofore:

         A.       Policies on leases enrolled before 12:01 a.m., Eastern
                  Standard Time, January 1, 1994.


ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.


IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Endorsement as of the following dates:
In Liberty Corner, New Jersey, this 26th day of September 1997.

                                       EVEREST REINSURANCE COMPANY
                                       A Delaware Corporation
                                       
                                       By /s/ Robert Capicchioni
                                         ---------------------------------------
                                                    (signature)

                                                  Robert Capicchioni
                                       -----------------------------------------
                                                      (Name)

                                                        VP
                                       -----------------------------------------
                                                      (title)




                                                                          Page 1
<PAGE>   28
                                ENDORSEMENT NO. 1


Attaching to and forming part of the AUTOMOBILE LEASING RESIDUAL VALUE EXCESS OF
LOSS REINSURANCE AGREEMENT between PHILADELPHIA INSURANCE COMPANY, and
PHILADELPHIA INDEMNITY INSURANCE COMPANY, both of Bala Cynwyd, Pennsylvania
(hereinafter together called the "Company") and the Reinsurer specifically
identified below (hereinafter called the "Reinsurer").

IT IS AGREED, effective 12:01 a.m., Eastern Standard Time, January 1, 1997, that
the following changes are made in this Agreement:

1.       ARTICLE 3 - TERM, will read as follows and not as heretofore:

         TERM

         This Agreement shall become effective at 12:01 a.m., Eastern Standard
         Time, January 1, 1997, and shall remain in full force and effect until
         all leases under all Policies covered hereunder have expired.

2.       ARTICLE 5 - EXCLUSIONS, exclusion A. will read as follows and not as
         heretofore:

         A.       Policies on leases enrolled before 12:01 a.m., Eastern
                  Standard Time, January 1, 1994.


ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.


IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Endorsement as of the following dates:
In Sydney, Australia, this 29th day of September, 1997.

                                       GIO INSURANCE LTD.  ACN 052 179 647
                                       Trading as GIO REINSURANCE
                                       Sydney, Australia


                                       By /s/ C. Maclachlan
                                         ---------------------------------------
                                                      (signature)

                                                     C. Maclachlan
                                       -----------------------------------------
                                                         (name)

                                                   Underwriting Assistant
                                       -----------------------------------------
                                                         (title)


                                                                          Page 1
<PAGE>   29
and in Bala Cynwyd, Pennsylvania, this day of                         , 1997.

                                        PHILADELPHIA INSURANCE COMPANY
                                        PHILADELPHIA INDEMNITY INSURANCE COMPANY


                                        BY  /s/ Christopher J. Maguire
                                          --------------------------------------
                                                        (signature)
                                                Christopher J. Maguire
                                        ----------------------------------------
                                                          (name)
                                                VP Underwriting
                                        ----------------------------------------
                                                          (title)








                        AUTOMOBILE LEASING RESIDUAL VALUE
                      EXCESS OF LOSS REINSURANCE AGREEMENT



                                    issued to

                         PHILADELPHIA INSURANCE COMPANY
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY







                                                                         Page 2
<PAGE>   30
                               [SEDGWICK RE LOGO]

                                    SEDGWICK

                                   Sedgwick Re
 Century Square, Suite 1400, 1501 Fourth Avenue, Seattle, Washington 98101-1635
               Telephone (206) 223-1200. Facsimile (206) 625-6926

                                  May 13, 1997



Mr.  Christopher J. Maguire
Assistant Vice President
Philadelphia Insurance Companies
One Bala Plaza, Suite 100
Bala Cynwyd, Pennsylvania 19004

Dear Mr. Maguire:

Auto Leasing Residual Value Excess Of Loss
Reinsurance Agreement
Effective: January 1, 1997
Our Reference: P10500-061

We are happy to enclose for your permanent file a copy of the fully executed
documentation for the captioned Agreement, effective January 1, 1997.

This completes the signing process for these documents. Please discard any
"working Copies" of these documents you may have previously received and retain
this as your permanent record. If you have any questions or we can be of further
assistance please do not hesitate to call.


                                   Very truly yours,

                                   SEDGWICK RE
                                   


                                   /s/ Debbie A. Mysliwy
                                   Deborah A. Mysliwy, ARe, FLMI
                                   Senior Treaty Specialist

DAM
97DM153
Enclosure
Special Mail Services



cc:     James Overend, Sedgwick Re, Philadelphia





          Atlanta - Boston - Chicago - Dallas - Hartford - Los Angeles
    Minneapolis - New York - Philadelphia - San Francisco - Seattle - Toronto



<PAGE>   31
                                     SUMMARY
                                       AND
                                AGREEMENT WORDING
                                       FOR


                         PHILADELPHIA INSURANCE COMPANY
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
              SECOND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT
                           EFFECTIVE: JANUARY 1, 1997



<PAGE>   32
                                   SUMMARY OF
              SECOND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT
<TABLE>

<S>                        <C>                                                    <C>
REINSURED COMPANY:         PHILADELPHIA INSURANCE COMPANY, and                    (PREAMBLE)
                           PHILADELPHIA INDEMNITY INSURANCE COMPANY, both of
                           Bala Cynwyd, Pennsylvania (hereinafter together
                           called the "Company")

BUSINESS REINSURED:        In force, new and renewal business classified by the   ARTICLE 1
                           Company as Casualty, Fidelity, and/or Fiduciary
                           Liability.

ACCOUNT BASIS:             Losses occurring.

COVER:                     $5,000,000 Ultimate Net Loss, each loss, each          ARTICLE 2
                           Insured, excess $1,000,000 Ultimate Net Loss, each
                           loss, each Insured.

                           The Company shall be the sole judge of what
                           constitutes one "Insured".

TERM:                      Effective 12:01 a.m., EST, January 1, 1997; expires    ARTICLE 3
                           12:01 a.m., EST, January 1, 1998. Upon expiration of
                           this Agreement, the entire liability of the Reinsurer
                           for losses occurring subsequent to expiration shall
                           cease concurrently with the expiration.

TERRITORY:                 Per original Policies.                                 ARTICLE 4

EXCLUSIONS:                Per Agreement wording.                                 ARTICLE 5

PREMIUM:                   Deposit premium $2,000,000, payable quarterly in       ARTICLE 6
                           arrears. Adjustable within 90 days after expiration,
                           at 3.5% GNEPI.

REPORTS:                   Within 90 days after expiration.                       ARTICLE 7

DEFINITIONS:               Ultimate Net Loss (Includes 100% ECO, 100% XPL,        ARTICLE 8
                             allocated loss adjustment expense, including claim-
                             specific declaratory judgment expense). 
                           Gross Net Earned Premium Income Policy
                           
CLAUSES:                   Net Retained Lines                                     ARTICLE 9
                           Currency - U.S. Dollar                                 ARTICLE 10
                           Loss Funding (including IBNR)                          ARTICLE 11
                           Taxes (Reinsurers pay FET as applicable)               ARTICLE 12
                           Notice of Loss and Loss Settlements (Company to        ARTICLE 13
                             report individual claims reserved at 50% or more of
                             retention.)
                           Excess of Policy Limits                                ARTICLE 14
</TABLE>




                                                                         Page A

<PAGE>   33
<TABLE>
<S>                        <C>                                                    <C>
                           Extra Contractual Obligations                          ARTICLE 15
                           Delay, Omission or Error                               ARTICLE 16
                           Inspection                                             ARTICLE 17
                           Arbitration                                            ARTICLE 18
                           Service of Suit                                        ARTICLE 19
                           Insolvency                                             ARTICLE 20
                           Sedgwick Re Intermediary Clause                        ARTICLE 21

PARTICIPATION:                                                                    ARTICLE 22

REGULATION 98:             Premium and loss payments made to Sedgwick Re shall
                           be deposited in a Premium and Loss Account in
                           accordance with Section 32.3(a)(1) of Regulation 98
                           of the New York Insurance Department. The parties
                           hereto consent to withdrawals from said Account in
                           accordance with Section 32.3(a)(3) of the Regulation,
                           including interest and Federal Excise Tax.
</TABLE>



                                                                     
                                                                          Page B
<PAGE>   34
              SECOND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT


This Agreement is made and entered into by and between PHILADELPHIA INSURANCE
COMPANY, and PHILADELPHIA INDEMNITY INSURANCE COMPANY, both of Bala Cynwyd,
Pennsylvania (hereinafter together called the "Company") and the Reinsurer
specifically identified on the signature page of this Agreement (hereinafter
called the "Reinsurer").


                                    ARTICLE 1

BUSINESS REINSURED

This Agreement is to indemnify the Company in respect of the net excess
liability as a result of any loss or losses which may occur during the term of
this Agreement under any Policies classified by the Company as Casualty,
Fidelity, and/or Fiduciary Liability in force, written or renewed by or on
behalf of the Company, subject to the terms and conditions herein contained.


                                    ARTICLE 2

COVER

The Reinsurer will be liable in respect of each loss, each Insured for the
Ultimate Net Loss over and above an initial Ultimate Net Loss of $1,000,000 each
loss, each Insured, subject to a limit of liability to the Reinsurer of
$5,000,000 each loss, each Insured.

Recoveries from the Company's underlying Per Insured Excess Reinsurance
Agreement(s) will not be deducted when establishing Ultimate Net Loss for
purposes of this Agreement.

The Company shall be the sole judge of what constitutes one "Insured".


                                    ARTICLE 3

TERM

This Agreement shall become effective at 12:01 a.m., Eastern Standard Time,
January 1, 1997, and shall remain in full force and effect for one year,
expiring 12:01 a.m., Eastern Standard Time, January 1, 1998.

Upon expiration of this Agreement, the entire liability of the Reinsurer for
losses occurring subsequent to expiration shall cease concurrently with the
expiration.


                                    ARTICLE 4

TERRITORY

This Agreement will cover wherever the Company's original Policies cover.


                                                                          Page 1
<PAGE>   35
                                    ARTICLE 5

EXCLUSIONS

This Agreement does not cover:

A.       Pools, Associations and Syndicates, except losses from Assigned Risk
         Plans or similar plans are not excluded.

B.       Business excluded by the attached Nuclear Incident Exclusion Clauses:

         1.       Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  U.S.A., No. 08-31.1.

         2.       Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  Canada, No. 08-32.1.

C.       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
         guarantee fund, insolvency fund, plan, pool, association, fund or other
         arrangement, howsoever denominated, established or governed, which
         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.

D.       Financial Guarantee or Insolvency

         However, the liability of the Company under any bond covering losses
         due to negligence of any person or failure of any person to faithfully
         perform his duty or failure to account for and pay over money or other
         property in his custody shall not be considered Financial Guarantee or
         Insolvency.

         Notwithstanding the foregoing, no claim to attach hereto in respect of
         any loss or losses arising as a result of:

         1.       the insolvency of any financial institution at which trust
                  moneys are deposited or insolvency of any person, firm, or
                  company, or

         2.       the fall in the market value of investments,

                  unless such loss is the direct result of a) a dishonest,
                  fraudulent, criminal or negligent act on the part of the
                  bonded person or b) a dishonest, fraudulent or criminal act on
                  the part of any other person or persons or c) unless such loss
                  is solely created by a physical damage loss to property other
                  than where such physical damage loss could have been recovered
                  from a third party but for the insolvency of such third party.

E.       Pollution to the extent excluded in the Company's original Policies.

F.       Fidelity business, except when written in conjunction with a Director's
         and Officers' Liability Policy.

G.       Primary Rental Liability and Supplemental Liability.



                                                                          Page 2

<PAGE>   36
                                    ARTICLE 6

PREMIUM

A.       The Company will pay the Reinsurer a deposit premium of $2,000,000 for
         the term of this Agreement, to be paid in the amount of $500,000 on
         March 31, June 30, September 30, and December 31, 1997.

B.       Within 90 days following the expiration of this Agreement, the Company
         will calculate a premium at a rate of 3.5% multiplied by the Company's
         Gross Net Earned Premium Income. Should the premium so calculated
         exceed the deposit premium paid in accordance with Paragraph A. above,
         the Company will immediately pay the Reinsurer the difference. Should
         the premium so calculated be less than the deposit premium, the
         Reinsurer will immediately pay the Company the difference.


                                    ARTICLE 7

REPORTS

Within 90 days following the expiration of this Agreement, the Company will
furnish the Reinsurer with:

A.       Gross Net Earned Premium Income of the Company for the term of this
         Agreement.

B.       Any other information which the Reinsurer may require to prepare its
         Annual Statement which is reasonably available to the Company,


                                    ARTICLE 8

DEFINITIONS

A.       The term "Ultimate Net Loss" as used in this Agreement shall mean the
         actual loss paid by the Company or for which the Company becomes liable
         to pay, such loss to include 100% of any Extra Contractual Obligation
         (and expense) as defined in the EXTRA CONTRACTUAL OBLIGATIONS ARTICLE,
         100% of any Excess of Policy Limit as defined in the EXCESS OF POLICY
         LIMITS ARTICLE, expenses of litigation and interest, claim-specific
         declaratory judgment expenses, and all other loss expense of the
         Company including subrogation, salvage, and recovery expenses (office
         expenses and salaries of officials and employees not classified as loss
         adjusters are not chargeable as expenses for purposes of this
         paragraph), but salvages and all recoveries, including recoveries under
         all reinsurances which inure to the benefit of this Agreement (whether
         recovered or not), shall be first deducted from such loss to arrive at
         the amount of liability attaching hereunder.

         The phrase "claim-specific declaratory judgment expenses," as used in
         this Agreement will mean all expenses incurred by the Company in
         connection with declaratory judgment actions brought to determine the
         Company's defense and/or indemnification obligations that are allocable
         to specific Policies and claims subject to this Agreement. Declaratory
         judgment expenses will be deemed to have been incurred by the Company
         on the date of the original loss (if any) giving rise to the
         declaratory judgment action.



                                                                          Page 3
<PAGE>   37
         All salvages, recoveries or payments recovered or received subsequent
         to loss settlements hereunder shall be applied as if recovered or
         received prior to the aforesaid settlement, and all necessary
         adjustments shall be made by the parties hereto.

         For purposes of this definition, the phrase "becomes liable to pay"
         shall mean the existence of a judgment which the Company does not
         intend to appeal, or a release has been obtained by the Company, or the
         Company has accepted a proof of loss.

         Nothing in this clause shall be construed to mean that losses are not
         recoverable hereunder until the Company's Ultimate Net Loss has been
         ascertained.

B.       The term "Gross Net Earned Premium Income" as used in this Agreement
         shall mean gross earned premium income on business the subject of this
         Agreement less earned premium income paid for reinsurances, recoveries
         under which would inure to the benefit of this Agreement.

C.       The term "Policy" as used in this Agreement shall mean any binder,
         policy, or contract of insurance or reinsurance issued, accepted or
         held covered provisionally or otherwise, by or on behalf of the
         Company.


                                    ARTICLE 9

NET RETAINED LINES

This Agreement applies only to that portion of any insurances or reinsurances
covered by this Agreement which the Company retains net for its own account, and
in calculating the amount of any loss hereunder and also in computing the amount
in excess of which this Agreement attaches, only loss or losses in respect of
that portion of any insurances or reinsurances which the Company retains net for
its own account shall be included, it being understood and agreed that the
amount of the Reinsurer's liability hereunder in respect of any loss or losses
shall not be increased by reason of the inability of the Company to collect
from any other reinsurers, whether specific or general, any amounts which may
have become due from them whether such inability arises from the insolvency of
such other reinsurers or otherwise.


                                   ARTICLE 10

CURRENCY

The currency to be used for all purposes of this Agreement shall be United
States of America currency.


                                   ARTICLE 11

LOSS FUNDING


With respect to losses, funding will be in accordance with the attached Loss
Funding Clause No. 13-03.


                                                                          Page 4
<PAGE>   38
                                   ARTICLE 12

TAXES

The Company will be liable for taxes (except Federal Excise Tax) on premiums
reported to the Reinsurer hereunder.

Federal Excise Tax applies only to those Reinsurers, excepting Underwriters at
Lloyd's, London and other Reinsurers exempt from the Federal Excise Tax, who are
domiciled outside the United States of America.

The Reinsurer has agreed to allow for the purpose of paying the Federal Excise
Tax 1% of the premium payable hereon to the extent such premium is subject to
Federal Excise Tax.

In the event of any return of premium becoming due hereunder, the Reinsurer will
deduct 1% from the amount of the return, and the Company or its agent should
take steps to recover the Tax from the U.S. Government.


                                   ARTICLE 13

NOTICE OF LOSS AND LOSS SETTLEMENTS

The Company will advise the Reinsurer promptly of all claims which in the
opinion of the Company may involve the Reinsurer and of all subsequent
developments on these claims which may materially affect the position of the
Reinsurer, such advices to include any claim for which the reserve is 50% or
more of the Company's retention.

The Reinsurer agrees to abide by the loss settlements of the Company, provided
that retroactive extension of Policy terms or coverages made voluntarily by the
Company and not in response to court decisions (whether such court decision is
against the Company or other companies affording the same or similar coverages)
will not be covered under this Agreement.

When so requested the Company will afford the Reinsurer an opportunity to be
associated with the Company, at the expense of the Reinsurer, in the defense of
any claim or suit or proceeding involving this reinsurance and the Company will
cooperate in every respect in the defense of such claim, suit or proceeding.

The Reinsurer will pay its share of loss settlements immediately upon receipt of
proof of loss from the Company.


                                   ARTICLE 14

EXCESS OF POLICY LIMITS

In the event the Ultimate Net Loss includes an amount in excess of the Company's
Policy limit, such amount, as provided for in the definition of Ultimate Net
Loss, in excess of the Company's Policy limit shall be added to the amount of
the Company's Policy limit, and the sum thereof shall be covered hereunder,
subject to the Reinsurer's limit of liability appearing in the COVER ARTICLE of
this Agreement.


                                                                          Page 5
<PAGE>   39
However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.

For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Policy.


                                   ARTICLE 15

EXTRA CONTRACTUAL OBLIGATIONS

This Agreement shall protect the Company, subject to the Reinsurer's limit of
liability appearing in the COVER ARTICLE of this Agreement, where the loss
includes any Extra Contractual Obligations as provided for in the definition of
Ultimate Net Loss. "Extra Contractual Obligations" are defined as those
liabilities not covered under any other provision of this Agreement and which
arise from handling of any claim on business covered hereunder, such liabilities
arising because of, but not limited to, the following: failure by the Company to
settle within the Policy limit, or by reason of alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of any action against its insured or in the
preparation or prosecution of an appeal consequent upon such action.

The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original loss.

However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.


                                   ARTICLE 16

DELAY, OMISSION OR ERROR

Any inadvertent delay, omission or error shall not be held to relieve either
party hereto from any liability which would attach to it hereunder if
such delay, omission or error had not been made, providing such delay, omission
or error is rectified upon discovery.


                                   ARTICLE 17

INSPECTION

The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect, through its authorized
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith.



                                                                        Page 6
<PAGE>   40
                                   ARTICLE 18

ARBITRATION

Any irreconcilable dispute between the parties to this Agreement will be
arbitrated in Bala Cynwyd, Pennsylvania in accordance with the attached
Arbitration Clause No. 22-01.1.


                                   ARTICLE 19

SERVICE OF SUIT

The attached Service of Suit Clause No, 20-01.5 - U.S.A. will apply to this
Agreement.


                                   ARTICLE 20

INSOLVENCY

In the event of the insolvency of the Company, reinsurance under this Agreement
shall be payable by the Reinsurer on the basis of the liability of the Company
under Policy or Policies reinsured without diminution because of the insolvency
of the Company, to the Company or to its liquidator, receiver or statutory
successor, except as provided by Section 4118(a) of the New York Insurance Law
or except when the Agreement specifically provides another payee of such
reinsurance in the event of the insolvency of the Company and when the Reinsurer
with the consent of the direct insured or insureds has assumed such Policy
obligations of the Company as direct obligations of the Reinsurer to the payees
under such Policies and in substitution for the obligations of the Company to
such payees.

It is agreed, however, that the liquidator or receiver or statutory successor of
the insolvent Company shall give written notice to the Reinsurer of the pendency
of a claim against the insolvent Company on the Policy or Policies reinsured
within a reasonable time after such claim is filed in the insolvency proceeding
and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding when such claim is to
be adjudicated, any defense or defenses which it may deem available to the
Company or its liquidator or receiver or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to court approval,
against the insolvent Company as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to the Company
solely as a result of the defense undertaken by the Reinsurer.

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

Should the Company go into liquidation or should a receiver be appointed, the
Reinsurer shall be entitled to deduct from any sums which may be due or may
become due to the Company under this reinsurance Agreement any sums which are
due to the Reinsurer by the Company under this reinsurance Agreement and which
are payable at a fixed or stated date as well as any other sums due the
Reinsurer which are permitted to be offset under applicable law.

In the event of the insolvency of any company or companies included in the
designation of "Company," this clause will apply only to the insolvent company
or companies.


                                                                          Page 7
<PAGE>   41
                                   ARTICLE 21

INTERMEDIARY

Sedgwick Re, Inc. is hereby recognized as the Intermediary negotiating this
Agreement for all business hereunder. All communications, including notices,
premiums, return premiums, commissions, taxes, losses, loss adjustment expenses,
salvages and loss settlements relating thereto shall be transmitted to the
Reinsurer or the Company through Sedgwick Re, Inc., 1501 Fourth Avenue, Suite
1400, Seattle, Washington 98101. Payments by the Company to the Intermediary
shall be deemed to constitute payment to the Reinsurer. Payments by the
Reinsurer to the Intermediary shall be deemed only to constitute payment to the
Company to the extent that such payments are actually received by the Company.








                                                                          Page 8
<PAGE>   42
                                   ARTICLE 22

PARTICIPATION:    SECOND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT
                  EFFECTIVE: January 1, 1997

This Agreement obligates the Reinsurer for ________% of the interests and
liabilities set forth under this Agreement.

The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.

IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:

<TABLE>
<CAPTION>
                    PARTICIPATING REINSURERS
            --------------------------------------------

<S>                                               <C>   
            Kemper Reinsurance Company            50.00%
            NAC Reinsurance Corporation           25.00%
            SCOR Reinsurance Company              25.00%
                                                  ----- 
            
            TOTAL:                               100.00%
</TABLE>
  


Upon completion of Reinsurers' signing, fully executed signature pages will be
forwarded to you for the completion of your file.








                                                                          Page 9

<PAGE>   43
                                   ARTICLE 22

PARTICIPATION:    SECOND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT
                  EFFECTIVE: January 1, 1997

This Agreement obligates the Reinsurer for 25.00% of the interests and
liabilities set forth under this Agreement.

The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.

IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:

In New York, New York, this 21st day of May, 1997.

                                                   SCOR REINSURANCE COMPANY
                                                   New York, New York


                                                   By: /s/ Richard D. Eckis
                                                       ------------------------
                                                               (signature)

                                                           RICHARD D. ECKIS
                                                       ------------------------
                                                                  (name)

                                                           V.P.
                                                       ------------------------
                                                                  (title)




                                                                          Page 9

                                                 
<PAGE>   44
                                   ARTICLE 22

PARTICIPATION:    SECOND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT
                  EFFECTIVE: January 1, 1997

This Agreement obligates the Reinsurer for 50.00% of the interests and
liabilities set forth under this Agreement.

The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.

IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:

In Long Grove, Illinois, this 18th day of March, 1997.

                               KEMPER REINSURANCE COMPANY
                               Long Grove, Illinois


                               By /s/ John Jenkins
                                  ------------------------------------------
                                         (signature)
                                                                             
                                      John Jenkins, Treaty Officer Ref: 23103-8
                                  ------------------------------------------
                                           (name)


                                  ------------------------------------------
                                           (title)



                                                                          Page 9


<PAGE>   45
                                   ARTICLE 22

PARTICIPATION:    SECOND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT
                  EFFECTIVE: January 1, 1997

This Agreement obligates the Reinsurer for 25.00% of the interests and
liabilities set forth under this Agreement.

The participation of the Reinsurer in the interests and liabilities of this
Agreement shall be separate and apart from the participations of other
reinsurers and shall not be joint with those of other reinsurers, and the
Reinsurer shall in no event participate in the interests and liabilities of
other reinsurers.

IN WITNESS WHEREOF, the parties hereto, by their authorized representatives,
have executed this Agreement as of the following dates:

In Greenwich, Connecticut, this 9th day of April, 1997.

                                          NAC REINSURANCE CORPORATION
                                          (Formerly NORTH AMERICAN COMPANY FOR
                                          PROPERTY AND CASUALTY INSURANCE)
                                          New York, New York

                                          By /s/ Robert H. McFadden
                                             -------------------------------
                                                     (signature)

                                                 ROBERT H. McFADDEN
                                             -------------------------------
                                                        (name)

                                                 SECOND VICE PRESIDENT
                                             -------------------------------
                                                        (title)









                                                                          Page 9


<PAGE>   46
and in Bala Cynwyd, Pennsylvania, this day of                    , 1997.

                                   PHILADELPHIA INSURANCE COMPANY
                                   PHILADELPHIA INDEMNITY INSURANCE COMPANY


                                   By /s/ Christopher J. Maguire
                                      ----------------------------------
                                                   (signature)

                                         Christopher J. Maguire
                                      ----------------------------------
                                                     (name)

                                         V.P. Underwriting
                                      ----------------------------------
                                                    (title)








              SECOND CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT



                                    issued to

                         PHILADELPHIA INSURANCE COMPANY
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY




                                                                         Page 10

<PAGE>   47
                                  LOSS FUNDING

This clause is only applicable to those Reinsurers who cannot qualify for
credit by the State having jurisdiction over the Company's loss reserves.

As regards policies or bonds issued by the Company coming within the scope of
this Agreement, the Company agrees that when it shall file with the insurance
department or set up on its books reserves for losses covered hereunder which
it shall be required to set up by law it will forward to the Reinsurer a
statement showing the proportion of such loss reserves which is applicable to
them.

The Reinsurer hereby agrees that it will apply for and secure delivery to the
Company a clean irrevocable and unconditional Letter of Credit issued by a bank
chosen by the Reinsurer and acceptable to the appropriate insurance
authorities, in an amount equal to the Reinsurer's proportion of the loss
reserves in respect of known outstanding losses that have been reported to the
Reinsurer, allocated loss expenses relating thereto and Incurred But Not
Reported loss and loss expense as shown in the statement prepared by the
Company.

The Letter of Credit shall be "Evergreen" and shall be issued for a period of
not less than one year, and shall be automatically extended for one year
from its date of expiration or any future expiration date unless thirty
(30) days prior to any expiration date, the bank shall notify the Company by
certified or registered mail that it elects not to consider the Letter of
Credit extended for any additional period.

The Company, or its successors in interest, undertakes to use and apply any
amounts which it may draw upon such Credit pursuant to the terms of the
Agreement under which the Letter of Credit is held, and for the following
purposes only:

     (a)  To pay the Reinsurer's share or to reimburse the Company for the
          Reinsurer's share of any liability for loss reinsured by this
          Agreement, the payment of which has been agreed by the Reinsurer and
          which has not otherwise been paid.

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

     (c)  In the event of expiration of the Letter of Credit as provided for
          above, to establish deposit of the Reinsurer's share of known and
          reported outstanding losses and allocated expenses relating thereto,
          and Incurred But Not Reported loss and loss expense, under this
          Agreement. Such cash deposit shall be held in an interest bearing
          account separate from the Company's other assets, and interest
          thereon shall accrue to the benefit of the Reinsurer. It is understood
          and agreed that this procedure will be implemented only in exceptional
          circumstances and that, if it is implemented, the Company will ensure
          that a rate of interest is obtained for the Reinsurers on such a
          deposit account that is at least equal to the rate which would be
          paid by Citibank N.A. in New York, and further that the Company will
          account to the Reinsurers on an annual basis for all interest accruing
          on the cash deposit account for the benefit of the Reinsurer.

The bank chosen for the issuance of the Letter of Credit shall 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 semiannually, the Company shall prepare a specific statement, for the sole
purpose of amending the Letter of Credit, of the Reinsurer's share of known and
reported outstanding losses and allocated expenses relating thereto. If the
statement shows that the Reinsurer's share of such losses and allocated loss
expenses, and Incurred But Not Reported loss and loss expense, exceeds the
balance of credit as of the statement date, the Reinsurer shall, within thirty
(30) days after receipt of notice of such excess, secure delivery to the
Company of an amendment of the Letter of Credit increasing the amount of credit
by the amount of such difference. If, however, the statement shows that the
Reinsurer's share of known and reported outstanding losses plus allocated loss
expenses, and Incurred But Not Reported loss and loss expense, relating thereto
is less than the balance of credit as of the statement date, the Company shall,
within thirty (30) days after receipt of written request from the Reinsurer,
release such excess credit by agreeing to secure an amendment to the Letter of
Credit reducing the amount of credit available by the amount of such excess
credit.

NOTE:-- Wherever used herein the terms:

        "Company" shall be understood to mean "Company," "Reinsured,"
        "Reassured" or whatever other term is used in the attached reinsurance
        agreement to designate the reinsured company. "Agreement" shall be
        understood to mean "Contract," "Agreement," "Policy" or whatever other
        term is used to designate the attached reinsurance document. "State"
        shall be understood to mean the state, province or Federal authority
        having jurisdiction over the Company's loss reserves.
<PAGE>   48
                                SERVICE OF SUIT

This Clause applies only to a reinsurer domiciled outside the United States of
America or should the Company be authorized to do business in the State of New
York, a reinsurer unauthorized in New York as respects suits instituted in New
York.

It is agreed that in the event of the failure of the Reinsurer hereon to pay
any amount claimed to be due hereunder, the Reinsurer hereon, at the request of
the Company, will submit to the jurisdiction of a court of competent
jurisdiction within the United States. Nothing in this Clause 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.

It is further agreed that service of process in such suit may be made upon
Messrs. Mendes & Mount, 750 Seventh Avenue, New York, New York 10019-6829 and
that in any suit instituted against the Reinsurer 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 shall be
instituted.

Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereon 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 process in any action, suit or proceeding instituted by 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.

Note: -- Wherever used herein the terms:

         "Company" shall be understood to mean "Company," "Reinsured,"
         "Reassured" or whatever other term is used in the attached reinsurance
         Agreement to designate the reinsured company. "Agreement" shall be
         understood to mean "Contract," "Agreement," "Policy" or whatever other
         term is used to designate the attached reinsurance document.
<PAGE>   49
ARBITRATION CLAUSE

As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Agreement will be submitted for decision to
a board of arbitration composed of two arbitrators and an umpire.

Arbitration shall be initiated by the delivery of a written notice of demand
for arbitration by one party to the other within a reasonable time after the
dispute has arisen.

The members of the board of arbitration shall be active or retired disinterested
officials of insurance or reinsurance companies, or Underwriters at Lloyd's,
London, not under the control or management of either party to this Agreement.
Each party shall appoint its arbitrator and the two arbitrators shall choose an
umpire before instituting the hearing. If the respondent fails to appoint its
arbitrator within four weeks after being requested to do so by the claimant, the
latter shall also appoint the second arbitrator. If the two arbitrators fail to
agree upon the appointment of an umpire within four weeks after their
nominations, each of them shall name three, of whom the other shall decline two,
and the decision shall be made by drawing lots.

The claimant shall submit its initial brief within 45 days from appointment of
the umpire. The respondent shall submit its brief within 45 days thereafter and
the claimant may submit a reply brief within 30 days after filing of the
respondent's brief.

The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which evidence may be introduced without
following strict rules of evidence but in which cross-examination and rebuttal
shall be allowed. The board shall make its decision within 60 days following the
termination of the hearing unless the parties consent to an extension. The
majority decision of the board shall be final and binding upon all parties to
the proceeding. Judgment may be entered upon the award of the board in any court
having jurisdiction.

Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire. The remaining
costs of the arbitration proceedings shall be allocated by the board.



Note:-- Wherever used herein, the term "Company" shall be understood to mean
        "Reinsured," "Reassured" or whatever other term is used in the attached
        Agreement to designate the reinsured company. The term "Agreement" shall
        be understood to mean "Contract," "Policy" or whatever other term is 
        used to designate the attached reinsurance document.
<PAGE>   50
      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.

(Wherever the word "Reassured" appears in this clause, it shall be deemed to
read "Reassured," "Reinsured," "Company," or whatever other word is employed
throughout the text of the reinsurance agreement to which this clause is
attached to designate the company or companies reinsured.)

     (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
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 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 to include the following
provision (specified as the Limited Exclusion Provision):

     LIMITED EXCLUSION PROVISION.*

       I.  It is agreed that the policy does not apply under any liability
           coverage,

              (   injury, sickness, disease, death or destruction
           to (
              (   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 out 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 coverages:

          Owners, Landlords and Tenants Liability, Contractual Liability,
          Elevator Liability, Owners or 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 coverages, from the time
specified in Clause V of this paragraph (3), the following provision (specified
as the Broad Exclusion Provision):

     BROAD EXCLUSION PROVISION.*

     It is agreed that the policy does not apply:
                                            (  injury, sickness, disease,
                                            (  death or destruction
      I.  Under any Liability Coverage, to  ( 
                                            (  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, 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 United States of America, or any
              agency thereof, with any person or organization.

     II.  Under any Medical Payments Coverage, or under any Supplementary
          Payments Provision relating


                       immediate medical or
                       surgical relief
          to  [brace]                          to expenses incurred with respect
                        first aid,




                                                                          Page 1
<PAGE>   51
                  (bodily injury, sickness, disease or death
       to         (                      resulting from the hazardous properties
                  (                      of nuclear material and
                  (bodily injury
  
      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

       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 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
                     (                        arises out of the furnishing by an
                     (                        insured of services,
                     (bodily injury or property damage
                      
           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 or Canada, this exclusion (c) applies
           only
                  
           to    (injury to or destruction of property at such nuclear facility.
                 (property 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 other than tailings or wastes produced by
      the extraction or concentration of uranium or thorium from any ore
      processed primarily for its source material content, and (2) resulting
      from the operation by any person or organization of any nuclear facility
      included under the first two paragraphs of the definition of nuclear
      facility; "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 device 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 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,

      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 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. 
      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 1st 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 containing those words.
________________________________________________________________________________

                                                                          Page 2
<PAGE>   52
      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA

     1.   This Agreement does not cover any loss or liability accruing to the
Company 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 Company, 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 provision:_

     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 Company, 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 of:_

     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
          (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 useable 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;
               (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.