EXHIBIT 10.2a

                                 PERSONAL LINES
                            GENERAL AGENCY AGREEMENT


         THIS AGREEMENT,  made March 1, 1998 between CARNEGIE GENERAL  INSURANCE
AGENCY at 3601 Calle Tecate,  Suite 200,  Camarillo,  CA 93012 ("General Agent")
and PENN-AMERICA  INSURANCE COMPANY,  420 S. York Road,  Hatboro,  Pennsylvania,
19040 ("Company").

         1. General  Provisions:  The  relationship  between the Company and the
General  Agent  is  one  of  independent   contract  based  upon  mutual  trust,
understanding,  accountability,  and responsibility. The parties agree to comply
with all applicable licensing and regulatory rules, and to conduct themselves in
a professional,  business-like,  and ethical manner at all times. This agreement
supersedes any and all prior or contemporaneous agreements, representations, and
understandings,  written and oral, on these subjects.  The undersigned signators
hereby warrant that they have full power and authority to execute this Agreement
on behalf of the respective parties thereto.

         2.   Authority  of  General   Agent:   The  General  Agent  is  granted
non-exclusive  authority  to write  private  passenger  automobile  business  in
California and Nevada as specified in Schedule A, "Underwriting Requirements and
Authority".

         3.  Compensation:  The  General  Agent will earn  commissions  and,  if
applicable,  Contingent  Profit  Commission  on  insurance  written  under  this
Agreement as set forth in Schedule B, "Commissions,  Policy Fees, and Contingent
Profit  Commission." The General Agent will not collect any service,  policy, or
other type of fee unless the Company has given  written  approval of the fee and
the fee does not  violate  any  statute,  regulation,  or other  directive.  See
Schedule B for the schedule of fees.

         4.  Premiums:  The General  Agent  shall  collect  premiums  due on all
business  written  for the  Company,  and shall be  responsible  for the  timely
payment of all premiums written by the General Agents'  subproducers and brokers
submitting  business through the General Agent. All premiums must be received by
the Company no later than 45 days after the  premium  due date,  and the General
Agent will not collect  any fee or other  compensation  related to the  business
written without the Company's prior written approval. The Company may offset any
balance  relating to premiums,  commissions,  or  otherwise,  due to the General
Agent under this Agreement or any other  agreement  (regardless of the effective
date)  entered  into  between the Company  and the  General  Agent,  against any
balance due or to become due to the Company from the General  Agent or any other
agreement between them.

         5.  Records  and  Reports:  The  General  Agent  will  comply  with the
Company's  rules and  procedures  relating to the  maintenance  and reporting of
policy and related  records,  data, and other file activity.  All of the General
Agent's records which relate in any way to the Company's business are subject to
the Company's  inspection.  This  inspection may occur during  regular  business
hours  without  prior  notice.  The  Company  may copy all such  records or make
extracts.

         6.  Indemnification:  The Company shall indemnify,  hold harmless,  and
defend the  General  Agent,  and the  General  Agent  shall  indemnify  and hold
harmless the Company, for any loss, damage,  judgment cost, claim, or expense of
any kind,  including but not limited to, attorneys' fees, which either may incur
or become liable due to the other's acts or omissions relating to or arising out
of this Agreement. The Company's obligation to indemnify the General Agent shall
be conditioned on the Company receiving prompt notification of any suit or claim
against  the  General  Agent and being  afforded  the  opportunity  to make such
investigation, settlement, or defense as the Company deems prudent.

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         7.  Arbitration:  Any controversy or claim arising out of or related to
this Agreement or its breach shall be settled by binding arbitration in Hatboro,
Pennsylvania.  One  Arbiter  shall be  chosen by the  Company,  the other by the
General Agent and these Arbiters  shall then choose an Umpire.  The Arbiters and
the  Umpire  shall be active or  retired  disinterested  executive  officers  of
property and casualty companies or insurance agencies.  If either party fails to
choose an Arbiter within thirty days following a written request from the other,
the other may choose both Arbiters.  If the Arbiters fail to agree on an Umpire,
the Umpire shall be selected in accordance with the Commercial Arbitration Rules
of the  American  Arbitration  Association  then in effect,  which  Rules  shall
generally govern the conduct of the arbitration except as specifically  modified
by this Agreement.  The decision of a majority of the three shall be final,  and
shall be based on the  customs  and  usages of the  business  and in a spirit of
equity rather than of technicalities or legal requirements. The written decision
of the Arbiters and the Umpire shall be delivered to the Company and the General
Agent within  thirty days after all matters have been  submitted  for  decision.
Each party shall pay the  expenses of its own Arbiter and  one-half the expenses
of the Umpire, except that, in the event both Arbiters have been selected by one
party,  then each party shall pay one-half of the expenses of the two  Arbiters.
Judgment on the award  rendered in the  arbitration  may be entered in any court
having jurisdiction thereof.

         8. Prompt  Notification  to Company:  The General  Agent shall  forward
promptly  to the  Company  any  correspondence  from any  regulatory  agency  or
governmental  authority.  The General Agent shall notify the Company immediately
of all  administrative  proceedings,  lawsuits,  and  threats of  lawsuits  that
involve or may  involve  the  General  Agent or the  Company  as they  relate to
business  written  pursuant to this  Agreement  or as they relate to the General
Agent's capacity to act as a General Agent of the Company.

         9. Errors and Omissions:  The General Agent shall  maintain  errors and
omissions  insurance and fidelity bonds  providing  coverage for matters arising
out of or relating to all aspects of the General Agent's business.

         10. Use of Company  Name:  The name of the Company  shall not appear in
any advertising or marketing materials used and distributed by the General Agent
unless the Company has given prior written approval.

         11.  Supplies:  All  supplies  furnished  by the Company to the General
Agent  (including but not limited to policy forms,  endorsements,  certificates,
applications and claims drafts) shall remain the Company's property. The General
Agent shall account for and/or return all supplies upon demand.

         12.  Assignment:  The  General  Agent  may not  assign  any  rights  or
obligations under this Agreement without the Company's prior written consent.

         13. Termination:  This Agreement may be terminated in one of four ways:
(i) By either  party on ninety (90) days  advance  written  notice to the other;
(ii) By either party on written  notice for any breach of the Agreement that has
not been cured within thirty (30) days after receipt of written notice  thereof;
(iii)  Automatically  if the General Agent's  insurance  license is suspended or
terminated  in any  jurisdiction;  (iv) On the  effective  date  of the  sale or
transfer of the General Agent's business,  or substantially all of the business'
assets,  from the General Agent's present  ownership without the Company's prior
written  consent.  In the  event of  termination,  all  gross  premiums  written
hereunder shall become  immediately  due and payable to the Company.  No charges
shall be made by the General  Agent for services in settlement of its account or
in winding up the business of the Company.

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<PAGE>

         14.  Severability:  If any portion of this Agreement or its application
to any circumstance is judged void or  unenforceable,  the remaining  provisions
shall not be affected,  and shall be enforced to the fullest extent permitted by
law.

         IN WITNESS  WHEREOF,  and  intending  to be bound,  the Company and the
General Agent have executed this Agreement effective March 1, 1998.

PENN-AMERICA INSURANCE COMPANY             CARNEGIE GENERAL INSURANCE AGENCY



BY: /s/ David D. Taylor                    BY: /s/ Charles W. Smith
        David D. Taylor, CIC, CPCU                 Charles W. Smith
        Senior Vice President                      Chairman and CEO

                                           BY: /s/ Eileene N. Smith
                                                   Eileene N. Smith
                                                   Vice Chairman/Secretary

                 **********************************************


PERSONAL GUARANTEE: If the General Agent is a corporation or a limited liability
company,  the  shareholder(s)  or member(s),  as the case may be,  signing below
agree to guarantee the payment of all sums due the Company under this  Agreement
and any successors hereto.



  /s/ Charles W. Smith                          /s/ Eileene N. Smith
      Charles W. Smith                              Eileene N. Smith

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                                   SCHEDULE A

                     UNDERWRITING REQUIREMENTS AND AUTHORITY



1.       The General Agent is authorized to bind,  issue,  and/or cancel private
         passenger  automobile  insurance coverage on behalf of the Company, and
         to have general  supervision of the underwriting of this coverage.  The
         Company  may  cancel or reduce the  amount of  coverage  on any risk it
         considers to be unsatisfactory.

2.       The  General  Agent  shall  adhere  to all  underwriting  requirements,
         guidelines,  and  manuals  approved  by the  Company  for  its  private
         passenger  automobile  program,  as published  and updated from time to
         time,  and the  General  Agent  shall  not bind any risk  that does not
         satisfy this criteria.

3.       The  Company  reserves  the  right  to  limit or  suspend  the  binding
         authority  and/or  premium  volume  written by the General Agent in the
         event the Company,  in its sole  discretion,  determines  that the loss
         ratios, premium volume, policy term mix, or other factors may adversely
         affect the Company's continued  compliance with regulatory,  rating, or
         financial requirements.

4.       All subproducers  utilized by the General Agent shall be deemed brokers
         of  the  General   Agent  for  all   purposes   other  than   licensing
         requirements,  and the General Agent shall be responsible and indemnify
         the Company for any liability  resulting from their acts or failures to
         act as set forth in Section 6 of the Agreement.


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<PAGE>

                                   SCHEDULE B

               COMMISSION, FEES, AND CONTINGENT PROFIT COMMISSION


1.       COMMISSION:

         The Company shall pay the General Agent the following commission on all
         business  written  pursuant to this Agreement as  compensation  for its
         services as the General Agent.

            LINES OF BUSINESS                         COMMISSION
            California
            Private Passenger Auto                    Twenty-one Percent (21%)
            Liability and Physical Damage Package


            Nevada
            Private Passenger Auto                    Twenty-three Percent (23%)
            Liability and Physical Damage Package


2.       SCHEDULE OF FEES: (California and Nevada)

             Policy Fee                               58% to the General Agent
             Billing Fee                             100% to the General Agent

The Company will be responsible  for applicable  taxes on all billing and policy
fees reported to the Company.


3.       CONTINGENT PROFIT COMMISSION (Effective January 1, 1998)

         The Company will also pay a Contingent  Profit  Commission as described
         below  ("Payments  To You Under The Plan").  Payment of the  Contingent
         Profit  Commission  will be made in  shares  of stock of the  Company's
         parent,  Penn-America  Group,  Inc.  ("PAGI") ("PAGI Stock" or "Stock")
         and,  unless the General  Agent elects  otherwise,  cash, in accordance
         with the provisions below.


PAYMENTS TO YOU UNDER THE PLAN

     A.   Allocation of Contingent Profit Commission between stock and cash:

          1)   33 1/3% of your Contingent  Profit Commission will be distributed
               in shares of PAGI stock, rounded to the nearest even share.

          2)   For the  purposes  of the  calculation,  the PAGI  stock  will be
               valued as of the median between the bid and asked price for stock
               as of March 31, Contingent Profit Commission calculation date. If
               the stock markets are closed on that date,  the valuation will be
               on the same basis as of the nearest business day.

          3)   You may, at your  option,  exercisable  by written  notice to the
               Company  received  by us on or before  March 15, take either 50%,
               75%, or 100% of your  Contingent  Profit  Commission in shares of
               PAGI stock.

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<PAGE>

     B.   Payment Due Date:

          1)   Your Contingent  Profit  Commission will be distributed to you by
               June 1.

          2)   Shares of stock  distributed to you will be delivered free of all
               commissions and transaction costs.

     C.   Your  Contingent  Profit  Commission  will be subject to income tax in
          accordance  with  the  applicable  IRS  laws  and  regulations.  Stock
          distributed to you under the Plan may not be sold until after August 1
          of the same year, and will be legended accordingly.

TERMINATION

     A.   If your General  Agency  Agreement is terminated by either party,  the
          plan also terminates,  with the final calculation of Contingent Profit
          Commission payment concerning any eligible years made at June 1 of the
          following year.

     B.   The plan may be terminated or amended by us at any time without cause,
          but existing obligations will be honored.

     C.   Contingent Profit Commission Upon Termination.

          1)   In the event the General  Agency  Agreement is  terminated by the
               Company in  accordance  with the terms of  Paragraph  13 (i), the
               General  Agency's  right to Contingent  Profit  Commission  shall
               cease on  December  31 of the year in which  the  termination  is
               effective  with the final payment made at June 1 of the following
               year.

          2)   In the event the General  Agency  Agreement is  terminated by the
               Company in accordance  with the terms of Paragraph 13 (ii), or in
               the event the General Agency  Agreement  terminates in accordance
               with  the  terms of  Paragraph  13  (iii)  or  (iv),  no  further
               calculations  shall be made,  nor  Contingent  Profit  Commission
               paid.

          3)   In the event the General  Agency  Agreement is  terminated by the
               General  Agency in accordance  with the terms of Paragraph 13 (i)
               or (ii),  or in the event the Company  gives  written  consent in
               accordance  with Paragraph  (iv),  the General  Agency's right to
               Contingent  Profit  Commission  shall cease on December 31 of the
               year  preceding  the  year in  which  termination  is  effective,
               notwithstanding  the  continuance  in  force  and  effect  of any
               unexpired policies or binders after such calendar year.  Payments
               due   concerning  any  eligible  prior  years  will  be  made  in
               accordance with the terms of Paragraph A above.



GENERAL

     A. This Contingent  Profit  Commission  Program  constitutes the entire and
     exclusive  agreement  between  Company and General Agency on the subject of
     Contingent Profit  Commissions,  and  representation,  and  understandings,
     written and oral, on these  subjects.  The  undersigned  signatures  hereby
     warrant that they have full power and authority to execute this Addendum on
     behalf of the respective parties thereto.

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                                    EXAMPLE

                          PRIVATE PASSENGER AUTOMOBILE

Passenger Automobile for Policy Year 1998

Minimum Eligibility $1,000,000 (includes all fees)
<TABLE>
<CAPTION>
                                                                Profit Calculation:
                                                                (Subtract commission and fees from earned premium;
                                                     General    multiply by difference between Company Desired        Per Year
1998                                    Company      Agency     Loss Ratio and Agency Actual Loss Ratio; divide by    Pay out
Policy                                  Desired      Actual     half; then divide by half again to establish the      Value (1/2of
Year Valued         Class of            Loss          Loss      General Agency's portion for each                     1/2 expected
As Of               Business            Ratio        Ratio      year.)                                                profit)
<S>                <C>                 <C>          <C>         <C>                                                  <C>
3/31/00 *           Private Passenger   55%           45%        Earned Premium = $10,000,000 - $2,600,000            $185,000
                    Auto Liability                               (commission paid and policy fees) = $7,400,000 x
                    and Physical                                 10% = $740,000 / 2 = $370,000 / 2
                    Damage

3/31/01 *           Private Passenger   60%           55%        Earned Premium = $10,000,000 - $2,600,000            $92,500
                    Auto Liability                               (commission paid and policy fees) = $7,400,000 x
                    and Physical                                 5% = $370,000 / 2 = $185,000 /2
                    Damage


* Note:   In any year, any actual loss ratio below 40% will be calculated as if it were 40%.

                  Total 2-year Value of Private Passenger Auto Pay Out for Policy Year 1998:                          $277,500
</TABLE>


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