<PAGE>
                                                                   EXHIBIT 10.16

                               AMENDED SCHEDULE I

                           INVESTMENT POLICY GUIDELINE

I.       PORTFOLIO

         1.       The Client is IPCRe LIMITED (formerly International Property
                  Catastrophe Reinsurance Company Ltd.)

                  The invested portfolio is comprised of the assets held within
                  the following accounts :

                  (i)      AGM PROP Invests primarily in US Dollar High-Grade
                           Fixed Income Securities

                  (ii)     AGM PROM Invests primarily in Money Market
                           Instruments in various currencies as directed by the
                           Client from time to time.

                  (iii)    AGM PREP US Invests in US Equities only

                  (iv)     AGM PREP GE Invests in Global Equities

         hereinafter collectively referred to as "the Portfolio".

                  a.       The Portfolio represents capital for solvency
                           purposes of the Client.

                  b.       The primary objective of the Portfolio is
                           preservation of capital. A secondary objective is
                           returns commensurate with the Benchmarks as
                           hereinafter defined.

                  c.       The Client acknowledges that these Guidelines apply
                           at the time of purchase only, and failure to comply
                           at a later date with any specific guideline or
                           restriction contained in this Schedule 1 because of
                           market fluctuation, changes in the capital structure
                           of any Portfolio company, ratings agency or credit
                           ratings changes or withdrawals or other events
                           outside of the Company's control will not be deemed a
                           breach of the this Agreement including this Schedule
                           1, provided that (i) the Company cures such failure
                           to comply as soon as practicable after its discovery
                           by the Company, or (ii) the Company believes that
                           such a cure would not be in the Client's best
                           interest, and the Client provides written or oral
                           notice instructing the Company to allow the Portfolio
                           to remain outside the Guidelines.

                  d.       Any benchmarks or specific investment goals or
                           objectives (whether included within these Guidelines
                           or not) are targets only, and the Company shall not
                           be liable to the Client or to any third party for the
                           Company's failure to meet or outperform any such
                           benchmark or investment goal or objective.

         2.       The Portfolio is to be invested only in the asset class(es)
                  detailed below; together with all subsequent additions thereto
                  of which the Company is given notice, and all other property
                  acquired therefrom, proceeds therefrom, or in substitution
                  therefor, less authorized payment by the Custodian.

<TABLE>
<CAPTION>
          Asset Class                         Min %       Max %
-----------------------------------------------------------------
<S>                                         <C>         <C>
[X]  Fixed Income Securities                    0          100
                                            --------    ---------
[X]  Money Market Instruments                   0          100
                                            --------    ---------
[X]  Equity Securities  *                       0           20
                                            --------    ---------
[ ]  Convertible Bonds
                                            --------    ---------
[ ]  Equity Derivatives
                                            --------    ---------
[ ]  Financial Derivatives
                                            --------    ---------
[X]  Foreign Exchange Contracts                 0           20
                                            --------    ---------
[ ]  Foreign Exchange Derivatives
                                            --------    ---------
[X]  Money Market Funds                         0          100
                                            --------    ---------
[X]  Repurchase Agreements                      0          100
                                            --------    ---------
[ ]
                                            --------    ---------
[ ]
                                            --------    ---------
</TABLE>

         Other asset classes shall not be permitted without the express written
approval of the Client.

         *        Equity securities include investments in UCITS and other forms
                  of mutual funds.
<PAGE>
                  a.       The Portfolio shall be denominated in US DOLLARS,
                           hereinafter referred to as the Base Currency.

         3.       Counterparty Risk

                  a.       Wherever possible, all securities transactions shall
                           be executed "delivery versus payment."

                  b.       All securities transactions shall be executed with
                           commercial banks, investment banks, brokers and
                           trading firms ("Counterparties") of recognized
                           standing in the financial markets.

                  c.       To the extent that OTC Options and other derivatives,
                           Foreign Exchange Contracts and Repurchase Agreements
                           are permitted in Section I.2, they shall be executed
                           with Counterparties of recognized standing in the
                           financial markets. Further, such Counterparties shall
                           carry Investment Grade Ratings, as defined by Moody's
                           or Standard & Poor's.

II.      BENCHMARK

         The Portfolio performance shall be measured against the following
composite index:

<TABLE>
                  <S>                                                           <C>
                  Salomon Smith Barney Eurodollar Bonds 1-3 year AAA/AA Index       42.5
                                                                                ------------
                  Salomon Smith Barney Eurodollar Bonds 3-5 year AAA/AA Index       42.5
                                                                                ------------
                  US S & P 500 Index                                                 7.5
                                                                                ------------
                  MSCI World All Countries Free Daily Total Return Net (USD)         7.5
                                                                                ------------
</TABLE>

III.     CUSTODIAN

         1.       The main Custodian is AIG GLOBAL INVESTMENT TRUST SERVICES,
                  LTD., although additional Custodian accounts may be opened
                  with the approval of the Client.


IV.      GENERAL FIXED INCOME GUIDELINES

         1.       Currency

                  The Fixed Income portion of the Portfolio (hereafter, the
                  "Fixed Income Portfolio") is a

                                      [ ] Single Currency Account

                                      [ ] Hedged Currency Account

                                      [X] Multi-Currency Account as hereinafter
                                          defined.

                  a.       A Single Currency Account shall be invested 100% in
                           the Base Currency as defined in Section I.2.a.
                           Securities denominated in or linked to other
                           currencies are permitted only at the direction of the
                           Client.

                  b.       A Hedged Currency Account shall be invested in
                           securities denominated in or linked to any currency
                           provided, however, that foreign exchange contracts,
                           futures and/or options are executed to reduce the net
                           non-Base Currency exposure to less than 5 % of the
                           Portfolio Market Value.

                  c.       A Multi-Currency Account shall be invested in
                           securities denominated in or linked to any currency.
                           Whether or not foreign exchange contracts, futures
                           and or options are permitted in Section I.2., the
                           non-Base Currency exposure of the Fixed Income
                           Portfolio shall not exceed 20.0 % of the Fixed Income
                           Portfolio Market Value. The net non-Base Currency
                           exposure shall not exceed 20.0 % of the Fixed Income
                           Portfolio Market Value

                           Unless permitted in Section I.2., Foreign Exchange
                           Contracts shall not be executed for a Multi-Currency
                           Account except for the acquisition or disposition of
                           securities or for the conversion of coupon/dividend
                           receipts to the Fixed Income Portfolio Base Currency;
                           no hedging or speculative currency transactions are
                           permitted.

         2.       Country Risk
<PAGE>
                  The Fixed Income Portfolio is a    [X] Diversified Country
                                                         Risk Account

                                                     [ ] Targeted Country Risk
                                                         Account as hereinafter
                                                         defined.

                  All country limits are percent of Fixed Income Portfolio
                  MARKET Value on date of purchase and refer to the country of
                  issuer or guarantor. In the case of banking institutions, the
                  country of a full branch shall be deemed to be the domicile of
                  the head office. Country exposures shall not exceed the
                  greater of the country limit or U.S. $5,000,000 equivalent at
                  the time of purchase.

                  A Diversified Country Risk Account permits the following per
                  country limits.
<TABLE>
                  <S>                                                                            <C>
                  a.   United States                                                             100%

                  b.   Canada                        Switzerland                                  75%
                       Germany                       United Kingdom
                       Japan

                  c.   EEC, EIB, ECSC, World Bank (IBRD), Other Supranationals                    50%

                  d.   Australia    Finland          Luxembourg        Portugal                   25%
                       Austria      France           Netherlands       Spain
                       Belgium      Ireland          New Zealand       Sweden
                       Denmark      Italy            Norway

                  e.   Other (Total value of all securities not covered under IV.2.a.-d. above)   10%
</TABLE>

         3.       Issuer Limits

                  a.       Except in the case of Supranational, Sovereign, and
                           Sovereign - supported issues, where the limits under
                           IV.2 above apply, the securities of one issuer should
                           not exceed the greater of 10.0 % of the Fixed Income
                           Portfolio MARKET Value or U.S. $5,000,000 at time of
                           purchase.

         4.       Issue Limits

                  a.       In the case of fixed income securities, no holding
                           should exceed the greater of 10 % of the amount
                           outstanding or U.S. $5,000,000 nominal at the time of
                           purchase.

         5.       Maturity Limits

                  a.       In the case of fixed income securities, no individual
                           security shall have a remaining MODIFIED DURATION
                           greater than EIGHT YEARS.

                  b.       In the case of money market securities, no individual
                           security shall have a remaining MATURITY greater than
                           TEN YEARS, notwithstanding the frequency of any rate
                           reset provision of the security.

                  c.       The Fixed Income Portfolio shall maintain a target
                           WEIGHTED AVERAGE MODIFIED DURATION of between
                           approximately 1.25 AND 3.75 YEARS. For purposes of
                           this calculation only, the maturity of a floating
                           rate security is deemed to be its next succeeding
                           reset date.

         6.       US Securities

                  The purchase of US securities IS permitted.

         7.       Credit Risk

                  a.       All securities purchased for the Fixed Income
                           Portfolio which carry a long term rating by either
                           Standard & Poor's or Moody's shall have a rating of
                           AA- or AA3 or better at the time of purchase.
<PAGE>
                           Notwithstanding the foregoing, securities may be
                           purchased for the Fixed Income Portfolio which have
                           ratings of A- or A3 or better provided that, in
                           aggregate, they do not constitute more than 25 % of
                           the Fixed Income Portfolio MARKET Value. (Securities
                           which are not so rated at the time of intended
                           purchase shall not be permitted except on a case by
                           case approval of the Client.)

                           All securities purchased for the Fixed Income
                           Portfolio which carry a short term rating by either
                           Standard & Poor's or Moody's shall have a rating of
                           A-1 or P-1 or better at the time of purchase.
                           Notwithstanding the foregoing, securities may be
                           purchased for the Fixed Income Portfolio which have
                           ratings of A-2 or P-2 or better provided that, in
                           aggregate, they do not constitute more than 25 % of
                           the Fixed Income Portfolio MARKET Value. (Securities
                           which are not so rated at the time of intended
                           purchase shall not be permitted except on a case by
                           case approval of the Client.)

                  b.       Unrated securities ARE permitted. The unrated
                           securities shall have credit quality at the time of
                           purchase, as determined in good faith by the Company,
                           equivalent to other permitted securities which are
                           rated as in IV.7.a. The Client shall be notified at
                           least quarterly as to the composition and status of
                           the unrated securities held in the Fixed Income
                           Portfolio.

                  c.       A security purchased either in accordance with
                           Section IV.7.a. which receives a downwardly revised
                           rating or in accordance with Section IV.7.b. which
                           receives a newly established rating that in either
                           case would make such security ineligible for further
                           purchase remains a permitted security to the extent
                           of the then current holdings.

                  d.       Private placements ARE permitted. Any private
                           placements purchased for the Fixed Income Portfolio
                           shall be marketable securities. This permission is
                           specifically intended to allow the purchase of
                           unlisted securities.

         8.       Realized Gains/Losses

                  Net realized capital gains and losses should be minimized.
                  (For example: To the extent fixed income assets are permitted,
                  bond switch activity to enhance returns is encouraged, but
                  should not become excessive and should be undertaken within
                  the context of minimizing net gains and losses).

V.       GENERAL EQUITY GUIDELINES

         1. The U.S. Equity portion of the Portfolio may utilize either or both
         of two equity strategies. The first seeks to replicate the aggregate
         price and yield performance of the Standard & Poor's 500 Composite
         Stock Price Index (the "S&P 500 Index"), an index which emphasizes
         large capitalization companies in the United States. The second
         strategy is an actively managed equity Portfolio with emphasis on, but
         not limited to, large capitalization companies in the United States. It
         seeks to outperform the total return of the Standard & Poor's 500
         Composite Stock Price Index (the "S&P 500 Index").

         2. The Global Equity portion of the Portfolio seeks to outperform the
         total return of the MSCI World All Countries TR Free (USD) Index.

VI.      FEES

         The fee schedule will be calculated as follows: 0.35 % per annum on the
         first $100 MILLION U.S. dollars, or equivalent of Portfolio MARKET
         value; 0.25 % per annum on the next $100 MILLION; and 0.15 % per annum
         on any amount exceeding $200 MILLION.

         The fees will be calculated based on the previous month end MARKET
         value of the portfolio (including accrued interest) and are payable
         MONTHLY IN ARREARS. The fees shall be reduced proportionally for any
         part of a period in which this Agreement is not in full effect. The
         Client will be separately responsible for all brokerage commissions,
         taxes, custodian fees and any other transaction-related fees, and the
         Client authorizes the Company to incur and pay such expenses for the
         Portfolio as deemed appropriate by the Company.
<PAGE>
         Pursuant to Section 17.3 of the Agreement, effective as of 24 December,
         2001. this Amended Schedule 1 hereby supersedes and replaces in its
         entirety the previously effective Schedule 1, and all investment
         guidelines and restrictions therein, and any prior amendment or
         agreement, written or oral, between the parties, that may contradict
         the terms hereof; in all other respects, the Agreement, including all
         attachments, remains in full force and effect. Capitalized terms not
         defined herein shall have the meaning assigned to them in the Agreement
         including the attachments thereto.


Signed by:         /s/ John Weale
          ----------------------------------
          John Weale
          Vice President
          for and on behalf of IPCRE LIMITED


Signed by:        /s/  Robert Hennessy
          ----------------------------------
          Robert Hennessy
          for and on behalf of
          AIG GLOBAL INVESTMENT CORP. (IRELAND) LIMITED