Exhibit 10.1







2005
Short Term Incentive (STI) Plan




Purpose: to focus
management on business challenges and opportunities within their control in the
current year. While current year results should be maximized, it should be done
in context with the steady, long-term development of the company and its
franchise with consumers.




Composition:





	 	
      1.
	
      The
      Short Term Incentive score is created by using the Core Business
      Performance Matrix (as defined below) based upon Company results as
      externally reported to shareholders. Net Income is no longer a component
      of the formula.




 


	 	
      2.
	
      An
      STI “pool” is created by multiplying the STI performance score by the STI
      target percentage for each position and the paid salary of the individual.
      Management will recommend to the Compensation Committee any variances from
      the calculated amounts for each manager in the Plan based on that
      individual’s performance and contributions for the
year.




 


	 	
      3.
	
      After
      approval of the Plan and communication of the Plan to management, the
      “pool amount” result of this Plan may not be subsequently modified without
      the affirmative vote of 2/3 of the full Compensation Committee and 2/3 of
      the full Board.




 


	 	
      4.
	
      Any
      revisions to this STI Plan, such as to the Core Business matrix for a
      subsequent year, are to be completed and approved by the Compensation
      Committee and the Board by September 30th of the year prior to the change
      taking effect.




 


	 	
      5.
	
      Bonus
      accruals are included in underwriting
results.




 

Core
Business Performance Matrix:





	 	
      1.
	
      Combined
      Ratio - calculated as the total Company combined
ratio.




 


	 	
      2.
	
      Growth
      - calculated as the percentage growth in direct written
      premium.




 


	 	
      3.
	
      Results
      will be on a Calendar Year GAAP basis as externally reported to
      shareholders.




 


	 	
      4.
	
      Specifically
      excluded from results:




 


	 	
      a.
	
      Investment
      income, financing costs, income taxes, etc.




 


	 	
      b.
	
      SB1899,
      Northridge and similar pre 2003 earthquakes and Homeowners insurance
      exposures




 


	 	
      c.
	
      One
      time adjustments in Capitalized assets, such as for
IT.




 


	 	
      5.
	
      Specifically
      includes the impact of new earthquakes, fire, flood and other natural
      disasters affecting the personal auto
business.




 


	 	
      6.
	
      Specifically
      included is the revenue and profitability from cross-selling products to
      our customers. These products may be underwritten by 21st or other
      companies.




 


	 	
      7.
	
      Results
      will be placed against the attached matrix to produce a STI Performance
      Score. Results falling between the listed points will be
      interpolated.




 




















 


	
      2005
      Core Business Performance Matrix:

	 	 	
      Calendar
      Year GAAP Combined Ratio:

	 	 	
      94
	
      95
	
      96
	
      97
	
      98
	
      99
	
      100
	
      101
	
      102

	
      %
      Growth in DWP
	
      30%
	
      200
	
      185
	
      170
	
      145
	
      120
	
      100
	
      85
	
      50
	
      0

	
      25%
	
      180
	
      165
	
      150
	
      130
	
      100
	
      85
	
      50
	
      0
	
      0

	
      20%
	
      165
	
      150
	
      125
	
      110
	
      75
	
      50
	
      0
	
      0
	
      0

	
      15%
	
      145
	
      125
	
      100
	
      75
	
      50
	
      25
	
      0
	
      0
	
      0

	
      10%
	
      130
	
      105
	
      85
	
      65
	
      35
	
      20
	
      0
	
      0
	
      0

	
      5%
	
      105
	
      90
	
      70
	
      55
	
      25
	
      15
	
      0
	
      0
	
      0

	
      0%
	
      75
	
      65
	
      50
	
      40
	
      20
	
      10
	
      0
	
      0
	
      0

	
      -5%
	
      40
	
      30
	
      25
	
      0
	
      0
	
      0
	
      0
	
      0
	
      0








	 	
      ·
	
      Numbers
      in tables represent % of target bonus to be
paid.





	 	
      ·
	
      Actual
      results are interpolated between chart
values.











	
      TARGET
      STI AS A 

      PERCENTAGE
      OF BASE 

      SALARY

	
      CEO
	
      150%

	
      Operating
      

      Committee

      Officers
	
      75%

	
      Other
      Officers
	
      50%

	
      Managers
	
      25%