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                                                                   EXHIBIT 10.21

                   FIRST EXCESS OF LOSS REINSURANCE AGREEMENT

                  (hereinafter referred to as the "Agreement")

                           entered into by and between

                SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
                       and/or S.C.P.I.E. INDEMNITY COMPANY
                      and/or S.C.P.I.E. MANAGEMENT COMPANY
                  and/or AMERICAN HEALTHCARE INDEMNITY COMPANY,
                           and/or FG CASUALTY COMPANY,
                   and/or S.C.P.I.E. INSURANCE SERVICES. INC.,
                   and/or S.C.P.I.E. MANAGEMENT SERVICES, INC.
                            Beverly Hills, California

             (hereinafter collectively referred to as the "Company")

                                       and

                   The Subscribing Reinsurer(s) executing the
                      Interests and Liabilities Contract(s)
                         attached to and forming a part
                                of this Agreement

                  (hereinafter referred to as the "Reinsurer")


WITNESSETH:

       The Reinsurer hereby reinsures the Company to the extent and the terms
and conditions subject to the exceptions, exclusions and limitations hereinafter
set forth and nothing hereinafter shall in any manner create any obligations or
establish any rights against the Reinsurer in favor of any third parties or any
persons not parties to this Agreement.

                                   ARTICLE I.

BUSINESS COVERED:

       The Reinsurer agrees to reimburse the Company, on an excess of loss
basis, for the amount of ultimate net loss which the Company may pay as the
result of claims made during the term of this Agreement under the Company's
Physicians and Surgeons Comprehensive Professional and Business Liability
policies, including Clinics and Clinical Laboratories, Professional and Business
Liability policies for Hospitals and Errors and Omissions Liability policies for
Managed Care Organizations which are in force or may hereinafter come into force
during the term of this Agreement, except as excluded under the Exclusions
Article subject to the limitations set forth in the Limits of Cover Article.


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                                   ARTICLE II.

EXCLUSIONS:

       This Agreement specifically excludes:

        1.      All liability of the Company arising by contract, operation of
                law, or otherwise, from its participation or membership, whether
                voluntary or involuntary, in any insolvency fund. "Insolvency
                Fund" includes any guaranty fund, plan, pool, association, fund
                or other arrangement, howsoever denominated, established or
                governed 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.

        2.      Loss or Liability excluded by the provisions of the attached
                "Nuclear Incident Exclusion Clause - Liability - Reinsurance".

        3.      All Assumed Reinsurance.

                                  ARTICLE III.

TERM:

A. Except as provided in paragraph C. below, this Agreement shall apply to
claims made during the twelve (12) month period beginning January 1, 1997. In
the event a loss, as defined in the Definitions Article, involves a loss or
losses covered under the current Agreement Year and a prior Agreement Year(s) no
recovery shall be made hereunder in respect of any loss which occurred prior to:

        1.      January 1, 1979 as regards Extra Contractual Obligations (as
                provided for in the Extra Contractual Obligations Clause
                Article)

        2.      January 1, 1976 as regards all other business.

B. It is understood however, that in respect of Personal Liability and Discovery
Period coverage for Deceased, Disabled, Retired and Withdrawing Physicians and
for Physicians ceasing Medical Practice within the State, this Agreement covers
claims made during the period of this Reinsurance Agreement. In the event this
Agreement is not renewed, all such liability shall be assumed by the Company
with effect from the date of cancellation.

C. The provisions of paragraphs A. and B. notwithstanding, the Company may, at
its option, elect to continue to cover the in force portfolio of liability on
the date of expiration for a further period of twelve (12) months. Should the
Company exercise this option, the Company shall give the Reinsurer notice prior
to expiration that they wish to exercise this option. The Company shall pay to
the Reinsurer an additional premium thereon as set forth in the Premium Article.


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D. If any law or regulation of the Federal, State or Local Government or any
jurisdiction in which the Company is doing business shall render illegal the
arrangements made herein, this Agreement can be terminated immediately insofar
as it applies to such jurisdiction by the Company giving notice to the Reinsurer
to such effect.

E. Notwithstanding the expiration of this Agreement as hereinabove provided, the
provisions of this Agreement shall continue to apply to all unfinished business
hereunder to the end that all obligations and liabilities incurred by each party
hereunder prior to such termination shall be fully performed and discharged.

                                   ARTICLE IV.

ATTACHMENT OF LIABILITY:

A. For purposes of determining the attachment of the Reinsurer's liability
hereunder as respects any one loss, all losses (including Discovery Period
Losses) involving one or more Original Insureds, arising from the same medical
incident, and in which First Notice of Claim or Circumstance is notified to the
Company during the term of this Agreement shall be covered hereunder. Where
First Notice falls in Agreement Years prior to January 1, 1992 paragraph D.
(Interlocking Clause) of the Limits of Cover Article below, shall apply hereon
for Physicians and Surgeons Comprehensive Professional Liability policies only.

B. The date of loss hereunder shall be the earliest date, within the term of
this Agreement, that the Company has received First Notice of Claim or
Circumstance.

                                   ARTICLE V.

LIMITS OF COVER:

A. The Company shall retain for its own account and pay under one or more of the
Company's policies the first $1,000,000 ultimate net loss, each and every loss
and the Reinsurer agrees to reimburse the Company for the amount of ultimate net
loss paid in excess of $1,000,000, each and every loss, but the Reinsurer's
maximum liability shall not exceed $1,000,000 resulting from each and every
loss.

B. Notwithstanding the foregoing, it is a condition hereto that an Annual
Aggregate Deductible of losses otherwise recoverable hereunder equal to 1% of
GNEPI shall first be deducted before any liability attaches to the Reinsurer
hereon.

C. The Reinsurer's maximum liability from all losses during the term of this
Agreement shall not exceed $8,500,000 or 182.5% of the Company's Reinsurance
Premiums Earned during the period, whichever is greater. It is further agreed
that the Reinsurer's maximum liability, as respects any elected run off period,
shall be limited to $8,500,000 or 182.5% of the Company's Reinsurance Premiums
Earned, whichever is greater, for said run-off period.

D. (This paragraph shall apply only to those claims where first notice of claim
or circumstance falls in Agreement Years prior to January 1, 1992.) As respects
each and every loss where this Agreement responds on a claims made basis, and
more than one insured or policy

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is covered under this Agreement period with claims made dates falling in more
than one reinsurance agreement period, the limit and retention as respects
claims covered under this Agreement shall be the percentage of the Limit and
Retention under this Agreement that the amount of covered claim or claims
hereunder bears to the total of all covered claims from the same loss.

                                   ARTICLE VI.

WARRANTY:

A. The Company warrants that as respects Professional and Business Liability
policies for Hospitals written on or after January 1, 1996, policy limits
greater than $500,000 reinsured elsewhere on an Excess of Loss basis or so
deemed.

B. The Company further warrants that as respects Professional and Business
Liability policies for Hospitals written prior to January 1, 1996, policy limits
greater than $5,000,000 reinsured elsewhere on an Excess of Loss basis or so
deemed.

                                  ARTICLE VII.

DEFINITIONS:

A. The term "each and every loss" shall mean the happening of one or a series of
related acts, errors, or omissions to act, accidents or occurrences arising out
of one event.

B. The term "Gross Net Earned Premium Income" shall mean the gross earned
premium on business the subject matter hereof less cancellations and return
premiums and less premiums paid for reinsurance recoveries under which would
inure to the benefit of the Reinsurer.
Such Premium Income shall be understood to include:

       1.     that content of pre-paid premiums under policies in respect of
              Deceased, Disabled and Retired Insureds, the coverage for which
              becomes effective during the Agreement period.

       2.     the premium transferred internally by the Company from a prior
              Agreement year or years, in respect of Deceased, Disabled and
              Retired Insureds and in respect of other withdrawing Insureds who
              have purchased extended coverage under Reporting Endorsements.

C. The term "claims made" as used herein shall mean (A) In respect of Claims
Made Policies, claims first notified to the Company during the term of this
Agreement on any in force policy or reporting endorsement arising out of
incidents subsequent to the retroactive date of said policy as the result of the
rendering of or failure to render a professional service or the reporting of
losses which arise from the insured premises and operations incidental to the
practice of a physician, hospital or managed care organization and/or (B) In
respect of Occurrence Policies, claims or losses first notified to the Company
during the term of this Agreement.


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                                  ARTICLE VIII.

NET RETAINED LINES:

A. This Agreement applies to only that portion of any insurance which the
Company retains net for its own account; and in calculating the amount of any
loss hereunder and also in computing the amount or amounts in excess of which
this Agreement attaches, only loss or losses in respect of that portion of any
insurance which the Company retains net for its own account shall be included.

B. 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 underwriters, whether specific or general, any amount
which may become due from them, whether such inability arises from the
insolvency of such other underwriters or otherwise.

                                   ARTICLE IX.

ULTIMATE NET LOSS:

A. The term "ultimate net loss" as used herein shall be understood to mean the
sum actually paid by the Company in settlement of losses for which it is held
liable, including pre judgment interest when made part of the award or judgment,
80% of Extra Contractual Obligations and 100% of loss in Excess of Original
Policy Limits as provided in the respectively captioned Articles, after making
proper deductions for all recoveries, salvages, and claims upon other
reinsurances and insurances which inure to the benefit of the Reinsurer under
this Agreement, whether collectible or not, and shall exclude all loss
adjustment expenses (which shall be separately allocated and paid as provided in
paragraph B. below); provided, however, that in the event of the insolvency of
the Company, "ultimate net loss" shall mean the amount of loss which the Company
has incurred or for which it is liable, and payment by the Reinsurer shall be
made to the liquidator, receiver or statutory successor of the Company in
accordance with the provisions of the Insolvency Article in this Agreement.
Nothing in this clause, however, shall be construed to mean that losses under
this Agreement are not recoverable until the ultimate net loss of the Company
has been ascertained.

B. All loss adjustment expenses incurred in investigation, adjustment and
litigation, defense and settlement of claims made against the Company under its
original policies reinsured hereunder, including pre judgment interest when not
part of an award or judgment and post judgment interest, shall be apportioned in
proportion to the respective interests of the parties hereto in the ultimate net
loss. Office expenses and salaries of officials and employees not classified as
loss adjusters are not chargeable as expenses for the purpose of this paragraph.

C. In the event a verdict or judgment is reduced by an appeal or a settlement,
subsequent to the entry of a judgment, resulting in an ultimate saving on such
verdict or judgment, or a judgment is reversed outright, the expense incurred in
securing such final reduction or reversal shall (1) be prorated between the
Reinsurer and the Company in proportion that each benefits from such reduction
or reversal and the expense incurred up to the time of the original verdict or
judgment shall be prorated in proportion to each party's interest in such
verdict or judgment; or (2) when the terms and conditions of the Company's
original policies reinsured hereunder include expenses as part of the policy
limit, be added to the Company's ultimate net loss.

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                                   ARTICLE X.

PROFIT COMMISSION:

A. The Reinsurer shall make a Profit Commission allowance of 90% to the Company
on the net profits accruing to the Reinsurer under this Agreement period
(January 1, 1997 through December 31, 1997), computed as follows.

       INCOME

       1.     Premiums earned by the Reinsurer during the Agreement period.

       OUTGO

       1.     Losses and loss adjustment expenses incurred by the Reinsurer
              during the Agreement period.

       2.     Allowance for Reinsurer's management expenses during the Agreement
              period of 25% on the reinsurance premiums earned during the
              Agreement period.

       3.     Deficit or underwriting loss, if any, brought forward from the
              preceding Agreement period.

       The amount by which INCOME exceeds OUTGO is profit.

       The amount by which OUTGO exceeds INCOME is deficit.

B. The first calculation of Profit Commission shall be computed as of December
31, 1997, and annually thereafter, and the first and final payment of any Profit
Commission shall be made by the Reinsurers to the Company as of December 31,
2001. The Company agrees that Payment of any Profit Commission shall be subject
to complete commutation as respects all losses known and unknown within the
Profit Commission period. Payment of any Profit Commission by the Reinsurers
shall constitute full and final release from all further loss development.

C. For the purposes of this Article the phrase "losses incurred" means losses
paid plus loss adjustment expenses paid less salvages recovered in respect of
claims made during the period for which computation is being made, plus the
reserve for unpaid outstanding losses and loss adjustment expenses at the close
of the period, in respect of claims made during the period.

                                   ARTICLE XI.

EXCESS OF ORIGINAL POLICY LIMITS:

A. This Agreement shall protect the Company, within the limits hereof, in
connection with any loss in excess of the limit of its original policy, such
loss in excess of the limit having been incurred because of failure by it 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.

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B. 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.

C. For the purposes 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 XII.

EXTRA CONTRACTUAL OBLIGATIONS CLAUSE:

A. This Agreement shall protect the Company within the limits hereof, where the
ultimate net loss includes Extra Contractual Obligations. "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 reinsured or in the preparation or prosecution of
an appeal consequent upon such action.

B. The date on which an Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original accident,
casualty, disaster or loss and furthermore, for the purposes hereof be deemed to
follow the claims made provisions of this Agreement, subject always to the
provisions of the Term Article.

C. 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 XIII.

CLAIMS:

A. In the event of a claim arising hereunder which either results in or appears
to be of serious enough nature as probably to result in a loss involving this
Agreement, the Company shall give notice as soon as reasonably practicable to
Reinsurers and the Company shall keep the Reinsurer advised of all subsequent
developments in connection therewith.

B. The Company shall also promptly notify the Reinsurers of all incidents
involving the following injuries for which the Company has established an
indemnity reserve of $550,000 or greater and with policy limits to affect
Reinsurers:-

       1.     Death of high wage earner with two or more dependents.

       2.     Brain Injury.

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       3.     Nerve Injury.

       4.     Paralysis - cord injury.

       5.     Amputations.

       6.     Internal injuries which require continuous treatment (e.g.
              Dialysis, Hyperalimentation, failure to diagnose).

       7.     Blindness.

C. All loss settlements made by the Company provided they are within the terms
of the Company's original policies and of this Agreement, shall be
unconditionally binding upon Reinsurer and amounts falling to the share of the
Reinsurer shall be payable to the Company in accordance with the provisions set
forth in paragraph C. of the Reports and Remittances Article.

                                  ARTICLE XIV.

COMMUTATION CLAUSE:

       The Company or the Reinsurer may, at any time express their desire to the
other party to commute all losses which are applicable to any Agreement year and
which are still unsettled. In such event the Company and the Reinsurer shall
mutually determine and evaluate such losses and the payment by the Reinsurer of
their proportion of the amount so ascertained and mutually agreed to be the
value of such losses shall relieve them of all further liability, in respect of
that Agreement year both in respect of known or unknown losses.

                                   ARTICLE XV.

PREMIUM:

A. The Company shall pay to the Reinsurer a deposit premium of $3,450,000
payable in equal quarterly installments of $862,500 on January 1st, April 1st,
July 1st and October 1st, 1997. In the event the Company elects to run off its
policies in force until natural expiration, not to exceed twelve (12) months
from the expiration date hereon, the Company shall pay to the Reinsurer a
run-off premium equal to 50% of the Actual Earned Reinsurance Premium, as set
forth in paragraph B. The run-off premium shall be paid in equal quarterly
installments on January 1st, April 1st, July 1st and October 1st, 1998.

B. As soon as practicable after expiration of this Agreement, the Company shall
calculate the premium due the Reinsurer based on a rate of 2.88% of the Gross
Net Earned Premium Income accounted for by the Company during the term of this
Agreement on all business subject matter of the Agreement, subject to a minimum
premium of $2,760,000. In the event the premium due hereunder is greater than
the deposit premium paid, the difference shall be paid to the Reinsurer
forthwith. If the actual premium is less then the deposit premium paid, the
difference shall be refunded to the Company, subject to the minimum premium.


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                                  ARTICLE XVI.

REPORTS AND REMITTANCES:

A. The Company will provide the Reinsurer within forty-five (45) days at the end
of each quarter, all necessary data respecting premiums and losses, including
reserves thereon, as at dates and on forms mutually acceptable to the Company
and the Reinsurer.

B. Payments of deposit premium, provisional premium and adjusted premium shall
be made in accordance with the provisions of the Premium Article.

C. Payment by the Reinsurer of its portion of loss and loss expenses paid by the
Company will be made by the Reinsurer to the Company as soon as possible, but
not later than sixty (60) days after proof of payment by the Company is received
by the Reinsurer.

                                  ARTICLE XVII.

OFFSET:

       The Company and the Reinsurer shall have the right to offset any balance
or amounts due from one party to the other under the terms of this Agreement.
The party asserting the right of offset may exercise such right any time whether
the balances due are on account of premiums or losses or otherwise.

                                 ARTICLE XVIII.

CONFIDENTIALITY CLAUSE:

A. This Agreement and the pre Agreement documentation may contain confidential
or proprietary information of either party to this Agreement. All parties shall
maintain the confidentiality of this information and shall not disclose these to
any third party without both parties approval.

B. Notwithstanding the above, any party may disclose such information without
further approval from the other party in answer to interrogations, subpoenas or
other legal/arbitration process as well as to the Company's reinsurance
intermediary hereon, the Reinsurer's retrocessionaires or in response to
requests by governmental and regulatory agencies. In addition the parties may
disclose such information to their accountants and outside legal counsel as may
be necessary.

                                  ARTICLE XIX.

CURRENCY:

       Premiums shall be payable by the Company and losses shall be paid to the
Company in United States currency.



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                                   ARTICLE XX.

FEDERAL EXCISE TAX:

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

A. The Reinsurer has agreed to allow, for the purpose of paying the Federal
Excise Tax, the applicable percentage of the premium payable hereon (as imposed
under Section 4371 of the Internal Revenue Service Code) to the extent such
premium is subject to the Federal Excise Tax.

B. In the event of any return of premium becoming due hereunder the Reinsurer
will deduct the aforesaid percentage from the return premium payable hereon and
the Company or its agent should take steps to recover the tax from the United
States government.

                                  ARTICLE XXI.

ERRORS AND OMISSIONS:

       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, provided such delay, omission
or error is rectified immediately upon discovery; provided, however, this
Article is not to override retroactive dates specified in the Term Article.

                                  ARTICLE XXII.

ACCESS TO RECORDS:

A. 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
this reinsurance hereunder or the subject matter thereof.

B. The Reinsurer shall be afforded the opportunity, at its own expense to
appoint an attorney of its own choice to assess the Company's claims procedures
who shall report to the Reinsurer the results of such.

                                 ARTICLE XXIII.

FUNDING:

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

A. 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 by law to set up, it will forward to the Reinsurer a statement
showing the proportion of such loss reserves which


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is applicable to the Reinsurer. The Reinsurer hereby agrees that it will apply
for and secure delivery to the Company of a clean, irrevocable and unconditional
Letter of Credit, issued by a bank which is acceptable to the regulatory
authority(ies) having jurisdiction over the Company's loss reserves in an amount
equal to the Reinsurer's proportion of reserves in respect of known outstanding
losses that have been reported to the Reinsurer and allocated loss expenses
relating thereto, plus reserves for losses incurred but not reported, as shown
in the statement prepared by the Company.

B. The Letter of Credit shall be issued for a period of not less than one (1)
year, and shall be automatically extended for one (1) year from its date of
expiration or any future expiration date unless thirty (30) days prior to any
expiration date the issuing bank shall notify the Company by registered mail
that the bank elects not to consider the Letter of Credit extended for any
additional period. An issuing bank, not a member of the Federal Reserve System
or not chartered in New York State shall provide sixty (60) days notice to the
Company prior to any expiration in the event of non-extension.

C. Notwithstanding any other provision of this Agreement, the Company or its
successors in interest may draw upon such credit at any time without diminution
because of the insolvency of the Company or of the Reinsurer for one or more of
the following purposes only:

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

        2.    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.

        3.    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.

D. The issuing bank 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.

E. At annual intervals, or more frequently as agreed but never more frequently
than quarterly, 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, plus
reserves for losses incurred but not reported. If the statement shows that
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


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expenses relating thereto, plus reserves for losses incurred but not reported 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.

                                  ARTICLE XXIV.

SPECIAL FUNDING CLAUSE:

A. If, during the period of this Agreement and thereafter, as respects any
outstanding liabilities hereunder, the Reinsurer shall fail to pay any loss
payable hereunder within the time prescribed, the Reinsurer agrees that it will
fund uncollected paid losses and loss adjustment expenses within thirty (30)
days from the date of written demand by the Company to so fund. Such demand
shall not be made unless balances are sixty (60) days or more past the due date
of payment specified in this Agreement.

B. The Reinsurer shall have the sole option of determining the method of funding
referred to above, provided it is acceptable to the insurance regulatory
authorities involved. If the Reinsurer elects to fund the aforesaid loss by a
Letter of Credit, the procedures set forth in the Funding Article in respect of
Letters of Credit shall apply. If the Reinsurer has already funded obligations
hereunder in accordance with the Funding Article in this Agreement, it agrees
that such funds as are required to pay overdue losses may immediately be drawn
down by the Company.

C. The phrase "any loss payable" as used in paragraph A. above shall mean any
ultimate net loss subject to recovery under this Agreement wherein the Reinsurer
has not disputed said loss in writing within the due date for payment.

D. The Company will provide the Reinsurer with a reinsurance proof of loss and
such other substantive loss material reflecting the nature of the settlement
(i.e., applicable Proofs of Loss, Releases, adjuster's reports, etc.). If,
subsequent to receipt of this material, the information supplied is insufficient
or not in accordance with the contractual conditions, then the payment due date
as defined in the Reports and Remittances Article, will be deemed to be the date
upon which the Reinsurer received such additional substantive material necessary
to approve payment of the claim, or the date the claim is presented in a manner
acceptable to the Reinsurer.

                                  ARTICLE XXV.

ARBITRATION:

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

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

C. If the two arbitrators are unable to agree upon the third arbitrator within
thirty (30) days of their appointment, the deficiency shall be supplied on the
application of the party requesting arbitration by an appointment made by the
American Arbitration Association. Notwithstanding the appointment of any third
Arbitrator by the American Arbitration Association, the arbitration proceedings
shall not be governed by the American Arbitration Association's commercial
arbitration rules.

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

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

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

G. The panel shall interpret this Agreement as if it were an honorable
engagement rather than as merely a legal obligation and shall make its decision
considering the custom and practice of the applicable insurance and reinsurance
business within sixty (60) days following the termination of the hearings.
Judgment upon the award may be entered in any court having jurisdiction thereof.

H. Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the cost of the third arbitrator. The
remaining costs of the arbitration shall be allocated by the panel. The panel
may, at its discretion, award such further costs and expenses as it considers
appropriate, including but not limited to attorneys fees, to the extent
permitted by law.

                                  ARTICLE XXVI.

SERVICE OF SUIT CLAUSE (U.S.A.):

A. 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


                                                                   Page 13 of 15
<PAGE>   14
Clause constitutes or should be understood to constitute a waiver of the
Reinsurer's rights 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, 725
South Figueroa, Suite 1990, Los Angeles, CA 90017, and that in any suit
instituted, the Reinsurer will abide by the final decision of such Court or of
any Appellate Court in the event of an appeal.

B. 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 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.

C. 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 their true and lawful attorney upon whom may be served
any lawful process in action, suit or proceeding instituted by or on behalf of
the Company or any beneficiary hereunder arising out of this Agreement, and
hereby designate the above-named as the person to whom the said officer is
authorized to mail such process or a true copy thereof.

                                 ARTICLE XXVII.

INSOLVENCY:

A. The portion of any risk or obligation assumed by the Reinsurer, when such
portion is ascertained, shall be payable on demand of the Company at the same
time as the Company shall pay its net retained portion of such risk or
obligation, with reasonable provision for verification before payment, and the
reinsurance shall be payable by the Reinsurer, on the basis of the liability of
the Company under the policy or policies reinsured without diminution because of
the insolvency of the Company.

B. In the event of the insolvency of one or more than one of the Companies,
reinsurance under this Agreement shall be payable immediately on demand, with
reasonable provision for verification, on the basis of claims allowed against
the insolvent Company(ies) by any court of competent jurisdiction or by any
liquidator, receiver, or statutory successor of the Company(ies) having
authority to allow such claims, without diminution because of such insolvency or
because such liquidator, receiver, or statutory successor has failed to pay all
or a portion of any claims. Such payments by the Reinsurer shall be made
directly to the Company or its liquidator, receiver or statutory successor,
except where the contract of insurance or reinsurance provides another payee of
such reinsurance in the event of the insolvency of the Company(ies).


                                                                   Page 14 of 15
<PAGE>   15
C. It is agreed, however, that the liquidator or receiver or statutory successor
of the insolvent Company(ies) will give written notice to the Reinsurer of the
pendency of a claim against the insolvent Company(ies) 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
where such claim is to be adjudicated any defense or defenses which it may deem
available to the Company(ies) or its liquidator or receiver or statutory
successor. The expense thus incurred by the Reinsurer will be chargeable,
subject to court approval, against the insolvent Company(ies) as part of the
expense of liquidation to the extent of a proportionate share of the benefit
which may accrue to the Company(ies) solely as a result of the defense
undertaken by the Reinsurer.

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

                                 ARTICLE XXVIII.

INTERMEDIARY:

       Willcox Incorporated Reinsurance Intermediaries is hereby recognized as
the Intermediary negotiating this Agreement for all business hereunder. All
communications (including but not limited to notices, statements, premium,
return premium, commissions, taxes, losses, loss adjustment expense, salvages
and loss settlements) relating thereto shall be transmitted to the Company or
the Reinsurer through Willcox Incorporated Reinsurance Intermediaries, 180
Maiden Lane, New York, New York 10038-4993. 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 to constitute payment to the
Company only to the extent that such payments are actually received by the
Company.

                                  ARTICLE XXIX.

GOVERNING LAW:

       This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California, U.S.A.

                                  ARTICLE XXX.

SEVERAL LIABILITY NOTICE:

       The subscribing reinsurers' obligations under contracts of reinsurance to
which they subscribe are several and not joint and are limited solely to the
extent of their individual subscriptions. The subscribing reinsurers are not
responsible for the subscription of any co-subscribing reinsurer who for any
reason does not satisfy all or part of its obligations.

                                                                   Page 15 of 15
<PAGE>   16
                       INTERESTS AND LIABILITIES CONTRACT

                   (hereinafter referred to as the "Contract")

                                     to the

                   FIRST EXCESS OF LOSS REINSURANCE AGREEMENT

                  (hereinafter referred to as the "Agreement")

                         It is hereby mutually agreed by

                SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
                       and/or S.C.P.I.E. INDEMNITY COMPANY
                      and/or S.C.P.I.E. MANAGEMENT COMPANY
                  and/or AMERICAN HEALTHCARE INDEMNITY COMPANY,
                           and/or FG CASUALTY COMPANY,
                   and/or S.C.P.I.E. INSURANCE SERVICES. INC.,
                   and/or S.C.P.I.E. MANAGEMENT SERVICES, INC.
                            Beverly Hills, California

             (hereinafter collectively referred to as the "Company")

                                       and





            (hereinafter referred to as the "Subscribing Reinsurer")


that the Subscribing Reinsurer shall have a __% participation in the Interests
and Liabilities of the Reinsurer as set forth in the Agreement attached hereto
entitled First Excess of Loss Reinsurance Agreement.

       Such participation shall be several and not joint with the participation
of other subscribing reinsurers, and the Subscribing Reinsurer shall under no
circumstances participate in the Interests and Liabilities, if any, of the other
subscribing reinsurers in said Agreement.

       The Company shall pay to the Subscribing Reinsurer __% of all premiums
due or which may become due the Reinsurer in accordance with the provisions of
the Agreement attached.

       This Contract shall attach on January 1, 1997 and is subject to the
provisions contained in the Term Article of the attached Agreement, which are
hereby incorporated by reference into this Contract and which shall apply as
though they had been specifically provided for herein.


                                                                     Page 1 of 2
<PAGE>   17
       The Agreement to which this Contract is attached and therefore the
Interests and Liabilities of the Subscribing Reinsurer therein, may be changed,
altered and amended as the parties may agree, provided such change, alteration
and amendment is evidenced in writing or by Addendum to this Contract, executed
by the Company and the Subscribing Reinsurer.

       IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Contract to be signed in duplicate by their duly authorized
representatives.

Signed in Beverly Hills, California
this                     day of                           August   , 1997

SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE
and/or S.C.P.I.E. INDEMNITY COMPANY
and/or S.C.P.I.E. MANAGEMENT COMPANY
and/or AMERICAN HEALTHCARE INDEMNITY COMPANY,
and/or FG CASUALTY COMPANY,
and/or S.C.P.I.E. INSURANCE SERVICES. INC.,
and/or S.C.P.I.E. MANAGEMENT SERVICES, INC.




By: /s/ DONALD J. ZUK
    ------------------------------


Signed in
this                     day of                                          , 199



                                                                     Page 2 of 2
<PAGE>   18

                              MEMORANDUM OF CHANGES

                                     to the

            SOUTHERN CALIFORNIA PHYSICIANS INSURANCE EXCHANGE, et al

                   FIRST EXCESS OF LOSS REINSURANCE AGREEMENT


       The following changes have been effected from the expiring First Excess
of Loss Reinsurance Agreement Number 01-96-0020 as per the cover note/placement
slip:

1.     The list of Companies hereon, collectively referred to as the "Company",
       has been revised.

2.     Article III, "Term", the dates have been amended, in this and all other
       applicable Articles, for the current term.

3.     Article XV, "Premium",
       -      the deposit premium decreased from $3,780,000 to $3,450,000.
       -      the minimum premium decreased from $3,024,000 to $2,760,000.
       -      the rate decreased from 3.15% to 2.88%.





                        ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.


                                                                     Page 1 of 1