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                                                                   EXHIBIT 10.64

                  FOURTH EXCESS OF LOSS REINSURANCE AGREEMENT

                 (hereinafter referred to as the "Agreement")

                          entered into by and between

                         SCPIE HOLDINGS, INC., and/or

                      S.C.P.I.E. INDEMNITY COMPANY and/or

                 AMERICAN HEALTHCARE INDEMNITY COMPANY, and/or

                 AMERICAN HEALTHCARE SPECIALTY COMPANY, and/or

                  S.C.P.I.E. INSURANCE SERVICES, INC., and/or

                     S.C.P.I.E. MANAGEMENT SERVICES, INC.
                           Beverly Hills, California
                                    and/or

                           FREMONT INDEMNITY COMPANY

            (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, Errors
<PAGE>

and Omissions Liability policies for Managed Care Organizations and Directors
and Officers Liability policies with respect to 1) claims made during the term
of this Agreement under subject policies which are in force or may hereinafter
come into force during the term of this Agreement, and 2) losses which were
first reported to the Company during the period January 1, 1992 to December 31,
1993 and are first reported to the Reinsurer 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.

                                  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, 1999.
     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 1st, 1979 as regards Extra Contractual Obligations (as provided
         for in the Extra Contractual Obligations Clause Article)

     2.  January 1st, 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
<PAGE>

     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
     covered under Section A.1. of the Limits of Cover Article of this Agreement
     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.

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
     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 incepting prior to January 1,
     1992 paragraph B. (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 a 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.   1.   As respects policies in force during the term of this Agreement, the
          Company shall retain for its own account and pay under one or more of
          the Company's policies the first $10,000,000 ultimate net loss, each
          and every loss and the Reinsurer agrees to reimburse the Company for
          the amount of ultimate net
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          loss paid in excess of $10,000,000, each and every loss, but the
          Reinsurer's maximum liability shall not exceed $10,000,000 resulting
          from each and every loss as respects Physicians and Surgeons
          Comprehensive Professional and Business Liability policies, including
          Clinics and Clinical Laboratories, Errors and Omissions Liability
          policies for Managed Care Organizations and/or Directors and Officers
          Liability and/or Professional and Business Liability policies for
          hospitals and/or Extra Contractual Obligation losses and losses in
          Excess of Original Policy Limits only, resulting from the Company's
          net retained liability from the Texas Physicians and Surgeons
          Professional Liability Program underwritten by Poe & Brown, Inc.,
          arising from any one incident.

     2.   As respects losses which were first reported to the Company during the
          period January 1, 1992 to December 31, 1993 and are first reported to
          the Reinsurer during the term of this Agreement, the Company shall
          retain for its own account and pay under one or more of the Company's
          policies the first $10,000,000 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 $10,000,000, each and every loss,
          but the Reinsurer's maximum liability shall not exceed $10,000,000
          resulting from each and every loss. The coverage provided hereunder
          shall be no narrower nor broader in scope than that which was provided
          to the Company under their Fourth Excess of Loss Reinsurance Agreement
          in force for the same period (see attached Cover Note Number 01-92-
          0599 and 01-93-0599).

          It is understood that the Maximum Annual Aggregate Amount recoverable
          under A.1. and A.2. combined is $20,000,000 in all during the period
          of this Agreement.

B.   (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 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.

WARRANTIES

The Company warrants the following in respect of the business covered hereunder:

1.   In respect of Physicians and Surgeons Comprehensive Professional and
     Business Liability policies, including Clinics and Clinical Laboratories,
     the Company
<PAGE>

     warrants the maximum original policy limits shall not exceed $10,000,000
     subject to inuring protection of $8,000,000 excess of $2,000,000 or so
     deemed.

2.   In respect of Professional and Business Liability policies for Hospitals
     written prior to January 1, 1996, policy limits greater than $5,000,000
     shall be reinsured elsewhere on an excess of loss basis or so deemed.

3.   In respect of Professional and Business Liability policies for Hospitals
     written on or after January 1, 1996 and prior to October 1, 1997, policy
     limits greater than $500,000 shall be reinsured elsewhere on an excess of
     loss basis or so deemed.

4.   In respect of Professional and Business Liability policies for Hospitals
     written on or after October 1, 1997, policy limits greater than $1,000,000
     shall be reinsured elsewhere on an excess of loss basis or so deemed.

5.   In respect of Errors and Omissions Liability policies for Managed Care
     Organizations and Directors and Officers Liability policies, the maximum
     original policy limit is $5,000,000, subject to inuring 50% Quota Share
     Recoveries and Excess of Loss Reinsurance of $2,000,000 excess of $500,000.
     Policy limits greater than $5,000,000 reinsured elsewhere on an Excess of
     Loss basis or so deemed.

6.   It is understood and agreed that the Company shall maintain an 85%
     placement of an 80% Quota Share Treaty (being a maximum cession of 80% of
     $1,000,000/$3,000,000 limit per physician) covering business classified by
     the Company as Texas Physicians and Surgeons Professional Liability
     underwritten by Poe & Brown, Inc.

                                 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
<PAGE>

          respect of other withdrawing Insureds who have purchased extended
          coverage under Reporting Endorsements.

C.   1.   With respect to recoveries made under Section A.1. of the Limits of
          Cover Article, 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.

     2.   With respect to recoveries made under Section A.2. of the Limits of
          Cover Article, the term "claims made" as used herein shall mean claims
          first reported to the Company during the period January 1, 1992 to
          December 31, 1993 and first reported to the Reinsurer during the term
          of this Agreement.

                                 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 declaratory judgement expenses incurred in
     connection with coverage questions and legal actions related to a specific
     claim, 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
<PAGE>

     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.

D.   It is understood that the Company has in effect First, Second and Third
     Excess of Loss Reinsurance Agreements and recoveries thereunder will be for
     the sole benefit of the Company and will be disregarded when computing the
     ultimate net loss of the Company.

                                  ARTICLE X.

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.
<PAGE>

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 XI.

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 XII.

CLAIMS

A.   In the event of a claim of $3,000,000 or greater 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.
<PAGE>

B.   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 XIII.

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 XIV.

PREMIUM

A.   The Company shall pay to the Reinsurer a deposit premium of $556,000
     payable in equal quarterly installments of $139,000 on January 1st, April
     1st, July 1st and October 1st, 1998. 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, 2000.

B.   As soon as practicable after expiration of this Agreement, the Company
     shall calculate the premium due the Reinsurer based on a rate of .445% 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 $417,000. 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.
<PAGE>

                                  ARTICLE XV.

REINSTATEMENT

A.   1.   As respects Section A.1. of the Limits of Cover Article:

     1.   In the event of any portion of the coverage under this Agreement being
          depleted or exhausted by loss, the amount so depleted or exhausted
          may, at the option of the Company, be reinstated from the time claim
          is first made and the Company will pay to the Reinsurer for such
          reinstatement an additional premium calculated at 100% of the annual
          reinsurance premium pro rated as to the amount so reinstated.

     2.   All calculations of reinstatement premium shall be based on paid
          losses only. The decision of the Company to exercise its reinstatement
          option must be relayed to Reinsurers within three (3) months from the
          time any reserve invades this Agreement.

Plus,

A.   2.   As respects Section A.2. of the Limits of Cover Article:

     1.   In the event of a paid loss arising under this Section, additional to
          the reinstatement premium payable above, a further reinstatement
          premium shall be payable to the Reinsurer, to be calculated at pro
          rata as respects amount reinstated and 100% as respects premium based
          on an annual premium of $120,000.

     2.   It is understood and agreed that the payment of reinstatement premiums
          arising from losses recoverable under Section A.2. above shall be
          mandatory and not at the option of the Company.

B.   Nevertheless, the Reinsurer's liability will never be more than $10,000,000
     in respect of any claim made nor more than the Maximum Annual Aggregate
     Amount Recoverable under Sections A.1. and A.2. combined of $20,000,000 in
     all during the term of the Agreement.

                                 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 and annual adjustments shall be made in
     accordance with the provisions of the Premium Article.
<PAGE>

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

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.
<PAGE>

                                  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.
<PAGE>

                                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 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.
<PAGE>

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 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
<PAGE>

     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.

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.
<PAGE>

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 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.
<PAGE>

                                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).

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).
<PAGE>

                                ARTICLE XXVIII.

INTERMEDIARY

Guy Carpenter & Company, Inc. 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 Guy Carpenter & Company, Inc., 2 World Trade Center, New York,
New York 10048. 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.