<PAGE>

                                                                    EXHIBIT 10.3

                             CASUALTY EXCESS OF LOSS
                              REINSURANCE AGREEMENT
                                 NO.TC1573A,B,C

                           EFFECTIVE: January 1, 2004

                                     between
                 PHILADELPHIA CONSOLIDATED HOLDING CORPORATION'S
                           following member Companies:
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                         PHILADELPHIA INSURANCE COMPANY
                        both of Bala Cynwyd, Pennsylvania

                                       and

                      SWISS REINSURANCE AMERICA CORPORATION
                                Armonk, New York

<PAGE>

          CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT NO. TC1573A,B,C

<TABLE>
<CAPTION>
ARTICLE                 CONTENTS                                  PAGE
-------                 --------                                  ----
<S>                     <C>                                       <C>
                        PREAMBLE                                   1

I                       BUSINESS COVERED                           1

II                      EFFECTIVE DATE AND TERMINATION             2

III                     TERRITORY                                  2

IV                      LIMIT AND RETENTION                        3

V                       WARRANTY                                   4

VI                      REINSTATEMENT                              4

VII                     ULTIMATE NET LOSS                          5

VIII                    LOSS IN EXCESS OF POLICY LIMITS            6

IX                      EXTRA CONTRACTUAL OBLIGATIONS              6

X                       EXCLUSIONS                                 7

XI                      SPECIAL ACCEPTANCE                        11

XII                     LOSS OCCURRENCE                           11

XIII                    REINSURANCE PREMIUM                       13

XIV                     REPORTS AND REMITTANCES                   13

XV                      CLAIMS                                    15

XVI                     SALVAGE AND SUBROGATION                   16

XVII                    TERRORISM EXCESS RECOVERY                 16

XVIII                   ACCESS TO RECORDS                         17

XIX                     TAXES                                     18

XX                      CURRENCY                                  18

XXI                     OFFSET                                    18

XXII                    ERRORS OR OMISSIONS                       18

XXIII                   DISPUTE RESOLUTION                        19

XXIV                    INSOLVENCY                                20

XXV                     SPECIAL TERMINATION                       21

XXVI                    AMENDMENTS                                22

                        SIGNATURES                                23
</TABLE>

ATTACHMENTS:      POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE
                  INSOLVENCY FUNDS EXCLUSION CLAUSE
                  NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
                    REINSURANCE  - U.S.A.
                  NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY -
                    REINSURANCE - CANADA
                  NUCLEAR INCIDENT EXCLUSION CLAUSE -
                    REINSURANCE - NO. 4
                  PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING

<PAGE>

                             CASUALTY EXCESS OF LOSS
                              REINSURANCE AGREEMENT
                                 NO. TC1573A,B,C
                  (hereinafter referred to as the "Agreement")

                                     between
                 PHILADELPHIA CONSOLIDATED HOLDING CORPORATION'S
                           following member Companies:
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                         PHILADELPHIA INSURANCE COMPANY
                        both of Bala Cynwyd, Pennsylvania
                   (hereinafter referred to as the "Company")

                                       and

                      SWISS REINSURANCE AMERICA CORPORATION
                                Armonk, New York
                  (hereinafter referred to as the "Reinsurer")

ARTICLE I - BUSINESS COVERED

A.    The Reinsurer shall indemnify the Company on an excess of loss basis in
      respect of the Company's Ultimate Net Loss paid by the Company as a result
      of losses occurring during the term of this Agreement, for Policies in
      force as of January 1, 2004, and new and renewal Policies becoming
      effective on or after said date, subject to the terms and conditions
      contained herein.

B.    This Agreement is solely between the Company and the Reinsurer, and
      nothing contained in this Agreement shall create any obligations or
      establish any rights against the Reinsurer in favor of any person or
      entity not a party hereto.

C.    The performance of obligations by both parties under this Agreement shall
      be in accordance with a fiduciary standard of good faith and fair dealing.

D.    The term "Policies" shall mean each of the Company's binders, policies and
      contracts of insurance on the business covered hereunder.

E.    Under this Agreement, the indemnity for reinsured loss applies only to the
      following Classes of Insurance, except as excluded under Article X-
      Exclusions of this Agreement.

<PAGE>

CLASSES OF INSURANCE

      1.    Automobile Liability:

            Bodily Injury Liability, Property Damage Liability, Medical
            Payments, Uninsured Motorists, Underinsured Motorists and No-Fault
            Coverage.

      2.    Liability Other Than Automobile:

            Bodily Injury Liability, Property Damage Liability, Personal and
            Advertising Injury Liability, and Medical Payments Coverage when
            written as part of a Commercial or Personal Package Policy or on a
            monoline basis. However, Advertising Injury Liability shall only
            apply to this Agreement when written as part of a Commercial Package
            Policy or a Commercial General Liability Coverage Form.

      3.    Commercial Umbrella Liability.

      4.    Professional Liability:

            Director's and Officers Liability for For Profit and Not for Profit
            risks, Miscellaneous Errors and Omissions Liability, Lawyers
            Professional Liability, Accountants Professional Liability, Dentists
            Professional Liability, Insurance Agents Professional Liability,
            Miscellaneous Professional Liability, Employment Practices
            Liability.

ARTICLE II - EFFECTIVE DATE AND TERMINATION

A.    This Agreement shall apply to losses occurring within the period
      commencing 12:01 a.m., Eastern Standard Time, January 1, 2004, and ending
      12:01 a.m., Eastern Standard Time, January 1, 2005.

B.    During the running of such notice as stipulated in Paragraph A. above, the
      Reinsurer shall participate in business coming within the terms of this
      Agreement until the date of termination of this Agreement.

C.    Upon termination of this Agreement, the Reinsurer shall be liable for
      losses occurring prior to the date of termination; however, the Reinsurer
      shall have no liability for losses occurring subsequent to the termination
      of this Agreement.

ARTICLE III - TERRITORY

This Agreement applies to Policies issued by the Company within the United
States of America, its territories and possessions, and Canada and shall apply
to losses covered hereunder wherever occurring.

<PAGE>

ARTICLE IV - LIMIT AND RETENTION

A.    The limits and retentions provided under this Agreement are set forth in
      the following Parts I, II and III:

      Part I - First Excess of Loss (Accounting Code No. TC1573A)

      The Company shall retain the first $2,000,000 of Ultimate Net Loss as
      respects any one Loss Occurrence. The Reinsurer shall then be liable for
      the amount by which the Company's Ultimate Net Loss exceeds the Company's
      retention of $2,000,000, but the liability of the Reinsurer shall never
      exceed $3,000,000 with respect to any one Loss Occurrence. However, in no
      event shall the liability of the Reinsurer arising out of Act(s) of
      Terrorism exceed $3,000,000 during the term of this Agreement.

      Part II - Second Excess of Loss (Accounting Code No TC1573B)

      The Company shall retain the first $5,000,000 of Ultimate Net Loss as
      respects any one Loss Occurrence. The Reinsurer shall then be liable for
      the amount by which the Company's Ultimate Net Loss exceeds the Company's
      retention of $5,000,000, but the liability of the Reinsurer shall never
      exceed $5,000,000 with respect to any one Loss Occurrence. However, in no
      event shall the liability of the Reinsurer arising out of Act(s) of
      Terrorism exceed $5,000,000 during the term of this Agreement.

      Part III - Third Excess of Loss (Accounting Code No. TC1573C)

      The Company shall retain the first $10,000,000 of Ultimate Net Loss as
      respects any one Loss Occurrence. The Reinsurer shall then be liable for
      the amount by which the Company's Ultimate Net Loss exceeds the Company's
      retention of $10,000,000, but the liability of the Reinsurer shall never
      exceed $10,000,000 with respect to any one Loss Occurrence. However, in no
      event shall the liability of the Reinsurer arising out of Act(s) of
      Terrorism exceed $10,000,000 during the term of this Agreement.

B.    The Company's retention and the Reinsurer's limit of liability for each
      Loss Occurrence, set forth in Parts I, II and III above, shall apply
      irrespective of the number of Policies affected or number of hazards in
      one Policy and regardless of the number of Classes of Insurance involved.

C.    Reinsurance of the Company's retention, set forth above, shall not be
      deducted in arriving at the Company's Ultimate Net Loss herein.

D.    An "Act of Terrorism" for purposes of this Agreement shall mean:

      1.    Any actual or threatened violent act or act harmful to human life,
            tangible or intangible property or infrastructure directed towards
            or having the effect of (a) influencing or protesting against any de
            jure or de facto government or policy thereof, (b)

<PAGE>

            intimidating, coercing or putting in fear a civilian population or
            section thereof for the purpose of establishing or advancing a
            specific ideological, religious or political system of thought,
            perpetrated by a specific individual or group directly or indirectly
            through agents acting on behalf of said individual or group or (c)
            retaliating against any country for direct or vicarious support by
            that country of any other government or political system.

      2.    Any act declared pursuant to the Terrorism Risk Insurance Act of
            2002 shall also be considered an "Act of Terrorism" for purposes of
            this Agreement.

ARTICLE V - WARRANTY

A.    It is deemed that inuring Casualty Excess of Loss Reinsurance for limits
      greater than $1,000,000 per occurrence/per claim and inuring Corporate
      Errors and Omissions Insurance coverages that are in effect at the
      inception of this agreement shall be maintained without change during the
      term of this agreement.

B.    It is further warranted that Policies subject to this Agreement with
      inuring coverage as deemed above, shall not exceed a combined limit for
      both the Primary Policy and Umbrella Policy of $11,000,000 per occurrence.

C.    It is also warranted that there are no known or reported losses as of
      March 23, 2004 for the business covered hereunder.

ARTICLE VI - REINSTATEMENT

A.    Each claim hereunder reduces the amount of indemnity from the time of
      occurrence of the loss by the sum paid, but any amount so exhausted is
      hereby reinstated from the time the Loss Occurrence commences hereon.

B.    For each amount so reinstated the Company agrees to pay an additional
      premium calculated at pro rata of the annual premium hereon, being pro
      rata only as to the fraction of the limit of liability of this Agreement
      (i.e., the fraction of $3,000,000 as respects Part I and $5,000,000 as
      respects Part II and $10,000,000 as respects Part III) so reinstated and
      100% as to the term.

<PAGE>

C.    Nevertheless, the Reinsurer's liability hereunder shall never exceed
      $3,000,000 as respects Part I and $5,000,000 as respects Part II and
      $10,000,000 as respects Part III in respect of any one Loss Occurrence and
      shall be further limited in all during the term of this Agreement to
      $6,000,000 as respects Part I and $10,000,000 as respects Part II and
      $20,000,000 as respects Part III.

ARTICLE VII - ULTIMATE NET LOSS

A.    The term "Ultimate Net Loss" shall mean the actual sum paid by the Company
      in settlement of losses or liability including interest accrued prior to
      judgment after making deductions for all recoveries, including
      subrogation, salvages, and claims upon other reinsurances, whether
      collectible or not, which inure to the benefit of the Reinsurer under this
      Agreement, and shall include Loss Adjustment Expenses incurred by the
      Company; provided, however, that in the event of the insolvency of the
      Company, Ultimate Net Loss shall mean the amount of loss and Loss
      Adjustment Expenses for which the Company is liable, and payment by the
      Reinsurer shall be made to the liquidator, receiver, conservator or
      statutory successor of the Company in accordance with the provisions of
      Article XXIV- Insolvency of this Agreement.

B.    The term "Ultimate Net Loss" shall include 90% of Loss In Excess of Policy
      Limits and 90% of Extra Contractual Obligations, as defined herein, but
      only as respects business covered under this Agreement.

C.    The term "Loss Adjustment Expenses" shall mean all expenses incurred by
      the Company in connection with the investigation, settlement, defense or
      litigation, including court costs and post-judgment interest, of any claim
      or loss covered by the Policies reinsured under this Agreement, and shall
      include Declaratory Judgment Expenses. However, the term "Loss Adjustment
      Expenses" shall not include the salaries and expenses of Company
      employees, office expenses and other overhead expenses.

D.    The term "Declaratory Judgment Expenses" shall mean all legal expenses,
      incurred in the representation of the Company in litigation brought to
      determine the Company's defense and/or indemnification obligations, that
      are allocable to any specific claim or loss applicable to Policies subject
      to this Agreement. In addition, the Company shall promptly notify the
      Reinsurer of any Declaratory Judgment Expenses subject to this Agreement.

E.    All recoveries, salvages or payments recovered or received subsequent to a
      loss settlement under this Agreement shall be applied as if recovered or
      received prior to the aforesaid settlement and all necessary adjustments
      to the loss settlement shall be made by the parties hereto.

<PAGE>

F.    Nothing in this Article shall be construed to mean that losses are not
      recoverable hereunder until the Ultimate Net Loss of the Company has been
      ascertained.

ARTICLE VIII - LOSS IN EXCESS OF POLICY LIMITS

A.    "Loss in Excess of Policy Limits" is defined as loss in excess of the
      limit of the original Policy, such loss in excess of the limit having been
      incurred because of 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 in the preparation or
      prosecution of an appeal consequent upon such action.

B.    However, this Article shall not apply where the loss has been incurred due
      to fraud by 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
      which the Company would have been contractually liable to pay had it not
      been for the limit of the original Policy.

D.    With respect to coverage provided under this Article, recoveries from any
      insurance or reinsurance other than this Agreement shall be deducted to
      arrive at the amount of the Company's Ultimate Net Loss.

ARTICLE IX - EXTRA CONTRACTUAL OBLIGATIONS

A.    "Extra Contractual Obligations" are defined as those liabilities not
      covered under any other provision of this Agreement and which arise from
      the 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 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 occurrence.

<PAGE>

C.    However, coverage hereunder as respects Extra Contractual Obligations
      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.

D.    Recoveries, collectibles or retention from any other form of insurance or
      reinsurance including deductibles or self-insured retention which protect
      the Company against Extra Contractual Obligations shall inure to the
      benefit of the Reinsurer and shall be deducted from the total amount of
      Extra Contractual Obligations for purposes of determining the loss
      hereunder.

ARTICLE X- EXCLUSIONS

THIS AGREEMENT DOES NOT COVER:

A.    THE FOLLOWING GENERAL CATEGORIES

      1.    Ex-gratia payments.

      2.    Risks subject to a deductible or a self-insured retention excess of
            $25,000.

      3.    Loss or damage caused directly or indirectly by: (a) enemy attack by
            armed forces including action taken by military, naval or air forces
            in resisting an actual or an immediately impending enemy attack; (b)
            invasion; (c) insurrection; (d) rebellion; (e) revolution; (f)
            intervention; (g) civil war; and (h) usurped power.

      4.    Reinsurance assumed by the Company.

      5.    Business derived from any Pool, Association, including Joint
            Underwriting Association, Syndicate, Exchange, Plan, Fund or other
            facility directly as a member, subscriber or participant, or
            indirectly by way of reinsurance or assessments; provided this
            exclusion shall not apply to Automobile or Workers Compensation
            assigned risks which may be currently or subsequently covered
            hereunder.

      6.    Pollution Liability as per the attached Pollution Liability
            Exclusion Clause - Reinsurance.

      7.    Insolvency Funds as per the attached Insolvency Funds Exclusion
            Clause.

      8.    Nuclear Incident Exclusion Clauses which are attached and made part
            of this Agreement:

<PAGE>

            a.    Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  U.S.A.

            b.    Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  Canada.

            c.    Nuclear Incident Exclusion Clause - Reinsurance - No. 4.

      9.    Any actual or alleged liability whatsoever for any claim or claims
            in respect of loss or losses, directly or indirectly arising out of,
            resulting from, or in consequence of asbestos, in whatever form or
            quantity.

      10.   Any liability, loss, cost or expense of whatsoever nature directly
            or indirectly caused by, contributed to by, resulting from, arising
            out of or in connection with the use or release, or threat thereof,
            of any nuclear weapon or device or chemical or biological agent,
            regardless of any other cause or event contributing concurrently or
            in any other sequence to the loss.

B.    THE FOLLOWING INSURANCE COVERAGES

      1.    Fiduciary Liability.

      2.    Fidelity and Surety.

      3.    Credit and Financial Guarantee.

      4.    Securities and Exchange Liability.

      5.    Retroactive coverage.

      6.    Personal Excess or Umbrella Liability.

      7.    Medical Malpractice for Doctors, Physicians, Surgeons, Nurses,
            Hospitals and Clinics.

      8.    Advertisers,' Broadcasters' and Telecasters' Liability as respects
            Personal Injury Liability except as provided under Commercial
            Package Policies or Commercial General Liability Coverage Forms.

      9.    Liquor Law Liability except Host Liquor Law Liability.

      10.   Kidnap, Extortion and Ransom Liability.

      11.   Boiler and Machinery Insurance.

      12.   Protection and Indemnity (Ocean Marine).

      13.   Workers Compensation and Employers Liability Insurance.

      14.   Business classified by the Company as Primary Rental Liability and
            Supplemental Liability.

<PAGE>

      15.   New and Renewal business classified by the Company as Nursing Home
            or Assisted Living General Liability or Professional Liability.
            However, this exclusion shall not apply if the Company is required
            by the applicable regulatory authority(ies) to renew any insured(s)
            policy.

C.    THE FOLLOWING RISKS AS RESPECTS AUTOMOBILE LIABILITY AND AUTOMOBILE
      COLLISION

      1.    Vehicles used in or while in practice or preparation for, a
            prearranged racing, speed, exhibition or demolition contest.

      2.    All vehicles classified as "Public Automobiles" except church buses,
            social service agency automobiles, van pools and vehicles used for
            the transportation of employees.

      3.    Fire, police, emergency or municipal vehicles.

      4.    Motorcycles.

      5.    The rental or leasing of vehicles to others.

      6.    Logging trucks.

      7.    Vehicles regularly used to haul property of others and operating
            beyond a 200 mile radius.

      8.    Newspaper delivery trucks.

      9.    Vehicles engaged in the transportation or distribution of fireworks,
            fuses, explosives, ammunitions, natural or artificial fuel, gas, or
            liquefied petroleum gases or gasoline.

D.    THE FOLLOWING AS RESPECTS LIABILITY OTHER THAN AUTOMOBILE

      1.    Risks involving known exposure to the following substances:

            a.    dioxin.

            b.    polychlorinated biphenols.

      2.    Liability as respects Products and Completed Operations:

            a.    The manufacture, labeling or re-labeling, importation or
                  wholesale distribution of:

                  (i)   Drugs or pharmaceuticals.

                  (ii)  Cosmetics.

                  (iii) Herbicides, insecticides or pesticides.

                  (iv)  Petrochemical or electrical equipment used for heating,
                        lighting or cooking.

                  (v)   Industrial or toxic chemicals.

                  (vi)  Valves, gaskets or seals of a hydraulic, petrochemical
                        or high pressure nature.

                  (vii) Medical supplies.

                  (viii) Heavy machinery and equipment.

                  (ix)  Power tools.

<PAGE>

                  (x)   Medical equipment used for diagnostic or life sustaining
                        purposes.

            b.    The manufacture or importing of motorized or self-propelled
                  vehicles and equipment.

            c.    The manufacturing, importing, packing, canning, bottling or
                  processing of foodstuffs.

            d.    The blending, mixing, processing or importing of animal feed.

            e.    The manufacture, sale, distribution, handling, servicing or
                  maintenance of aircraft, aerospacecraft, missiles, satellites
                  or any component or components thereof.

      3.    Ownership, operation or use of vessels exceeding 50 feet in length.

      4.    All railway operations except sidetrack agreements.

      5.    Amusement parks, carnivals or circuses.

      6.    Public assembly exposure in excess of 5,000.

      7.    Gas, electric and water utility companies.

      8.    Subaqueous operations.

      9.    Mining.

      10.   Blasting operations.

      11.   Demolition of buildings or structures in excess of two stories.

      12.   Shoring, underpinning or moving of buildings or structures.

      13.   Manufacture, sale, rental, lease, erection or repair of scaffolds.

      14.   Construction of bridges, tunnels or dams.

      15.   a.    Manufacturers or importers of fireworks, fuses, or any
                  substance, as defined and noted below, intended for use as an
                  explosive.

            b.    Loading of fireworks, fuses, or any explosive substance
                  defined below into containers for use as explosive objects,
                  propellant charges or detonation devices and the storage
                  thereof.

            c.    Manufacturers or importers of any product in which fireworks,
                  fuses, or any explosive substance defined below is an
                  ingredient.

            d.    Handling, storage, transportation or use of fireworks, fuses,
                  or any explosive substance defined below.

<PAGE>

                  NOTE: An explosive substance is defined as any substance
                  manufactured for the express purpose of exploding as
                  differentiated from commodities used industrially and which
                  are only incidentally explosive.

      16.   Manufacture, production, refining, storage, wholesale distribution
            or transportation of natural or artificial fuel, gas, butane,
            propane or liquefied petroleum gases or gasoline.

      17.   Onshore and offshore gas and oil drilling operations.

      18.   Ownership, maintenance or use of any airport or aircraft, including
            fueling, or any device or machine intended for and/or aiding in the
            achievement of atmospheric flight, projection or orbit.

      19.   Municipalities.

      20.   Liability as respects companies identified in the attached
            Pharmaceutical / Medical Company Exclusion Listing, including all
            affiliates and subsidiaries thereof.

E.    Those exclusions set forth under Items 5. and 16. of Section D. shall not
      apply if the exposure is incidental to the regular operations of the
      insured covered hereunder. An exposure shall be considered incidental if
      it comprises 15% or less of the insured's exposure base.

F.    In the event the Company is inadvertently bound on any risk which is
      excluded under this Agreement and identified below, the reinsurance
      provided under this Agreement shall apply to such risk until discovery by
      the Company within its Home Office of the existence of such risk and for
      30 days thereafter, and shall then cease unless within the 30 day period,
      the Company has received from the Reinsurer written notice of its approval
      of such risk:

      1.    As respects Automobile Liability And Collision:

            Items 2. through 9. of Section C.

      2.    As respects Liability Other Than Automobile:

            Items 2. through 19. of Section D.

ARTICLE XI - SPECIAL ACCEPTANCE

Policies which are beyond the terms, conditions or limitations of this Agreement
may be submitted to the Reinsurer for special acceptance hereunder; and such
Policies, if accepted in writing by the Reinsurer, shall be subject to all of
the terms, conditions and limitations of this Agreement, except as modified by
the special acceptance. Premiums and losses derived from any special acceptance
shall be included with other data for rating purposes under this Agreement.

<PAGE>

ARTICLE XII - LOSS OCCURRENCE

The term "Loss Occurrence" shall mean any accident or occurrence or series of
accidents or occurrences arising out of any one event and happening within the
term and scope of this Agreement. Without limiting the generality of the
foregoing, the term "Loss Occurrence" shall be held to include:

A.    As respects Products Bodily Injury and Products Property Damage Liability,
      injuries to all persons and all damage to property of others occurring
      during a Policy Period and proceeding from or traceable to the same
      causative agency shall be deemed to arise out of one Loss Occurrence, and
      the date of such Loss Occurrence shall be deemed to be the commencing date
      of the Policy Period. For the purpose of this provision, each annual
      period of a Policy which continues in force for more than one year shall
      be deemed to be a separate Policy Period.

B.    As respects Bodily Injury Liability (other than Automobile and Products),
      said term shall also be understood to mean, as regards each original
      assured, injuries to one or more than one person resulting from infection,
      contagion, poisoning, or contamination proceeding from or traceable to the
      same causative agency.

C.    As respects Property Damage Liability (other than Automobile and
      Products), said term shall also, subject to Provisions 1. and 2. below, be
      understood to mean loss or losses caused by a series of operations,
      events, or occurrences arising out of operations at one specific site and
      which cannot be attributed to any single one of such operations, events or
      occurrences, but rather to the cumulative effect of the same. In assessing
      each and every Loss Occurrence within the foregoing definition, it is
      understood and agreed that:

      1.    the series of operations, events or occurrences shall not extend
            over a period longer than 12 consecutive months; and

      2.    the Company may elect the date on which the period of not exceeding
            12 consecutive months shall be deemed to have commenced.

      Inthe event that the series of operations, events or occurrences extend
      over a period longer than 12 consecutive months, then each consecutive
      period of 12 months, the first of which commences on the date elected
      under 2. above, shall form the basis of claim under this Agreement.

D.    As respects those Policies of the Company which provide aggregate limits
      of liability, the total of all individual losses occurring during any one
      Policy year which proceed from or are traceable to the same causative
      agency.

<PAGE>

ARTICLE XIII - REINSURANCE PREMIUM

A.    The Company shall pay to the Reinsurer a premium for the reinsurance
      provided under the First, Second and Third Excess of Loss Layers at the
      rates set forth in Paragraph B. below. Such rates shall be applied to the
      Company's Subject Earned Premium for the term of this Agreement.

B.    A deposit premium for each layer set forth below, shall be payable by the
      Company to the Reinsurer in four equal installments each due January 1,
      April 1, July 1 and October 1. Within 60 days after the termination of
      this Agreement, the Company shall render a statement to the Reinsurer
      showing the actual reinsurance premiums due hereunder. If such premium
      calculations differ from the deposit previously paid, the debtor party
      shall pay the outstanding balance within 60 days after the termination of
      this Agreement. However, in no event shall the adjusted premium be less
      than the minimum premium for each layer, set forth below.

<TABLE>
<CAPTION>
                                Minimum     Deposit      Quarterly
                       Rate     Premium     Premium       Deposit
                       ----     -------     -------       -------
<S>                    <C>      <C>        <C>           <C>
First Excess Layer     .056%    $279,104   $279,104      $ 69,776

Second Excess Layer    .068%    $338,912   $338,912      $ 84,728

Third Excess Layer     .131%    $652,904   $652,904      $163,226
</TABLE>

C.    The term "Subject Earned Premium" as used herein is equal to the sum of
      the Net Premiums Written on the business covered hereunder during the
      period under consideration, plus the unearned premium reserve as respects
      premiums in force at the beginning of such period, less the unearned
      premium reserve as respects premiums in force at the end of the period,
      said unearned premium is to be calculated on an actual daily basis or in
      accordance with the Company's methodology, as agreed.

D.    The term "Net Premiums Written" shall mean gross premiums written less
      returns, allowances and reinsurances which inure to the benefit of the
      Reinsurer.

ARTICLE XIV - REPORTS AND REMITTANCES

A.    The Company shall furnish the Reinsurer with all necessary data respecting
      premiums and losses for as long as one of the parties hereto has a claim
      against the other arising from this Agreement.

B.    All checks and supporting documentation shall be sent via wire transfer to
      the Reinsurer through one of the options set forth below:

<PAGE>

      a.    WIRE TRANSFER

            (i)   All wires should be sent to:

                        The Bank of New York
                        1 Wall Street
                        New York, NY 10286
                        Account Name: Swiss Reinsurance America Corporation
                        Account Number: 8900489197
                        ABA Number: 021000018 (SWIFT: IRVTUS3N)

            (ii)  All supporting documentation should be sent to:

                        Swiss Reinsurance America Corporation
                        Accounting Department
                        175 King Street
                        Armonk, NY 10504

      b.    LOCK BOX

            Both checks and supporting documentation shall be sent to:

            Swiss Reinsurance America Corporation
            P.O. Box 7247-7281
            Philadelphia, PA 19170-7281

C.    Premium Bordereau as respects each Policy covered under this Agreement -
      Within 30 days after the close of each calendar quarter, the Company shall
      submit a premium bordereau to the Reinsurer segregated by underwriting
      year, the following information as respects each Policy covered under this
      Agreement:

      1.    Name of Insured,

      2.    Policy Number,

      3.    Effective and Expiration Dates,

      4.    Line of Business.

D.    Payment by the Reinsurer of its portion of loss and Loss Adjustment
      Expenses paid by the Company shall be made by the Reinsurer to the Company
      within 15 days after proof of payment is received by the Reinsurer.

<PAGE>

ARTICLE XV - CLAIMS

A.    The Company shall promptly notify the Reinsurer of each claim which may
      involve the reinsurance provided hereunder and of all subsequent
      developments relating thereto, stating the amount claimed and estimate of
      the Company's Ultimate Net Loss and Loss Adjustment Expenses.
      Notwithstanding the provisions set forth in any other Article herein,
      prompt notification of loss shall be considered a condition precedent to
      liability under this Agreement.

B.    The Company shall advise the Reinsurer of all claims which:

      1.    Are reserved by the Company for an amount in excess of 50% of its
            retention;

      2.    Originate from fatal injuries;

      3.    Originate from the following kinds of bodily injury:

            a.    Brain injuries resulting in impairment of physical function;

            b.    Spinal injuries resulting in a partial or total paralysis of
                  upper or lower extremities;

            c.    Amputation or permanent loss of use of upper or lower
                  extremities;

            d.    Severe burn injuries;

            e.    Loss of sight in one or both eyes;

            f.    All other injuries likely to result in a permanent disability
                  rate of 50% or more.

C.    The Company shall have the responsibility to investigate, defend or
      negotiate settlements of all claims and lawsuits related to Policies
      written by the Company and reinsured under this Agreement. The Reinsurer,
      at its own expense, may associate with the Company in the defense or
      control of any claim, suit or other proceeding which involves or is likely
      to involve the reinsurance provided under this Agreement, and the Company
      shall cooperate in every respect in the defense of any such claim, suit or
      proceeding.

<PAGE>

ARTICLE XVI - SALVAGE AND SUBROGATION

A.    In the event of the payment of any indemnity by the Reinsurer under this
      Agreement, the Reinsurer shall be subrogated, to the extent of such
      payment, to all of the rights of the Company against any person or entity
      legally responsible for damages of the loss. The Company agrees to enforce
      such rights; but, in case the Company refuses or neglects to do so, the
      Reinsurer is hereby authorized and empowered to bring any appropriate
      action in the name of the Company or their policyholders or otherwise to
      enforce such rights.

B.    From any amount recovered by subrogation, salvage or other means, there
      shall first be deducted the expenses incurred in effecting the recovery.
      The balance shall then be used to reimburse the excess carriers in the
      inverse order to that in which their respective liabilities attached,
      before being used to reimburse the Company for its primary loss.

ARTICLE XVII - TERRORISM EXCESS RECOVERY

A.    For purposes of this Article:

      1.    "Act" shall mean the Terrorism Risk Insurance Act of 2002, any
            amendments thereto and any regulations promulgated thereunder.

      2.    "Affiliate," "Insured Losses," and "Program Year" shall have the
            meanings provided in the Act.

      3.    "Company" shall include the Company and all affiliates.

B.    This reinsurance shall not apply to any fines, civil penalties or
      surcharges assessed pursuant to the Act.

C.    To the extent that the Company allocates Insured Losses and/or federal
      assistance under the Act among affiliates, claims, contracts or otherwise
      in any manner which impacts the reinsurance provided hereunder, the
      Company shall apply a reasonable allocation method acceptable to the
      Reinsurer.

D.    To the extent that an Insured Loss is otherwise payable hereunder, the
      reinsurance provided by this Agreement shall apply only to the portion of
      liability, loss, cost and/or expense retained by the Company net of any
      federal assistance pursuant to the Act. For each Program Year, the
      liability of the Reinsurer for Insured Losses under this Agreement shall
      be reduced by the ratio that the financial assistance under the Act
      allocated to Policies subject to this Agreement bears to the Company's
      total Insured Losses subject to this Agreement. If the Company does not
      make such allocation, the liability of the Reinsurer for Insured Losses in
      any Program Year under this Agreement shall be reduced by the ratio that
      the financial assistance available to the Company under the Act for that
      Program

<PAGE>

      Year bears to the Company's total Insured Losses for the same Program
      Year.

E.    The parties recognize that, for any Program Year, the Reinsurer may
      without waiver of the foregoing Paragraphs make payments for Insured
      Losses which, together with available financial assistance under the Act
      and the Company retentions and/or deductibles hereunder, exceed the
      Company's Insured Losses. In such event, the Reinsurer's proportional
      share of all such excess recovery (hereafter "Reinsurer's Excess Share")
      shall inure to the benefit of the Reinsurer. All excess recovery described
      in this Paragraph shall be allocated to the Reinsurer and the Company in
      proportion to the respective liability of each for Insured Losses, net of
      federal assistance under the Act, salvage, subrogation and other similar
      recoveries, as applicable.

F.    In the event of a Reinsurer's Excess Share, the Company shall:

      1.    Promptly pay the Reinsurer's Excess Share to the Reinsurer; or

      2.    Upon request of the Reinsurer at any time and at the Reinsurer's
            sole discretion, instead assign to the Reinsurer its rights to
            recover directly from the federal government any portion of
            Reinsurer's Excess Share not already paid to the Reinsurer. The
            Company shall cooperate with and assist the Reinsurer, at its own
            expense, to the extent reasonably necessary for the Reinsurer to
            exercise those rights. If the Reinsurer is unable, for any reason,
            to exercise any right assigned to it by the Company pursuant to this
            Article, the Company shall pay the Reinsurer's Excess Share to the
            Reinsurer as if no assignment had taken place to the extent that the
            Company has not been deemed to have forfeited the right to financial
            assistance under the Act by virtue of the attempted assignment.

G.    In the event of an Insured Loss, the Company shall provide the Reinsurer
      with a monthly report detailing claim settlement activities and financial
      assistance under the Act. Calculations for each Program Year shall
      continue to be made until the settlement of all Insured Losses covered
      hereunder.

ARTICLE XVIII - ACCESS TO RECORDS

The Reinsurer or its duly authorized representatives shall have the right to
examine, at the offices of the Company at a reasonable time, during the currency
of this Agreement or anytime thereafter, all books and records of the Company
relating to business which is the subject of this Agreement.

<PAGE>

ARTICLE XIX - TAXES

The Company shall be liable for all taxes on premiums paid to the Reinsurer
under this Agreement, except income or profit taxes of the Reinsurer, and shall
indemnify and hold the Reinsurer harmless for any such taxes which the Reinsurer
may become obligated to pay to any local, state or federal taxing authority.

ARTICLE XX - CURRENCY

Wherever the word "dollars" or the "$" symbol is used in this Agreement, it
shall mean dollars of the United States of America, excepting in those cases
where the Policy is issued by the Company in Canadian dollars, in which case it
shall mean dollars of Canada. In the event the Company is involved in a loss
requiring payment in United States and Canadian currency, the Company's
retention and the limit of liability of the Reinsurer shall be apportioned
between the two currencies in the same proportion as the amount of net loss in
each currency bears to the total amount of net loss paid by the Company. For the
purposes of this Agreement, where the Company receives premiums or pays losses
in currencies other than United States or Canadian currency, such premiums and
losses shall be converted into United States dollars at the actual rates of
exchange at which the premiums and losses are entered in the Company's books.

ARTICLE XXI - OFFSET

Each party to this Agreement together with their successors or assigns shall
have and may exercise, at any time, the right to offset any balance or balances
due the other (or, if more than one, any other). Such offset may include
balances due under this Agreement and any other agreements heretofore or
hereafter entered into between the parties regardless of whether such balances
arise from premiums, losses or otherwise, and regardless of capacity of any
party, whether as assuming insurer and/or ceding insurer, under the various
agreements involved, provided however, that in the event of insolvency of a
party hereto, offsets shall only be allowed in accordance with the provisions of
Section 7427 of the Insurance Law of the State of New York to the extent such
statute or any other applicable law, statute or regulation governing such offset
shall apply.

ARTICLE XXII - ERRORS OR OMISSIONS

Errors or omissions of an administrative nature on the part of the Company shall
not invalidate the reinsurance under this Agreement, provided such errors or
omissions are corrected promptly after discovery

<PAGE>

thereof; but the liability of the Reinsurer under this Agreement or any
exhibits, addenda, or endorsements attached hereto shall in no event exceed the
limits specified herein nor be extended to cover any risks, perils, lines of
business or classes of insurance generally or specifically excluded herein.

ARTICLE XXIII - DISPUTE RESOLUTION

Part I - Choice Of Law And Forum

Any dispute arising under this Agreement shall be resolved in the State of
Pennsylvania, and the laws of the State of Pennsylvania shall govern the
interpretation and application of this Agreement.

Part II - Mediation

If a dispute between the Company and the Reinsurer, arising out of the
provisions of this Agreement or concerning its interpretation or validity and
whether arising before or after termination of this Agreement has not been
settled through negotiation, both parties agree to try in good faith to settle
such dispute by nonbinding mediation, before resorting to arbitration.

Part III - Arbitration

A.    Resolution of Disputes - As a condition precedent to any right of action
      arising hereunder, any dispute not resolved by mediation between the
      Company and the Reinsurer arising out of the provisions of this Agreement
      or concerning its interpretation or validity, whether arising before or
      after termination of this Agreement, shall be submitted to arbitration in
      the manner hereinafter set forth.

B.    Composition of Panel - Unless the parties agree upon a single arbitrator
      within 15 days after the receipt of a notice of intention to arbitrate,
      all disputes shall be submitted to an arbitration panel composed of two
      arbitrators and an umpire chosen in accordance with Paragraph C. hereof.

C.    Appointment of Arbitrators - The members of the arbitration panel shall be
      chosen from persons knowledgeable in the insurance and reinsurance
      business. Unless a single arbitrator is agreed upon, the party requesting
      arbitration (hereinafter referred to as the "claimant") shall appoint an
      arbitrator and give written notice thereof by certified mail, to the other
      party (hereinafter referred to as the "respondent") together with its
      notice of intention to arbitrate. Within 30 days after receiving such
      notice, the respondent shall also appoint an arbitrator and notify the
      claimant thereof by certified mail. Before instituting a hearing, the two
      arbitrators so appointed shall choose an umpire. If, within 20 days after
      the appointment of the arbitrator chosen by the respondent, the

<PAGE>
      two arbitrators fail to agree upon the appointment of an umpire, each of
      them shall nominate three individuals to serve as umpire, of whom the
      other shall decline two and the umpire shall be chosen from the remaining
      two by drawing lots. The name of the individual first drawn shall be the
      umpire.

D.    Failure of Party to Appoint an Arbitrator - If the respondent fails to
      appoint an arbitrator within 30 days after receiving a notice of intention
      to arbitrate, the claimant's arbitrator shall appoint an arbitrator on
      behalf of the respondent, such arbitrator shall then, together with the
      claimant's arbitrator, choose an umpire as provided in Paragraph C. of
      Part III of this Article.

E.    Submission of Dispute to Panel - Unless otherwise extended by the
      arbitration panel or agreed to by the parties, each party shall submit its
      case to the panel within 30 days after the selection of the umpire.

F.    Procedure Governing Arbitration - All proceedings before the panel shall
      be informal and the panel shall not be bound by the formal rules of
      evidence. The panel shall have the power to fix all procedural rules
      relating to the arbitration proceeding. In reaching any decision, the
      panel shall give due consideration to the customs and usages of the
      insurance and reinsurance business.

G.    Arbitration Award - The arbitration panel shall render its decision within
      60 days after termination of the proceeding, which decision shall be in
      writing, stating the reasons therefor. The decision of the majority of the
      panel shall be final and binding on the parties to the proceeding.

H.    Cost of Arbitration - Unless otherwise allocated by the panel, each party
      shall bear the expense of its own arbitrator and shall jointly and equally
      bear with the other parties the expense of the umpire and the arbitration.

ARTICLE XXIV- INSOLVENCY

A.    In the event of insolvency of the Company, the reinsurance provided by
      this Agreement shall be payable by the Reinsurer on the basis of the
      liability of the Company as respects Policies covered hereunder, without
      diminution because of such insolvency, directly to the Company or its
      liquidator, receiver, conservator or statutory successor except as
      provided in Sections 4118(a)(1)(A) and 1114(c) of the New York Insurance
      Law.

<PAGE>

B.    The Reinsurer shall be given written notice of the pendency of each claim
      or loss which may involve the reinsurance provided by this Agreement
      within a reasonable time after such claim or loss is filed in the
      insolvency proceedings. The Reinsurer shall have the right to investigate
      each such claim or loss and interpose, at its own expense, in the
      proceedings where the claim or loss is to be adjudicated, any defense
      which it may deem available to the Company, its liquidator, receiver,
      conservator or statutory successor. The expense thus incurred by the
      Reinsurer shall be chargeable, subject to court approval, against the
      insolvent Company as part of the expense of liquidation to the extent of a
      proportionate share of the benefit which may accrue to the Company solely
      as a result of the defense undertaken by the Reinsurer.

C.    In addition to the offset provisions set forth in Article XXI- Offset, any
      debts or credits, liquidated or unliquidated, in favor of or against
      either party on the date of the receivership or liquidation order (except
      where the obligation was purchased by or transferred to be used as an
      offset) are deemed mutual debts or credits and shall be set off with the
      balance only to be allowed or paid. Although such claim on the part of
      either party against the other may be unliquidated or undetermined in
      amount on the date of the entry of the receivership or liquidation order,
      such claim will be regarded as being in existence as of such date and any
      claims then in existence and held by the other party may be offset against
      it.

D.    Nothing contained in this Article is intended to change the relationship
      or status of the parties to this Agreement or to enlarge upon the rights
      or obligations of either party hereunder except as provided herein.

ARTICLE XXV - SPECIAL TERMINATION

A.    Notwithstanding the termination provisions set forth in Article
      II-Effective Date and Termination, this Agreement shall be:

      1.    Terminated automatically and simultaneously upon the happening of
            any of the following events:

            a.    Entry of an order of liquidation, rehabilitation, receivership
                  or conservatorship with respect to the Company or the
                  Reinsurer by any court or regulatory authority;

            b.    Assignment of this Agreement by either party;

            c.    General reinsurance of any portion of the Company's business
                  it retains net for its own account, as determined under the
                  provisions of this Agreement without prior consent of the
                  Reinsurer.

<PAGE>

      2.    Terminated by either party giving not less than 30 days prior
            written notice to the other party upon the happening of the
            following event:

                  Any transfer of control of either party by change in ownership
                  or otherwise.

      3.    Terminated by the Reinsurer by giving not less than 30 days prior
            written notice to the Company upon the happening of the following
            event:

                  Failure of the Company to remit premiums in accordance with
                  the provisions set forth in this Agreement.

      4.    Terminated in accordance with the provisions set forth in this
            Paragraph, upon the discovery of the following event:

                  A reduction of 50% or more of the Company's policyholders
                  surplus during any calendar year. Such reduction shall be
                  determined by calculating the difference between the Company's
                  prior year annual statement and each subsequent quarterly
                  statutory statement within such current calendar year.

            Asrespects the event set forth in this Paragraph A.4., the Company
            shall be obligated to notify the Reinsurer in writing within 30 days
            after the filing of its quarterly statement. Upon receipt of such
            notification the Reinsurer shall have the right to terminate this
            Agreement, by giving not less than 30 days notice of its intention
            to do so.

B.    Any notice of termination pursuant to the provisions set forth in
      Paragraphs A.2., A.3. and A.4. above shall be sent by certified mail,
      return receipt requested. Such notice period shall commence upon the other
      party's receipt of the notice of termination.

C.    In the event of termination, as provided under the provisions of this
      Article, the Reinsurer shall not be liable for losses occurring subsequent
      to the date of termination.

ARTICLE XXVI - AMENDMENTS

This Agreement may be amended by mutual consent of the parties expressed in an
addendum; and such addendum, when executed by both parties, shall be deemed to
be an integral part of this Agreement and binding on the parties hereto.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate, by their duly authorized representatives as of the following
dates:

In Bala Cynwyd, Pennsylvania, this       day of      , 2004.

ATTEST:                           PHILADELPHIA CONSOLIDATED HOLDING
                                     CORPORATION'S
                                  following member Companies:
                                  PHILADELPHIA INDEMNITY INSURANCE
                                     COMPANY
                                  PHILADELPHIA INSURANCE COMPANY

Douglas Goudet                    Christpher Maguire
------------------------          ----------------------------------------------

And in Armonk, New York, this     day of                   , 2004.

ATTEST:                           SWISS REINSURANCE AMERICA CORPORATION

Peter Thomson                      Bruno P. Bauer
------------------------          ----------------------------------------------
  Member of Management                    Member of Senior Management

<PAGE>

                          SUPPLEMENT TO THE ATTACHMENTS

         DEFINITION OF IDENTIFICATION TERMS USED WITHIN THE ATTACHMENTS

A.    Wherever the term "Company" or "Reinsured" or "Reassured" or whatever
      other term is used to designate the reinsured company or companies within
      the various attachments to the reinsurance agreement, the term shall be
      understood to mean Company or Reinsured or Reassured or whatever other
      term is used in the attached reinsurance agreement to designate the
      reinsured company or companies.

B.    Wherever the term "Agreement" or "Contract" or "Policy" or whatever other
      term is used to designate the attached reinsurance agreement within the
      various attachments to the reinsurance agreement, the term shall be
      understood to mean Agreement or Contract or Policy or whatever other term
      is used to designate the attached reinsurance agreement.

C.    Wherever the term "Reinsurer" or "Reinsurers" or "Underwriters" or
      whatever other term is used to designate the reinsurer or reinsurers in
      the various attachments to the reinsurance agreement, the term shall be
      understood to mean Reinsurer or Reinsurers or Underwriters or whatever
      other term is used to designate the reinsuring company or companies.

<PAGE>

               POLLUTION LIABILITY EXCLUSION CLAUSE - REINSURANCE

      This Reinsurance excludes:

      (1)   Any loss occurrence arising out of the actual, alleged or threatened
            discharge, dispersal, release or escape of pollutants:

            a)    At or from premises owned, rented or occupied by an original
                  assured; or

            b)    At or from any site or location used for the handling,
                  storage, disposal, processing or treatment of waste; or

            c)    Which are at any time transported, handled, stored, treated,
                  disposed of, or processed as waste; or

            d)    At or from any site or location on which any original assured
                  is performing operations:

                  (i)     If the pollutants are brought on or to the site or
                          location in connection with such operations; or

                  (ii)    If the operations are to test for, monitor, clean up,
                          remove, contain, treat, detoxify or neutralize the
                          pollutants.

      (2)   Any liability, loss, cost or expense arising out of any governmental
            direction or request to test for, monitor, clean up, remove,
            contain, treat, detoxify or neutralize pollutants.

"Pollutants" means any solid, liquid, gaseous or thermal irritant or
contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
waste. Waste includes materials to be recycled, reconditioned or reclaimed.

Subparagraphs a) and d)(i) of paragraph (1) of this exclusion do not apply to
loss occurrences caused by heat, smoke or fumes from a hostile fire. As used
herein, "hostile fire" means one which becomes uncontrollable or breaks out from
where it was intended to be.

"Original assured" as used herein means all insureds as defined in the policy
issued by the Company.

<PAGE>

                        INSOLVENCY FUNDS EXCLUSION CLAUSE

This Agreement excludes 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 or from reimbursement of any
person for any such liability. "Insolvency fund" includes any guaranty fund,
insolvency fund, plan, pool, association, fund or other arrangement, howsoever
denominated, established or governed, which provides for any assessment of or
payment or assumption by any person 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.

      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.

      N.M.A. 1590

1.    This reinsurance does not cover any loss or liability accruing to the
      Reassured as a member of, or subscriber to, any association of insurers or
      reinsurers formed for the purpose of covering nuclear energy risks or as a
      direct or indirect reinsurer of any such member, subscriber or
      association.

2.    Without in any way restricting the operation of paragraph 1. of this
      Clause it is understood and agreed that for all purposes of this
      reinsurance all the original policies of the Reassured (new, renewal and
      replacement) of the classes specified in Clause II. in this paragraph 2.
      from the time specified in Clause III. in this paragraph 2. shall be
      deemed to include the following provision (specified as the Limited
      Exclusion Provision):

      LIMITED EXCLUSION PROVISION*

      I.    It is agreed that the policy does not apply under any liability
            coverage, to INJURY, SICKNESS, DISEASE, DEATH OR DESTRUCTION, bodily
            injury or property damage with respect to which an insured under the
            policy is also an insured under a nuclear energy liability policy
            issued by Nuclear Energy Liability Insurance Association, Mutual
            Atomic Energy Liability Underwriters or Nuclear Insurance
            Association of Canada, or would be an insured under any such policy
            but for its termination upon exhaustion of its limit of liability.

<PAGE>

      II.   Family Automobile Policies (liability only), Special Automobile
            Policies (private passenger automobiles, liability only), Farmers
            Comprehensive Personal Liabilities Policies (liability only),
            Comprehensive Personal Liability Policies (liability only) or
            policies of a similar nature; and the liability portion of
            combination forms related to the four classes of policies stated
            above, such as the Comprehensive Dwelling Policy and the applicable
            types of Homeowners Policies.

      III.  The inception dates and thereafter of all original policies as
            described in II. above, whether new, renewal or replacement, being
            policies which either

<PAGE>

            (a)   become effective on or after 1st May, 1960, or

            (b)   become effective before that date and contain the Limited
                  Exclusion Provision set out above; provided this paragraph 2.
                  shall not be applicable to Family Automobile Policies, Special
                  Automobile Policies, or policies or combination policies of a
                  similar nature, issued by the Reassured on New York risks,
                  until 90 days following approval of the Limited Exclusion
                  Provision by the Governmental Authority having jurisdiction
                  thereof.

3.    Except for those classes of policies specified in Clause II. of paragraph
      2. and without in any way restricting the operation of paragraph 1. of
      this Clause, it is understood and agreed that for all purposes of this
      reinsurance the original liability policies of the Reassured (new, renewal
      and replacement) affording the following coverages:

      Owners, Landlords and Tenants Liability, Contractual Liability, Elevator
      Liability, Owners or Contractors (including railroad) Protective
      Liability, Manufacturers and Contractors Liability, Product Liability,
      Professional and Malpractice Liability, Storekeepers Liability, Garage
      Liability, Automobile Liability (including Massachusetts Motor Vehicle or
      Garage Liability)

      shall be deemed to include with respect to such coverages, from the time
      specified in Clause V. of this paragraph 3., the following provision
      (specified as the Broad Exclusion Provision):

      BROAD EXCLUSION PROVISION*

      It is agreed that the policy does not apply:

      I.    Under any Liability Coverage to INJURY, SICKNESS, DISEASE, DEATH OR
            DESTRUCTION, bodily injury or property damage

            (a)   with respect to which an insured under the policy is also an
                  insured under nuclear energy liability policy issued by
                  Nuclear Energy Liability Insurance Association, Mutual Atomic
                  Energy Liability Underwriters or Nuclear Insurance Association
                  of Canada, or would be an insured under any such policy but
                  for its termination upon exhaustion of its limit of liability;
                  or

            (b)   resulting from the hazardous properties of nuclear material
                  and with respect to which (1) any person or organization is
                  required to maintain financial protection pursuant to the
                  Atomic Energy Act of 1954, or any law amendatory thereof, or
                  (2) the insured is, or had this policy not been issued would
                  be, entitled

<PAGE>

                  to indemnity from the United States of America, or any agency
                  thereof, under any agreement entered into by the United States
                  of America, or any agency thereof, with any person or
                  organization.

      II.   Under any Medical Payments Coverage, or under any Supplementary
            Payments Provision relating to IMMEDIATE MEDICAL OR SURGICAL RELIEF,
            first aid, to expenses incurred with respect to BODILY INJURY,
            SICKNESS, DISEASE OR DEATH, bodily injury resulting from the
            hazardous properties of nuclear material and arising out of the
            operation of a nuclear facility by any person or organization.

      III.  Under any Liability Coverage, to INJURY, SICKNESS, DISEASE, DEATH OR
            DESTRUCTION, bodily injury or property damage resulting from the
            hazardous properties of nuclear material, if

            (a)   the nuclear material (1) is at any nuclear facility owned by,
                  or operated by or on behalf of, an insured or (2) has been
                  discharged or dispersed therefrom;

            (b)   the nuclear material is contained in spent fuel or waste at
                  any time possessed, handled, used, processed, stored,
                  transported or disposed of by or on behalf of an insured; or

            (c)   the INJURY, SICKNESS, DISEASE, DEATH OR DESTRUCTION, bodily
                  injury or property damage arises out of the furnishing by an
                  insured of services, materials, parts or equipment in
                  connection with the planning, construction, maintenance,
                  operation or use of any nuclear facility, but if such facility
                  is located within the United States of America, its
                  territories, or possessions or Canada, this exclusion (c)
                  applies only to INJURY TO OR DESTRUCTION OF PROPERTY AT SUCH
                  NUCLEAR FACILITY, property damage to such nuclear facility and
                  any property thereat.

<PAGE>

      IV.   As used in this endorsement:

            "hazardous properties" include radioactive, toxic or explosive
            properties; "nuclear material" means source material, special
            nuclear material or byproduct material; "source material," "special
            nuclear material," and "byproduct material" have the meanings given
            them in the Atomic Energy Act of 1954 or in any law amendatory
            thereof; "spent fuel" means any fuel element or fuel component,
            solid or liquid, which has been used or exposed to radiation in a
            nuclear reactor; "waste" means any waste material (1) containing
            byproduct material other than the tailings or wastes produced by the
            extraction or concentration of uranium or thorium from any ore
            processed for its source material content and (2) resulting from the
            operation by any person or organization of any nuclear facility
            included within the definition of nuclear facility under paragraph
            (a) or (b) thereof; "nuclear facility" means

            (a)   any nuclear reactor,

            (b)   any equipment or device designed or used for (1) separating
                  the isotopes of uranium or plutonium, (2) processing or
                  utilizing spent fuel, or (3) handling, processing or packaging
                  waste,

            (c)   any equipment or device used for the processing, fabricating
                  or alloying of special nuclear material if at any time the
                  total amount of such material in the custody of the insured at
                  the premises where such equipment or device is located
                  consists of or contains more than 25 grams of plutonium or
                  uranium 233 or any combination thereof, or more than 250 grams
                  of uranium 235,

            (d)   any structure, basin, excavation, premises or place prepared
                  or used for the storage or disposal of waste

            and includes the site on which any of the foregoing is located, all
            operations conducted on such site and all premises used for such
            operations; "nuclear reactor" means any apparatus designed or used
            to sustain nuclear fission in a self-supporting chain reaction or to
            contain a critical mass of fissionable material; WITH RESPECT TO
            INJURY TO OR DESTRUCTION OF PROPERTY, THE WORD "INJURY" OR
            "DESTRUCTION" INCLUDES ALL FORMS OF RADIOACTIVE CONTAMINATION OF
            PROPERTY; "property damage" includes all forms of radioactive
            contamination of property.

<PAGE>

      V.    The inception dates and thereafter of all original policies
            affording coverages specified in this paragraph 3., whether new,
            renewal or replacement, being policies which become effective on or
            after 1st May, 1960, provided this paragraph 3. shall not be
            applicable to

            (i)   Garage and Automobile Policies issued by the Reassured on New
                  York risks, or

            (ii)  Statutory liability insurance required under Chapter 90,
                  General Laws of Massachusetts,

            until 90 days following approval of the Broad Exclusion Provision by
            the Governmental Authority having jurisdiction thereof.

4.    Without in any way restricting the operations of paragraph 1. of this
      Clause, it is understood and agreed that paragraphs 2. and 3. above are
      not applicable to original liability policies of the Reassured in Canada,
      and that with respect to such policies, this Clause shall be deemed to
      include the Nuclear Energy Liability Exclusion Provisions adopted by the
      Canadian Underwriters' Association or the Independent Insurance Conference
      of Canada.

*NOTE:      The words printed in BOLD TYPE in the Limited Exclusion Provision
            and in the Broad Exclusion Provision shall apply only in relation to
            original liability policies which include a Limited Exclusion
            Provision or a Broad Exclusion Provision containing those words.

      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA

      N.M.A. 1979

1.    This Agreement does not cover any loss or liability accruing to the
      Company as a member of, or subscriber to, any association of insurers or
      reinsurers formed for the purpose of covering nuclear energy risks or as a
      direct or indirect reinsurer of any such member, subscriber or
      association.

2.    Without in any way restricting the operation of Paragraph 1. of this
      Clause, it is agreed that for all purposes of this Agreement all the
      original liability contracts of the Company, whether new, renewal or
      replacement, of the following classes, namely,

            Personal Liability
            Farmers' Liability
            Storekeepers' Liability

<PAGE>

      which become effective on or after 31st December 1984, shall be deemed to
      include, from their inception dates and thereafter, the following
      provision:

      Limited Exclusion Provision -

      This Policy does not apply to bodily injury or property damage with
      respect to which the Insured is also insured under a contract of nuclear
      energy liability insurance (whether the Insured is unnamed in such
      contract and whether or not it is legally enforceable by the Insured)
      issued by the Nuclear Insurance Association of Canada or any other group
      or pool of insurers or would be an Insured under any such policy but for
      its termination upon exhaustion of its limits of liability.

      With respect to property, loss of use of such property shall be deemed to
      be property damage.

3.    Without in any way restricting the operation of Paragraph 1. of this
      Clause, it is agreed that for all purposes of this Agreement all the
      original liability contracts of the Company, whether new, renewal or
      replacement, of any class whatsoever (other than Personal Liability,
      Farmers' Liability, Storekeepers' Liability or Automobile Liability
      contracts), which become effective on or after 31st December 1984, shall
      be deemed to include, from their inception dates and thereafter, the
      following provision:

<PAGE>

      Broad Exclusion Provision -

      It is agreed that this Policy does not apply:

      (a)   to liability imposed by or arising under the Nuclear Liability Act;
            nor

      (b)   to bodily injury or property damage with respect to which an Insured
            under this Policy is also insured under a contract of nuclear energy
            liability insurance (whether the Insured is unnamed in such contract
            and whether or not it is legally enforceable by the Insured) issued
            by the Nuclear Association of Canada or any other insurer or group
            or pool of insurers or would be an Insured under any such policy but
            for its termination upon exhaustion of its limit of liability; nor

      (c)   to bodily injury or property damage resulting directly or indirectly
            from the nuclear energy hazard arising from:

            (i)   the ownership, maintenance, operation or use of a nuclear
                  facility by or on behalf of an Insured;

            (ii)  the furnishing of an Insured of services, materials, parts or
                  equipment in connection with the planning, construction,
                  maintenance, operation or use of any nuclear facility; and

            (iii) the possession, consumption, use, handling, disposal or
                  transportation of fissionable substances, or of other
                  radioactive material (except radioactive isotopes, away from a
                  nuclear facility, which have reached the final stage of
                  fabrication so as to be usable for any scientific, medical,
                  agricultural, commercial or industrial purpose) used,
                  distributed, handled or sold by an Insured.

      As used in this Policy:

      (1)   The term "nuclear energy hazard" means the radioactive, toxic,
            explosive, or other hazardous properties of radioactive material;

      (2)   The term "radioactive material" means uranium, thorium, plutonium,
            neptunium, their respective derivatives and compounds, radioactive
            isotopes of other elements and any other substances that the Atomic
            Energy Control Board may, by regulation, designate as being
            prescribed substances capable of releasing atomic energy, or as
            being requisite for the production, use or application of atomic
            energy;

<PAGE>

      (3)   The term "nuclear facility" means:

            (a)   any apparatus designed or used to sustain nuclear fission in a
                  self-supporting chain reaction or to contain a critical mass
                  of plutonium, thorium and uranium or any one or more of them;

            (b)   any equipment or device designed or used for (i) separating
                  the isotopes of plutonium, thorium and uranium or any one or
                  more of them, (ii) processing or utilizing spent fuel, or
                  (iii) handling, processing or packaging waste;

            (c)   any equipment or device used for the processing, fabricating
                  or alloying of plutonium, thorium or uranium enriched in the
                  isotope uranium 233 or in the isotope uranium 235, or any one
                  or more of them if at any time the total amount of such
                  material in the custody of the Insured at the premises where
                  such equipment or device is located consists of or contains
                  more than 25 grams of plutonium or uranium 233 or any
                  combination thereof, or more than 250 grams of uranium 235;

            (d)   any structure, basin, excavation, premises or place prepared
                  or used for the storage or disposal of waste radioactive
                  material;

            and includes the site on which any of the foregoing is located,
            together with all operations conducted thereon and all premises used
            for such operations.

      (4)   The term "fissionable substance" means any prescribed substance that
            is, or from which can be obtained, a substance capable of releasing
            atomic energy by nuclear fission.

      (5)   With respect to property, loss of use of such property shall be
            deemed to be property damage.

<PAGE>

             NUCLEAR INCIDENT EXCLUSION CLAUSE - REINSURANCE - NO. 4

1.    This Reinsurance does not cover any loss or liability accruing to the
      Reassured as a member of, or subscriber to, any association of insurers or
      reinsurers formed for the purpose of covering nuclear energy risks or as a
      direct or indirect reinsurer of any such member, subscriber or
      association.

2.    Without in any way restricting the operations of Nuclear Incident
      Exclusion Clauses, - Liability, - Physical Damage, - Boiler and Machinery
      and paragraph 1. of this Clause, it is understood and agreed that for all
      purposes of the reinsurance assumed by the Reinsurer from the Reinsured,
      all original insurance policies or contracts of the Reinsured (new,
      renewal and replacement) shall be deemed to include the applicable
      existing Nuclear Clause and/or Nuclear Exclusion Clause(s) in effect at
      the time and any subsequent revisions thereto as agreed upon and approved
      by the Insurance Industry and/or a qualified Advisory or Rating Bureau.

<PAGE>

               PHARMACEUTICAL / MEDICAL COMPANY EXCLUSION LISTING

<TABLE>
<S>                                                  <C>
ABBOTT LABORATORIES                                  NOVARTIS
AKZO NOBEL                                           NOVO NORDISK
ALLERGAN                                             OTSUKA PHARMACEUTICAL
ALPHARMA                                             PFIZER
ALTANA AG                                            PIERRE FABRE
AMGEN                                                PROCTER & GAMBLE
ASTRAZENECA                                          PURDUE FREDERICK / PRA HOLDING
AVENTIS                                              ROCHE
BARR LABORATORIES                                    SANKYO
BAXTER INTERNATIONAL                                 SANOFI-SYNTHELABO
BAYER                                                SCHERING AG
BEAUFOUR IPSEN                                       SCHERING-PLOUGH
BECTON, DICKINSON AND COMPANY                        SCHWARZ PHARMA
BIOGEN                                               SERONO
BOEHRINGER INGELHEIM KG                              SHIONOGI
BOSTON SCIENTIFIC CORPORATION                        SHIRE PHARMACEUTICALS
BRISTOL-MYERS SQUIBB                                 SMITH & NEPHEW
CELLTECH (former MEDEVA)                             SOLVAY
CHIRON                                               ST. JUDE MEDICAL
CHUGAI PHARMACEUTICAL                                STRYKER
CSL (including ZLB Behring [former ZLB and Aventis
Behring]                                             SUMITOMO PHARMACEUTICALS
                                                     / SUMITOMO CHEMICAL
DAIICHI PHARMACEUTICAL                               SYNTHES-STRATEC
DAINIPPON PHARMACEUTICAL                             TAKEDA CHEMICAL INDUSTRIES
EDWARDS LIFESCIENCES                                 TANABE
EISAI                                                TAP PHARMACEUTICAL PRODUCTS
ELAN                                                 TEVA PHARMACEUTICAL
FOREST LABORATORIES                                  UCB
GENENTECH                                            WATSON PHARMACEUTICAL
GLAXOSMITHKLINE                                      WYETH
GUIDANT                                              YAMANOUCHI PHARMACEUTICAL /
                                                     FUJISAWA PHARMACEUTICAL
HOSPIRA                                              ZIMMER
IVAX
JOHNSON & JOHNSON
KING PHARMACEUTICALS
KYOWA HAKKO KOGYO
LABORATOIRE FOURNIER
LABORATOIRE SERVIER
LILLY (ELI)
MEDTRONIC
MERCK & CO
MERCK KGAA
MINNESOTA MINING & MANUFACTURING
MITSUBISHI PHARMACEUTICAL
MYLAN LABORATORIES
</TABLE>

GROUP PM CASUALTY/2004 APRIL 30