<PAGE>

                                                                   EXHIBIT 10.22

                EIGHTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT

     EIGHTH AMENDMENT AND WAIVER TO CREDIT AGREEMENT (this "Amendment"), dated
as of May 1, 2002, among HIGHLANDS INSURANCE GROUP, INC., a Delaware corporation
(the "Borrower"), the lenders party to the Credit Agreement referred to below
(the "Banks") and JPMORGAN CHASE BANK (formerly known as The Chase Manhattan
Bank), as administrative agent (the "Administrative Agent"). Unless otherwise
defined herein, all capitalized terms used herein and defined in the Credit
Agreement are used herein as so defined.

                              W I T N E S S E T H:

     WHEREAS, the Borrower, the Banks and the Administrative Agent are parties
to a Credit Agreement, dated as of April 30, 1997 (as amended, modified or
supplemented to, but not including, the date hereof, the "Credit Agreement");

     WHEREAS, the Borrower, the Banks and the Administrative Agent are parties
to a Waiver to the Credit Agreement dated as of December 31, 2001; and

     WHEREAS, subject to the terms and conditions of this Amendment, the parties
hereto wish to amend and modify the Credit Agreement as provided herein;

     NOW, THEREFORE, it is agreed:

     1. Subject to the terms and conditions set forth herein, the Banks hereby
waive for the period from March 1, 2002 to June 30, 2002 (such period,
hereinafter referred to as the "Waiver Period") (i) any Default or Event of
Default that has arisen as a result of the failure of the Borrower to comply
with Sections 6.05, 7.01, 7.11, 7.12, 7.13, 7.14 and 7.15 of the Credit
Agreement and (ii) any Event of Default under Sections 8.01 and 8.09 of the
Credit Agreement. The waivers set forth in this Section 1 shall cease to have
any further force or effect after the Waiver Period.

     2. Section 9 of the Credit Agreement is hereby amended by deleting the
definition of "Maturity Date" and inserting in lieu thereof the following new
definition:

          "Maturity Date" shall mean June 30, 2002.

     3. In order to induce the Banks to enter into this Amendment, the Borrower
hereby represents and warrants that (i) the representations, warranties and
agreements contained in Section 5 of the Credit Agreement are true and correct
in all material respects both before and after giving effect to the Amendment
Effective Date (as hereinafter defined) except to the extent such
representations and warranties expressly relate to an earlier date and (ii)
there exists no Default or Event of Default on and as of the Amendment Effective
Date other than as may have been waived pursuant to Section 1 hereof.

     4. With the goal of fostering the continued economic viability of the
Regulated Insurance Companies for the benefit of all policyholders and
creditors, the Borrower

<PAGE>

agrees that it will cause one or more of the Regulated Insurance Companies to
retain, no later than ten (10) days following the Amendment Effective Date, a
financial advisor (the "Advisor") to assist the Regulated Insurance Companies in
the development of a comprehensive, strategic operational plan and related
financial model for the run-off of the insurance business of such Regulated
Insurance Companies (the "Plan"). The Plan shall be deliverable to the
Administrative Agent within ninety (90) days after the date of retention of the
Advisor and shall include, among other things, a schedule of operational,
financial and other performance goals to be achieved by the Regulated Insurance
Companies over the next five (5) years. In addition, the Borrower shall deliver
interim written status reports regarding the Plan to the Administrative Agent on
or about June 3, 2002 and June 17, 2002, respectively.

     5. The Borrower hereby covenants that it shall promptly deliver to the
Administrative Agent, and continue to deliver after the date hereof, copies of
any and all orders, directives, stipulations, consent decrees, memoranda,
correspondence or any other communications from or with any Applicable
Regulatory Insurance Authority.

     6. This Amendment shall become effective as of the date (the "Amendment
Effective Date") when the Borrower and Required Banks shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered (including by way of facsimile transmission) the same to the
Administrative Agent at the Notice Office.

     7. The waivers contained in this Amendment are limited to the Waiver Period
and as otherwise herein as specified and shall not constitute a modification,
acceptance or waiver of any other provision of the Credit Agreement or any other
Credit Document. Except for the waivers specifically granted above in Section 1,
the Banks and the Administrative Agent expressly reserve the option to exercise
any and all rights and remedies afforded to them (i) as a result of any other
Default or Event of Default of any other provision of the Credit Agreement (or
any provision beyond the specific waivers granted hereby) or any other Credit
Document or (ii) that may be available to them under common law or otherwise.

     8. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which counterparts
when executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. A complete set of counterparts
shall be lodged with the Borrower and the Administrative Agent.

     9. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF
NEW YORK.

     10. From and after the Amendment Effective Date, all references in the
Credit Agreement and in the other Credit Documents to the Credit Agreements
shall be deemed to be references to the Credit Agreement as modified hereby.

                                     * * *

                                       2

<PAGE>


     IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Modifications as of the date first above
written.


                                HIGHLANDS INSURANCE GROUP, INC.

                                By
                                  ------------------------------------
                                  Title:


                                JPMORGAN CHASE BANK,
                                 Individually and as Administrative Agent


                                By
                                  ------------------------------------
                                  Title:


                                FLEET NATIONAL BANK


                                By
                                  ------------------------------------
                                  Title:



                                BANK OF MONTREAL


                                By
                                  ------------------------------------
                                  Title:



                                BANK ONE, NA


                                By
                                  ------------------------------------
                                  Title:

<PAGE>


                                DRESDNER BANK AG, New York
                                 and Grand Cayman Branches


                                By
                                  ------------------------------------
                                  Title:


                                By
                                  ------------------------------------
                                  Title:


                                BANK OF AMERICA


                                By
                                  ------------------------------------
                                  Title: