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                                                                   EXHIBIT 10.17

                              AMENDMENT NUMBER ONE

                                       TO

                        STOP-LOSS REINSURANCE AGREEMENT

     WHEREAS, Odyssey Reinsurance Corporation (formerly known as Skandia America
Reinsurance Corporation) and Skandia Insurance Company Ltd (publ) ("Skandia")
entered into a Stop-Loss Reinsurance Agreement, effective December 31, 1995 (the
"Agreement"); and

     WHEREAS, Skandia assigned its rights and obligations under the Agreement to
ORC Re Limited (the "Retrocessionaire") pursuant to a Final Settlement Agreement
entered into as of January 1, 1999; and

     WHEREAS, Odyssey Reinsurance Corporation and Retrocessionaire wish to amend
the Agreement to reflect these changes,

     NOW, THEREFORE, in consideration of the mutual undertakings, agreements and
covenants hereinafter set forth (in which the capitalized terms shall have the
meanings set forth in Article 1 of the Agreement, as amended hereby), Odyssey
Reinsurance Corporation and the Retrocessionaire do hereby agree to the
following:

     1.  Section 1.1 of Article 1, "Definitions", of the Agreement is hereby
amended as follows:

          a.  The definition, "Annual Aggregate", is deleted in its entirety.

          b.  The definition, "Company", is amended to read in its entirety as
     follows:

             "Company": Odyssey Reinsurance Corporation, Hudson Insurance
        Company and Odyssey Reinsurance Company of Canada."

          c.  The definition, "Eligible Trust Account", is deleted in its
     entirety.

          d.  The definition, "Net Uncollectible Reinsurance Recoverable
     Write-Offs", is amended to read in its entirety as follows:

             " "Net Uncollectible Reinsurance Recoverable Write-offs": shall
        mean an amount equal to (a) Reinsurance Recoverables that qualify for
        write-off and have been written off during the period commencing with
        the Effective Time under GAAP, MINUS (b) the sum of Reinsurance
        Recoverables previously written off (without regard to the Effective
        Time) as to which a change in circumstance requires recharacterization
        as collectible, and money received by the Company in respect of
        Reinsurance Recoverables previously written off (without regard to the
        Effective Time), in each case during the period commencing with the
        Effective Time."

          e.  The definition, "Paid Losses", is amended to read in its entirety
     as follows:

             " "Paid Losses": an amount equal to the sum of (I) amounts paid by
        the Company with respect to Net Incurred Losses during the period
        commencing with the Effective Time and (ii) Net Uncollectible
        Reinsurance Recoverable Write-Offs."

          f.  The definition, "Subsidiary", is amended to read in its entirety
     as follows:

             " "Subsidiary": Hudson Insurance Company or Odyssey Reinsurance
        Company of Canada."

     2.  Section 2.2 of Article 2, "Reinsurance Ceded", of the Agreement is
hereby amended to read in its entirety as follows:

          "2.2  The Company may retrocede Reinsurance Ceded up to the amount of
     its actual calendar year loss development subject to the Aggregate Limit.
     The Retrocessionaire shall, subject to the Aggregate Limit, provide the
     Company, as beneficiary, with an Eligible Letter of Credit, with the
     Eligible Letter of Credit securing payment to the Company of the
     Reinsurance Ceded.
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          In consideration of Retrocessionaire having applied for and secured
     delivery of the Eligible Letter of Credit which is hereby acknowledged, the
     Company undertakes to use and apply any amounts which it may draw upon such
     Eligible Letter of Credit, without diminution because of any insolvency of
     the Company, for the following purposes:

             1)  To pay or reimburse the Company for the amount of Reinsurance
        Ceded owing to the Company if, for any reason, such Reinsurance Ceded is
        not paid in accordance with the terms of the underlying reinsurance
        agreements;

             2)  To make payment to Retrocessionaire of any balance as required
        in Article 7 hereof;

             3)  Where the Company has received notification of the non-renewal
        of the Eligible Letter of Credit, to obtain a cash deposit equal to the
        aggregate amount of the Reinsurance Ceded, and deposit such amount in a
        separate account, in the name of the Company, in any United States bank
        or trust company in trust for such uses and purposes specified in
        Section 7.2 of this Agreement as may remain executory after obtaining
        the cash deposit and for any period after such expiration date; and

             4)  Where Retrocessionaire has entered into any composition or
        arrangement (whether formal or informal) with its creditors generally
        or, because of considerations of Retrocessionaire's solvency or ability
        to pay, with any of its creditors; or has gone into liquidation (other
        than for the purpose of a reconstruction or amalgamation in
        circumstances such that the company resulting therefrom effectively
        agrees to be bound and/or assumes the obligations of Retrocessionaire
        under this Agreement); or has or has had a provisional liquidator or a
        receiver or an administrative receiver appointed over the whole because
        of considerations of Retrocessionaire's solvency or ability to pay any
        part of its assets or undertaking; or has suffered in any jurisdiction
        outside Ireland any events analogous to those specified hereinabove
        including the commencement of a voluntary case under the Federal
        Bankruptcy Code (as now or hereafter in effect) or in the event an
        involuntary case under said Code shall be instituted against
        Retrocessionaire and such proceeding shall continue undismissed for a
        period of thirty (30) days, to obtain a cash deposit equal to the
        aggregate amount of the Reinsurance Ceded on the date such event shall
        occur or such case shall be so commenced or instituted and deposit such
        amount in a separate account, in the name of the Company, in any United
        States bank or trust company, in trust for such uses and purposes
        specified in this Agreement as may remain executory after obtaining the
        cash deposit and for any period after such expiration date."

     3.  Section 2.3 of Article 2, "Reinsurance Ceded", of the Agreement is
hereby amended to read in its entirety as follows:

          "2.3  Notwithstanding anything to the contrary contained in Section
     2.2 hereof, to the extent Paid Losses exceeds the Attachment Point, the
     Retrocessionaire will pay the Company dollar for dollar such amounts up the
     Aggregate Limit."

     4.  Section 4.1 of Article 4, "Commencement and Term of this Agreement", of
the Agreement is hereby amended to read in its entirety as follows:

          "4.1  The liability of the Retrocessionaire shall commence at the
     Effective Time and this Agreement shall be continuous and shall remain in
     effect until the later to occur of (i) such date as the parties hereto may
     mutually agree to commute this Agreement and (ii) the making of all
     payments due hereunder."

     5.  Section 6.1. of Article 6, "Maintenance of Security", of the Agreement
is hereby amended to read in its entirety as follows:

          "6.1  The Retrocessionaire shall provide security in the form of
     collateral in an amount equal to the Aggregate Limit, minus the amount of
     any Eligible Letters of Credit established on behalf of the Company
     pursuant to Section 2.2 of this Agreement, or any payments made by
     Retrocessionaire to the

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     Company under section 2.3 of this Agreement ("Required Security"). Such
     collateral shall be provided in the form of Eligible Letters of Credit."

     6.  Section 6.2 of Article 6, "Maintenance of Security", of the Agreement
is hereby amended to read in its entirety as follows:

          "6.2  If, as of the end of any calendar quarter, the provided security
     is less than the Required Security, the Retrocessionaire shall, as soon as
     practicable, but in no event later than thirty (30) days after the end of
     that quarter, purchase or add to the face amount of an Eligible Letter of
     Credit, so that the provided security is at least equal to the Required
     Security. If, as of the end of any calendar quarter, the provided security
     is greater than the Required Security, the Retrocessionaire may reduce the
     face amount of the Eligible Letter of Credit or Eligible Letters of Credit
     by the amount of such excess."

     7.  Section 6.3 of the Agreement is deleted in its entirety.

     8.  Section 8.1 of the Agreement of Article 8, "Commutation", of the
Agreement is hereby amended to read in its entirety as follows:

          "This Agreement may be commuted upon the mutual agreement of the
     parties. Upon the provision or receipt of a request to commute this
     Agreement as of a date certain (the "Commutation Date"), the Company shall
     provide to the Retrocessionaire a calculation of the Settlement Value (the
     final amount payable under this Agreement) along with a report detailing
     the basis for its calculations (the "Settlement Report"). The Settlement
     Report shall be prepared by the Company in a manner that is consistent with
     the Company's reserving practices at the date of such notice. If the
     Settlement Value is a positive amount, such amount will be paid by the
     Company to the Retrocessionaire. If the Settlement Value is a negative
     amount, such amount shall be paid by the Retrocessionaire to the Company."

     9.  Section 18.1 of Article 18, "Notices", of the Agreement is hereby
amended to read in its entirety as follows:

          "18.1  All notices and other communications hereunder shall be in
     writing and shall be deemed to have been duly given if delivered or given
     by telecopy and shall be addressed:

        (a)  If the Company, to:
             Odyssey Reinsurance Corporation
             300 First Stamford Place
             Stamford, CT 06902

        Attention:  General Counsel

        (b)  If to the Retrocessionaire, to:
             ORC Re Limited
             Victoria Lacey,
             First Floor, 12/13 Exchange Place,
             IFSC, Dublin 1, Ireland

        or to such other address or person as such party shall have specified by
        notice to the other party."

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     IN WITNESS WHEREOF, the parries hereto have agreed to and adopted this
Amendment No. 1 to the Agreement this 2nd day of June, 2000.

                                             ODYSSEY REINSURANCE CORPORATION

                                             By: /s/

                                             ORC RE LIMITED

                                             By: /s/

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                           FINAL SETTLEMENT AGREEMENT

     This Final Settlement Agreement is entered into as of 1st January 1999
among:

(1)    Forsakringsaktiebolaget Skandia (publ), together with any successor
      entity, "Skandia" (whose English name is Skandia Insurance Company Ltd
      (Publ)), an insurance company incorporated in Sweden with registered
      number 502017-3083, Sveavagen 44, S-103 50 Stockholm;

(2)    Skandia International Holding Aktiebolag, "SIHAB", a company incorporated
      in Sweden with registered number 556241-7559, Sveavagen 44, S-103 50
      Stockholm;

(3)    Skandia America Corporation, "SAC", a corporation incorporated in
      Delaware, with registered office at One Exchange Plaza, 28th floor, New
      York, NY 10006;

(4)    Skandia US Holding Corporation, "SKUSH", a corporation incorporated in
      Delaware, with registered office at One Exchange Plaza, 28th floor, New
      York, NY 10006;

(5)    Fairfax Financial Holdings Limited, together with any successor entity,
      "Fairfax", a company incorporated in Canada with registered office at 95
      Wellington Street West, Suite 800, Toronto, Ontario, Canada M5J 2N7;

(6)    Fairfax Inc. (formerly known as Ranger Inc.), "Ranger", a corporation
      incorporated in Wyoming, with registered office at c/o Crum & Forster, 305
      Madison Avenue, Morristown, NJ 07960;

(7)    ORG Sweden Holdings Aktiebolag (previously named Gigantissimo 2109
      Aktiebolag), "ORG", a company incorporated in Sweden with registered
      number 556556-1296, Norrlandsgatan 16, Box 1709, 111 87 Stockholm;

(8)    Odyssey Reinsurance Corporation (previously named Skandia America
      Reinsurance Corporation), "SARC", a corporation incorporated in Delaware,
      with registered office at One Liberty Plaza, New York, NY 10006;

(9)    Hudson Insurance Company, "Hudson", a corporation incorporated in
      Delaware, with registered office at One Liberty Plaza, New York, N.Y.
      10006;

(10)   Odyssey Reinsurance Company of Canada (previously named Skandia Canada
      Reinsurance Company), "Skandia Canada", a corporation incorporated in
      Canada, with registered office at 55 University Avenue, Suite 1600,
      Toronto, Ontario M5J 2N7;

(11)   Odyssey Re (Stockholm) Insurance Corporation (publ) (previously named
      Skandia International Insurance Corporation (publ)). "SIIC", an insurance
      company incorporated in Sweden, registered number 557206-0977,
      Norrlandsgatan 16, Box 1709, 111 87 Stockholm;

(12)   Skandia UK Insurance plc, "SUKI", an insurance company incorporated in
      England, registered number 93860, with registered office at c/o Odyssey Re
      London, Suite 5/4 Minster Court, Mincing Lane, London, EC3R 7XF; and

(13)   ORC Re Limited, "ORC", a company incorporated in Ireland, with registered
      office at Ground Floor, #12 Exchange Place, International Financial
      Services Center, Dublin, 1 Ireland.

1.     BACKGROUND

1.1    On 15th December 1988, SIIC and SARC entered into a stop loss reinsurance
      agreement, Appendix A (as amended) under which SIIC's rights and
      obligations were transferred to Skandia as of 1st January 1992, the "1988
      Stop Loss".

1.2    As of 31st December 1995, Skandia, SARC, Hudson and Skandia Canada
      entered into a stop loss reinsurance agreement, Appendix B, the "1995 Stop
      Loss".

1.3    On 20th February 1996, SAC, Fairfax and Ranger entered into a stock
      purchase agreement (as transferred and amended) whereby Ranger acquired
      all of the issued share capital of SARC, the
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      "SARC Stock Purchase Agreement". The transaction contemplated by the SARC
      Stock Purchase Agreement was completed on 31st May 1996. In connection
      with the SARC Stock Purchase Agreement, several other agreements were
      entered into among, inter alia, Skandia, SAC, SARC and Fairfax, inter
      alia, on 20th February 1996 a Cooperation Agreement, the "Cooperation
      Agreement", and on 31st May 1996 a non-competition agreement, the
      "Non-Compete Agreement".

1.4    On 19th February 1998, SIHAB, Skandia, Fairfax and ORG entered into a
      share sale agreement (as transferred and amended), whereby ORG acquired
      all of the issued share capital of SIIC and SUKI, the "SIIC/SUKI Share
      Sale Agreement". The SIIC/SUKI Share Sale Agreement was completed on 4th
      September 1998.

1.5    The purpose of this Final Settlement Agreement is to finally settle and
      terminate the Terminated Obligations (as defined below) and any Claims (as
      defined below) originating in the Terminated Obligations.

2.     INTERPRETATION

       "Additional Taxes"    the amount of Tax that would result from an
                             Adjustment, taking into account carryovers and
                             carrybacks, assuming all increases in income and
                             all reductions of deductions and basis, and all
                             reductions of carrybacks and carryovers, would
                             increase Taxes by the rate of tax applied to
                             determine Tax on the return and all reductions of
                             credits would increase Tax by the same amount as
                             the reductions of credit. In the event that there
                             should be a later determination between Skandia and
                             a taxing authority that an Adjustment should be
                             reversed and no Tax should result therefrom,
                             Skandia shall refund any related payment with
                             respect thereto, to SARC or Fairfax;

       "Adjustment"          shall mean any change in any SARC Tax Item reported
                             or shown on any Skandia-SARC Return on audit or
                             otherwise by a taxing authority and which change
                             has not been protested or challenged in a claim or
                             suit for refund or otherwise;

       "Assigned
       Obligations"          all obligations or ORC under the 1988 Stop Loss and
                             1995 Stop Loss assigned by Skandia and assumed by
                             ORC under clauses 3.1 and 3.4 hereof;

       "Claim"               any present, pending or possible disputes, claims,
                             rights, demands, liabilities, causes of action,
                             costs, disputes, obligations or debts, contingent
                             or otherwise, direct or indirect, known or unknown,
                             and reported or unreported;

       "Completion"          the completion of the transactions contemplated
                             hereby in accordance with clause 6 hereof;

       "Conditions"          the conditions set out in clause 5.1 hereof;

       "Cooperation
       Agreement"            the Cooperation Agreement dated 20th February 1996
                             between certain members of the Skandia group and
                             the Fairfax Group;

       "Fairfax Group"       Fairfax Financial Holdings Limited and any other
                             entity included in the same group as Fairfax (or
                             any successor entity) from time to time;

       "First and Second
       Loan Agreements"      the loan agreements entered into between ORG and
                             Skandia pursuant to the SIIC/SUKI Share Sale
                             Agreement;

       "group"               has the meaning set out in chapter 1, section 9 of
                             the Swedish Insurance Business Act
                             (Forsakringsrorelselagen, 1982:713);

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       "Intercompany
       Insurance
       Agreements"           insurance and reinsurance and claims adjusting and
                             claims management agreements currently in force
                             between any member of the Skandia group and any
                             member of the Fairfax Group, and any instruments,
                             agreements or arrangements in support thereof, in
                             each case entered into in the ordinary course of
                             business;

       "Non-Compete
       Agreement"            the non-competition agreement dated 31st May 1996
                             between certain members of the Skandia group and
                             the Fairfax Group;

       "Reductions of
       Taxes"                the amount of the reduction in Tax that would
                             result from an Adjustment, and which Adjustment
                             relates to (i) the amount of any decrease in income
                             and increases in deductions multiplied by the rate
                             of tax applied to determine Tax on the return, and
                             (ii) any increase in the amount of any credit,
                             provided that, to the extent such an Adjustment
                             does not give rise to a current realizable Tax
                             Benefit, there shall be no Reductions of Taxes
                             under this Agreement. "Tax Benefit" shall mean an
                             amount by which the Tax liability of Skandia is
                             reduced for the period covered by the return. Where
                             Skandia has other losses, deductions, credit or
                             items available to it, the Tax Benefit as defined
                             herein shall be deemed to be realized only after
                             the utilization of such other losses, reductions of
                             income, deductions and credits. For purposes of
                             this Agreement a Tax Benefit is "currently
                             realizable" to the extent it is realized in the
                             current taxable period or year or in any tax return
                             with respect thereto including through a carryback
                             or carryover to a prior or later taxable period or
                             taxable year for which a return has been filed at
                             the time of the final determination of the
                             Adjustment. In the event that there should be a
                             determination disallowing the Tax Benefit, SARC and
                             Fairfax shall be liable to refund to Skandia the
                             amount of any related payments for Reductions of
                             Taxes previously made;

       "SARC Stock Purchase
       Agreement"            the stock purchase agreement, dated 20th February
                             1996, by and between SAC and Fairfax, as amended
                             and assigned;

       "SARC Tax Item"       any tax item, including, but not limited to, gross
                             income, reductions of income, deductions, credits,
                             tax computation or allowance, reported or shown on
                             a Skandia-SARC Return, or paid without the filing
                             of a return, provided that the period or year was
                             prior to 1st January 1997 and the items reported or
                             shown on the tax return, invoice or voucher related
                             to SARC and/or its Subsidiaries;

       "SEK"                 Swedish kroner or the equivalent in any successor
                             currency unit being the lawful currency at any
                             relevant time of the Kingdom of Sweden;

       "Settlement Payment"  the final settlement payment referred to in clause
                             4 hereof;

       "SHAB"                Skandia Holding Aktiebolag;

       "SIIC/SUKI Share
       Sale Agreement"       This share sale agreement dated 19th February 1998,
                             between SIHAB, Skandia, Fairfax and ORG (as
                             amended);

       "Skandia group"       Forsakringsaktiebolaget Skandia (publ) and any
                             other entity included in the same group as Skandia
                             (or any successor entity) from time to time;

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       "Skandia-SARC
       Return"               a tax return for any period or year or an invoice
                             or voucher with respect to taxes filed and paid
                             without a return, for any period or year prior to
                             1st January 1997 relating to items of SARC and/or
                             its Subsidiaries as well as items of a corporation
                             in the Skandia group;

       "Specified
       Agreements"           the collective reference to each of the following
                             agreements (for the purposes of this definition,
                             the agreements not defined herein are as defined in
                             the SARC Stock Purchase Agreement): (i) the SARC
                             Stock Purchase Agreement, (ii) the Termination
                             Agreement (as defined below), (iii) the 1988 Stop
                             Loss, (iv) the 1995 Stop Loss, (v) the Parental
                             Support Agreement, (vi) the Non-Compete Agreement,
                             (vii) the Subleases, if any, under the Parental
                             Support Agreement or the Cooperation Agreement,
                             (viii) the Intercompany Agreements, if any, under
                             the Parental Support Agreement or the Cooperation
                             Agreement, and (ix) the Cooperation Agreement
                             except for (a) the obligations of the Skandia group
                             parties thereto under Article I, until such
                             obligations have been terminated under clause 3.10
                             hereof, (b) the obligations of SHAB under Article
                             III of the Cooperation Agreement and (c) the
                             obligations of each of Fairfax, SARC and Hudson
                             under Articles I and II of the Cooperation
                             Agreement;

       "Subsidiaries"        any corporation as to which SARC directly or
                             indirectly (including through one or more
                             subsidiaries) owns or owned a majority of the
                             outstanding shares of stock or other ownership
                             interests having voting power under ordinary
                             circumstances to elect directors of such
                             corporation or other persons performing similar
                             functions for such entity, including Skandia Canada
                             and Hudson, but not including Capital Assurance
                             Company, Inc. and Capital Alliance Insurance Co.,
                             Inc.

       "subsidiary"          has the meaning set out in chapter 1 section 9 of
                             the Swedish Insurance Business Act
                             (Forsakringsrorelselagen, 1982:713);

       "Surviving
       Obligations"          all obligations, if any, of (i) each of SHAB, SKUSH
                             and SAC under the Indemnity Agreement, dated 22nd
                             August 1991 between SHAB, SKUSH, SARC and SAC, (ii)
                             the Skandia group parties to the Cooperation
                             Agreement under Article I thereof until such
                             obligations have been terminated under clause 3.10
                             hereof, (iii) SHAB under Article III of the
                             Cooperation Agreement, (iv) each of Fairfax, SARC
                             and Hudson under Articles I and II of the
                             Cooperation Agreement, (v) each of SIHAB, Skandia,
                             Fairfax and ORG under the SIIC/SUKI Share Sale
                             Agreement, to the extent not specifically
                             terminated herein, (vi) ORC that are Assigned
                             Obligations, (vii) each party under the First and
                             Second Loan Agreements and under all letters of
                             credit issued in support thereof, (viii) each of
                             the parties under any Intercompany Insurance
                             Agreement and (ix) the parties hereto under this
                             Agreement;

       "Tax" or "Taxes"      taxes, fees, social costs, employee's withholding
                             taxes and any other public charges (and penalties
                             and interest in relation thereof) imposed in or by
                             any country, state, province, municipality, county
                             or political subdivision of the foregoing;

       "Terminated
       Obligations"          all obligations of any current member of: (i) the
                             Skandia group under (a) each agreement between any
                             such member and any current member of the Fairfax
                             Group, (b) each agreement between any such member
                             of the Skandia group and any person other than any
                             such member of the Skandia group or the Fairfax
                             Group relating to any such member of the

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                             Fairfax Group, and (c) all guarantees, letters of
                             credit, documents and instruments in support of or
                             otherwise related to any of the foregoing; and (ii)
                             the Fairfax Group under (a) each agreement between
                             any such member and any current member of the
                             Skandia group, (b) each agreement between any such
                             member of the Fairfax Group and any person other
                             than any such member of the Fairfax Group or the
                             Skandia group relating to any such member of the
                             Skandia group, and (c) all guarantees, letters of
                             credit, documents and instruments in support of or
                             otherwise related to any of the foregoing; in each
                             case entered into on or before 4th February 1999
                             including, without limitation, in each such case
                             any obligations arising under, inter alia, the
                             Specified Agreements and excluding in each such
                             case, only the Surviving Obligations;

       "Termination
       Agreement"            the Intercompany Termination Agreement, dated 31st
                             May 1996, by and among SKUSH, SAC, SARC, Hudson,
                             Skandia Canada, Skandia Investment Management,
                             Inc., and Capital Alliance Insurance Company, Inc.,
                             Capital Assurance Company, Inc., Capital Assurance
                             Services, Inc., Insurers Technical Services, Inc.,
                             American Skandia Investment Holding Corporation,
                             American Skandia Life Assurance Corporation,
                             American Skandia Business Services Corporation,
                             Skandia Life Equity Sales Corporation and American
                             Skandia Life Investment Management, Inc.;

       "USD"                 United States dollars or the equivalent in any
                             successor currency unit being the lawful currency
                             at any relevant time of the United States of
                             America;

       "1988 Stop Loss"      the stop loss reinsurance agreement dated 15th
                             December 1988, referred to in Appendix A; and

       "1995 Stop Loss"      the stop loss reinsurance agreement dated 31st
                             December 1995, referred to in Appendix B.

3.     FINAL SETTLEMENT

A.     1998 Stop Loss

3.1    Upon the terms and conditions of this Agreement and against payment of
      the Settlement Payment, each of (i) Skandia, (ii) SIIC, (iii) SARC, (iv)
      Fairfax, (v) Ranger and (vi) ORC hereby agrees that all the rights and
      obligations of Skandia and SIIC under or arising from the 1988 Stop Loss
      shall be assigned to and assumed by ORC and that ORC will be substituted
      in each and every respect for Skandia. Thus, each of (i) Skandia, (ii)
      SIIC, (iii) SARC, (iv) Fairfax and (v) Ranger irrevocably releases and
      discharges the others from any and all Claims under or arising from the
      1988 Stop Loss, whether known or unknown and reported or unreported, which
      a party ever may have had, now has, or hereafter may have against any of
      the others by reason of any matter arising out of or relating to the 1988
      Stop Loss.

3.2    For the avoidance of any doubt, the parties referred to in clause 3.1
      hereof confirm that pursuant to clause 9.1 of the SIIC/SUKI Share Sale
      Agreement, any Claims pertaining to the 1988 Stop Loss between Skandia and
      SIIC have been terminated, released and discharged on completion of the
      SIIC/SUKI Share Sale Agreement. It is further confirmed that none of such
      parties shall have any claim against the other due to such termination,
      release or discharge or otherwise.

3.3    Each of Fairfax and SARC shall procure that Skandia is released from
      every guarantee, indemnity, warranty, bond or security issued on behalf of
      the retrocedants under the 1988 Stop Loss (including but not restricted to
      trust arrangements). Each of Fairfax, SARC and SIIC shall indemnify and
      keep indemnified Skandia against all Claims in respect of each such
      guarantee, indemnity, warranty, bond or security. On this date and in
      conjunction with the signing hereof, Fairfax will sign such documents

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      as required to effect such releases. The indemnity obligations of each of
      Fairfax and SARC shall commence upon payment of the Settlement Payment and
      shall continue notwithstanding such release or termination of this
      Agreement.

B.     1995 Stop Loss

3.4    Upon the terms and conditions of this Agreement and against payment of
      the Settlement Payment, each of (i) Skandia, (ii) Fairfax, (iii) Ranger,
      (iv) SARC, (v) Hudson, (vi) Skandia Canada, and (vii) ORC hereby agrees
      that all the rights and obligations of Skandia under or arising from the
      1995 Stop Loss shall be assigned to and assumed by ORC, and that ORC will
      be substituted in each and every respect for Skandia. Thus, each of (i)
      Skandia, (ii) Fairfax, (iii) Ranger, (iv) SARC, (v) Hudson, and (vi)
      Skandia Canada irrevocably releases and discharges the others from any and
      all Claims under or arising from the 1995 Stop Loss, whether known or
      unknown and reported or not, which a party ever may have had, now has, or
      hereafter may have against any of the others by reason of any matter
      arising out of or relating to the 1995 Stop Loss.

3.5    Each of Fairfax, Ranger, SARC, Hudson, and Skandia Canada shall procure
      that Skandia is released from every guarantee, indemnity, warranty, bond
      or security issued on behalf of the retrocedants under the 1995 Stop Loss
      (including but not restricted to trust arrangements). Each of Fairfax,
      SARC, Hudson, and Skandia Canada shall indemnify and keep indemnified
      Skandia against all Claims in respect of each such guarantee, indemnity,
      warranty, bond or security. On this date and in conjunction with the
      signing hereof, Fairfax will sign such documents as required to effect
      such releases. The indemnity obligations of Fairfax, Ranger, SARC, Hudson
      and Skandia Canada shall commence upon payment of the Settlement Payment
      and shall continue notwithstanding such release or termination of this
      Agreement.

C.     SARC Stock Purchase Agreement

3.6    Upon the terms and conditions of this Agreement and against payment of
      the Settlement Payment, each of Ranger, Fairfax, SARC agrees to
      irrevocably release and discharge SAC and Skandia from any and all Claims
      under or arising from the entire SARC Stock Purchase Agreement and the
      Specified Agreements, in each case with the exception of the Surviving
      Obligations, or any other direct and indirect financial Claim pursuant to
      the Specified Agreements, whether known or unknown, which SAC or Skandia
      ever may have had, now has, or hereafter may have against any of the
      others by reason of any matter arising out of or relating to the SARC
      Stock Purchase Agreement.

D.     SIIC/SUKI Share Sale Agreement

3.7    Upon the terms and conditions of this Agreement and against payment of
      the Settlement Payment, each of SIIC, ORG and Fairfax agrees to
      irrevocably release and discharge SIHAB and Skandia from any and all
      obligations and liabilities under or arising from clause 10 (Warranties),
      except the warranties in relation to Tax (as defined in the SIIC/SUKI
      Share Sale Agreement) contained in clauses 10.4.34 to 10.4.43 (all clauses
      included) of the SIIC/SUKI Share Sale Agreement, whether known or unknown,
      which SIHAB or Skandia ever may have had, now has, or hereafter may have
      against any of the others by reason of any matter arising out of or
      relating to the SIIC/SUKI Share Sale Agreement.

3.8    Upon the terms and conditions of this Agreement and against payment of
      the Settlement Payment, each of SIIC, ORG and Fairfax agrees to release
      and discharge Skandia and SIHAB from any Claims under or arising from
      clause 6.4 (Investment Policy) of the SIIC/SUKI Share Sale Agreement and
      clause 6.6 (Asset Composition) of the variation agreement dated 4th
      September 1998 to the SIIC/SUKI Share Sale Agreement in relation the
      assets of SIIC which consist of deposits of securities held for the
      benefit of certain cedants of reinsurance and denominated in French francs
      and Portuguese escudos.

                                        6
<PAGE>   11

3.9    Each of (i) Skandia, (ii) SIHAB, (iii) ORG and (iv) Fairfax hereby agrees
      that the Purchase Price relating to the SIIC Shares (as defined in the
      SIIC/SUKI Share Sale Agreement) shall be SEK 578,676,120 (as set out in
      the draft final completion accounts provided by Skandia and SIHAB dated
      22nd October 1998). ORG and Fairfax confirm that they require no auditors'
      certificate other than the certificate attached to the draft final
      completion accounts provided by Skandia and SIHAB dated 22nd October 1998.
      Each of Fairfax and ORG hereby agrees that (y) no later than 11th February
      1999, it shall deliver to Skandia duly executed copies of the Second Loan
      Agreement (in agreed-upon form) and the Final Completion Accounts (as
      defined in the SIIC/SUKI Share Sale Agreement) and (z) no later than 4th
      March 1999, it shall cause to be issued to Skandia a letter of credit in
      the amount of SEK 117,426,120 and otherwise complying with the terms of
      the SIIC/SUKI Share Sale Agreement.

E.     New Supporting Letters of Credit

3.10   Each of Fairfax and Skandia hereto agrees that no later than 31st
      December 1999 (i) all Supporting LOC's (as defined in the Cooperation
      Agreement) and New Supporting LOC's (as defined in the Cooperation
      Agreement) outstanding under the Cooperation Agreement shall be terminated
      and all original copies thereof returned to Skandia and (ii) all
      obligations of Skandia under Article I of the Cooperation Agreement shall
      be terminated.

F.     Termination of Other Agreements and Obligations

3.11   (a)  Upon the terms and conditions of this Agreement and against payment
            of the Settlement Payment, each of Skandia and Fairfax agrees to
            irrevocably release and discharge the other from all of its
            Terminated Obligations to the extent the same have not otherwise
            been released and discharged under the preceding provisions of this
            clause 3, and all Claims in connection therewith, whether known or
            unknown, which Skandia or Fairfax, as the case may be, now has, or
            hereafter may have, against the other by reason of any matter
            arising out of, or relating to, the Terminated Obligations.

      (b)  Notwithstanding the survival of all obligations of Skandia and
         Fairfax under Intercompany Insurance Agreements, Skandia and Fairfax
         agree that all Claims made and settled under Intercompany Insurance
         Agreements on or before Completion shall be deemed to be finally and
         definitively settled and each of Skandia and Fairfax waive any rights
         to appeal, dispute or otherwise make any Claim with respect thereto.

G.     Effect of terminations and releases

3.12   By way of the terminations and releases referred to above and upon
      payment of the Settlement Payment, any and all Claims which Skandia and
      Fairfax ever may have had, now has, or hereafter may have against any of
      the other by reason of any of the subject matters referred to above
      (subject to the restrictions set out above), are finally and irrevocably
      settled with immediate effect from and after payment of the Settlement
      Payment.

H.     Other Undertakings

3.13   At any time after Completion hereof, each party shall provide the other
      parties with such assistance (including the execution of documents) as may
      reasonably be required for the purposes of vesting in the party requiring
      such assistance any right pursuant to this Agreement. The cost of such
      assistance shall be borne by the party requiring assistance.

3.14   Fairfax, Ranger, ORG, SARC, Hudson, Skandia Canada, SIIC and SUKI will
      indemnify and keep indemnified Skandia against all Claims, by any third
      party due to or arising from any obligation of Skandia to SARC, Hudson,
      Skandia Canada, SIIC or SUKI, with the exception of the Surviving
      Obligations and any direct obligation of Skandia to such third party.

                                        7
<PAGE>   12

I.      SARC Group Taxes

3.15   Any Tax sharing allocation or arrangement, including the Tax Allocation
      Agreement (as defined in the SARC Stock Purchase Agreement) between
      Skandia and SARC or Fairfax shall remain terminated with respect to any
      taxable year with respect to SARC and any other corporation in the Fairfax
      Group and shall have no further application to or effect on such companies
      for any taxable year (whether the current year, a future year, or a past
      year). Except as otherwise provided herein, any amounts actually paid
      prior hereto by or to SARC or Fairfax pursuant to any such Tax sharing
      agreement with respect to any taxable period shall be considered the
      proper payment and no further payment or adjustment shall be made.

3.16   SARC and Fairfax shall reimburse and indemnify Skandia for any Additional
       Taxes and Skandia shall pay to SARC any Reductions of Taxes resulting
       from an audit or other adjustment made by a taxing authority of any SARC
       Tax Item reported on any Skandia-SARC Return (regardless of when filed or
       the period covered thereby), including, without limitation, the portion
       of Taxes relating to SARC and/or its Subsidiaries for items reported on
       the SKUSH consolidated U.S. federal income tax return for the year ended
       31st December 1996. No payment shall be made to SARC or Fairfax for any
       Reductions of Taxes until, and not before, the first to occur of (i) the
       receipt by Skandia of a refund of Taxes and (ii) a reduction of the final
       payment made for Taxes with a current tax return resulting from the
       filing of such current tax return.

3.17   For purposes of apportioning a Tax between parts of a taxable year, if
       necessary, the returns including such part of a taxable year by any
       corporation in the Skandia group or SARC or a SARC Subsidiary shall be
       accepted by the parties unless a taxing authority shall require a
       different apportioning.

3.18   Unless otherwise provided in this Agreement, a party responsible for a
       Tax pursuant to this Agreement shall also be entitled to any refund of
       such Tax, except with respect to a refund of U.S. federal income tax
       relating to the carryback or carryover of losses of SARC shown on the
       consolidated U.S. federal income tax return for the year ended 31st
       December 1996. SARC and Fairfax shall be entitled to $5,219,967 in the
       event that the full amount of the loss claimed for the year ended 31st
       December 1996 shall be allowed as a carryback resulting in a refund of
       Taxes or as a carryover resulting in a reduction of Taxes, in the
       aggregate amount of $26,306,416 (the "Full Tax Refund or Tax Reduction");
       provided, (i) that the Full Tax Refund or Tax Reduction shall not be
       considered allowed if there are any Adjustments and Additional Taxes as
       provided in clause 3.16 hereof with respect to such returns; and provided
       further, (ii) that any such Additional Taxes or any as yet unpaid
       Additional Taxes with respect to other years and Reductions of Taxes
       shall be netted and the net amount shall reduce or increase,
       respectively, the $5,219,967 to which SARC shall be entitled on a
       dollar-for-dollar basis. SARC shall be entitled to the portion of any
       interest received by a corporation in the Skandia group, with respect to
       the Full Tax Refund or Tax Reduction, determined by the ratio that
       $5,219,967, reduced by any Additional Taxes referred to in proviso (i)
       above, bears to $26,306,416, reduced by any Additional Taxes.

3.19   SARC and its Subsidiaries shall elect or have elected to waive, to the
       fullest extent permitted by law, the carryback to any taxable period
       prior to 31st May 1996 of any post 31st May 1996 Tax attribute of SARC or
       its Subsidiaries.

3.20   Notwithstanding any other interpretation of clauses 3.16 and 3.18 hereof,
       Skandia shall be entitled to any Reductions of Taxes and any other
       reduction of Taxes resulting from a carryback, which may not be waived
       under the tax laws or other provision of applicable law, of a post 31st
       May 1996 Tax attribute of any of SARC and its Subsidiaries into a Skandia
       group consolidated U.S. federal income tax return or other return for any
       year. SARC and its Subsidiaries shall cooperate with the Skandia group in
       obtaining such refunds, including through the filing of amended tax
       returns or refund claims. Any Additional Taxes and any other increase in
       Taxes resulting from any such carryback shall be paid by SARC and
       Fairfax.

                                        8
<PAGE>   13

3.21   (a)  Generally, the party who has responsibility for Taxes, or the right
         to claim any refund of Taxes, with respect to a taxable year pursuant
         to this Agreement shall have the sole right to represent the taxpayer's
         interests with respect to any Tax Claim or refund claim relating to
         such Taxes for such taxable year in any audit, or administrative or
         court proceeding.

      (b)  In any case where more than one party is responsible for Taxes for a
         particular taxable year or multiple taxable years that are the subject
         of a single Tax Claim or refund claim pursuant to this Agreement, all
         such responsible parties may participate in the resolution of a Tax
         Claim or refund claim relating to such taxable year or years at their
         own cost and expense; provided, that such Tax Claim or refund claim
         shall not be settled or otherwise finally resolved without the consent
         of Skandia and Fairfax, which consent may not be unreasonably withheld.

      (c)  Notwithstanding anything to the contrary in the foregoing, Skandia
         shall have the ability acting reasonably to settle any Tax Claim or
         refund claim involving a consolidated U.S. federal income tax return of
         corporations included in the Skandia group for any year.

3.22   (a)  Each of Skandia and Fairfax agree that it shall cooperate with the
         other and its counsel in the defense against or compromise of any Tax
         Claim and the procurement of any tax refund. SARC and its Subsidiaries,
         Fairfax and Skandia shall provide, or shall cause corporations within
         their respective groups to provide, such information, to the extent not
         otherwise available, relating to SARC and its Subsidiaries as is
         reasonably requested by the other party in order to permit (i) the
         filing of any tax return, amended tax return, or claim for refund; (ii)
         the determination of any tax liability, right to the refund of Taxes,
         or the amount of any foreign tax credit; (iii) the determination of the
         amount of any payment required under this Agreement; and (iv) the
         conduct or defense of any Tax Claim and on other matters relating to
         Taxes.

      (b)  SARC and its Subsidiaries, Fairfax and Skandia shall, and shall cause
         corporations within their respective groups, to preserve all
         information, records and documents relating to Taxes of SARC and its
         Subsidiaries, including, without limitation, all tax returns and
         associated work papers, until the expiration of the statute of
         limitations (including extensions) of the taxable years to which such
         tax returns and other documents relate (including related taxable years
         in which Tax carryovers from an earlier taxable year are utilized) and
         until the final determination of any payments which may be required in
         respect of such years under this Agreement. Notwithstanding the
         foregoing, no party shall dispose of any materials specified in this
         clause 3.22(b) without first offering the other party the opportunity
         to take possession of and retain such materials (at the sole cost and
         expense of such other party). Any information obtained under this
         clause 3.22(b) shall be kept confidential, except as may be otherwise
         necessary in connection with the filing of tax returns or claims for
         refund of taxes or in conducting any tax audit or similar proceeding.

3.23   Skandia shall have the right to elect to retain all net operating loss
      carryovers and capital loss carryovers of SARC and its Subsidiaries under,
      and to the extent permitted by, Treasury Regulation sec.1.1502-20(g). At
      the request of any corporation in the Skandia group, SARC and its
      Subsidiaries shall join with Skandia in filing and supporting any
      necessary elections under Treasury Regulation sec.1.1502-20(g).

3.24   Except as otherwise provided in claims 3.16 and 3.18 hereof, any payment
      required by this Agreement shall be made within fifteen (15) business days
      of receipt by the party required to make such payment of a written request
      for payment. Any request for payment shall set forth information
      sufficient to apprise the recipient of the rationale for the requested
      payment and the amount of, and method of calculating, the requested
      payment. Any disputes with respect to a requested payment shall be
      resolved pursuant to clause 12.2 hereof.

J.     Interpretation

3.25   Wherever used in this clause 3, the reference to "Skandia" shall include
      Skandia itself and all current or future companies included in the same
      group as Skandia (or any successor of Skandia) and the

                                        9
<PAGE>   14

      reference to "Fairfax" itself and all current or future companies included
      in the same group as Fairfax (or any successor of Fairfax). As a
      consequence hereof, Skandia and Fairfax, respectively, shall procure that
      no member of their respective groups will make any Claim relating to the
      terminations, discharges and releases.

4.     SETTLEMENT PAYMENT

4.1    Skandia shall, on behalf of itself, SIHAB, SAC, and all current or future
      companies within the Skandia group, make a final settlement payment to ORC
      on behalf of itself, Fairfax, ORG, SARC, Hudson, Skandia Canada, SIIC,
      SUKI, and the Fairfax Group of USD 160,000,000 (one hundred sixty million)
      less an amount equal to any applicable Tax (including any income,
      withholding or excise tax) for which Skandia may be liable in whole or in
      part, as a withholding agent, directly or otherwise, as a result of the
      payment contemplated under this Agreement; provided however that Skandia
      shall make such a reduction for Taxes only if ORC and Fairfax fail to
      provide Skandia with the necessary documentation or information to
      establish, to the satisfaction of Skandia in its sole judgment, that
      Skandia is not liable or obligated to pay or withhold any such Taxes.

4.2    ORC and Fairfax shall be solely responsible for all Taxes charged to ORC
      or any member of the Fairfax Group relating to the Settlement Payment.
      Furthermore, each of ORC and Fairfax agrees that it will indemnify and
      keep indemnified any member of the Skandia group against any adverse Tax
      effects and all Claims in respect thereof solely due to the destination of
      the Settlement Payment.

5.     CONDITIONS

5.1    Completion is conditional upon:

      (a)  Fairfax having obtained (i) the consent to or approval of (or
           acknowledgment that no such consent or approval is required) the
           Final Settlement Agreement and all transactions contemplated hereby
           from the insurance departments of the states of Delaware, New
           Hampshire and New York, with Skandia having the right to attend any
           meeting and to participate in any discussions with members of such
           insurance departments, (ii) the consent to or approval of the Final
           Settlement Agreement and all such transactions from any other
           regulator whose consent or approval is required by the law or
           regulations of any other relevant jurisdiction, and (iii) all other
           authorizations, licenses, approvals and consents described in clause
           9.1 hereof;

      (b)  Skandia having received evidence of the satisfaction of (i), (ii) and
           (iii) of clause 5.1(a) hereof satisfactory to Skandia in its sole
           reasonable judgment;

      (c)  the relevant members of the Skandia group having received evidence,
           satisfactory to Skandia in its sole reasonable judgment, of such
           companies' release from every guarantee, indemnity, warranty, bond or
           security issued as referred to in clauses 3.3 and 3.5 hereof
           (including without prejudice to the generality of the foregoing (i)
           all outstanding letters of credit caused to have been issued by
           Skandia for the benefit of SARC and Hudson having been released and
           terminated, and all reimbursement obligations of Skandia to any bank
           issuing such letters of credit, having been terminated and the
           original copies of such letters of credit having have been delivered
           to Skandia, (ii) all trusts established under the 1988 Stop Loss and
           the 1995 Stop Loss to secure the obligations of SIIC and Skandia
           thereunder having been terminated and the corpora thereof having been
           delivered to Skandia, and (iii) every guarantee, indemnity, warranty,
           bond or security issued on behalf of the retrocedants under the 1988
           Stop Loss or the 1995 Stop Loss having been released and terminated);

      (d)  Skandia having received all corpora of the of the trusts established
           under the 1995 Stop Loss; and

      (e)  an exchange by the Skandia group and the Fairfax Group of legal
           opinions (in a form reasonably acceptable to the party receiving such
           opinion) issued by counsel (internal or otherwise) in relation to
           those matters referred to in clause 9.1 hereof and with regard to
           regulatory consents

                                        10
<PAGE>   15

         and approvals required by (i) Swedish law in the case of the Skandia
         group and (ii) U.S. and Canadian law in the case of the Fairfax Group.

5.2    Save as otherwise provided in this Agreement, the parties hereto
       undertake to use their best endeavors to procure the fulfillment of the
       Conditions and otherwise to complete the transactions provided for herein
       as soon as reasonably possible and, without prejudice to the generality
       of the foregoing, will make all applications and notifications required
       to seek the necessary authorizations, licenses, approvals and consents
       referred to in clause 5.1 and will procure that all such information as
       is requested by the relevant authorities and relevant third parties in
       connection with such applications and notifications is provided as soon
       as practicable following request.

5.3    Unless otherwise agreed in writing by the parties hereto, if the
      Conditions have not been fulfilled or waived on or before 1st June 1999,
      the provisions of this Agreement and the respective obligations of the
      parties hereunder shall cease except in relation to clause 7 hereto, and
      no party shall have any Claim against any other party except in relation
      to such clause.

6.     COMPLETION

6.1    Completion shall take place at the offices of Cadwalader, Wickersham &
      Taft, 100 Maiden Lane, New York, N.Y. 10038, five (5) New York business
      days following the date when the Conditions shall have been fulfilled or
      waived and all parties shall have been notified thereof.

6.2    On Completion, Skandia shall cause the Settlement Payment to be paid by
      electronic funds transfer for same day delivery to ORC's bank account with
      Deutsche Bank AG New York Branch, ABA #026003780, A/C #10045700000, A/C
      DBNY Custody Svcs Clearing, F/A #600170010.

7.     ANNOUNCEMENTS

      Except as may be required by law or by any regulatory authority (including
      relevant stock exchanges), there shall be no special public announcement
      of the making of this Agreement or of Completion without the prior consent
      of the other parties hereto.

8.     COSTS

      Save as expressly provided in this Agreement, each of the parties hereto
      shall bear its own legal, accountancy and other costs, charges and
      expenses connected with the negotiation, preparation and implementation of
      this Agreement.

9.     REPRESENTATIONS AND ASSIGNMENT

9.1    Each of the parties hereto warrants and represents that it has the full
      corporate power to sign this Agreement, that this Agreement has been duly
      authorized, that this Agreement has been duly executed by such party and
      that this Agreement constitutes the legal, valid and binding obligations
      of such party enforceable against it in accordance with its terms.

9.2    Each of the parties hereto warrants and represents that, except as
      previously disclosed to the other party in writing, it has obtained and
      complied with the terms of all authorizations, approvals, licenses and
      consents required in or by the laws and regulation of its country of
      incorporation to enable it to enter into and perform its obligations under
      this Agreement or to ensure the legality, validity or enforceability in
      all relevant jurisdictions.

9.3    This Agreement and all rights hereunder may not be assigned by any party
      hereto without the prior written consent of the other parties hereto.

9.4    Skandia represents to Fairfax that the following item, which appears on
      page 1 of the schedule delivered under cover of a letter dated 1st
      February 1999 to Eric Salsberg and Brad Martin from Helena Nelson, refers
      to Primerus France Etat Long Terme:

                                        11
<PAGE>   16

                     "Primerus France     17 361     24869288.56"

10.    ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS

10.1   This Agreement constitutes the entire agreement between the parties
      hereto with respect to the subject matter hereof.

10.2   No variation to this Agreement shall be effective unless made in writing
      and signed by the parties.

10.3   No waiver of any term, provision or condition of this Agreement shall be
      effective unless such waiver is evidenced in writing and signed by the
      waiving party. No waiver of any of the provisions of this Agreement shall
      be deemed or shall constitute a waiver of any other provision hereof, nor
      shall such waiver constitute a continuing waiver unless expressly
      provided.

11.    INVALIDITY

      If at any time any one or more of the provisions of this Agreement is or
      becomes invalid, illegal or unenforceable in any respect under any law,
      the validity, legality and enforceability of the remaining provisions
      hereof shall not be in any way affected.

12.    GOVERNING LAW AND DISPUTES

12.1   This Agreement shall be governed by and construed in accordance with
      Swedish law.

12.2   Any dispute, controversy or claim arising out of or in connection with
      this Agreement or the breach, termination or invalidity thereof shall be
      finally settled by arbitration in accordance with the Insurance
      Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of
      Commerce. However, with deviation from sec. 3 thereof, the Rules of the
      Simplified Arbitration Procedures shall not apply, but, instead, the
      provisions of the Rules of the Arbitration Institute of the Stockholm
      Chamber of Commerce shall apply, and the Arbitration Tribunal shall always
      consist of three arbitrators. In case two or more parties are on the same
      side of a dispute, such parties shall appoint one arbitrator together. The
      place of arbitration shall be Stockholm, Sweden, and the language to be
      used in the proceedings shall be English.

                      ------------------------------------

This Agreement has been executed in fifteen (15) original copies to the English
language. Each party and its respective legal counsel have received one original
copy.

IN WITNESS WHEREOF, the parties hereto, intending to be bound, have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.

FORSAKRINGSAKTIEBOLAGET SKANDIA (publ)

/s/
------------------------------------------------------
Jan-Mikael Bexhad, under Power of Attorney

SKANDIA INTERNATIONAL HOLDING AKTIEBOLAG

/s/
------------------------------------------------------
Jan-Mikael Bexhed, under Power of Attorney

                                        12
<PAGE>   17

SKANDIA AMERICA CORPORATION
/s/  Jan Skogh
------------------------------------------------------
Jan Skogh

SKANDIA US HOLDING CORPORATION

/s/  Jan Skogh
------------------------------------------------------
Jan Skogh

FAIRFAX FINANCIAL HOLDINGS LIMITED

/s/
------------------------------------------------------

FAIRFAX, INC.

/s/
------------------------------------------------------

ORG SWEDEN HOLDINGS AKTIEBOLAG

/s/
------------------------------------------------------

ODYSSEY REINSURANCE CORPORATION

/s/
------------------------------------------------------

HUDSON INSURANCE COMPANY

/s/
------------------------------------------------------

ODYSSEY REINSURANCE COMPANY OF CANADA

/s/
------------------------------------------------------

ODYSSEY RE (STOCKHOLM) INSURANCE CORPORATION (publ)

/s/
------------------------------------------------------

                                        13
<PAGE>   18

SKANDIA UK INSURANCE PLC

/s/
------------------------------------------------------

ORC RE LIMITED

/s/
------------------------------------------------------

                                        14
<PAGE>   19

                        STOP-LOSS REINSURANCE AGREEMENT

THIS AGREEMENT effective as of December 31, 1995, by and among

                    SKANDIA AMERICA REINSURANCE CORPORATION

                                      AND

                      SKANDIA INSURANCE COMPANY LTD(PUBL)
                            (THE "RETROCESSIONAIRE")

In consideration of the mutual undertakings, agreements and covenants
hereinafter set forth (in which the capitalized terms shall have the meanings
set forth in Article 1 hereof), the parties agree as follows:

                                   ARTICLE 1

                                  DEFINITIONS

     a.  As used in this Agreement, capitalized terms shall have the following
meanings (the definitions to be applicable to both the singular and the plural
forms of each term defined in this Agreement):

     "Aggregate Limit": shall mean $175 million ($175,000,000.00).

     "Allocated Loss Adjustment Expenses": all costs and expenses (excluding
Losses) incurred by the Company in the investigation, appraisal, adjustment,
settlement, litigation, defense or appeal of specific Gross Incurred Losses, but
excluding Unallocated Loss Adjustment Expenses.

     "Allocated Reinsurance Recoverable Expenses": all reasonable costs and
expenses incurred by the Company in the investigation, appraisal, adjustment,
settlement, or litigation of specific Reinsurance Recoverables, but excluding
the costs and
expenses incurred by the Company of office administration, salaried employees
and third party consultants (other than legal counsel, medical consultants,
claim adjusters and other consultants employed in connection with the
investigation, appraisal, adjustment, settlement, or litigation thereof).

     "Annual Aggregate": as defined in Section 2.2 hereof.

     "Assumed Reinsurance Contract": any insurance or reinsurance policy,
insurance or reinsurance cover note, binder, slip, contract, agreement, treaty,
certificate or other instrument under which liabilities have been assumed, on an
indemnity or assumption basis, by the Company on or before the Effective Time,
excluding the reinsurance contracts or endorsements included in Exhibit A.

     "Attachment Point": equals $928,609,840.00, which represents the sum of the
Company's reserve for unpaid losses (including incurred but not reported) and
allocated loss adjustment expenses less the asset for reinsurance recoverables
of $898,746,840.00, plus the Company's provision for potentially uncollectible
reinsurance recoverables of $29,863,000.00, both as reflected in the
consolidated financial statements of the Company as of December 31, 1995
prepared in conformity with GAAP (excepting any amounts included in respect of
Capital Assurance Company, Inc. and Capital Alliance Insurance Co., Inc.).

     "Commutation Date": as defined in Section 8.1 hereof or such earlier date
as may be determined under Section 9.1 hereof.

     "Commutation Value": an amount equal to the present value as of the
Commutation Date of the Remaining Liability after taking into account the
expected payment pattern of such liability. For the purposes of this definition,
the present value shall be calculated using a discount rate equal to the
five-year U.S. Treasury note rate prevailing at the close of business on the
Commutation Date, as set forth in the Federal Reserve statistical release
H.15(519) or any replacement release therefor for such date (or if such release
is not available, as agreed by the Retrocessionaire and the Company, acting
reasonably), plus .375% (37.5 basis points).
<PAGE>   20

     "COMPANY": Skandia American Reinsurance Corporation, Hudson Insurance
Company and Skandia Canada Reinsurance Company.

     "CUMULATIVE NET INCURRED UNCOLLECTIBLE REINSURANCE RECOVERABLES": (i)
Uncollectible Reinsurance Recoverables, plus (ii) Net Uncollectible Reinsurance
Recoverable Write-Offs, plus (iii) Allocated Reinsurance Recoverable Expenses,
in each case after exclusion of any amounts related to Reinsurance Recoverables
from the Retrocessionaire or its affiliates.

     "DISPUTE NOTICE": as defined in Section 8.2 hereof.

     "DISPUTED AMOUNTS": as defined in Section 8.2 hereof.

     "EFFECTIVE TIME": 11:59 p.m. (Eastern Standard Time) on December 31, 1995.

     "ELIGIBLE LETTER OF CREDIT": a clean, irrevocable, unconditional, evergreen
letter of credit in favor of the Company issued by a U.S. bank acceptable to the
Company (which acceptance shall not be unreasonably withheld) which is in the
form and substance necessary to allow the Company to take statutory financial
statement credit equal to the face amount of such letter of credit in respect of
the reinsurance provided by this Agreement on its statutory financial statements
in every jurisdiction in which the Company is licensed or otherwise approved to
transact, or transacts, business and which requires security in order for such
statutory financial statement credit to be taken by the Company.

     "ELIGIBLE TRUST ACCOUNT": a trust account established and maintained by the
Retrocessionaire for the benefit of the Company with a U.S. bank acceptable to
the Company (which acceptance shall not be unreasonably withheld) serving as the
trustee pursuant to a trust agreement which is in the form and substance
necessary to allow the Company to take statutory financial statement credit in
respect of the reinsurance provided by this Agreement on its statutory financial
statements in every jurisdiction in which the Company is licensed or otherwise
approved to transact, or transacts, business and which requires security in
order for such statutory financial statement credit to be taken by the Company.

     "EXTRA-CONTRACTUAL LIABILITIES": liabilities arising from failure by the
Company or an Original Insurer to settle within the limit of any policy or
reinsurance contract or policy, or by reason of alleged or actual negligence or
bad faith of the Company or an Original Insurer in handling a claim, rejecting
an offer of settlement or in the preparation, defense or trial of any action
against an insured or reinsured of the Company or an Original Insurer or in the
preparation or prosecution of an appeal consequent upon such action.

     "GAAP": shall mean generally accepted accounting principles as in effect in
the United States on the relevant date, consistently applied.

     "GROSS INCURRED LOSSES": Losses incurred by the Company under Assumed
Reinsurance Contracts applicable to accident years 1995 and prior, and Losses
incurred by the Company on Prorated Business determined in accordance with the
prorated business allocation formula set forth in Exhibit B hereto.

     "IDENTIFIABLE LOSSES": as defined in Exhibit B hereto.

     "LOSSES": shall mean gross indemnity obligations (excluding Allocated Loss
Adjustment Expenses and Unallocated Loss Adjustment Expenses) incurred by the
Company under Assumed Reinsurance Contracts including, but not limited to,
Extra-Contractual Liabilities.

     "NET INCURRED LOSSES": shall mean (a) Gross Incurred Losses plus Allocated
Loss Adjustment Expenses with respect to such Gross Incurred Losses MINUS (b)
Reinsurance Recoveries and Reinsurance Recoverables, whether such Reinsurance
Recoverables are received or accrued by the Company pursuant to Retrocession
Reinsurance Contracts, net, in the case of each item in clauses (a) and (b) of
this definition, of payments made by the Company or amounts received by the
Company prior to the Effective Time.

     "NET UNCOLLECTIBLE REINSURANCE RECOVERABLE WRITE-OFFS": shall mean an
amount equal to (a) Reinsurance Recoverables that qualify for write-off and have
been written off during the period commencing with the Effective Time and ending
with the Commutation Date under GAAP, MINUS (b) the sum of Reinsurance
Recoverables previously written off (without regard to the Effective Time) as to
which a

                                        2
<PAGE>   21

change in circumstance requires recharacterization as collectible, and money
received by the Company in respect of Reinsurance Recoverables previously
written off (without regard to the Effective Time), in each case during the
period commencing with the Effective Time and ending with the Commutation Date.

     "ORIGINAL INSURER": the insurer ceding or retroceding risks to the Company
under an Assumed Reinsurance Contract.

     "PAID LOSSES": an amount equal to the sum of (i) amounts paid by the
Company with respect to Net Incurred Losses during the period commencing with
the Effective Time and ending with the Commutation Date and (ii) Net
Uncollectible Reinsurance Recoverable Write-Offs.

     "PANEL": as defined in Section 16.2 hereof.

     "PRORATED BUSINESS": the Assumed Reinsurance Contracts listed in Exhibit B
hereto.

     "REINSURANCE CEDED": as defined in Section 2.1 hereof.

     "REINSURANCE RECOVERABLES": amounts, whether or not collectible, which may
be due or may become due to the Company pursuant to Retrocession Reinsurance
Contracts under which the Company ceded losses applicable to accident years 1995
and prior, or in connection with Prorated Business determined in accordance with
the prorated business allocation formula set forth in Exhibit B hereto.

     "REINSURANCE RECOVERIES": amounts actually received by the Company pursuant
to Retrocession Reinsurance Contracts.

     "REMAINING LIABILITY": an amount determined by subtracting Paid Losses in
excess of the Attachment Point as of the Commutation Date from the lesser of
$175 million and the amount ceded by the Company under Section 2.1 hereof as of
the Commutation Date.

     "REQUIRED SECURITY": as defined in Section 6.1 hereof.

     "RETROCESSION REINSURANCE CONTRACT": any reinsurance certificate,
retrocession agreement or other instrument of reinsurance ceded by the Company
with respect to Assumed Reinsurance Contracts, other than this Agreement.

     "Settlement Report": as defined in Section 8.1 hereof.

     "Settlement Value": the positive or negative amount equal to (a) the
Commutation Value, SUBTRACTED FROM (b) an amount equal to the total payments by
the Retrocessionaire to the Company under Section 2.2 or Section 2.3 hereof
MINUS Paid Losses.

     "Subsidiary": Hudson Insurance Company or Skandia Canada Reinsurance
Company.

     "Term of this Agreement": the period commencing with the Effective Time and
ending with the later to occur of (i) the Commutation Date and (ii) the making
of all payments due hereunder.

     "Termination Notice": as defined in Section 9.1 hereof.

     "Unallocated Loss Adjustment Expenses": the costs and expenses (excluding
Losses) incurred by the Company of office administration, salaried employees and
third party consultants, other than legal counsel, medical consultants, claim
adjusters and other consultants employed in connection with the investigation,
appraisal, adjustment, settlement, litigation, defense or appeal of specific
Gross Incurred Losses or in contesting the validity of or the Company's payment
obligations under Assumed Reinsurance Contracts.

     "Uncollectible Reinsurance Recoverables": with respect to a balance sheet
of the Company as at any balance sheet date which is relevant under this
Agreement, the amount included in the Company's provision for potentially
uncollectible reinsurance recoverables in its GAAP financial statements as at
such date with respect to Reinsurance Recoverables.

                                        3
<PAGE>   22

                                   ARTICLE 2

                               REINSURANCE CEDED

     2.1  Subject to all applicable terms, conditions, exclusions and
limitations contained in this Agreement, the Company hereby agrees to retrocede
as reinsurance to the Retrocessionaire, and the Retrocessionaire hereby agrees
to reinsure the Company for, one hundred percent (100%) of the Net Incurred
Losses plus Cumulative Net Incurred Uncollectible Reinsurance Recoverables, on a
losses incurred basis, in excess of the Attachment Point (the "Reinsurance
Ceded") up to the Aggregate Limit.

     2.2  The Company may retrocede Reinsurance Ceded subject to an annual
aggregate limitation of $17.5 million (the "Annual Aggregate"). In the event a
portion of the Annual Aggregate is not utilized in any year, any such unused
amount shall carry over cumulatively to the subsequent years as an addition to
the Annual Aggregate. When the cumulative Reinsurance Ceded exceeds $60.5
million, the Retrocessionaire will, subject to the Annual Aggregate and the
Aggregate Limit, pay to the Company cash in an amount equal to the Reinsurance
Ceded in excess of $60.5 million which amount shall be placed in the trust
established pursuant to Section 6.3 hereof.

     2.3  Notwithstanding anything to the contrary contained in Section 2.2
hereof, to the extent Paid Losses exceeds the Attachment Point, the
Retrocessionaire will pay the Company dollar for dollar such amounts up to a
maximum of $60.5 million.

                                   ARTICLE 3

                              REINSURANCE PREMIUM

     3.1  The Company shall within 90 days after the Effective Time pay to the
Retrocessionaire as the reinsurance premium hereunder $60.5 million.

                                   ARTICLE 4

                    COMMENCEMENT AND TERM OF THIS AGREEMENT

     4.1  The liability of the Retrocessionaire shall commence at the Effective
Time, and this Agreement shall be continuous and shall remain in effect until
the later to occur of (i) the Commutation Date and (ii) the making of all
payments due hereunder.

                                   ARTICLE 5

                                   TERRITORY

     5.1  This Agreement shall apply to Assumed Reinsurance Contracts and
Retrocession Reinsurance Contracts reinsured hereunder covering risks wherever
situated.

                                   ARTICLE 6

                            MAINTENANCE OF SECURITY

     6.1  The Retrocessionaire shall provide security in the form of collateral
in an amount equal to the Aggregate Limit, minus any payments made by the
Retrocessionaire to the Company under Section 2.2 and Section 2.3 of this
Agreement ("Required Security"). Such collateral shall be provided in the form
of Eligible Letters of Credit or an Eligible Trust Account or any combination
thereof.

     6.2  If, as of the end of any calendar quarter, the provided security is
less than the Required Security, the Retrocessionaire shall, as soon as
practicable, but in no event later than thirty (30) days after the end of that
quarter, either deposit an amount in an Eligible Trust Account or purchase or
add to the face amount of an Eligible Letter of Credit or both, so that the
provided security is at least equal to the Required Security. If,

                                        4
<PAGE>   23

as of the end of any calendar quarter, the provided security is greater than the
Required Security, the Retrocessionaire may withdraw the amount of any such
excess from the Eligible Trust Account or Eligible Trust Accounts in accordance
with the terms of the related trust agreement(s) or reduce the face amount of
the Eligible Letter of Credit or Eligible Letters of Credit by the amount of
such excess.

     6.3  The Company shall deposit an amount equal to all payments made by the
Retrocessionaire to the Company under Section 2.2 hereof into a trust account
for the benefit of the Retrocessionaire for the purpose of securing Paid Losses
in excess of the Attachment Point (which may be paid out of such trust account)
and any payments due to the Retrocessionaire under Article 8 hereof, under a
trust agreement in form and substance reasonably satisfactory to the
Retrocessionaire. Such trust account shall be in form and substance necessary to
allow the Company to take statutory financial statement credit for the
reinsurance provided by this Agreement. In the event that such trust account is
not effective to allow the Company to take such credit, then in lieu thereof,
the Company shall provide such substitute security which shall be (a) in form
and substance satisfactory to the Retrocessionaire and (b) in a form and
substance such that the Company will not suffer any material adverse effect to
its financial statement. Amounts held in such trust account may be held in the
discretion of the Company in cash or investment grade fixed income securities.
If at the end of any calendar quarter the amount on deposit in the trust account
is less than required hereunder, the Company shall, as soon as practicable, but
in no event later than thirty (30) days after the end of that quarter, deposit
an amount equal to the amount of such deficiency. If at the end of any calendar
quarter the amount on deposit in the trust account exceeds the amount required
hereunder, the Company may withdraw the amount of such excess.

                                   ARTICLE 7

                              REPORTS AND PAYMENTS

     7.1  Within ninety (90) days following the end of each calendar quarter the
Company shall render a statement to the Retrocessionaire in a form and content
to be mutually agreed upon by the Company and Retrocessionaire. Such report will
include at a minimum:

          (a)  Net Incurred Losses for such quarter and inception-to-date
     experience under this Agreement;

          (b)  Cumulative Net Incurred Uncollectible Reinsurance Recoverables
     identified during such quarter and inception-to-date experience under this
     Agreement;

          (c)  Payment due to or from the Retrocessionaire;

          (d)  Any commutation carried out during such quarter, which shall in
     all cases be commercially reasonable commutation in the ordinary course;
     and

          (e)  Information regarding the status of efforts to collect
     Uncollectible Reinsurance Recoverables including plans to collect, the
     status of any litigations or arbitrations relating to such collections and
     the amount of Allocated Reinsurance Recoverable Expenses expended
     inception-to-date.

     7.2  With respect to any payments due pursuant to Section 7.1 for which no
time period is specified by this Agreement, if the party entitled to receive
such payment shall present a claim for payment hereunder, payment thereon shall
be made by the party required to make such payment promptly, but in no event
more than thirty (30) days after the presentation thereof.

     7.3  All payments due under this Agreement shall be made by wire transfer
of immediately available funds to an account designated by the recipient of such
funds no less than three (3) business days prior to the date such payments are
due.

     7.4  No payment made pursuant to this Article 7 shall be deemed a waiver by
the party making such payment of any of its rights under any other provision of
this Agreement, including without limitation the right to dispute any report
delivered to it hereunder.

                                        5
<PAGE>   24

                                   ARTICLE 8

                                  COMMUTATION

     8.1  This Agreement shall be commuted effective December 31, 2005 (the
"Commutation Date"), unless the parties agree otherwise. On or before April 30,
2006, the Company shall provide to the Retrocessionaire a calculation of the
Settlement Value (the final amount payable under this Agreement) along with a
report detailing the basis for its calculations (the "Settlement Report"). The
Settlement Report shall be prepared by the Company in a manner which is
consistent with the Company's reserving practices at the Effective Time. If the
Settlement Value is a positive amount, such amount shall be paid by the Company
to the Retrocessionaire. If the Settlement Value is a negative amount, such
amount shall be paid by the Retrocessionaire to the Company.

     8.2  If, within 45 days of its receipt of the Settlement Report, the
Retrocessionaire notifies the Company in writing (a "Dispute Notice") that it
disputes any amounts or calculations used in determining the Settlement Value or
the Commutation Value in the Settlement Report, the Retrocessionaire or the
Company, as the case may be, may withhold payment of the amounts so disputed
(the "Disputed Amounts"), if any, shown due in the Settlement Report until the
dispute is resolved in accordance with the terms of this Agreement. The Dispute
Notice shall specifically identify the Disputed Amount and thereafter the
parties will, to the extent practicable, confer in good faith to resolve such
dispute. If, after so conferring, the Retrocessionaire still contests the
Disputed Amounts reported in the Settlement Report, then, no later than 90 days
after the Retrocessionaire's receipt of the Settlement Report, the
Retrocessionaire shall appoint an independent actuary who is a member of the
Casualty Actuarial Society reasonably acceptable to the Company to review the
Settlement Report and provide to the parties a report which includes the
conclusions of such independent actuary and the bases for such conclusions. The
parties will abide by the conclusions of the independent actuary. The cost of
such independent actuary shall be shared equally by the Company and the
Retrocessionaire.

                                   ARTICLE 9

                              SPECIAL TERMINATION

     9.1  The Company may terminate and commute, in accordance with Article 8
hereof as of the date of termination, this Agreement at any time by the giving
of fifteen (15) days notice in writing to the other party (the "Termination
Notice") upon the happening of any one of the following circumstances:

          1.  An insurance regulatory authority or other legal authority orders
     the Retrocessionaire to cease writing business, and such cessation would
     materially impair the claims-paying ability of the Retrocessionaire, or

          2.  The Retrocessionaire has become insolvent or has been placed into
     liquidation or receivership (whether voluntary or involuntary), or there
     has been instituted against it proceedings for the appointment of a
     receiver, liquidator, rehabilitator, conservator, or trustee in bankruptcy,
     or other agent known by whatever name, to take possession of its assets or
     control of its operations, or

          3.  The Retrocessionaire attempts to assign or transfer any of its
     liability under this Agreement without the Company's prior written consent,
     which consent shall not be unreasonably withheld, except under
     circumstances in which the Retrocessionaire remains liable to the Company
     hereunder.

                                   ARTICLE 10

                              FOLLOW THE FORTUNES

     10.1  The Retrocessionaire's liability under this Agreement shall be
subject in all respects to the terms and conditions of the Assumed Reinsurance
Contracts, it being the intent of this Agreement that at all times the
Retrocessionaire shall follow the fortunes of the Company under the Assumed
Reinsurance Contacts.

                                        6
<PAGE>   25

                                   ARTICLE 11

                              ERRORS AND OMISSIONS

     11.1  Any inadvertent delay, omission or error shall not be held to relieve
either party hereto from any liability which would attach to that party if such
delay, omission or error had not occurred, provided such delay, omission or
error is corrected promptly upon discovery and does not prejudice the other
party hereto.

                                   ARTICLE 12

                                    CURRENCY

     12.1  All of the provisions of this Agreement are expressed in terms of
United States dollars and all amounts shall be paid in United States dollars.

                                   ARTICLE 13

                            ACCESS TO RECORDS, AUDIT

     13.1  The Retrocessionaire or its authorized representative shall have the
right, at any reasonable time and from time to time, upon reasonable notice and
in a reasonable manner, to review, inspect and, at the expense of the
Retrocessionaire, make copies of records, documents and other media of the
Company which relate to this Agreement, such right to continue as long as the
Company or Retrocessionaire shall have a claim against the other relating to
this Agreement.

                                   ARTICLE 14

                                     OFFSET

     14.1  Each party hereto shall have, and may exercise at any time and from
time to time, the right to offset any balance or balances due from such party to
the other party under this Agreement or under any other reinsurance agreement
heretofore or hereafter entered into by and between them against any balance or
balances due or to become due to the former from the latter under this Agreement
or any other reinsurance agreement referred to above. The party asserting offset
shall have and may exercise such right regardless of the capacity, whether as
assuming reinsurer or as ceding company, in which each party acted under this
Agreement, or, if more than one, the different agreements involved. In the event
of the insolvency of a party hereto that is the subject of an insolvency
proceeding in New York, offsets shall be allowed only in accordance with the
provisions of Section 7427 of the Insurance Law of the State of New York.

                                   ARTICLE 15

                                   INSOLVENCY

     15.1  In the event of the insolvency of the Company, the reinsurance
provided by this Agreement shall be payable by the Retrocessionaire on the basis
of the liability of the Company with respect to the assumed liabilities without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay
all or a portion of any claim. It is agreed that the liquidator, receiver,
conservator or statutory successor of the Company shall give written notice to
the Retrocessionaire within a reasonable time of the pendency of a claim against
the Company with respect to the assumed liabilities. During the pendency of such
claim, the Retrocessionaire may investigate such claim and interpose, at its own
expense, in the proceeding where such claim is to be adjudicated, any defense or
defenses that it may deem available to the Company or its liquidator, receiver,
conservator or statutory successor. The expense thus incurred by the
Retrocessionaire shall be chargeable, subject to the approval of the court,
against the Company as part of the expense of conservation or liquidation to the
extent of a pro rata share of the benefit which may accrue to the Company solely
as a result of the defense undertaken by the Retrocessionaire.
                                        7
<PAGE>   26

     15.2  The reinsurance provided by this Agreement shall be payable by the
Retrocessionaire to the Company, or to its liquidator, receiver, conservator or
statutory successor, except as provided in any applicable statute or except (a)
where this Agreement specifically provides another payee of such reinsurance in
the event of the insolvency of the Company and (b) where the Retrocessionaire,
with the consent of the Original Insurer, has assumed the obligations of the
Company under contracts of reinsurance as its direct obligations to the payees
with the consent of such payees and in substitution for the obligations of the
Company to such payees.

                                   ARTICLE 16

                                  ARBITRATION

     16.1  All disputes which may arise between the Company and the
Retrocessionaire with reference to the interpretation of this Agreement or their
respective rights and obligations hereunder, shall be submitted to arbitration
in accordance with this Article, which shall be the exclusive remedy available
to the parties hereto. Regardless of whether such dispute arises before, during
or after the Term of this Agreement, such dispute, upon the written request of
either party hereto within a reasonable time after the dispute has arisen, shall
be submitted to three arbitrators, one to be chosen by each party hereto, and
the third by the two arbitrators so chosen. If either party hereto refuses or
neglects to appoint an arbitrator within thirty (30) days after the receipt of
written notice from the other party requesting it to do so, the requesting party
may appoint two arbitrators. If the two arbitrators fail to agree in the
selection of a third arbitrator within thirty (30) days of their appointment,
each of them shall name two, of whom the other shall decline one and the third
arbitrator shall be chosen by drawing lots. All arbitrators shall be active or
retired disinterested officers of United States insurance or reinsurance
companies and shall not be under the control of or a former officer of either
party hereto or of any affiliate of either such party. The arbitration shall
take place in New York, New York, unless some other place is mutually agreed
upon by the Company and the Retrocessionaire.

     16.1  The claimant shall submit its pre-hearing brief within forty-five
(45) days from appointment of the third arbitrator. The respondent shall submit
its brief within forty-five (45) days after such submission and the claimant may
submit a reply brief within thirty (30) days after the filing of the
respondent's brief. The periods of time may be extended by unanimous consent in
writing of the arbitration panel (the "Panel"). The rules and procedures for
pre-hearing investigations shall be established by the Panel. To the extent any
rules or procedures necessary to conduct such arbitration are not specified by
this Article, the Commercial Arbitration Rules of the American Arbitration
Association shall be used as a nonbinding guideline in fashioning such rules or
procedures.

     16.3  Service of any paper in connection with the arbitration may be served
by certified mail return receipt requested, or by personal service or in such
other manner as may be permissible under the rules of the Panel, provided that a
reasonable time for appearances is allowed. Service upon either party shall be
directed as provided in Article 17 and Section 18.1 hereof.

     16.4  The Panel shall make its decision in accordance with the custom and
usage of the insurance and reinsurance business. The Panel shall issue its
decision in writing based upon a hearing in which evidence may be introduced
without following the strict rules of evidence but in which cross-examination
and rebuttal shall be allowed. The Panel shall make its decision within sixty
(60) days following the termination of the hearings unless the parties consent
to an extension. The Panel may award such damages (other than punitive damages)
and may impose such other orders or remedies, including (but not limited to)
specific performance, as it deems just and appropriate. The majority decision of
the Panel, upon delivery thereof to the parties, shall be final and binding upon
all parties to the proceeding and shall not be subject to appeal.

     16.5  Unless prohibited by applicable law, any arbitral award hereunder and
any judgment thereon shall bear interest from the date of the award.

     16.6  Each party shall bear the expenses of the arbitrator appointed by it
or on its behalf and its own counsel and shall jointly and equally bear with the
other party the expenses of the third arbitrator. The remaining costs of the
arbitration proceeding shall be allocated by the Panel in its discretion.

                                        8
<PAGE>   27

                                   ARTICLE 17

                                SERVICE OF SUIT

     17.1  The parties hereto consent to the jurisdiction of the Supreme Court
of the State of New York, County of New York and of the United States District
Court for the Southern District of New York, for all purposes in connection with
arbitration conducted pursuant to this Agreement, including without limitation
any application to compel arbitration or to confirm any arbitration award. A
judgment in any such proceeding shall, as modified or affirmed upon any appeal
therefrom, be conclusive and binding upon the parties hereto.

     17.2  The Company appoints the person or designated representative named
for it in Article 18 hereof as its authorized agent to accept and acknowledge on
its behalf service of any and all process which may be served in any such suit.

     17.3  The Retrocessionaire appoints Cadwalader, Wickersham & Taft as its
authorized agent to accept and acknowledge on its behalf valid and duly
delivered service of any and all process which may be served in any such suit.

     17.4  Pursuant to any statute of any state, territory, or district of the
United States which makes provision therefor, the Retrocessionaire hereby
designates the Superintendent, Commissioner or Director of Insurance or other
official specified for that purpose in such statute, or his or her successor or
successors in office, as its true and lawful attorney upon whom may be served
any lawful process in such suit.

     17.5  Each of the parties hereto consents to process being served in any
suit provided for in this Article by serving a copy thereof upon such party or
upon its agent for service or process appointed pursuant to this Article, by
certified mail, return receipt requested, or by personal service or in such
other manner as may be permissible under the rules of the applicable court.

                                   ARTICLE 18

                                    NOTICES

     18.1  All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered or given by telecopy
and shall be addressed:

        (a)  If the Company, to:
             Skandia America Reinsurance Corporation
             One Liberty Plaza
             New York, New York 10006
             Attention: General Counsel
             Phone: (212) 978-4700
             Fax: (212) 571-3630

        (b)  If to the Retrocessionaire, to:
             Skandia Insurance Company Ltd(publ)
             Sveavagen 44
             S-103 50
             Stockholm, Sweden
             Attention: Jan Wangard
             Phone: 011 46 8 788 1000
             Fax: 011 46 8 10 8693

or to such other address or person as such party shall have specified by notice
to the other party.

     Parent hereby appoints Cadwalader, Wickersham & Taft, 100 Maiden Lane, New
York, New York 10038 as its authorized agent to accept and acknowledge on its
behalf valid and duly delivered service of any and all process which may be
served in connection with any claim hereunder.

                                        9
<PAGE>   28

                                   ARTICLE 19

                                OTHER PROVISIONS

     19.1  THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS OF THE
PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF, EXCEPT WITH RESPECT TO MATTERS
OF LAW CONCERNING THE INTERNAL CORPORATE AFFAIRS OF ANY CORPORATE ENTITY WHICH
IS A PARTY TO OR THE SUBJECT OF THIS AGREEMENT, AND AS TO THOSE MATTERS THE LAW
OF THE JURISDICTION UNDER WHICH THE RESPECTIVE ENTITY DERIVES ITS POWERS SHALL
GOVERN.

     19.2  The invalidity or unenforceability of any provision or portion hereof
shall not affect the validity or enforceability of the other provision or
portion hereof.

     19.3  This Agreement:

          (a)  may be executed in counterparts (or by counterpart signature
     pages), each of which shall be deemed an original and all of which
     constitute one and the same instrument;

          (b)  is not intended to confer any rights upon any person other than
     the parties hereto and their respective successors or assigns;

          (c)  shall be binding upon and inure to the benefit of the parties
     hereto and their respective successors and assigns; and

          (d)  may not be amended, changed or otherwise modified or, except as
     otherwise expressly provided herein, assigned in any respect unless agreed
     upon in writing and signed by the duly authorized representatives of the
     respective parties hereto.

                                        10
<PAGE>   29

     IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as
of December 31, 1995.

                                             SKANDIA INSURANCE COMPANY LTD
                                             (publ)

                                             By: /s/  Sau-Mihael Bexbell
                                             Name: Sau-Mihael Bexbell
                                             Title: General Counsel, S.V.P.
                                             Date:

                                             By: /s/  Arne Hailstrom
                                             Name: Arne Hailstrom
                                             Title: Senior Vice President
                                             Date:

                                             SKANDIA AMERICA REINSURANCE
                                             CORPORATION

                                             By: /s/  T.M. Tobin
                                             Name: T.M. Tobin
                                             Title: Senior Vice President
                                             Date:

                                        11
<PAGE>   30

                                   EXHIBIT A
                                       TO
                        STOP-LOSS REINSURANCE AGREEMENT

     Any insurance or reinsurance policy, insurance or reinsurance cover note,
binder, slip, contract, agreement, treaty, certificate or assumption or
cut-through endorsement under which liabilities have been assumed, on an
indemnity or assumption basis, by the Company from or on behalf of the
Retrocessionaire or any affiliate of the Retrocessionaire and which are subject
to indemnification pursuant to the Indemnification Agreement, dated August 22,
1991, between Skandia Holding Aktiebolag and Skandia U.S. Holding Corporation,
Skandia America Corporation and Skandia America Reinsurance Corporation.
<PAGE>   31

                                   EXHIBIT B
                                       TO
                        STOP-LOSS REINSURANCE AGREEMENT

                               PRORATION SCHEDULE
                     ALLOCATION OF NET INCURRED LOSSES AND
                     CUMULATIVE NET INCURRED UNCOLLECTIBLE
                            REINSURANCE RECOVERABLES
                             FOR PRORATED BUSINESS

1.   In respect of the contracts listed in the schedule attached, Net Incurred
     Losses and Cumulative Net Incurred Uncollectible Reinsurance Recoverables
     (less Identifiable Losses as defined below) will be allocated to accident
     years 1995 and prior in the same proportion as the Company's earned premium
     on the contracts through December 31, 1995, as reflected in the Company's
     statutory annual statement, bears to the Company's inception-to-date earned
     premium on the contracts through the end of each calendar quarter.

2.   An Identifiable Loss is one for which the date of loss can be readily
     determined and accordingly will be charged to the appropriate accident
     years.
<PAGE>   32

PRORATED BUSINESS

<TABLE>
<CAPTION>
       SAIL ID                  SAG ID
   SYSTEM CONTRACT         CONVERTED SYSTEM
       NUMBER              CONTRACT NUMBER       CEDING COMPANY NAME
---------------------      ----------------      --------------------------
<S>                        <C>                   <C>
xx08-0047-1995                   8250            ACCEPTANCE INS CO
xx24-0005-1994                   4466            CALVERT INS CO
xx24-0005-1995                   4466            CALVERT INS CO
xx24-0024-1994                   8203            CALVERT INS CO
KM75-0001-1995                   8292            CASCADE NATIONAL INS CO
[illegible]-0060-1995            8291            CHUBB INS CORP NJ
[illegible]-0108-1994            8194            CIGNA CORP (GROUP)
xx32-0022-1994                   8182            CLARENDON NATL I C
xx32-0022-1995                   8182            CLARENDON NATL I C
xx32-0023-1995                   8160            CLARENDON NATL 1 C
xx32-0027-1995                   8245            CLARENDON NATL I C
xx32-0031-1995                   8251            CLARENDON NATL 1 C
xx32-0033-1995                   8286            CLARENDON NATL I C
[illegible]-0004-1994            8085            COAST NATIONAL I C
[illegible]-0004-1995            8085            COAST NATIONAL I C
HM10-0021-1994                   7913            COMMERCE & INDUST IC
HM10-0021-1995                   7913            COMMERCE & INDUST IC
[illegible]-0034-1995            8272            CONTINENTAL CAS CO
[illegible]-0084-1995            8183            CONTINENTAL INS CO
[illegible]-0005-1995            5025            DEANS & HOMER
[illegible]-0011-1995            8252            ELTON GEORGE & CO
[illegible]-0007-1984            5189            FINANCIAL GUAR I C
[illegible]-0007-1985            5189            FINANCIAL GUAR I C
[illegible]-0007-1986            5189            FINANCIAL GUAR I C
[illegible]-0007-1987            5189            FINANCIAL GUAR I C
[illegible]-0007-1988            5189            FINANCIAL GUAR I C
[illegible]-0007-1989            5189            FINANCIAL GUAR I C
[illegible]-0007-1990            5189            FINANCIAL GUAR I C
[illegible]-0007-1991            5189            FINANCIAL GUAR I C
18287-0001-1990                  7181            FINANCIAL SEC ASSURANCE
18287-0001-1991                  7181            FINANCIAL SEC ASSURANCE
22039-0056-1990                  8139            GENL REINS CORP
41343-0005-1995                  8295            GERLING AMER INS CO
19429-0010-1994                  7257            INS CO OF ST OF PENN
11661-0007-1994                  6787            KEYSTONE INS CO
11661-0007-1995                  6787            KEYSTONE INS CO
24422-0019-1995                  8253            LEGION INSURANCE CO
19437-0040-1994                  8125            LEXINGTON INS CO
19437-0040-1995                  8125            LEXINGTON INS CO
23043-0093-1995                  8305            LIBERTY MUT INS CO
07055-0001-1995                  7123            MEGA LIFE&HEALTH IC
20351-0002-1995                  7738            NORTHERN CITY MUT IC
20351-0004-1995                  8127            NORTHERN CITY MUT IC
24015-0006-1995                  5147            NORTHLAND NS CO
24015-0033-1995                  7439            NORTHLAND NS CO
29378-0013-1995                  8254            OLD AMER CITY MFIC
28959-0004-1994                  8200            PRUDENTIAL P&C OF NJ
28959-0004-1995                  8200            PRUDENTIAL P&C OF NJ
</TABLE>
<PAGE>   33

<TABLE>
<CAPTION>
       SAIL ID                  SAG ID
   SYSTEM CONTRACT         CONVERTED SYSTEM
       NUMBER              CONTRACT NUMBER       CEDING COMPANY NAME
---------------------      ----------------      --------------------------
<S>                        <C>                   <C>
41297-0016-1994                  6566            SCOTTSDALE INS CO
41297-0016-1994                  6566            SCOTTSDALE INS CO
30461-0009-1994                  5170            ST PAUL SRPLS LINES
30461-0009-1994                  5170            ST PAUL SRPLS LINES
30461-0011-1994                  4626            ST PAUL SRPLS LINES
30451-0011-1995                  4626            ST PAIR. SRPLS LINES
25534-0043-1995                  8258            TIG INSURANCE CO
18031-0003-1994                  5885            TOPA INSURANCE CO
25433-0001-1995                  8298            TRAFALGAR INS CO
24619-0008-1994                  7244            TRANSPORTATION CAS
24619-0008-1995                  7244            TRANSPORTATION CAS
25831-0052-1995                  8284            TRAVELERS CORP
10182-0001-1995                  8307            U S F & G SPECIALTY INS CO
US262-0002-1995                  8260            UNDERWRITERS INS CO
13064-0042-1994                  7296            UNITED NAT'L INS CO
13064-0079-1994                  8180            UNITED NAT'L INS CO
13064-0079-1995                  8180            UNITED NAT'L INS CO
13064-0083-1995                  8261            UNITED NATL INS CO
37150-0012-1995                  8097            WESTERN HERITAGE I C
27855-0015-1995                  8079            ZURICH AMER IC OF IL
16535-0003-1994                  8198            ZURICH INS CO-U.S BR
16535-0003-1995                  8198            ZURICH INS CO-U.S BR
</TABLE>
<PAGE>   34

                                 ACKNOWLEDGMENT

     Reference is made to the Stop-Loss Reinsurance Agreement (the "Agreement"),
effective as of December 31, 1995, by and among Skandia America Reinsurance
Corporation, a corporation organized under the laws of Delaware, and Skandia
Insurance Company Ltd (publ), a company organized under the laws of Sweden. The
undersigned acknowledge that Exhibit A attached hereto constitutes an example of
a representative calculation of amounts that may be payable under the Agreement.
To the extent applicable, calculations pursuant to the Agreement should be made
consistent with the calculations methodology utilized in Exhibit A.

                                             SKANDIA INSURANCE COMPANY LTD
                                             (publ)

                                             By: /s/  Arne Hallstrom
                                                 Name: Arne Hallstrom
                                                 Title: S.V.P.
                                                 Date:

                                             By: /s/  Sau-Mihael Bexbell
                                                 Name: Sau-Mihael Bexbell
                                                 Title: S.V.P., General Counsel
                                                 Date: May 30, 1996

                                             SKANDIA AMERICA REINSURANCE
                                             CORPORATION

                                             By: /s/  T.M. Tobin
                                                 Name: T.M. Tobin
                                                 Title: Senior Vice President
                                                 Date: May 30, 1996
<PAGE>   35

                                   EXHIBIT A

                   EXAMPLE OF OPERATION OF DECEMBER 31, 1995
                  SARC -- SICL STOP LOSS REINSURANCE AGREEMENT

As an aid to understanding the operation of the stop loss reinsurance agreement,
the following example, based on the assumptions noted before it, indicates the
payment and coverage position until December 31, 2005 and the calculation of the
commutation amount payable as of December 31, 2005.

Notes:

1.   The stop loss reinsurance agreement provides coverage in accordance with
     its terms on a losses incurred basis -- i.e. losses are retroceded as they
     are incurred (when reserves are established), not when they are payable or
     paid (except to the extent that this occurs first).

2.   It will not be necessary to calculate the "payments made" or "amounts
     received" netted out at the end of the definition of "Net Incurred Losses"
     (which would be a very time-consuming calculation since it goes from the
     beginning of SARC's existence), because, since the stop loss reinsurance
     agreement only reinsures adverse development beyond the Attachment Point,
     the "payments made" and "amounts received" netted out are exactly balanced
     by an equal amount included in the initial portion of the "Net Incurred
     Losses" definition.
<PAGE>   36

Example assumes a $175 million cover excess of carried reserve @ 12/31/95.

Premium recorded in 1995 of $60.5 million.

Assumes stop loss is utilized as indicated in the "Cover Utilized" column and
SARC's losses are paid as indicated in the "Sarc Paid Losses" column.

Assumes coverage is the last to pay, i.e. after payment of current reserve base.

Amounts listed below are in thousands of U.S. dollars.

<TABLE>
<CAPTION>
                                          SARC                               ANNUAL
                                          PAID      ANNUAL      COVER       PAYMENTS     COMMUTATION
YEAR                                     LOSSES    AGGREGATE   UTILIZED   BY REINSURER      VALUE
----                                     -------   ---------   --------   ------------   -----------
<S>                                      <C>       <C>         <C>        <C>            <C>
1995..................................                    0          0
1996..................................               17,500     17,500
1997..................................               17,500     35,000
1998..................................               17,500     52,500
1999..................................               17,500     70,000        9,500
2000..................................               17,500     87,500       17,500
2001..................................               17,500    105,000       17,500
2002..................................               17,500    122,500       17,500
2003..................................               17,500    140,000       17,500
2004..................................               17,500    157,500       17,500
2005..................................               17,500    175,000       17,500
2006..................................
2007..................................
2008..................................
2009..................................
2010..................................    21,996                                            16,437
2011..................................    28,347                                            19,983
2012..................................    23,982                                            15,949
2013..................................    20,120                                            12,624
2014..................................    17,042                                            10,687
2015..................................    14,286                                             7,977
2016..................................    12,676                                             6,677
2017..................................    10,794                                             5,364
2018..................................     9,045                                             4,241
2019..................................     7,155                                             3,165
2020..................................     5,128                                             2,140
                                                                                             1,129
2022..................................     1,134                                               421
2023..................................       427                                               150
                                         -------    -------                 -------        -------
Total.................................   175,000    175,000                 114,500        106,344
                                         =======    =======                 =======        =======
Calculation of Commutation Settlement:
Commutation Value.....................                                      106,344
Payments by Reinsurer.................                                      114,500
                                                                            -------
Amount due Reinsurer at Commutation
  Date................................                                       (8,156)
                                                                            =======
</TABLE>
<PAGE>   37

                                                                    May 31, 1996

Skandia America Reinsurance Corporation
One Liberty Plaza
New York, New York 10006

Gentlemen:

     Reference is made to the Stop-Loss Reinsurance Agreement, effective as of
December 31, 1995, by and among Skandia America Reinsurance Corporation
("SARC"), a corporation organized and existing under the laws of Delaware, and
Skandia Insurance Company Ltd (publ), a corporation organized and existing under
the laws of Sweden ("Grantor") (the "Stop-Loss Agreement"), and the Section 6.1
Trust Agreement, dated as of May 31, 1996, by and among Grantor, SARC, and
Citibank, N.A., a national banking association organized and existing under the
laws of the United States (the "Trust Agreement"), and New York State Insurance
Department Regulation No. 114, of the New York Insurance Law ("Regulation 114").

     Pursuant to the Stop-Loss Agreement and Trust Agreement, the parties
thereto have established a reinsurance trust account in accordance with
Regulation 114, to hold assets as security for the performance of Obligations
(as such term is defined in the aforementioned Regulation 114), in order to
secure the Obligations provided for therein (under specific reinsurance
agreements) (the "Section 6.1 Trust").

     To the extent that the market value of the Assets at any time held in the
Trust to fund Grantor's entire obligations under the Stop-Loss Agreement, based
on the last quarterly report provided by SARC to Grantor pursuant to the
Stop-Loss Agreement, exceeds the difference between (i) $175 million and (ii)
the sum of cumulative payments to the trust referred to in section 6.3 of the
Stop-Loss Agreement (the "Section 6.3 Trust) plus Eligible Letters of Credit
("Excess"), upon written notice to SARC, SARC shall within three business days
cause to be delivered to the Trustee a Withdrawal Notice directing payment to
Grantor of funds equal to the Excess, provided that at all times the sum of
amounts held in the Section 6.1 Trust, Section 6.3 Trust and Eligible Letters of
Credit, as defined in the Stop-Loss Agreement, is sufficient to enable SARC to
take statutory financial statement credit in respect of the reinsurance provided
by the Stop-Loss Agreement.
<PAGE>   38

     Capitalized terms not otherwise defined herein shall have the meanings
given in the Trust Agreement.

                                            Very truly yours,

                                            SKANDIA INSURANCE COMPANY LTD (publ)

                                            By: /s/  Sau-Mihael
                                                Bexbell  /s/  Arne Hallstrom
                                                Name: Sau-Mihael Bexbell/Arne
                                                Hallstrom
                                                Title: S.V.P. General
                                                Counsel/S.V.P.

Agreed to this 31st day of May,
1996

SKANDIA AMERICA REINSURANCE
CORPORATION

By: /s/  T.M. Tobin
    Name: T.M. Tobin
    Title: Senior Vice President

                                        2