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                                                                  EXHIBIT 10.42

                                  AMENDMENT

        This Amendment (the "Amendment") is entered into as of November 5, 1996
by and between American Eagle Group, Inc. (the "Borrower") and The First
National Bank of Chicago, individually and as Agent.

                            W I T N E S S E T H :

        WHEREAS, the Borrower and The First National Bank of Chicago, as the
sole Lender (the "Lender") and as Agent (in such capacity, the "Agent"), are
parties to that certain Amended and Restated Credit Agreement dated as of
December 29, 1994, as amended from time to time prior to the date hereof (as so
amended; the "Agreement"); and

        WHEREAS, the Borrower and the Lender desire to amend certain provisions
of the Agreement as more fully described hereinafter;

        NOW, THEREFORE, In consideration of the premises herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

        1.   Defined Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meanings attributed to such terms in the
Agreement.

        2.   Amendment.

        2.1. Article 1 of the Agreement is hereby amended by inserting, in
proper alphabetical order, the following definitions:

             "'Equity Issuance' means the issuance by the Borrower of any
    shares of any class of stock, warrants or other equity interests of the
    Borrower."

             "'Required Equity Issuance' means an Equity Issuance consummated
    substantially on the terms set forth in that certain Securities Purchase
    Agreement dated November 5, 1996 between American Financial Group, Inc. and
    the Borrower, or on such other terms and conditions as shall be
    satisfactory to the Required Lenders, pursuant to which the Borrower shall
    realize gross cash proceeds of not less than $35,000,000."

        2.2. Section 2.2 of the Agreement is hereby amended by inserting,
immediately after the table set forth therein, the following sentence:

             "In addition to the reductions set forth above, concurrently with
    the consummation of the Required Equity Issuance, the Aggregate Commitment
    shall be automatically and permanently reduced by $5,000,000. In addition,
    concurrently with the payment of any Obligations in accordance with Section
    7.29 the Aggregate Commitment shall be automatically and permanently
    reduced in an amount equal to any such payment." 

        
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        2.3. Section 7.10 of the Agreement is hereby ammended to read in its
entirety as follows:

                "7.10. Consolidated Tangible Net Worth. The Borrower will 
        maintain Consolidated Tangible Net Worth of not less that (i) at all 
        times prior to December 30, 1996, $43,500,000, and (ii) at all times 
        thereafter, $46,500,000. The amount set forth in the foregoing clause 
        (ii) shall be increased by $.65 for each $1.00 received by the 
        Borrower on or after November 5, 1996 from an Equity Issuance, 
        including without limitation the Required Equity Issuance."

        2.4. Section 7.11 of the Agreement is hereby amended by deleting the
period at the end thereof and inserting the following in lieu thereof:

        "provided further that the calculation of the Fixed Charge
        Coverage Ratio for any period shall be exclusive of operating losses on
        an after-tax basis, incurred or taken during such period directly
        related to operations of the transportation and dealer lines of
        businesses, calculated in accordance with Agreement Accounting
        Principles."

        2.5. Seciton 7.12 of the Agreement is hereby amended to read in its
entirety as follows:

                "7.12. Statutory Capital and Surplus. The Borrower will not 
        permit the total Statutory Capital and Surplus of American Eagle to be
        less than (i) $44,500,000 at any time prior to December 30, 1996 and 
        (ii) $48,000,000 at any time thereafter. The amount set forth in the
        foregoing clause (ii) shall be increased by $.25 for each $1.00
        received by American Eagle from any capital contribution made by the
        Borrower or any other Person."

        2.6. Section 7.13 of the Agreement is hereby amended to read in its
entirety as follows:

                "7.13. Combined Ratio. The borrower will cause American Eagle to
        maintain, as at the last day of each fiscal quarter ending
        during the following periods, a Combined Ratio, calculated for the four
        consecutive fiscal quarters ending on such day, not greater that (i)
        prior to October 1, 1996, 1.05 to 1.0. and (ii) thereafter, 1.02 to
        1.0."

        2.7. Section 7.14 of the Agreement is hereby amended to read in its
entirety as follows:

                "7.14. Ratio of Net Premiums Written to Statutory Capital and
        Surplus. The Borrower will cause American Eagle to maintain as
        at the last day of each fiscal quarter ending during the following
        periods, a Ratio of Net Premiums Written to Statutory Capital and
        Surplus, calculated for the four consecutive fiscal quarters ending on
        such day, not greater than (i) prior to October 1, 1996, 2.85 to 1.0
        (ii) during the period from October 1, 1996 to (but excluding) the
        earlier to occur of (a) March 31, 1997 and (b) the date of consummation
        of the Required Equity Issuance 2.75 to 1.0 and (iii) thereafter, 2.25
        to 1.0."

        2.8. Section 7.21 (ii) of the Agreement is hereby amended by deleting
the period at the end thereof and inserting the following in lieu thereof:


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        "; provided that any such investments made with the proceeds of
        the Required Equity issuance shall not exceed, in the aggregate, the
        excess, if any, of (a) the amount of net cash proceeds realized by the
        Borrower from the Required Equity Issuance over (b) $15,000,000."

        2.9. Article VII of the Agreement is hereby amended by inserting the
following new Section 7.29 at the end thereof:

                "7.29. Proceeds of Required Equity Issuance. The Borrower will
        cause not less than $10,000,000 of the proceeds of the Required Equity
        Issuance to be held as cash or invested in Cash Equivalents; provided,
        however, that the Borrower may also use any or all of such proceeds to
        (i) pay any Obligations under the Loan Documents, (ii) to pay mandatory
        dividends on or make mandatory redemptions of the Borrow's Series B
        Cumulative Preferred Stock, and (iii) to pay operating expenses of the  
        Borrower in the ordinary course of business."
        
        2.10. Article VIII of the Agreement is hereby amended by inserting the
following new Section 8.13 at the end thereof:

                "8.13. The Borrower shall fail to consummate, on or before
        March 31, 1997, the Required Equity Issuance."  

3.      Representations and Warranties. In order to induce the Lender and the
Agent to enter into this Amendment, the Borrower represents and warrants that:

        3.1. The representations and warranties set forth in Article VI of the
Agreement are true and correct on the date hereof as if made on and as of the
date hereof, except to the extent any such representation or warranty is stated
to relate solely to an earlier date, in which case such representation or
warranty was true and correct on and as of such earlier date, and there exists
no Default or Unmatured Default on the date hereof.

        3.2. The execution and delivery by the Borrower of this Amendment have
been duly authorized by proper corporate proceedings, and this Amendment and
the Agreement, as amended by this Amendment, constitute the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.

        3.3. Neither the execution and delivery by the Borrower of this
Amendment, nor the consummation of the transactions herein contemplated, nor
compliance with the provisions hereof will violate any law, rule, regulation,
order, writ, judgement, injunction, decree or award binding on the Borrower or
any of its Subsidiaries or the Borrower's or any of its Subsidiaries' articles
of incorporation or by-laws or the provisions of any indenture, instrument or
agreement to which the Borrower or any of its Subsidiaries is a party or is
subject, or by which it or its property is bound, or conflict with or
constitute a default thereunder. No consent, approval or authorization of any
Person is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, this Amendment or the Agreement, as amended by
this Agreement.




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        4. Effective Date. This Amendment shall become effective as of the date
first above written (the "Effective Date") upon receipt by the Agent of the
following:

        (i)     Counterparts of this Amendment duly executed by the Borrower
                and the Lender.

        (ii)    Copies, certified by the Secretary or an Assistant Secretary of
                the Borrower, of its Board of Directors' resolutions    
                authorizing the execution of this Amendment.
        
        (iii)   Such other documents, in each case in form and substance
                satisfactory to the Agent, as the Agent may reasonably request.

Notwithstanding the foregoing, upon the receipt of all such documents by the
Agent, the amendments contained in Sections 2.3 through 2.7 hereof shall be
deemed to become effective as of September 30, 1996.

        5.      Ratification. The Agreement, as amended hereby, shall remain in
full force and effect and is hereby ratified, approved and confirmed in all
respects.

        6.      Reference to Agreement. From and after the Effective Date, each
reference in the Agreement to "this Agreement", "hereof", or "hereunder" or
words of like import, and all references to the Agreement in any and all
agreements, instruments, documents, notes, certificates and other writings of
every kind and nature shall be deemed to mean the Agreement, as amended by this
Agreement.

        7.      Costs and Expenses. The Borrower agrees to pay all reasonable
costs, fees and out-of-pocket expenses (including attorneys' fees and time
charges of attorneys for the Agent, which attorneys may be employees of the
Agent) incurred by the Agent in connection with the preparation, execution and
enforcement of this Amendment.

        8.      CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

        9.      Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

        IN WITNESS WHEREOF, the Borrower, the Lender and the Agent have
executed this Amendment as of the date first above written.

                                        AMERICAN EAGLE GROUP, INC.

                                        By: /s/ M. PHILIP GUTHRIE
                                            ---------------------------------
                                        Title: Chairman, CEO and President
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                                        THE FIRST NATIONAL BANK OF
                                          CHICAGO, individually and as Agent

                                        By: /s/ THOMAS W. DODDRIDGE
                                            ---------------------------------
                                        Title: Vice President
                                               ------------------------------




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