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                                                                    EXHIBIT 4.12
                  AMENDED AND RESTATED DECLARATION OF TRUST OF
                            Fund American Trust III

     THIS AMENDED AND RESTATED DECLARATION OF TRUST, dated as of June 26, 2003,
among Fund American Companies, Inc., as Depositor (the "Depositor"), Bank One
Delaware, Inc., not in its individual capacity but solely as trustee (the
"Delaware Trustee",) and Reid T. Campbell and Dennis R. Smith, as trustees (the
"Regular Trustees" and collectively with the Delaware Trustee, the "Trustees")
amends and restates in entirety the Declaration of Trust, dated as of October
30, 2001, by and among the parties hereto, pursuant to which a certificate of
trust was filed with the Secretary of State of the State of Delaware. The
Depositor and the Trustees hereby agree as follows:

     1. The trust continued hereby (the "Trust") shall be known as "Fund
American Trust III", in which name the Trustees, or the Depositor to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.

     2. The Depositor has assigned, transferred, conveyed and set over to the
Trustees the sum of $10. The Trustees have acknowledged receipt of such amount
in trust from the Depositor, which amount shall constitute the initial trust
estate. The Trustees hereby declare that they will hold the trust estate in
trust for the Depositor. It is the intention of the parties hereto that the
Trust continued hereby constitute a statutory trust under Chapter 38 of Title 12
of the Delaware Code, 12 Del. C. Section 3801 ET SEQ. (the "Statutory Trust
Act"), and that this document constitutes the governing instrument of the Trust.

     3. The Depositor and Trustees will enter into a second amended and restated
Declaration of Trust, satisfactory to each such party and substantially in the
form to be included as an Exhibit to a 1933 Act Registration Statement referred
to below, to provide for the contemplated operation of the Trust created hereby
and the issuance by such Trust of the Preferred Securities and common securities
referred to therein. Prior to the execution and delivery of such second amended
and restated Declaration of Trust, the Trustees shall not have any duty or
obligation hereunder or with respect to the trust estate, except as otherwise
required by applicable law or as may be necessary to obtain prior to such
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.

     4. The Depositor and the Trustees hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) one or more Registration Statements on Form S-3 (each, a "1933
Act Registration Statement"), including any pre-effective or post-effective
amendments to any such 1933 Act Registration Statement, relating to the
registration under the Securities Act of 1933, as amended, of the Preferred
Securities of the Trust

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and certain other securities and (b) one or more Registration Statements on Form
8-A (each, a "1934 Act Registration Statement") (including all pre-effective and
post-effective amendments thereto) relating to the registration of the Preferred
Securities of the Trust under Section 12(b) of the Securities Exchange Act of
1934, as amended; (ii) to file with the New York Stock Exchange (the "Exchange")
and execute on behalf of the Trust a listing application and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Preferred Securities to be listed
on the Exchange; (iii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents as shall be
necessary or desirable to register the Preferred Securities under the securities
or blue sky laws of such jurisdictions as the Depositor, on behalf of the Trust,
may deem necessary or desirable and (iv) to execute on behalf of the Trust an
Underwriting Agreement relating to the Preferred Securities, among the Trust,
the Depositor and the several Underwriters named therein, substantially in the
form to be included as an Exhibit to a 1933 Act Registration Statement. In the
event that any filing referred to in clauses (i) through (iii) above is required
by the rules and regulations of the Commission, the Exchange or any other
national stock exchange or state securities or blue sky laws, to be executed on
behalf of the Trust by the Trustees, any Regular Trustee, in his capacity as
Trustee of the Trust, is hereby authorized and directed to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing, it
being understood that Bank One Delaware, Inc., in its capacity as Trustee of the
Trust, shall not be required to join in any such filing or execute on behalf of
the Trust any such document unless required by the rules and regulations of the
Commission, the Exchange or any other national stock exchange or state
securities or blue sky laws. In connection with all of the foregoing, the
Depositor hereby constitutes and appoints Reid T. Campbell and Dennis R. Smith,
and each of them, as its true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for the Depositor or in the
Depositor's name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to any 1933 Act
Registration Statement and any 1934 Act Registration Statement and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as the Depositor might or could do in person, thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
respective substitute or substitutes, shall do or cause to be done by virtue
hereof.

     5. This Declaration of Trust may be executed in one or more counterparts.

     6. The number of Trustees initially shall be three and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Depositor which may increase or decrease the
number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. Any Trustee may resign upon 30 days' prior written notice to the
Depositor.

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     7. The Delaware Trustee shall be a Trustee hereunder for the sole and
limited purpose of fulfilling the requirements of Section 3807 of the Statutory
Trust Act.

     8. This Declaration of Trust shall be governed by and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).

     IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.

                                         FUND AMERICAN COMPANIES, INC.,
                                         as Depositor

                                                By: /s/ Reid T. Campbell
                                                   ----------------------------
                                                   Name:  Reid T. Campbell
                                                   Title: Vice President

                                         Bank One Delaware, Inc.,
                                         as Delaware Trustee

                                                By: /s/ Melissa Weisman
                                                   ----------------------------
                                                   Name:  Melissa Weisman
                                                   Title: Vice President

                                                  /s/ Reid T. Campbell
                                         --------------------------------------
                                         as Regular Trustee
                                         Name: Reid T. Campbell
                                         Title:

                                                  /s/ Dennis R. Smith
                                         --------------------------------------
                                         as Regular Trustee
                                         Name: Dennis R. Smith
                                         Title:

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