<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                   Exhibit 10.25

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

<TABLE>
<CAPTION>
ARTICLE                                                                     PAGE
-------                                                                     ----
<S>                                                                         <C>
COVERAGE                                                                      1
FOLLOW THE FORTUNES                                                           1
TERM AND CANCELLATION                                                         2
SPECIAL TERMINATION OR SETTLEMENT                                             2
TERRITORY                                                                     4
EXCLUSIONS                                                                    5
DEFINITIONS                                                                   7
REINSURANCE PREMIUM AND CEDING COMMISSION                                     8
OTHER REINSURANCE                                                             8
EXTRA CONTRACTUAL OBLIGATIONS AND EXCESS LIMITS LIABILITY                     8
REPORTS AND REMITTANCES                                                       9
RESERVES AND FUNDING                                                          9
LOSS AND LOSS ADJUSTMENT EXPENSE                                             11
NOTICE OF LOSS AND LOSS SETTLEMENTS                                          11
OFFSET                                                                       12
SALVAGE AND SUBROGATION                                                      12
WARRANTY                                                                     13
DELAYS, ERRORS, OR OMISSIONS                                                 13
ENTIRE AGREEMENT, INTERPRETATION                                             13
ACCESS TO RECORDS                                                            13
CONFIDENTIALITY                                                              13
INSOLVENCY                                                                   13
ARBITRATION                                                                  15
GOVERNING LAW                                                                17
TAXES                                                                        17
CURRENCY REVALUATION                                                         17
FOREIGN EXCHANGE                                                             17
SERVICE OF SUIT                                                              17
AGENCY                                                                       18
INTERMEDIARY                                                                 18
</TABLE>


                                      p. 1

<PAGE>

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

     THIS AGREEMENT is made and entered into by and between ALLIED WORLD
ASSURANCE COMPANY, LTD, a Bermuda corporation and/or ALLIED WORLD ASSURANCE
COMPANY (EUROPE) LIMITED, an Ireland corporation, (hereinafter called the
"Company") of the one part, and the various Reinsurers as identified by the
Interests and Liabilities Agreements attaching to and forming a part of this
Agreement (hereinafter called the "Reinsurers") of the other part.

     The parties hereto agree as hereinbelow, in consideration of the mutual
covenants contained in the following Articles and upon the terms and conditions
set forth therein:

COVERAGE

     The Company will cede to the Reinsurers, and the Reinsurers will accept a
quota share participation in respect to all business underwritten by the
Company's staff reporting to Bermuda and classified by the Company as:

                       EXCESS GENERAL CASUALTY INSURANCE.

     Said quota share participation will be calculated individually with respect
to each subject Policy and will equal the ratio of the cession to Reinsurers
divided by the sum of the cession to the Reinsurers plus the Company's
retention. Policies subject to this Agreement will be written at or above an
attachment point of $25,000,000.

     The limit of liability to the Reinsurers for Loss will not exceed
$25,000,000 (i.e., 50% of $50,000,000) each Policy, each Occurrence and/or Claim
Made, subject to reinstatement and aggregate provisions, if any, in the
reinsured Policies, plus their proportionate share of: 1) any applicable Loss
Expense, unless Loss Expense is included within the limit of the reinsured
Policy, and 2) any extra contractual obligations or excess limits liability as
set forth in the Extra Contractual Obligations and Excess Limits Liability
Article. Should any loss involve this Agreement, the obligation of the
Reinsurers will be reinstated immediately and automatically as to any subsequent
loss for the full amount of reinsurance as set forth above.

FOLLOW THE FORTUNES

A.   The Reinsurers' liability will attach simultaneously with that of the
     Company and will be subject in all respects to the same terms, conditions,
     interpretations, waivers, modifications, alterations, and cancellations as
     the respective insurances (or reinsurances) of the Company, the true intent
     of this Agreement being that the Reinsurers will, subject to the terms,
     conditions, and limits of this Agreement, follow the fortunes of the
     Company.

B.   Nothing will in any manner create any obligations or establish any rights
     against the Reinsurers in favor of any third parties or any persons not
     parties to this Agreement.

<PAGE>

TERM AND CANCELLATION

     This Agreement will apply to all losses occurring and/or Claims Made on or
after December 1, 2002, 12:01 a.m. standard time (as set forth in the Company's
Policies) on Policies written or Renewed with effective dates on or after
December 1, 2002, 12:01 a.m. standard time, and will remain in full force and
effect until canceled as hereinafter provided.

     This Agreement may be canceled (or any Reinsurer's participation canceled
or reduced) any December 1, 12:01 a.m. standard time by either party giving at
least 90 days prior written notice to the other party. During any such period of
notice the parties will remain bound by the terms of this Agreement.

     In the event this Agreement is canceled (or any Reinsurer's participation
canceled or reduced) in accordance with the aforementioned procedure, the
Reinsurers will remain liable for all losses under Policies in force until their
expiration or renewal dates, whichever comes first. Additionally, the Reinsurers
will remain liable during any Extended Reporting Period that an insured may
elect to invoke on a Claims Made Policy that expires or is canceled during, or
at the end of, the period of the Reinsurers' liability hereunder. Claim Made
dates for claims first made during said Extended Reporting Period will be deemed
to be the last in force day of the original policy period. In conformance with
state regulations, the obligations of the Reinsurers under this Agreement as
respects all Claims Made Policies, will extend to the restatement of any
aggregate limits as may be afforded by any Extended Reporting Period provision.
The Reinsurers will receive their share of any premium applicable to said
Extended Reporting Period, which will be considered fully earned by the
Reinsurers on the last in force day of the original policy period.

     In the event that business subject to this Agreement is written in a
jurisdiction where cancellation, renewal, or nonrenewal of coverage is regulated
by the insurance authorities, and the Company is bound by statute or regulation
of said jurisdiction or by a judicial decision to continue coverage after the
cancellation date of this Agreement, then the Reinsurers will remain liable on
any Policies continuing such coverage (and will receive the premium therefor)
until the date each expires or until the first renewal date when the Company can
lawfully nonrenew said Policies, whichever occurs first. If, however, the
Company decides to hold the business net and for its own account, or has other
reinsurance agreements that would apply to such business, the Reinsurers will
not be liable for longer than the run-off period set forth above.

     Notwithstanding the cancellation of this Agreement (or any Reinsurer's
participation) as hereinabove provided, the provisions of this Agreement will
continue to apply to all obligations and liabilities of the parties incurred
hereunder to the end that all such obligations and liabilities will be fully
performed and discharged.

SPECIAL TERMINATION OR SETTLEMENT

Section I.

A.   Either party may terminate this Agreement upon 45 days notice in the event
     that:

     1.   The other party should at any time (whether voluntarily or otherwise)
          become insolvent, or suffer any impairment of capital, or become the
          subject of any


                                       -2-

<PAGE>

          liquidation, rehabilitation, receivership, supervision, conservation,
          or bankruptcy action or proceeding (whether judicial otherwise) or of
          a proposed Scheme of Arrangement, or be acquired or controlled
          (whether directly or indirectly) by any other company or organization;
          or

     2.   There is a severance or obstruction of free and unfettered
          communication and/or normal commercial and/or financial intercourse
          between Bermuda and the country in which the Reinsurer is incorporated
          or has its principal office as a result of war, currency regulations,
          or any circumstances arising out of political, financial or economic
          emergency.

B.   The Company may terminate this Agreement forthwith in the event that:

     1.   The Reinsurer ceases writing reinsurance; or

     2.   The Reinsurer at any time (i) has a Standard & Poor's (S&P) Insurer
          Financial Strength Rating of lower than "A-"; or (ii) ceases to have
          any S&P Insurer Financial Strength Rating (including a designation of
          "not rated" or "NR") after having had an S&P rating at or after the
          inception of this Agreement; or

     3.   The Reinsurer at any time (i) has a Best Rating, as provided by A.M.
          Best Company, of lower than "A-"; or (ii) ceases to have any Best
          Rating (including a designation of "not rated" or "NR") after having
          had a Best Rating at or after the inception of this Agreement; or

     4.   Over any period not exceeding twelve months, the policyholders;
          surplus of the Reinsurer, as reported in such financial statements of
          the Reinsurer as designated by the Company, drop by 20% or more; or

     5.   (Applicable to Reinsurers domiciled in the United States)

          Upon application of the NAIC Insurance Regulatory Information System
          (IRIS) tests to the Reinsurer's most recent statutory Annual Statement
          (which the Reinsurer hereby agrees to furnish to the Company upon
          request), it is found that four or more of the Reinsurer's IRIS
          financial ratio values are outside of the usual range established in
          the IRIS system.

     Notwithstanding the above, subparts 4 and 5 will not apply to any Reinsurer
     having at all times both S&P Insurer Financial Strength and Best Rating of
     "A" or higher.

C.   Termination under Part A. or B. of this Article will be effected by written
     notice. The Company will elect whether the termination will be on a run-off
     basis or a clean-cut basis with an immediate settlement of all present and
     future obligations under this Agreement. If the Company initially elects a
     run-off basis, within 15 days of receiving notice of the Company's
     election, any non-admitted Reinsurer will secure all such obligations
     through a trust account or a clean, unconditional, irrevocable, and
     evergreen letter of credit from a financial institution acceptable to the
     Company. However, even if such security is requested by the Company and/or
     provided by the Reinsurer, it is agreed that the


                                       -3-

<PAGE>

     Company will retain the right to require an immediate settlement of all
     present and future obligations at any subsequent date.

Section II

A.   After the expiration or termination of this Agreement for any reason other
     than a Special Termination governed by Section I., above, if the Reinsurer
     has any remaining present or future obligations to the Company and any of
     the five events described in Part B. of Section I. should occur, the
     Company (i) may require an immediate settlement of all present and future
     obligations under this Agreement, or (ii) may require any non-admitted
     Reinsurer to secure all such obligations through a trust account or a
     clean, unconditional, irrevocable, and evergreen letter of credit from a
     financial institution acceptable to the Company.

B.   If the Company initially requires security under Part A. of this Section,
     it will notify any non-admitted Reinsurer in writing and the Reinsurer will
     provide such trust account or letter of credit within 15 days. However,
     even if such security is requested by the Company and/or provided by the
     Reinsurer, it is agreed that the Company will retain the right to require
     an immediate settlement of all present and future obligations at any
     subsequent date.

Section III

A.   For purposes of this Article, "all present and future obligations" means
     outstanding Losses (including IBNR), return of unearned premiums, and all
     other present or future balances, obligations, or amounts due the Company
     or Reinsurer under this Agreement.

B.   In no event will this Article be construed to limit the amount of, or the
     rights and obligations of the parties with respect to, any security
     withheld or required in accordance with the Reserves and Funding Article
     hereof (if applicable).

C.   In the event of an immediate settlement of all present and future
     obligations, upon receipt of final payment, the Company and the Reinsurer
     will execute a full and final commutation and mutual release of their
     respective liabilities under the Agreement.

D.   When requested by either party an appraisal of IBNR will be made by a
     disinterested actuary.

E.   Settlements under this Article will be adjusted for net present value.

F.   In the event of any conflict between this Article and any other Article of
     this Agreement, the terms of this Article will control.

     This Article will survive the expiration or termination of this Agreement.

TERRITORY

     The territorial scope of this Agreement will follow that of the Company's
Policies.


                                       -4-

<PAGE>

EXCLUSIONS

     This Agreement does not apply to and specifically excludes the following:

A.   Loss of liability assumed by the Company under any form of treaty or
     facultative reinsurance other than facultative reinsurance of a captive
     insurance company solely writing the business of its parent company.

B.   Loss or liability excluded by the Insolvency Funds Exclusion Clause, as
     attached to this Agreement.

C.   Loss or liability excluded by the Nuclear Incident Exclusion
     Clause--Liability--Reinsurance and Nuclear Energy Risks Exclusion Clause
     (Reinsurance) (1994), NMA 1975a (Japanese Amendment), as attached to this
     Agreement.

D.   Loss or liability excluded by the following Nuclear Exclusion Clauses,
     which are attached to this Agreement:

     1.   Nuclear Incident Exclusion Clause--Physical Damage--Reinsurance
          (U.S.A. and Canada) and;

     2.   Nuclear Incident Exclusion Clause--Physical Damage and Liability
          (Boiler and Machinery Policies)--Reinsurance (U.S.A. and Canada).

E.   Loss or liability caused directly or indirectly by war, whether or not
     declared, civil war, insurrection, rebellion or revolution or any act or
     condition incidental to any of the foregoing. This exclusion will not be
     more limiting than the war exclusion in any Policy issued by the Company
     that is subject to this Agreement provided however that such exclusion is
     not in conflict with the March 2002 Underwriting Guidelines.

F.   Loss or liability from First Party Product Recall.

G.   Loss or liability arising out of integrated and/or batch occurrence in
     respect of auto manufacturers and critical auto parts manufacturers.
     Critical auto parts defined as brakes and component parts, alternators,
     engine and engine control parts, clutch set, axle/joint, fuel/gas tanks and
     component parts, ignition parts, shock/strut, steering/suspension,
     electrical switches, transmission/gearbox, wheels/tires, seatbelts, door
     latches and airbags.

H.   Loss or liability arising out of secondary product recall for companies
     involved with the manufacture of automobiles or critical automobile
     products as specified in G. above.

I.   Loss or liability arising out of cessions attaching below $25,000,000 per
     Occurrence or Claim Made.

J.   Loss or liability arising out of Directors and Officers and Errors and
     Omissions Insurance, when written as such.


                                       -5-

<PAGE>

K.   Loss or liability arising out of Multi-Year Policies (the term "Multi-Year
     Policies" to be defined but understood to mean Policies issued for periods
     greater than 12 months plus odd time not exceeding 18 months in all; with
     the exception of single project construction risks).

L.   Loss or liability arising out of business derived directly as a member of
     any Pool, Association or Syndicate.

M.   Loss or liability arising out of Surety/Fidelity/Credit/Financial Guarantee
     and Insolvency losses.

N.   Loss or liability arising out of Medical Malpractice, when written as such.

O.   Loss or liability arising out of Business classified as Environmental
     Impairment Liability Insurance.

P.   Loss or liability arising out of Asbestos, except as per XL 004 Policy Form
     (or Similar Occurrence Reported forms).

Q.   Loss or liability arising out of Aviation Liability, unless such coverage
     forms an incidental part of the original insured operations. However,
     Aircraft Products Liability will not be covered when the original Policy is
     issued to a concern principally engaged in the manufacture of aircraft,
     aircraft engines or aircraft propellers.

R.   Loss or liability arising from pollution, other than that contemplated by
     the attached, amended Limited Pollution Coverage Endorsement wording
     (issued 6/23/03). This exclusion applies to follow-form claims made and
     occurrence form Policies only.

S.   Loss or liability arising out of known and reported losses, as of the
     inception date of this Agreement are excluded from coverage hereunder.

T.   Loss or liability arising out of Employment Practices Liability, when
     written as such.

U.   Loss or liability arising out of Methyl tertiary-butyl ether (MTBE).

V.   Loss or liability from Enron, Arthur Anderson, World Com, and the terrorist
     attacks that took place in the United States on September 11th, 2001,
     including but not limited to losses either directly or indirectly caused by
     the hijacking and the crashes of the four passenger aircraft and any
     subsequent losses related to these incidents and all other circumstances
     that are publicly and/or generally known that may give rise to a claim
     hereon at Inception.

W.   Loss or liability arising out of pure financial loss.

     The Company may submit in writing to the Reinsurers, for special acceptance
hereunder, business not covered by this Agreement. If said business is accepted
in writing by the Reinsurers, it will be subject to the terms of this Agreement,
except as such terms are modified by such acceptance.


                                       -6-

<PAGE>

DEFINITIONS

     The following definitions will apply to this Agreement:

A.   "Agreement year" will mean the period from December 1, 2002 to March 1,
     2004, and each subsequent period of 12 consecutive months, commencing with
     each March 1.

B.   "Claim(s) Made" will mean those claims first made against the insured
     during the Policy period and occurring on or after the Retroactive Date, if
     any.

C.   "Declaratory Judgment Expense" will mean all expenses incurred by the
     Company in direct connection with declaratory judgment actions brought to
     determine the Company's defense and/or indemnification obligations that are
     allocable to specific Policies and claims subject to this Agreement.
     Declaratory Judgment Expense will be deemed to have been incurred by the
     Company on the date of the actual or alleged Occurrence or Claim Made
     giving rise to the action.

D.   "Extended Reporting Period" will mean a specific time period after a
     Policy's termination date within which claims may be made with respect to
     Occurrences happening between the original Retroactive Date, if any, and
     the original termination date of the Policy.

E.   "Loss" will mean the amount of any settlement, award, or judgment paid by
     the Company or for which the Company has become liable to pay, including
     interest accrued prior to final judgment if included as part of Loss on
     reinsured Policies. All recoveries, salvages, and subrogations, which are
     actually recovered, and inuring reinsurance whether recovered or not, will
     be deducted from the amount of the Loss. Loss will not include Loss
     Expense, unless the Policies reinsured hereunder include Loss Expense as
     part of Loss.

F.   "Loss Expense" will mean all expenses incurred by the Company in the
     investigation, appraisal, adjustment, litigation and/or defense of claims
     under Policies reinsured hereunder, including expenses identified in the
     Loss and Loss Adjustment Expense Article, court costs, interest accrued
     prior to final judgment if included as part of expense on reinsured
     Policies, and interest accrued after final judgment, but excluding internal
     office expenses, salaries, per diem, and other remuneration of regular
     Company employees. Loss Expense will also include Declaratory Judgment
     Expense. The Reinsurers will bear their pro rata shares of all Loss
     Expense. The Reinsurers' liability for Loss Expense will be in addition to
     their limit of liability under this Agreement as set forth in the Coverage
     Article (unless Loss Expense is included as part of Loss in reinsured
     Policies), and the Reinsurers will benefit pro rata in all salvages,
     subrogations, discounts, and other recoveries.

G.   "Net Subject Written Premium" will mean the gross written premium of the
     Company for the classes of business reinsured hereunder as specified in the
     Coverage Article, including any premium paid by original insureds in
     respect of any Extended Reporting Periods or discovery periods and any
     reinstatement premium payable by the original insureds, less returned
     premium for cancellations and reductions, and less premium for reinsurance
     as set forth in the Other Reinsurance Article.


                                       -7-

<PAGE>

H.   "Occurrence," unless defined otherwise in the Policies reinsured hereunder,
     will mean each and every disaster, casualty, or accident or series of
     disasters, casualties or accidents arising out of one event.

I.   "Policies" will mean all policies, binders, contracts, or agreements of
     insurance or reinsurance, whether written or oral. The maximum Policy
     period for subject business will be 12 months, plus odd time, not to exceed
     18 months in all; however, said limitation will not apply to single project
     construction risks.

J.   "Renewed" will include those Policies issued for more than one year (if
     any) as of their next annual anniversary or annual installment date.

K.   "Retroactive Date" will mean the date prescribed in a Claims Made Policy,
     which is the earliest date losses can actually occur for which an insured
     can claim coverage.

REINSURANCE PREMIUM AND CEDING COMMISSION

     The Company will cede to the Reinsurers their proportionate share of the
Net Subject Written Premium on all Policies written or Renewed with an effective
date on or after the effective date of this Agreement, less a flat ceding
commission of 22.5% on the Net Subject Written Premium ceded. The commission
will include premium taxes of all kinds local board assessments, and all other
expenses and charges whatsoever based on the premium for business ceded under
this Agreement.

OTHER REINSURANCE

     The Company is permitted to have other treaty reinsurance. The premium for
any such reinsurance that inures to the benefit of this Agreement will not be
included within the subject premium hereunder. Additionally, the Company may
purchase facultative reinsurance on any subject risk it deems advisable, and the
premium for that portion of the Company's Policy reinsured elsewhere will not be
included within the subject premium hereunder.

EXTRA CONTRACTUAL OBLIGATIONS AND EXCESS LIMITS LIABILITY

     This Agreement will extend to cover any claims-related extra contractual
obligations and/or excess limits liability arising because of, but not limited
to, the following:

A.   Failure of the Company to agree to pay a claim within the Policy limits or
     to provide a defense against such claims.

B.   Actual or alleged bad faith, fraud, or negligence in investigating or
     handling a claim or in rejecting an offer of settlement.

C.   Negligence or breach of duty in the preparation of the defense or the
     conduct of a trial or the preparation or prosecution of any appeal and/or
     subrogation and/or any subsequent action resulting therefrom.

     "Extra contractual obligations" as used in this Agreement will mean those
liabilities not covered under any other provision of this Agreement for which
the Company is liable to its


                                       -8-

<PAGE>

insured or a third-party claimant, or that the Company paid as its share of a
claims-related extra contractual obligation awarded against one or more of its
co-insurers.

     "Excess limits liability" as used in this Agreement will mean any amount
for which the Company would have been contractually liable to pay had it not
been for the limits of the reinsured Policy.

     There will be no recovery hereunder where the extra contractual obligation
or excess limits liability has been incurred due to fraud committed by a member
of the board of directors or a corporate officer of the Company, acting
individually, collectively, or in collusion with a member of the board of
directors, a corporate officer, or a partner of any other corporation,
partnership, or organization involved in the defense or settlement of a claim on
behalf of the Company.

     The date on which any extra contractual obligations and/or excess limits
liability is incurred by the Company will be deemed, in all circumstances, to be
the date of the original loss. Nothing in this Article will be construed to
create a separate or distinct loss apart from the original covered loss that
gave rise to the extra contractual obligations and/or excess limits liability
discussed in the preceding paragraphs. The Reinsurers' liability as respects
extra contractual obligations and/or excess limits liability under this
Agreement will be in addition to the Reinsurers' indemnification coverage set
forth in the Coverage Article; however, such additional liability will not
exceed one Agreement limit each loss.

REPORTS AND REMITTANCES

     Within 45 days after the close of each month, the Company will furnish the
Reinsurers with a report summarizing the gross premium, premium ceded less
return premium and commission, Losses paid, Loss Expense paid, monies recovered,
and net balance due either party. Said monthly reports will also include
detailed per risk information on accounts written, including original insured
name, limits, attachment, premium, applicable reinsurance and Company claim
information broken down by insured. Amounts due the Reinsurers will accompany
said reports. Any balance due the Company will be paid within 45 days after the
Reinsurers' receipt of the report.

     In addition, the Company will furnish the Reinsurers with such other
information as may be required by the Reinsurers for completion of their NAIC
interim and/or annual statements.

RESERVES AND FUNDING

     (This Article is applicable only to Reinsurers that cannot qualify for
     credit by each governmental authority having jurisdiction over the
     Company's reserves.)

     As regards Policies issued by the Company coming within the scope of this
Agreement, the Company agrees that, when it files with the insurance department
or sets up on its books reserves for losses (including Loss and Loss Expense
paid by the Company but not recovered from the Reinsurers, Loss and Loss Expense
reported and outstanding, and an allowance for IBNR as determined by the
Company) and/or unearned premium, which it is required by law to set up, it will
forward to the Reinsurers a statement showing the proportion of such reserves


                                       -9-

<PAGE>

applicable to them. The Reinsurers hereby agree that they will fund such
reserves by cash advances, trust agreements, escrow accounts for the benefit of
the Company, letters of credit, or a combination thereof. The Reinsurers will
have the option of determining the method of funding referred to above, provided
it is acceptable to the Company and the applicable regulatory authorities.

     If a Reinsurer's choice of funding is or includes a letter of credit, it
will apply for and secure delivery to the Company of a clean, irrevocable,
unconditional letter of credit, dated on or before December 31 of the year in
which the request is made, issued by a member of the Federal Reserve System or
any bank approved for use by the NAIC Securities Valuation Office, and
containing provisions acceptable to the insurance regulatory authorities having
jurisdiction over the Company's reserves in an amount equal to that Reinsurer's
proportion of said reserves. The letter of credit will be issued for a period of
not less than one year, and will be automatically extended for one year from its
date of expiration or any future expiration date unless 30 days prior to any
expiration date the issuing bank notifies the Company by registered mail that
the issuing bank elects not to consider the letter of credit extended for any
additional period. An issuing bank, not a member of the Federal Reserve System
or not chartered in the state of domicile of the Company, will provide 60 days
notice to the Company prior to any expiration in the event of nonextension.

Notwithstanding any other provisions of this Agreement, the Company or its
court-appointed successor in interest may draw upon the cash advances, trust
agreements, escrow accounts and/or letters of credit at any time without
diminution because of the insolvency of the Company or of any Reinsurer for one
or more of the following purposes only:

     A.   To reimburse the Company for the Reinsurer's share of unearned premium
          on Policies reinsured hereunder on account of cancellations of such
          Policies.

     B.   To pay the Reinsurer's share or to reimburse the Company for the
          Reinsurer's share of any Loss reinsured by this Agreement, which has
          not been otherwise paid.

     C.   To make refund of any sum in excess of the actual amount required to
          pay the Reinsurer's share of any liability reinsured by this
          Agreement.

     D.   In the event of nonextension of letters of credit as provided for
          above, to establish deposits of the Reinsurer's share of reserves for
          Losses and/or unearned premium under this Agreement. Such cash
          deposits will be held in an interest bearing account separate from the
          Company's other assets, and interest thereon will accrue to the
          benefit of the Reinsurers.

     E.   To pay any other amounts the Company claims are due under this
          Agreement.

     The issuing bank will have no responsibility whatsoever in connection with
the propriety of withdrawals made by the Company or the disposition of funds
withdrawn, except to ensure that withdrawals are made only upon the order of
properly authorized representatives of the Company.


                                      -10-

<PAGE>

     At annual intervals, or more frequently as agreed but never more frequently
than semi-annually, the Company will prepare and forward to the Reinsurers a
statement to reflect the Reinsurers' share of reserves for Losses and/or
unearned premium. If the statement shows that the Reinsurers' share of such
reserves exceeds the balance available through cash advances, trust agreements,
escrow accounts and/or letters of credit as of the statement date, then the
Reinsurers will, within 30 days after receipt of notice of such excess, make an
adjustment to increase the amount available. If, however, the statement shows
that the Reinsurers' share of such reserves is less than the balance available
through the chosen method of funding as of the statement date, then the Company
will, within 30 days after receipt of written request from the Reinsurers,
release such excess by making the appropriate adjustment.

LOSS AND LOSS ADJUSTMENT EXPENSE

A.   The Company alone and at its full discretion will adjust, settle or
     compromise all claims and losses. All such settlements, compromises, and
     adjustments, whether involving coverage issues or otherwise, will be
     binding on the Reinsurers in proportion to their participation. The Company
     will likewise at its sole discretion commence, continue, defend,
     compromise, settle or withdraw from actions, suits or proceedings and
     generally do all such matters and things relating to any claim or loss as
     in its judgment may be beneficial or expedient, and all payments made and
     costs and expenses incurred in connection therewith or in taking legal
     advice therefore (including those which are the result of actions and/or
     disputes between the insured and the Company and including the pro rata
     share, according to the time occupied in adjusting such claim, of salaries
     and expenses of the Company's field employees and salaried adjusters who
     have no administrative duties, including but not limited to charges and/or
     expenses incurred through the use of third party claim services and/or
     technical services, and expenses of the Company's officials incurred in
     connection with the claim but excluding salaries of the Company's officials
     and regular office employees and office expenses of the Company) will be
     shared by the Reinsurers proportionately. The Reinsurers will, on the other
     hand, benefit proportionately from all reductions of Losses by salvage,
     compromise or otherwise.

B.   If the amount due to the Company for Loss or Losses recoverable under this
     Agreement for any one Occurrence is in excess of $12,500,000, the
     Reinsurers will, upon demand and receipt of reinsurance proofs of loss,
     forthwith remit the amount due; otherwise losses will be carried to account
     as otherwise provided in the Reports and Remittances Article.

NOTICE OF LOSS AND LOSS SETTLEMENTS

A.   In the event of a loss for which the Reinsurers' liability exceeds their
     share of $12,500,000, as provided in paragraph B. of the Loss and Loss
     Adjustment Expense Article, the Company will give notice as soon as
     reasonably practicable to the Reinsurers and the Company will keep the
     Reinsurers advised of all subsequent developments in connection therewith.

B.   All settlements, compromises, and adjustments made by the Company, whether
     involving coverage issues or otherwise, will be binding on the Reinsurers.
     Such settlements,


                                      -11-

<PAGE>

     compromises, or adjustments will be considered satisfactory proofs of loss,
     and amounts falling to the share of the Reinsurers will be immediately
     payable to the Company upon presentation of reasonable evidence of the
     amount paid or due and payable by the Company. Amounts specifically
     remitted by the Reinsurers as set forth herein will be credited to their
     next quarterly account.

OFFSET

     Each party hereto will have, and may exercise at any time and from time to
time, the right to offset any undisputed balance or balances, whether on account
of premiums or on account of Losses or otherwise, due from such party to the
other (or, if more than one, any other) party hereto under this Agreement or
under any other reinsurance agreement heretofore or hereafter entered into by
and between them, and may offset the same against any undisputed balance or
balances due to the former from the latter under the same or any other
reinsurance agreement between them, and the party asserting the right of offset
will have and may exercise such right whether the undisputed balance or balances
due to such party from the other are on account of premiums or on account of
Losses or otherwise and regardless of the capacity, whether as assuming insurer
or as ceding insurer, in which each party acted under the agreement or, if more
than one, the different agreements involved, provided, however, that, in the
event of the insolvency of a party hereto, offsets will only be allowed in
accordance with the provisions of Section 7427 of the Insurance Law of the State
of New York.

     Where the Company is authorized under the Insurance Companies Act (Canada)
to insure in Canada risks, for the purpose of this Article, the branch of a
Company in Canada will be considered as a party separate and distinct from the
Company and the right of offset provided for in this Article will belong to and
be applied against that branch as though it were a separate and distinct party.

SALVAGE AND SUBROGATION

     The Reinsurers will be credited with their share of salvage and/or
subrogation in respect of claims and settlements under this Agreement, less
their share of recovery expense. Unless the Company and Reinsurers agree to the
contrary, the Company will enforce its right to salvage and/or subrogation and
will prosecute all claims arising out of such right. Should the Company refuse
or neglect to enforce this right, the Reinsurers are hereby empowered and
authorized to institute appropriate action in the name of the Company.

     Amounts recovered from salvage and/or subrogation will always be used to
reimburse the excess reinsurers (and the Company, should it carry a portion of
excess coverage net) before being used in any way to reimburse the Company and
the Reinsurers hereon, who will share pro rata in any remainder. If the amount
recovered exceeds the recovery expense, such expense will be borne by each party
in proportion to its benefit from the recovery. If the recovery expense exceeds
the amount recovered, the amount recovered (if any) will be applied to the
reimbursement of recovery expense and the remaining expense will be borne by
each party in proportion to its liability for the Loss before recovery was
attempted.


                                      -12-

<PAGE>

WARRANTY

     It is hereby warranted and agreed that the Company will retain net and
unreinsured $25,000,000 each Policy, each loss, each Occurrence or Claim Made.

DELAYS, ERRORS, OR OMISSIONS

     Any inadvertent delay, omission or error will not relieve either party
hereto from any liability, which would attach to it hereunder if such delay,
omission or error had not been made, provided such delay, omission or error is
rectified immediately upon discovery.

ENTIRE AGREEMENT, INTERPRETATION

A.   With respect to the business being reinsured hereunder, (i) this Agreement
     constitutes the entire agreement between the parties, and (ii) there are no
     understandings or agreements between the parties other than those expressed
     in this Agreement. Any change to or modification of this Agreement will be
     made by written amendment to this Agreement and signed by the parties
     hereto.

B.   This Agreement is between sophisticated parties, each of which has reviewed
     the Agreement and is fully knowledgeable about its terms and conditions.
     The parties therefore agree that this Agreement will be construed without
     regard to the authorship of the language and without any presumption or
     rule of construction in favor of either of them.

ACCESS TO RECORDS

     The Reinsurers, or their duly authorized representative, will have free
access at all reasonable times during and after the currency of this Agreement,
to books and records maintained by any of the division, department and branch
offices of the Company, which are involved in the subject matter of this
Agreement and which pertain to the reinsurance provided hereunder and all Claims
Made in connection therewith.

CONFIDENTIALITY

     All terms and conditions of this Agreement and any materials provided in
the course of inspection will be kept confidential by the Reinsurers as against
third parties, unless the disclosure is required pursuant to process of law or
unless the disclosure is to Reinsurers' retrocessionaires, financial auditors or
governing regulatory bodies. Disclosing or using this information for any
purpose beyond the scope of this Agreement, or beyond the exceptions set forth
above, is expressly forbidden without the prior consent of the Company.

INSOLVENCY

     (This Article will apply severally to each reinsured company referenced
     within the definition of the "Company" in the Preamble to this Agreement.
     Further, this Article and the laws of the domiciliary state will apply in
     the event of the insolvency of any company intended to be covered
     hereunder. In the event of a conflict between any provision of this


                                      -13-

<PAGE>

     Article and the laws of the domiciliary state of any company intended to be
     covered hereunder, that domiciliary state's laws will prevail.)

A.   In the event of the insolvency of the Company, this reinsurance will be
     payable directly to the Company, or to its liquidator, receiver,
     conservator or statutory successor immediately upon demand on the basis of
     the liability of the Company 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, however, that the liquidator, receiver,
     conservator or statutory successor of the Company will give written notice
     to the Reinsurers of the pendency of a claim against the Company, which
     would involve a possible liability on the part of the Reinsurers,
     indicating the Policy or bond reinsured, within a reasonable time after
     such claim is filed in the conservation or liquidation proceeding or in the
     receivership. It is further agreed that during the pendency of such claim
     the Reinsurers may investigate such claim and interpose, at their own
     expense, in the proceeding where such claim is to be adjudicated, any
     defense or defenses that they may deem available to the Company or its
     liquidator, receiver, conservator, or statutory successor. The expense thus
     incurred by the Reinsurers will 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
     Reinsurers.

B.   Where two or more Reinsurers are involved in the same claim and a majority
     in interest elect to interpose defense to such claim, the expense will be
     apportioned in accordance with the terms of the Agreement as though such
     expense had been incurred by the Company.

C.   The reinsurance will be payable by the Reinsurers to the Company or to its
     liquidator, receiver, conservator, or statutory successor, except as
     provided by Section 4118(a) (1) (A) and 1114 (c) of the New York Insurance
     Law or except (a) where the Agreement specifically provides another payee
     of such reinsurance in the event of the insolvency of the Company, and (b)
     where the Reinsurers with the consent of the direct insured or insureds
     have voluntarily assumed such Policy obligations of the Company as direct
     obligations of the Reinsurers to the payees under such Policies and in
     substitution for the obligations of the Company to the payees. Then, and in
     that event only, the Company, with the prior approval of the certificate of
     assumption on New York risks by the Superintendent of Insurance of the
     State of New York, is entirely released from its obligation and the
     Reinsurers pay any loss directly to payees under such Policy.

D.   Notwithstanding paragraphs A., B., and C., where the Company is authorized
     under the Insurance Companies Act (Canada) to insure in Canada risks, in
     the event of the insolvency of the Company, reinsurance payable in respect
     of the insurance business in Canada of the Company will be payable to the
     Chief Agent in Canada of the Company or to the liquidator, receiver,
     conservator or statutory successor appointed in Canada in respect of the
     insurance business in Canada of the Company without diminution because of
     the insolvency of the Company or because the Company or a liquidator,
     receiver, conservator or statutory successor of the Company has failed to
     pay all or any portion of


                                      -14-

<PAGE>

     any claim. All other terms and conditions of paragraphs A., B., and C.
     remain in effect and apply to this paragraph D, which will prevail if there
     is a conflict or inconsistency.

ARBITRATION

1.   Any and all disputes arising under or relating to this Policy, including
     its formation and validity, shall be finally and fully determined in
     Hamilton, Bermuda under the provisions of The Bermuda International
     Conciliation and Arbitration Act of 1993 (exclusive of the Conciliation
     Part of such Act), as may be amended and supplemented, by a Board composed
     of three arbitrators to be selected for each controversy as follows:

     In the event of a dispute, controversy or claim, any party may notify the
     other party or parties to such dispute, controversy or claim of its desire
     to arbitrate the matter, and at the time of such notification the party
     desiring arbitration shall notify any other party or parties of the name of
     the arbitrator selected by it. The other party who has been so notified
     shall within thirty (30) calendar days thereafter select an arbitrator and
     notify the party desiring arbitration of the name of such second
     arbitrator. If the party notified of a desire for arbitration shall fail or
     refuse to nominate the second arbitrator within thirty (30) calendar days
     following receipt of such notification, the party who first served notice
     of a desire to arbitrate shall, within an additional period of thirty (30)
     calendar days, apply to the Supreme Court of Bermuda for the appointment of
     a second arbitrator and in such a case the arbitrator appointed by such
     court shall be deemed to have been nominated by the party or parties who
     failed to select the second arbitrator. The two arbitrators, chosen as
     above provided, shall within thirty (30) calendar days after the
     appointment of the second arbitrator choose a third arbitrator. In the
     event of the failure of the first two arbitrators to agree on a third
     arbitrator within said thirty (30) calendar day period, either of the
     parties may within thirty (30) calendar days thereafter, after notice to
     the other party or parties, apply to a the Supreme Court of Bermuda for the
     appointment of a third arbitrator and in such case the person so appointed
     shall be deemed and shall act as the third arbitrator. Upon acceptance of
     the appointment by said third arbitrator, the Board of Arbitration for the
     controversy in question shall be deemed fixed.

2.   All claims, demands, denials of claims and notices pursuant to this Article
     shall be given in writing and given by hand, prepaid express courier,
     airmail or telecopier properly addressed to the appropriate party and shall
     be deemed as having been effected only upon actual receipt.

3.   The Board of Arbitration shall fix, by a notice in writing to the parties
     involved, a reasonable time and place for the hearing and may prescribe
     reasonable rules and regulations governing the course and conduct of the
     arbitration proceeding, including without limitation discovery by the
     parties. The Board will be relieved of all judicial formality and will not
     be bound by the strict rules of procedure evidence. The Board will
     interpret this Agreement as if it were an honorable engagement rather than
     as merely a legal obligation.

4.   The Board shall, within ninety (90) calendar days following the conclusion
     of the hearing, render its decision on the matter or matters in controversy
     in writing and shall


                                      -15-

<PAGE>

     cause a copy thereof to be served on all the parties thereto. In case the
     Board fails to reach a unanimous decision, the decision of the majority of
     the members of the Board shall be deemed to be the decision of the Board.
     Such decision shall be a complete defense to any attempted appeal or
     litigation of such decision of the Board of Arbitration by, any court or
     other body to the fullest extent permitted by applicable law.

5.   Any order as to the costs of the arbitration shall be in the sole
     discretion of the Board, who may direct to whom and by whom and in what
     manner they shall be paid.

6.   All awards made by the Arbitration Board shall be final and no right of
     appeal shall lie from any award rendered by the Arbitration Board. The
     parties agree that the Supreme Court of Bermuda: (i) shall not grant leave
     to appeal any award based upon a question of law arising out of the award;
     (ii) shall not grant leave to make an application with respect to an award;
     and (iii) shall not assume jurisdiction upon any application by a party to
     determine any issue of law arising in the course of the arbitration
     proceeding, including but not limited to whether a party has been guilty of
     fraud.

     All awards made by the Arbitration Board may be enforced in the same manner
     as a judgment or order from the Supreme Court of Bermuda and judgment may
     be entered pursuant to the terms of the award by leave from the Supreme
     Court of Bermuda.

7.   If the Company and more than one Reinsurer are involved in the same
     dispute(s) or difference(s) arising out of this Agreement, and the Company
     requests consolidated arbitration with those Reinsurers in an initial
     notice of arbitration or response, then those Reinsurers will constitute
     and act as one Party for purposes of the arbitration and thus will select a
     single party-appointed arbitrator among them. If the Company requests
     consolidation in its notice of arbitration, then both parties will elect
     their party-appointed arbitrators within 45 days of the commencement of the
     arbitration proceeding. If the Company requests consolidation in its
     response, then (i) that response will be appended to the Company's notice
     of arbitration to the additional Reinsurer(s) joined in the proceeding,
     (ii) any arbitral appointment made before that response will be of not
     effect, and (iii) the Reinsurers will select their arbitrator within 45
     days of their receipt of those pleadings. For purposes of this paragraph,
     any instance in which two or more Reinsurers have not paid their
     proportional shares of the same balance claimed due by the Company will be
     deemed to involve the "same dispute(s) or difference(s) arising out of this
     Agreement." Communications will be made by the Company to each of the
     Reinsurers constituting one party. Nothing in this paragraph will impair
     the rights of Reinsurers to assert several rather than joint defenses or
     claims, change their liability under this Agreement from several to joint,
     or impair their rights to retain separate counsel in connection with the
     arbitration.

8.   This Contract, and any dispute, controversy or claim arising out of or
     relating to this Contract, shall be governed by and construed in accordance
     with the law of the state of New York.

9.   Unless prohibited by law, the Supreme Court of Bermuda will have exclusive
     jurisdiction over any and all court proceedings that either party may
     initiate in connection with the


                                      -16-

<PAGE>

     arbitration, including proceedings to compel, stay, or enjoin arbitration
     or to confirm, vacate, modify, or correct an arbitration award.

10.  This article will survive the expiration or termination of this Agreement.

GOVERNING LAW

     This Agreement will be governed by and construed according to the laws of
New York, without regard to the principals of conflicts of laws thereunder.
Notwithstanding the foregoing, as to rules regarding credit for reinsurance, the
rules of all applicable states or other jurisdictions will pertain thereto.

TAXES

     The Company will pay all taxes on premiums reported to the Reinsurers on
this Agreement.

CURRENCY REVALUATION

     It is agreed that underwriting to contractual and/or underlying limits will
be done in terms of United States (U.S.) dollar equivalent on the basis of
exchange rates supplied by AIG at the start of each month and used by the
Company in their own books of account or in accordance with any subsequent
adjustments thereto. In the event there is a reduction in parity value of the
U.S. dollar from that existing at the time the risk was written, which results
in the contractual and/or underlying limits being exceeded, the Company will be
held covered for such excess until next renewal of the risk, at which time
underwriting will then conform to the contractual and/or underlying U.S. dollar
limits in effect at the time.

FOREIGN EXCHANGE

A.   All premium and loss payments hereunder will be in United States currency
     for all risks.

B.   Premiums due hereunder in other than United States currency will be paid by
     the Company in United States dollars at the rates of exchange used by the
     Company in their own books of account or in accordance with any subsequent
     adjustments thereto.

C.   The amounts recoverable for losses in other than United States will be
     converted into United States dollars at the same rates of exchange used by
     the Company in their own books either at the time of the settlement or in
     accordance with any subsequent adjustment thereto.

SERVICE OF SUIT

     (This Article applies to Reinsurers unauthorized in any jurisdiction that
     has authority over the Company and in which a subject suit has been
     instituted. This Article is not intended to conflict with or override the
     parties' obligation to arbitrate their disputes in accordance with the
     Arbitration Article.)


                                      -17-

<PAGE>

     In the event any Reinsurer hereon fails to pay any amount claimed due
hereunder, such Reinsurer, at the request of the Company, will submit to the
jurisdiction of a court of competent jurisdiction within England or Bermuda and
will comply with all requirements necessary to give that court jurisdiction.

AGENCY

     For purposes of sending and receiving notices and payments required by this
Agreement, the reinsured company that is set forth first in the definition of
"Company" in the Preamble to this Agreement will be deemed the agent of all
other reinsured companies referenced in the Preamble. In no event, however, will
any reinsured company be deemed the agent of another with respect to the terms
of the Insolvency Article.

INTERMEDIARY

     Aon Re Inc., an Illinois corporation, or one of its affiliated corporations
duly licensed as a reinsurance intermediary, is hereby recognized as the
Intermediary negotiating this Agreement for all business hereunder. All
communications (including but not limited to notices, statements, premiums,
return premiums, commissions, taxes, Losses, Loss Expenses, salvages, and loss
settlements) relating to this Agreement will be transmitted to the Company or
the Reinsurers through the Intermediary. Payments by the Company to the
Intermediary will be deemed payment to the Reinsurers. Payments by the
Reinsurers to the Intermediary will be deemed payment to the Company only to the
extent that such payments are actually received by the Company.


                                      -18-

<PAGE>

                       INSOLVENCY FUNDS EXCLUSION CLAUSE

This Agreement excludes all liability of the Company arising by contract,
operation of law, or otherwise, from its participation or membership, whether
voluntary or involuntary, in any insolvency fund. "Insolvency fund" includes any
guaranty fund, insolvency fund, plan, pool, association, fund, or other
arrangement, howsoever denominated, established, or governed, that provides for
any assessment of or payment or assumption by the Company of part or all of any
claim, debt, charge, fee, or other obligation of an insurer, or its successors
or assigns, which has been declared by any competent authority to be insolvent,
or which is otherwise deemed unable to meet any claim, debt, charge, fee, or
other obligation in whole or in part.


                                      -19-
<PAGE>

U.S.A.

            NUCLEAR INCIDENT EXCLUSION CLAUSE--LIABILITY--REINSURANCE

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

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

     Limited Exclusion Provision*

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

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

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

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

          (b)  become effective before that date and contain the Limited
               Exclusion Provision set out above;

          provided this paragraph 2 shall not be applicable to Family Automobile
          Policies, Special Automobile Policies, or policies or combination
          policies of a similar nature, issued by the Reassured on New York
          risks, until 90 days following approval of the Limited Exclusion
          Provision by the Governmental Authority having jurisdiction thereof.

3.   Except for those classes of policies specified in Clause II of paragraph 2
     and without in any way restricting the operation of paragraph 1 of this
     Clause, it is understood and


                                     1 of 4

<PAGE>

     agreed that for all purposes of this reinsurance the original liability
     policies of the Reassured (new, renewal and replacement) affording the
     following coverages:

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

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

     Broad Exclusion Provision*

     It is agreed that the policy does not apply:

     I.   Under any Liability Coverage, to (injury, sickness, disease, death or
          destruction bodily injury or property damage)

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

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

     II.  Under any Medical Payments Coverage, or under any Supplementary
          Payments Provision relating to (immediate medical or surgical relief
          first aid,) to expenses incurred with respect to (bodily injury,
          sickness, disease or death bodily injury) resulting from the hazardous
          properties of nuclear material and arising out of the operation of a
          nuclear facility by any person or organization.

     III. Under any Liability Coverage, to (injury, sickness, disease, death or
          destruction bodily injury or property damage) resulting from the
          hazardous properties of nuclear material, if


                                     2 of 4
<PAGE>

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

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

          (c)  the (injury, sickness, disease, death or destruction, bodily
               injury or property damage) arises out of the furnishing by an
               insured of services, materials, parts or equipment in connection
               with the planning, construction, maintenance, operation or use of
               any nuclear facility, but if such facility is located within the
               United States of America, its territories, or possessions or
               Canada, this exclusion (c) applies only to (injury to or
               destruction of property at such nuclear facility, property damage
               to such nuclear facility and any property thereat.)

     IV.  As used in this endorsement:

          "HAZARDOUS PROPERTIES" include radioactive, toxic or explosive
          properties; "NUCLEAR MATERIALS" means source materials, special
          nuclear material or byproduct material; "SOURCE MATERIAL," "SPECIAL
          NUCLEAR MATERIAL," and "BYPRODUCT MATERIAL" have the meanings given
          them in the Atomic Energy Act of 1954 or in any law amendatory
          thereof; "SPENT FUEL" means any fuel element or fuel component, solid
          or liquid, which has been used or exposed to radiation in a nuclear
          reactor; "WASTE" means any waste material (1) containing byproduct
          material and (2) resulting from the operation by any person or
          organization of any nuclear facility included within the definition of
          nuclear facility under paragraph (a) or (b) thereof; "NUCLEAR
          FACILITY" means

          (a)  any nuclear reactor,

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

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

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

          and includes the site on which any of the foregoing is located, all
          operations conducted on such site and all premises used for such
          operations; "NUCLEAR REACTOR" means any apparatus designed or used to
          sustain nuclear fission in a self-supporting chain reaction or to
          contain a critical mass of fissionable material; (With respect to
          injury to or destruction of property, the word "injury" or
          "destruction" includes all forms of radioactive contamination of
          property. "Property damage" includes all forms of radioactive
          contamination of property.)


                                     3 of 4
<PAGE>

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

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

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

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

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

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

N.M.A. 1590 (21/9/67)
Approved by Lloyd's Underwriters' Non-Marine Association

                      AMENDMENT TO THE DEFINITION OF WASTE

It is agreed that the definition of "WASTE" contained in sub-paragraph IV above
is amended to read as follows:

                           "WASTE" means any material

(a)  containing byproduct material other than the tailings or waste produced by
     the extraction or concentration of uranium or thorium from any ore
     processed primarily for its source material content, and

(b)  resulting from the operation by any person or organization of any nuclear
     facility included under the first two paragraphs of the definition of
     nuclear facility.


                                     4 of 4
<PAGE>

CANADA

            NUCLEAR INCIDENT EXCLUSION CLAUSE--LIABILITY--REINSURANCE

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

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

     Personal Liability.
     Farmers' Liability.
     Storekeepers' Liability.

     which become effective on or after 31st December 1992, shall be deemed to
     include, from their inception dates and thereafter, the following
     provision:-

     Limited Exclusion Provision

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

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

3.   Without in any way restricting the operation of paragraph 1 of this clause
     it is agreed that for all purposes of this Agreement all the original
     liability contracts of the Reinsured, whether new, renewal or replacement,
     of any class whatsoever (other than Personal Liability, Farmers' Liability,
     Storekeepers' Liability or Automobile Liability contracts), which become
     effective on or after 31st December 1992, shall be deemed to include from
     their inception dates and thereafter, the following provision:

     Broad Exclusion Provision

     It is agreed that this Policy does not apply:

     (a)  to liability imposed by or arising from any nuclear liability act, law
          or statute or any law amendatory thereof; nor

     (b)  to bodily injury or property damage with respect to which an Insured
          under this policy is also insured under a contract of nuclear energy
          liability insurance (whether the Insured is unnamed in such contract
          and whether or not it is legally


                                  Page 1 of 3

<PAGE>

          enforceable by the Insured) issued by the Nuclear Insurance
          Association of Canada or any other insurer or group or pool of
          insurers or would be an Insured under any such policy but for its
          termination upon exhaustion of its limit of liability; nor

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

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

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

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

     As used in this Policy:

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

     2.   The term "radioactive material" means uranium, thorium, plutonium,
          neptunium, their respective derivatives and compounds, radioactive
          isotopes of other elements and any other substances which may be
          designated by or pursuant to any law, act or statute, or law
          amendatory thereof as being prescribed substances capable of releasing
          atomic energy, or as being requisite for the production, use or
          application of atomic energy;

     3.   The term "nuclear facility" means:

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

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

          (c)  any equipment or device used for the processing, fabricating or
               alloying of plutonium, thorium or uranium enriched in the isotope
               uranium 233 or in the isotope uranium 235, or any one or more of
               them if at any time the total amount of such material in the
               custody of the Insured at the premises


                                     2 of 3

<PAGE>

               where such equipment or device is located consists of or contains
               more than 25 grams of plutonium or uranium 233 or any combination
               thereof, or more than 250 grams of uranium 235;

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

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

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

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

N.M.A. 1979a (01/04/96)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited


                                     3 of 3

<PAGE>

           NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (REINSURANCE) (1994)
                     (WORLDWIDE EXCLUDING U.S.A. AND CANADA)
                          (INCLUDES JAPANESE AMENDMENT)

This agreement shall exclude Nuclear Energy Risks whether such risks are written
directly and/or by way of reinsurance and/or via Pools and/or Associations.

For all purposes of this agreement Nuclear Energy Risks shall mean all first
party and/or third party insurances or reinsurances (other than Workers'
Compensation and Employers' Liability) in respect of:

     (I)  All Property on the site of a nuclear power station. Nuclear Reactors,
          reactor buildings and plant and equipment therein on any site other
          than a nuclear power station.

     (II) All Property, on any site (including but not limited to the sites
          referred to in (I) above) used or having been used for:

          (a)  the generation of nuclear energy; or

          (b)  the Production, Use or Storage of Nuclear Material.

     (III)Any other Property eligible for insurance by the relevant local
          Nuclear Insurance Pool and/or Association but only to the extent of
          the requirements of that local Pool and/or Association.

     (IV) The supply of goods and services to any of the sites, described in (I)
          to (III) above, unless such insurances or reinsurances shall exclude
          the perils of irradiation and contamination by Nuclear Material.

Except as undernoted, Nuclear Energy Risks shall not include:

     (i)  Any insurance or reinsurance in respect of the construction or
          erection or installation or replacement or repair or maintenance or
          decommissioning of Property as described in (I) to (III) above
          (including contractors' plant and equipment);

     (ii) Any Machinery Breakdown or other Engineering insurance or reinsurance
          not coming within the scope of (i) above;

Provided always that such insurance or reinsurance shall exclude the perils of
irradiation and contamination by Nuclear Material.

However, the above exemption shall not extend to:

     (1)  The provision of any insurance or reinsurance whatsoever in respect
          of:

          (a)  Nuclear Material;


                                      -27-

<PAGE>

          (b)  Any Property in the High Radioactivity Zone or Area of any
               Nuclear Installation as from the introduction of Nuclear Material
               or - for reactor installations - as from fuel loading or first
               criticality where so agreed with the relevant local Nuclear
               Insurance Pool and/or Association.

     (2)  The provision of any insurance or reinsurance for the undernoted
          perils:

          -    Fire, lightning, explosion;

          -    Earthquake;

          -    Aircraft and other aerial devices or articles dropped therefrom;

          -    Irradiation and radioactive contamination;

          -    Any other peril insured by the relevant local Nuclear Insurance
               Pool and/or Association;

          in respect of any other Property not specified in (1) above which
          directly involves the Production, Use or Storage of Nuclear Material
          as from the introduction of Nuclear Material into such Property.

Definitions

"Nuclear Material" means:

     (i)  Nuclear fuel, other than natural uranium and depleted uranium, capable
          of producing energy by a self-sustaining chain process of nuclear
          fission outside a Nuclear Reactor, either alone or in combination with
          some other material; and

     (ii) Radioactive Products or Waste.

"Radioactive Products or Waste" means any radioactive material produced in, or
any material made radioactive by exposure to the radiation incidental to the
production or utilisation of nuclear fuel, but does not include radioisotopes
which have reached the final stage of fabrication so as to be usable for any
scientific, medical, agricultural, commercial or industrial purpose.

"Nuclear Installation" means:

     (i)  Any Nuclear Reactor;

     (ii) Any factory using nuclear fuel for the production of Nuclear Material,
          or any factory for the processing of Nuclear Material, including any
          factory for the reprocessing of irradiated nuclear fuel; and

     (iii)Any facility where Nuclear Material is stored, other than storage
          incidental to the carriage of such material.

"Nuclear Reactor" means any structure containing nuclear fuel in such an
arrangement that a self-sustaining chain process of nuclear fission can occur
therein without an additional source of neutrons.


                                      -28-

<PAGE>

"Production, Use or Storage of Nuclear Material" means the production,
manufacture, enrichment, conditioning, processing, reprocessing, use, storage,
handling and disposal of Nuclear Material.

"Property" shall mean all land, buildings, structures, plant, equipment,
vehicles, contents (including but not limited to liquids and gases) and all
materials of whatever description whether fixed or not.

"High Radioactivity Zone or Area" means:

     (i)  For nuclear power stations and Nuclear Reactors, the vessel or
          structure which immediately contains the core (including its supports
          and shrouding) and all the contents thereof, the fuel elements, the
          control rods and the irradiated fuel store; and

     (ii) For non-reactor Nuclear Installations, any area where the level of
          radioactivity requires the provision of a biological shield.

Notwithstanding the provisions of this Clause, certain liabilities the type of
which by market practice and custom have not been declared to the Japanese
Nuclear Pool are covered hereunder.

N.M.A. 1975a (10/3/94) (with Japanese Amendment added).
Approved by Lloyd's Underwriters' Non-Marine Association.


                                      -29-

<PAGE>

U.S.A.

        NUCLEAR INCIDENT EXCLUSION CLAUSE--PHYSICAL DAMAGE--REINSURANCE

1.   This Reinsurance does not cover any loss or liability accruing to the
     Reassured, directly or indirectly and whether as Insurer or Reinsurer, from
     any Pool of Insurers or Reinsurers formed for the purpose of covering
     Atomic or Nuclear Energy risks.

2.   Without in any way restricting the operation of paragraph (1) of this
     Clause, this Reinsurance does not cover any loss or liability accruing to
     the Reassured, directly or indirectly and whether as Insurer or Reinsurer,
     from any insurance against Physical Damage (including business interruption
     or consequential loss arising out of such Physical Damage) to:

     I.   Nuclear reactor power plants including all auxiliary property on the
          site, or

     II.  Any other nuclear reactor installation, including laboratories
          handling radioactive materials in connection with reactor
          installations, and "critical facilities" as such, or

     III. Installations for fabricating complete fuel elements or for processing
          substantial quantities of "special nuclear material", and for
          reprocessing, salvaging, chemically separating, storing or disposing
          of "spent" nuclear fuel or waste materials, or

     IV.  Installations other than those listed in paragraph (2) III above using
          substantial quantities of radioactive isotopes or other products of
          nuclear fission.

3.   Without in any way restricting the operations of paragraphs (1) and (2)
     hereof, this Reinsurance does not cover any loss or liability by
     radioactive contamination accruing to the Reassured, directly or
     indirectly, and whether as Insurer or Reinsurer, from any insurance on
     property which is on the same site as a nuclear reactor power plant or
     other nuclear installation and which normally would be insured therewith
     except that this paragraph (3) shall not operate

     (a)  where Reassured does not have knowledge of such nuclear reactor power
          plant or nuclear installation, or

     (b)  where said insurance contains a provision excluding coverage for
          damage to property caused by or resulting from radioactive
          contamination, however caused. However on and after 1st January 1960
          this sub-paragraph (b) shall only apply provided the said radioactive
          contamination exclusion provision has been approved by the
          Governmental Authority having jurisdiction thereof.

4.   Without in any way restricting the operations of paragraphs (1), (2) and
     (3) hereof, this Reinsurance does not cover any loss or liability by
     radioactive contamination accruing to the Reassured, directly or
     indirectly, and whether as Insurer or Reinsurer, when such radioactive
     contamination is a named hazard specifically insured against.


                                      -30-

<PAGE>

5.   It is understood and agreed that this Clause shall not extend to risks
     using radioactive isotopes in any form where the nuclear exposure is not
     considered by the Reassured to be the primary hazard.

6.   The term "special nuclear material" shall have the meaning given it in the
     Atomic Energy Act of 1954 or by any law amendatory thereof.

7.   Reassured to be sole judge of what constitutes:

     (a)  substantial quantities, and

     (b)  the extent of installation, plant or site.

NOTE: Without in any way restricting the operation of paragraph (1) hereof, it
     is understood and agreed that

     (a)  all policies issued by the Reassured on or before 31st December 1957
          shall be free from the application of the other provisions of this
          Clause until expiry date or 31st December 1960 whichever first occurs
          whereupon all the provisions of this Clause shall apply.

     (b)  with respect to any risk located in Canada policies issued by the
          Reassured on or before 31st December 1958 shall be free from the
          application of the other provisions of this Clause until expiry date
          or 31st December 1960 whichever first occurs whereupon all the
          provisions of this Clause shall apply.

N.M.A. 1119 (12/12/57)


                                      -31-

<PAGE>

CANADA

         NUCLEAR INCIDENT EXCLUSION CLAUSE--PHYSICAL DAMAGE--REINSURANCE

1.   This Agreement does not cover any loss or liability accruing to the
     Reinsured directly or indirectly, and whether as Insurer or Reinsurer, from
     any Pool of Insurers or Reinsurers formed for the purpose of covering
     Atomic or Nuclear Energy risks.

2.   Without in any way restricting the operation of paragraph 1 of this clause,
     this Agreement does not cover any loss or liability accruing to the
     Reinsured, directly or indirectly, and whether as Insurer or Reinsurer,
     from any insurance against Physical Damage (including business interruption
     or consequential loss arising out of such Physical Damage) to:

     (a)  nuclear reactor power plants including all auxiliary property on the
          site, or

     (b)  any other nuclear reactor installation, including laboratories
          handling radioactive materials in connection with reactor
          installations, and critical facilities as such, or

     (c)  installations for fabricating complete fuel elements or for processing
          substantial quantities of radioactive materials, and for reprocessing,
          salvaging, chemically separating, storing or disposing of spent
          nuclear fuel or waste materials, or

     (d)  installations other than those listed in (c) above using substantial
          quantities of radioactive isotopes or other products of nuclear
          fission.

3.   Without in any way restricting the operation of paragraphs 1 and 2 of this
     clause, this Agreement does not cover any loss or liability by radioactive
     contamination accruing to the Reinsured, directly or indirectly, and
     whether as Insurer or Reinsurer, from any insurance on property which is on
     the same site as a nuclear reactor power plant or other nuclear
     installation and which normally would be insured therewith, except that
     this paragraph 3 shall not operate:

     (a)  where the Reinsured does not have knowledge of such nuclear reactor
          power plant or nuclear installation, or

     (b)  where the said insurance contains a provision excluding coverage for
          damage to property caused by or resulting from radioactive
          contamination, however caused.

4.   Without in any way restricting the operation of paragraphs 1, 2 and 3 of
     this clause, this Agreement does not cover any loss or liability by
     radioactive contamination accruing to the Reinsured, directly or
     indirectly, and whether as Insurer or Reinsurer, when such radioactive
     contamination is a named hazard specifically insured against.

5.   This clause shall not extend to risks using radioactive isotopes in any
     form where the nuclear exposure is not considered by the Reinsured to be
     the primary hazard.

6.   The term "radioactive material" means uranium, thorium, plutonium,
     neptunium, their respective derivatives and compounds, radioactive isotopes
     of other elements and any


                                      -32-

<PAGE>

     other substances which may be designated by or pursuant to any law, act or
     statute, or any law amendatory thereof as being prescribed substances
     capable of releasing atomic energy, or as being requisite for the
     production, use or application of atomic energy.

7.   Reinsured to be sole judge of what constitutes:

     (a)  substantial quantities, and

     (b)  the extent of installation, plant or site.

8.   Without in any way restricting the operation of paragraphs 1, 2, 3 and 4 of
     this clause, this Agreement does not cover any loss or liability accruing
     to the Reinsured, directly or indirectly, and whether as Insurer or
     Reinsurer caused:

     (a)  by any nuclear incident as defined in or pursuant to the Nuclear
          Liability Act or any other nuclear liability act, law or statute, or
          any law amendatory thereof, or nuclear explosion, except for ensuing
          loss or damage which results directly from fire, lightning or
          explosion of natural, coal or manufactured gas;

     (b)  by contamination by radioactive material.

NOTE: Without in any way restricting the operation of paragraphs 1, 2, 3 and 4
      of this clause, paragraph 8 of this clause shall only apply to all
      original contracts of the Reinsured whether new, renewal or replacement
      which become effective on or after December 31, 1992.

N.M.A. 1980a (01/04/96)
Form approved by Lloyd's Underwriters' Non-Marine Association Ltd.


                                      -33-

<PAGE>

U.S.A.

    NUCLEAR INCIDENT EXCLUSION CLAUSE--PHYSICAL DAMAGE AND LIABILITY (BOILER
                      AND MACHINERY POLICIES)--REINSURANCE

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

(2)  Without in any way restricting the operation of paragraph (1) of this
     Clause it is understood and agreed that for all purposes of this
     reinsurance all original Boiler and Machinery Insurance or Reinsurance
     contracts of the Reassured shall be deemed to include the following
     provisions of this paragraph;

     This Policy does not apply to "loss," whether it be direct or indirect,
     proximate or remote

     (a)  from an Accident caused directly or indirectly by nuclear reaction,
          nuclear radiation or radioactive contamination, all whether controlled
          or uncontrolled; or

     (b)  from nuclear reaction, nuclear radiation or radioactive contamination,
          all whether controlled or uncontrolled, caused directly or indirectly
          by, contributed to or aggravated by an Accident.

(3)  However, it is agreed that loss arising out of the use of Radioactive
     Isotopes in any form is not hereby excluded from reinsurance protection.

(4)  Without in any way restricting the operation of paragraph (1) hereof, it is
     understood and agreed that

     (a)  all policies issued by the Reassured effective on or before 30th
          April, 1958, shall be free from the application of the other
          provisions of this Clause until expiry date or 30th April, 1961,
          whichever first occurs, whereupon all the provisions of this Clause
          shall apply,

     (b)  with respect to any risk located in Canada policies issued by the
          Reassured effective on or before 30th June, 1958, shall be free from
          the application of the other provisions of this Clause until expiry
          date or 30th June, 1961, whichever first occurs, whereupon all the
          provisions of this Clause shall apply.

N.M.A. 1166 (23/6/58)


                                      -34-

<PAGE>

CANADA

    NUCLEAR INCIDENT EXCLUSION CLAUSE--PHYSICAL DAMAGE AND LIABILITY (BOILER
                      AND MACHINERY POLICIES)--REINSURANCE

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

(2)  Without in any way restricting the operation of paragraph (1) of this
     Clause it is understood and agreed that for all purposes of this
     reinsurance all original Boiler and Machinery Insurance or Reinsurance
     contracts of the Reassured shall be deemed to include the following
     provisions of this paragraph;

     This Policy does not apply to loss, whether it be direct or indirect,
     proximate or remote

     (a)  from an Accident caused directly or indirectly by nuclear reaction,
          nuclear radiation or radioactive contamination, all whether controlled
          or uncontrolled; or

     (b)  from nuclear reaction, nuclear radiation or radioactive contamination,
          all whether controlled or uncontrolled, caused directly or indirectly
          by, contributed to or aggravated by an Accident.

(3)  However, it is agreed that loss arising out of the use of Radioactive
     Isotopes in any form is not hereby excluded from reinsurance protection.

(4)  Without in any way restricting the operation of paragraph (1) hereof, it is
     understood and agreed that policies issued by the Reassured effective on or
     before 31st December, 1958, shall be free from the application of the other
     provisions of this Clause until expiry date or 31st December, 1961,
     whichever first occurs, whereupon all the provisions of this Clause shall
     apply.

N.M.A. 1251 (29/10/59)
Approved by Lloyd's Underwriters' Fire and Non-Marine Association.


                                      -35-

<PAGE>

                     LIMITED POLLUTION COVERAGE ENDORSEMENT
                                (REVISED 6/23/03)

In consideration of the premium charged, it is agreed that this Endorsement
shall apply in lieu of any Pollution Endorsement in the Followed Policy to the
extent this Endorsement is more restrictive than such Endorsement in the
Followed Policy.

1.   This Policy does not apply to:

     A.   (1)  any liability arising out of the Discharge of Pollutants into or
               upon land or the atmosphere, groundwater or aquifer, or any other
               watercourse or body of water whether above or below ground, or
               into the interior of any building or structure; or

          (2)  any liability, loss, cost or expense of the Insured or others
               arising out of any direction or request, whether governmental or
               otherwise, that the Insured or others test for, monitor, clean
               up, remove, contain, treat, detoxify or neutralize Pollutants.

          This exclusion applies whether or not such Discharge of such
          Pollutants:

               (a)  results from the Insured's activities or the activities of
                    any other person or entity;

               (b)  is sudden, abrupt, gradual, accidental, unexpected or
                    unintended; or

               (c)  arises out of or relates to industrial operations or the
                    Waste or by-products thereof.

     B.   Paragraph A. of this exclusion does not apply to:

          (1)  Products Pollution Liability; or

          (2)  liability of the Insured for Bodily Injury, Property Damage, or
               Personal Injury caused by an unexpected and unintended Discharge
               of such Pollutants, but only if such Discharge results solely
               from a Covered Pollution Peril which commences on a demonstrable
               date and time during the Policy Period of this Policy; or

          (3)  (a)  liability of the Insured for Bodily Injury, Property Damage
                    or Personal Injury caused by an intentional Discharge of
                    such Pollutants solely for the purpose of mitigating or
                    avoiding imminent Bodily Injury, Property Damage or Personal
                    Injury which would be covered by this Policy; or

               (b)  liability of the Insured for Bodily Injury, Property Damage
                    or Personal Injury caused by an unintended and unexpected
                    Discharge of such Pollutants, other than one encompassed by
                    (2)


                                  Page 1 of 3

<PAGE>

                    above, but only if the Insured becomes aware of the
                    commencement of such Discharge within twenty (20) days of
                    such commencement;

               provided the Insured gives the Company written notice of such
               commencement of the Discharge under Paragraphs (3) (a) or (b) of
               this Exclusion within eighty (80) days of such commencement. Such
               notice must be provided irrespective of whether notice otherwise
               would be required under any other provision of this Policy.

               Such notice shall specify, to the extent such information is
               available:

               (a)  where such Discharge took place;

               (b)  when such Discharge commenced;

               (c)  the nature and approximate quantity of the Pollutants or
                    other substance Discharged;

               (d)  when and the circumstances under which the Insured became
                    aware of such Discharge.

2.   Notwithstanding any definition in the Followed Policy, the following
     definitions apply to this Endorsement:

     A.   Automobile means a land motor vehicle, trailer or semi-trailer.

     B.   Covered Pollution Peril means Hostile Fire, lightning or windstorm;
          the collision of an Aircraft with a building, another ground-based
          fixed structure or Watercraft; the upset, overturn or collision of an
          Automobile or rail vehicle; or, solely with respect to an aboveground
          structure, explosion, implosion or structural collapse.

     C.   Discharge means discharge, emission, dispersal, migration, release or
          escape.

     D.   Hostile Fire means a fire which becomes uncontrollable or breaks out
          from where it was intended to be.

     E.   Insured's Products means goods or products manufactured, sold, tested,
          handled or distributed by the Insured or others trading under its
          name, or tools, uninstalled equipment or abandoned or unused materials
          that were the subject of Completed Operations performed for others by
          the Insured.

     F.   Pollutant means any solid, liquid, gaseous or thermal irritant,
          contaminant or toxic or hazardous substance or any substance,
          including smoke, vapor, soot, fumes, acids, alkalis, chemicals and
          Waste, which may, does, or is alleged to affect adversely the
          environment, property, persons or animals.

     G.   Product Pollution Liability means liability arising out of the abrupt,
          instantaneous Discharge of Pollutants, but only if such liability:


                                      2 of 3

<PAGE>

          (1)  arises out of the end-use of the Insured's Products, other than
               Insured Products which are Waste, and

          (2)  such use occurs after possession of such goods or products has
               been relinquished to others by the Insured or by others trading
               under its name and such use occurs away from premises owned,
               rented or controlled by the Insured.

          Such goods or products shall be deemed to include any container
          thereof other than an Automobile, Watercraft or Aircraft.

     H.   Waste means all waste and includes, without limitation, materials to
          be discarded, stored pending final disposal, recycled, reconditioned
          or reclaimed.

     I.   Watercraft means any ship or vessel designed principally for travel on
          water.


                                      3 of 3
<PAGE>

                                  ENDORSEMENT 1
                                       to
                       INTERESTS AND LIABILITIES AGREEMENT
                       attaching to and forming a part of
               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT
                                     between
                       ALLIED WORLD ASSURANCE COMPANY, LTD
                                     and/or
                 ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED
                       (hereinafter called the "Company")
                                       and
                            FEDERAL INSURANCE COMPANY
                (hereinafter called the "Subscribing Reinsurer")

     It is hereby mutually understood and agreed by and between the Company and
the Subscribing Reinsurer that Addendum 1 attaches to and forms a part of the
captioned Agreement.

     This Endorsement may be executed in two or more counterparts, each of
which, when duly executed will be deemed an original, but all of which together
will constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Endorsement to be
executed by their duly authorized representatives.

Signed at HAMILTON, BERMUDA

                       ALLIED WORLD ASSURANCE COMPANY, LTD
                 ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED


Signature: /s/ Scott Carmilani          Title: President
           --------------------------


Attest:    /s/ Jordan M. Gantz          Date: July 19, 2004
           --------------------------


Signed at BERNARDSVILLE, NEW JERSEY

                                 CHUBB RE, INC.
                              FOR AND ON BEHALF OF
                            FEDERAL INSURANCE COMPANY


Signature:                              Title: Vice President
           --------------------------


Attest:                                 Date: July 26, 2004
           --------------------------




<PAGE>

                                   ADDENDUM 2
                       attaching to and forming a part of

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

ISSUED TO: ALLIED WORLD ASSURANCE COMPANY, LTD
           ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED
           (hereinafter called the "Company")

ISSUED BY: VARIOUS REINSURERS IDENTIFIED BY
           INTERESTS AND LIABILITIES AGREEMENTS

     It is hereby mutually understood and agreed that, as respects business
written or Renewed with an effective date on or after 12:01 a.m. Atlantic
Standard Time, March 1, 2004, the following changes will be made to the
captioned Agreement:

     A.   The Preamble will be amended to read as follows:

               "THIS AGREEMENT is made and entered into by and between ALLIED
          WORLD ASSURANCE COMPANY, LTD, a Bermuda corporation and/or ALLIED
          WORLD ASSURANCE COMPANY (EUROPE) LIMITED, an Ireland corporation,
          and/or ALLIED WORLD ASSURANCE COMPANY (REINSURANCE) LTD., an Ireland
          corporation (hereinafter called the 'Company') of the one part, and
          the various Reinsurers as identified by the Interests and Liabilities
          Agreements attaching to and forming a part of this Agreement
          (hereinafter called the 'Reinsurers') of the other part."

     B.   As respects the Coverage Article, the second and third paragraphs will
          be amended and a fourth paragraph will be added and will read as
          follows:

               "Said quota share participation will be calculated individually
          with respect to each subject Policy and will equal the ratio of the
          cession to Reinsurers divided by the sum of the cession to the
          Reinsurers plus the Company's retention. Policies subject to this
          Agreement will be written at or above an attachment point of
          $25,000,000, E25,000,000, or L15,000,000 (or $25,000,000 United States
          dollar currency equivalent as respects Policies issued in currencies
          other than United States of America dollars, euros, or British
          pounds).

               "The limit of liability to the Reinsurers for Loss will not
          exceed $25,000,000 (i.e., 50% of $50,000,000, said limit also to apply
          to United States dollar currency equivalent for Policies issued in
          currencies other than United States of America dollars, euros, or
          British pounds) or E25,000,000 (i.e., 50% of E50,000,000) or
          L15,000,000 (i.e., 50% L30,000,000) of each Policy, each Occurrence,
          each Occurrence reported, or each Claim Made, subject to reinstatement
          and aggregate provisions in the reinsured Policies, if any, plus their
          proportionate share of: 1) any applicable Loss Expense, unless Loss
          Expense is included within the limit of the reinsured Policy, and 2)
          any extra contractual obligations or excess limits liability as set
          forth in the Extra Contractual


                                       1

<PAGE>

          Obligations and Excess Limits Liability Article. Should any loss
          involve this Agreement, the obligation of the Reinsurers will be
          reinstated immediately and automatically as to any subsequent loss for
          the full amount of reinsurance as set forth above.

               "The sign '$' in this Agreement refers to United States of
          America dollars. The sign 'E' refers to euros, the currency of the
          European Union. The sign 'L' refers to British pounds."

     C.   Subparagraph A.2. of Section I of the Special Termination or
          Settlement Article will no longer apply to the subject business.

     D.   Exclusion R of the Exclusions Article will no longer apply to the
          subject business.

     E.   The exclusions in the Exclusions Article that are identified below
          will be amended to read as follows:

          "A.  Loss or liability assumed by the Company under any form of treaty
               or facultative reinsurance other than facultative reinsurance of:

               a.   a captive insurance company solely writing the business of
                    its parent company, or

               b.   a local insurance company in a Non-U.S. jurisdiction where
                    such jurisdiction requires all direct insurance for
                    exposures domiciled in that jurisdiction be provided by a
                    local insurance company."

          "I.  Loss or liability arising from cessions attaching below
               $25,000,000, E25,000,000, or L15,000,000 (or United States dollar
               currency equivalent as respects Policies issued in currencies
               other than United States of America dollars, euros, or British
               pounds) per Occurrence."

          "J.  Loss or liability arising from Directors and Officers Liability."

          "N.  Loss or liability arising from Medical Malpractice. This
               exclusion will not apply to 'In-House Medical Professionals' such
               as Nurses or Physicians who treat fellow employees while in the
               course of their employment with that Insured."

          "O.  Loss or liability arising from business classified as
               'Environmental Impairment Liability Insurance', when written as
               such."

          "Q.  Loss or liability arising from Aviation Liability, unless such
               coverage pertains to an incidental part of the original insured's
               overall operations. Additionally, Aircraft Products Liability
               will not be covered when the original Policy is issued to a
               concern principally engaged in the manufacture of aircraft,
               aircraft engines or aircraft propellers. This exclusion does not
               apply to fuel or other fluids and lubricants utilized for
               Aircraft."


                                       2

<PAGE>

          "U.  Loss or liability arising from methyl tertiary-butyl ether
               (MTBE). However, as respects liability or alleged liability for
               other pollutants that may involve or include MTBE, coverage
               hereon shall not be excluded as long as such liability or alleged
               liability for that portion of the discharge is not based on a
               MTBE Pollutants Claim."

          "X.  Loss or liability arising from Errors and Omissions and
               Professional Liability coverage, except for incidental exposure.
               Incidental exposure is defined as an insured's operations for
               which there are no identifiable and dedicated third party
               revenues associated with the exposure. This exclusion shall not
               apply to resultant Bodily Injury or Personal Injury or Property
               Damage arising out of the operations of an Insured. Additionally,
               this exclusion does not apply to Druggist Liability."

     F.   The Currency Revaluation Article will be amended in its entirety to
          read as follows:

          "CURRENCY REVALUATION

               "It is understood and agreed that currencies other than United
          States dollars, euros, or British pounds, will be converted in terms
          of United States (U.S.) dollar equivalent on the basis of exchange
          rates supplied by AIG at the start of each month and used by the
          Company in their own books of account and also applicable to any
          subsequent adjustments of premium thereof. In the event there is a
          reduction in parity value of the U.S. dollar from that existing at the
          time the risk was written, which results in the contractual and/or
          underlying limits being exceeded, the Company will be held covered for
          such excess until next renewal of the risk, at which time underwriting
          will then conform to the contractual and/or underlying U.S. dollar
          limits in effect at the time."

     G.   Subparagraph B of the Loss and Loss Adjustment Expense Article will be
          amended to read as follows:

               "If the amount due to the Company for Loss or Losses recoverable
          under this Agreement for any one Occurrence is in excess of
          $7,500,000, the Reinsurers will, upon demand and receipt of
          reinsurance proofs of loss, forthwith remit the amount due; otherwise
          losses will be carried to account as otherwise provided in the Reports
          and Remittances Article."

     H.   Paragraph A of the Notice of Loss and Loss Settlements Article will be
          amended to read as follows:

          "A.  In the event of a loss for which the Reinsurers' liability
               exceeds their share of $7,500,000, as provided in the Loss and
               Loss Adjustment Expense Article, the Company will give notice as
               soon as reasonably practicable to the Reinsurers and the Company
               will keep the Reinsurers advised of all subsequent developments
               in connection therewith."


                                       3

<PAGE>

     I.   The Warranty Article will be amended in its entirety to read as
          follows:

          "WARRANTY

               "It is hereby warranted and agreed that the Company will retain
          net and unreinsured $25,000,000, E25,000,000, or L15,000,000 (or
          $25,000,000 United States dollar currency equivalent as respects
          Policies issued in currencies other than United States of America
          dollars, euros, or British pounds) each Policy, each Occurrence, each
          Occurrence reported, or Claim Made."

     All other terms and conditions of the captioned Agreement will remain
unchanged.


                                      -44-

<PAGE>

                       INTERESTS AND LIABILITIES AGREEMENT
                       attaching to and forming a part of

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

                                     between

                       ALLIED WORLD ASSURANCE COMPANY, LTD
                                     and/or
                 ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED
                       (hereinafter called the "Company")

                                       and

                            FEDERAL INSURANCE COMPANY
                (hereinafter called the "Subscribing Reinsurer")

     It is hereby mutually understood and agreed by and between the Company and
the Subscribing Reinsurer that as of 12:01 a.m. standard time, December 1, 2002,
the Subscribing Reinsurer's share in the interests and liabilities of the
Reinsurers on the attached Agreement will be 10.00%.

     The share of the Subscribing Reinsurer will be separate and apart from the
shares of the other Reinsurers and will not be joint with those of the other
Reinsurers, and the Subscribing Reinsurer will in no event participate in the
interests and liabilities of other Reinsurers.

     This Interests and Liabilities Agreement may be executed in two or more
counterparts, each of which, when duly executed will be deemed an original, but
all of which together will constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Interests and
Liabilities Agreement to be executed by their duly authorized representatives.

Signed at HAMILTON, BERMUDA

                       ALLIED WORLD ASSURANCE COMPANY, LTD
                 ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED


Signature: /s/ Scott Carmilani          Title: President
           --------------------------


Attest:    /s/ Jordan M. Gantz          Date: July 19, 2004
           --------------------------


                                       1

<PAGE>

Signed at BERNARDSVILLE, NEW JERSEY

                                 CHUBB RE, INC.
                              FOR AND ON BEHALF OF
                            FEDERAL INSURANCE COMPANY


Signature: /s/                          Title: V.P.
           --------------------------


Attest:                                 Date: July 26, 2004
           --------------------------


                                       2

<PAGE>

                                   ADDENDUM 1
                       attaching to and forming a part of

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

ISSUED TO: ALLIED WORLD ASSURANCE COMPANY, LTD
           ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED
           (hereinafter called the "Company")

ISSUED BY: VARIOUS REINSURERS IDENTIFIED BY
           INTERESTS AND LIABILITIES AGREEMENTS

     It is hereby mutually understood and agreed that, as respects business
written or Renewed with an effective date on or after 12:01 a.m. standard time,
December 1, 2002 all references to "standard time" in the captioned Agreement
will be replaced with "Atlantic Standard Time."

     It is further understood and agreed that, as respects business written or
Renewed with an effective date on or after 12:01 a.m. Atlantic Standard Time,
December 1, 2003, the second paragraph of the Term and Cancellation Article will
be amended to read as follows:

               "This Agreement may be canceled (or any Reinsurer's participation
          canceled or reduced) any March 1, 12:01 a.m. Atlantic Standard Time by
          either party giving at least 90 days prior written notice to the other
          party. During any such period of notice the Reinsurers will remain
          bound by the terms of this Agreement."

     All other terms and conditions of the captioned Agreement will remain
unchanged.




<PAGE>

                                  ENDORSEMENT 2
                                       to
                       INTERESTS AND LIABILITIES AGREEMENT
                       attaching to and forming a part of

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

                                     between

                       ALLIED WORLD ASSURANCE COMPANY, LTD
                                     and/or
                 ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED
                                     and/or
                ALLIED WORLD ASSURANCE COMPANY (REINSURANCE) LTD.
                       (hereinafter called the "Company")

                                       and

                            FEDERAL INSURANCE COMPANY
                (hereinafter called the "Subscribing Reinsurer")

     It is hereby mutually understood and agreed by and between the Company and
the Subscribing Reinsurer that Addendum 2 attaches to and forms a part of the
captioned Agreement.

     This Endorsement may be executed in two or more counterparts, each of
which, when duly executed will be deemed an original, but all of which together
will constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Endorsement to be
executed by their duly authorized representatives.

Signed at HAMILTON, BERMUDA

                       ALLIED WORLD ASSURANCE COMPANY, LTD
                 ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED
                ALLIED WORLD ASSURANCE COMPANY (REINSURANCE) LTD.


Signature: /s/ Scott Carmilani          Title: President
           --------------------------


Attest:    /s/ Jordan M. Gantz          Date: July 19, 2004
           --------------------------


                                       1

<PAGE>

Signed at BERNARDSVILLE, NEW JERSEY

                                 CHUBB RE, INC.
                              FOR AND ON BEHALF OF
                            FEDERAL INSURANCE COMPANY


Signature: /s/                          Title: Vice President
           --------------------------


Attest:                                 Date: July 26, 2004
           --------------------------


                                       2

<PAGE>

                                   ADDENDUM 3
                       attaching to and forming a part of

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT

ISSUED TO: Allied World Assurance Company, Ltd., Hamilton, Bermuda;
           Allied World Assurance Company (Europe) Ltd., Ireland
           Allied World Assurance Company (Reinsurance) Ltd., Ireland
           (hereinafter called the "Company")

ISSUED BY: VARIOUS REINSURERS IDENTIFIED BY
           INTEREST AND LIABILITIES AGREEMENTS

     It is hereby mutually understood and agreed that, as respects business
     written or renewed with an effective date on or after 12:01 a.m. Atlantic
     Standard Time March 1, 2005, the following change will be made to the
     captioned Agreement:

     INFORMATION: Estimated Gross Applicable Premium Income:
                  Section B: USD100,000,000

     All other terms and conditions of the captioned Agreement will remain
     unchanged.



<PAGE>

                                  ENDORSEMENT 3
                                       to
                       INTERESTS AND LIABILITIES AGREEMENT
                       attaching to and forming a part of

               CASUALTY VARIABLE QUOTA SHARE REINSURANCE AGREEMENT
                                     between

                      ALLIED WORLD ASSURANCE COMPANY, LTD.
                                     and/or
                 ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED
                                     and/or
                ALLIED WORLD ASSURANCE COMPANY (REINSURANCE) LTD.
                       (hereinafter called the "Company")

                                       and

                            FEDERAL INSURANCE COMPANY
                (hereinafter called the "Subscribing Reinsurer")

     It is hereby mutually understood and agreed by and between the Company and
the Subscribing Reinsurer that Addendum 3 attaches to and forms a part of the
captioned Agreement.

     This Endorsement may be executed in two or more counterparts, each of
which, when duly executed will be deemed an original, but all of which together
will constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Endorsement to be
executed by their duly authorized representatives.

Signed at HAMILTON, BERMUDA

                ALLIED WORLD ASSURANCE COMPANY, LTD.
                ALLIED WORLD ASSURANCE COMPANY (EUROPE) LIMITED
                ALLIED WORLD ASSURANCE COMPANY (REINSURANCE) LTD.


Signature:                              Title:
           --------------------------          ---------------------------------


Attest:                                 Date:
           --------------------------         ----------------------------------


                CHUBB RE, INC.
                FOR AND ON BEHALF OF
                FEDERAL INSURANCE COMPANY


Signature: /s/                          Title: Vice President
           --------------------------


Attest:                                 Date: 2/9/05
           --------------------------

/s/ Frank Diorzin                   4/13/2005
                                    SVP, AwAC