<PAGE>
                                                                   Exhibit 10.35


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        WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY $500,000 EXCESS OF
           $500,000 PER OCCURRENCE EXCESS OF LOSS REINSURANCE CONTRACT

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
 ARTICLE                                                                    PAGE
 -------                                                                    ----

<S>                                                                         <C>
    Preamble ..........................................................       2

  1 Business Reinsured ................................................       2

  2 Retention and Limit ...............................................       2

  3 Term ..............................................................       4

  4 Special Termination ...............................................       5

  5 Territory .........................................................       5

  6 Warranty ..........................................................       6

  7 Exclusions ........................................................       6

  8 Premium ...........................................................       7

  9 Reinstatements ....................................................       7

 10 Reports ...........................................................       7

 11 Definitions .......................................................       8

 12 Net Retained Lines ................................................      10

 13 Extra Contractual Obligations .....................................      11

 14 Loss in Excess of Policy Limits ...................................      11

 15 Legality ..........................................................      12

 16 Loss and Unearned Premium Reserve Funding .........................      12

 17 California SB 2093 Compliance .....................................      14

 18 Delays, Errors or Omissions .......................................      14

 19 Entire Agreement/Amendments .......................................      14

 20 Access to Records .................................................      15

 21 Insolvency ........................................................      15

 22 Arbitration .......................................................      16

 23 Taxes .............................................................      16

 24 Currency ..........................................................      17

 25 Service of Suit ...................................................      17

 26 Offset ............................................................      18

 27 Loss Notices and Settlements ......................................      18

 28 Federal Terrorism Excess Recovery .................................      19

 29 Commutation .......................................................      20

 30 Special Acceptances ...............................................      21

 31 Mode of Execution .................................................      21

 32 Intermediary ......................................................      22

    Company Signing Block .............................................      22

ATTACHMENTS

    Nuclear Incident Exclusion Clause - Liability -
    Reinsurance - U.S.A................................................      23
</TABLE>


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        WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY $500,000 EXCESS OF
                  $500,000 EXCESS OF LOSS REINSURANCE CONTRACT

This Contract is made and entered into by and between SEABRIGHT INSURANCE
COMPANY, Chicago, Illinois (the "Company") and the Reinsurer specifically
identified in the Interests and Liabilities Agreement attaching to and forming a
part of this Contract (the "Reinsurer").



                                    ARTICLE 1

BUSINESS REINSURED

This Contract is to indemnify the Company in respect of the net excess liability
as herein provided and specified which may accrue to the Company as a result of
any loss or losses under any Policies classified by the Company as Workers'
Compensation and Employers' Liability Business (including U.S. Longshore and
Harbor Workers' Compensation Act, Jones Act, Federal Employers' Liability Act,
and other Federal Acts) and Maritime Employers' Liability written or renewed by
or through the Company, subject to the terms and conditions herein contained.


                                    ARTICLE 2

RETENTION AND LIMIT

A.    The Company will retain an initial Ultimate Net Loss retention of $500,000
      in respect of each Loss Occurrence. The Reinsurer will then be liable for
      100% of the amount by which the Ultimate Net Loss exceeds the Company's
      retention in respect of each Loss Occurrence, subject to a limit of
      liability to the Reinsurer of $500,000 each Loss Occurrence.

B.    This Contract is further subject to an aggregate limitation of $1,500,000
      Ultimate Net Loss as respects losses from intentional nuclear detonation,
      reaction, radiation, or radioactive contamination or any intentional
      chemical or biological release or exposure.

If a Loss Occurrence involves a Policy with a deductible or self-insured
retention of $500,000 or less, the Company will retain the first $500,000 of
Ultimate Net Loss, each Loss Occurrence. The deductible or self-insured
retention will contribute to the satisfaction of the Company's retention. The
Reinsurer will then be liable for 100% of the amount by which the Ultimate Net
Loss exceeds the Company's retention, inclusive of the deductible or
self-insured retention. However, the liability of the Reinsurer will never
exceed $500,000 of Ultimate Net Loss, each Loss Occurrence.

If a Loss Occurrence involves a Policy with a deductible or a self-insured
retention of greater than $500,000, the Company's retention will be equal to and
deemed satisfied by the amount of


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the deductible or self-insured retention. The Reinsurer will then be liable for
100% of the amount by which the Ultimate Net Loss exceeds the Company's
retention, inclusive of the deductible or self-insured retention. However, the
liability of the Reinsurer will never exceed the difference between $1,000,000
and the Company's retention of Ultimate Net Loss, each Loss Occurrence.

If a Loss Occurrence involves more than one Policy, at least one Policy of which
contains a deductible or self-insured retention, the amount of the Ultimate Net
Loss to which the retention and limit of this Contract apply will be calculated
as the amount of Ultimate Net Loss from each Policy after application of the
deductible or self-insured retention plus the lesser of $500,000 or the sum of
the deductibles and/or self-insured retentions for all Policies contributing to
the Loss Occurrence. The sum of the deductibles and/or self-insured retentions
for all Policies contributing to the Loss Occurrence will contribute to the
satisfaction of the Company's retention. The Reinsurer will then be liable for
100% of the amount by which the loss exceeds the Company's retention of $500,000
inclusive of the sum of the deductibles and/or self-insured retentions. However,
the liability of the Reinsurer will never exceed $500,000 of Ultimate Net Loss,
each Loss Occurrence.

In the event one Loss Occurrence involves Policies ascribed to more than one
Contract, the Company's retention and the Reinsurer's limit of liability for the
Loss Occurrence shall be proportionate, with the amount of Ultimate Net Loss to
be retained by the Company for each Contract being reduced to that percentage
which the Company's settled losses attaching to each Contract bear to the total
of all the Company's settled losses contributing to the same Loss Occurrence.
The Reinsurer's liability shall be arrived at in the same manner.

For purposes of this Contract, "deductibles" will mean any insurance plan,
however denominated, where the insured participates in, and is responsible for,
reimbursing the Company for losses up to a specified limit. "Self-Insured
Retentions" will mean any insurance plan, however denominated, where the Company
provides coverage in excess of a specified per claim or per occurrence amount.

For the purposes of this Contract, all deductibles or self insured retentions
will be deemed to apply on an each Occurrence basis, exclusive of Loss Expenses,
regardless of the structure of the actual deductible or self insured retention
and irrespective of aggregate limitations to the insured's liability, if any.

Any Policy with a deductible of $500,000 or greater shall be subject to special
acceptance hereunder by the Reinsurer.

The Company shall retain a minimum of $150,000 Ultimate Net Loss, each Loss
Occurrence, net and unreinsured in any manner, with the exception of deductible
or self-insured retention Policies.


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In order for coverage to attach hereunder, all losses must be reported to the
Reinsurer before 120 months after the expiration of this Contract (being before
October 1, 2015) for all Policies attaching hereunder.


                                    ARTICLE 3

TERM

This Contract will become effective 12:01 a.m., Local Standard Time, October 1,
2004, and will remain in full force and effect for twelve months, expiring 12:01
a.m., Local Standard Time, October 1, 2005, applying to all Loss Occurrences
commencing during the term of this Contract.

Upon expiration of this Contract, the Reinsurer will remain liable for all
losses under Policies in force at the date of the expiration of this Contract
until the natural expiration or renewal dates of such Policies, whichever occurs
first, but in no event longer than twelve months, plus odd time and extensions,
not to exceed eighteen months in all, from the date of the expiration of this
Contract.

Alternatively, prior to expiration the Company shall have the option to
terminate the Reinsurer's liability for all losses occurring subsequent to
expiration. In such event, the reinsurance premium as outlined in the Premium
Article will be based on the Gross Net Earned Premium during the period of the
Contract and the minimum premium shall not apply. Should the Company elect to
terminate the Contract on this basis, the aggregate coverage afforded in
accordance with the Reinstatement Article shall be reduced on a proportionate
basis. Such proportion shall be in the same relational proportion as the Gross
Net Earned Premium and Gross Net Written Premium.

Notwithstanding other provisions in this Article, in the event the Company is
required by statute, regulation, or judicial decision to continue coverage on a
Policy or Policies in force at the date of expiration of this Contract beyond
the run-off coverage provided above, the Reinsurer will remain liable on the
Policy(ies) (and will receive the premium therefor) until the date the
Policy(ies) expire(s) or until the first renewal date when the Company can
lawfully non-renew the Policy(ies), whichever occurs first.

Notwithstanding the expiration of this Contract (or any Reinsurer's
participation) as provided above, the provisions of this Contract will continue
to apply to all obligations and liabilities of the Company and the Reinsurer
incurred hereunder until such obligations and liabilities are fully performed
and discharged.


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                                    ARTICLE 4

SPECIAL TERMINATION

A.    The Company may terminate the Reinsurer's share in this Contract at any
      time by giving written notice to the Reinsurer in the event any of the
      following circumstances occur:

      1.    The Reinsurer's policyholders' surplus at the inception of this
            Contract has been reduced by more than 25% of the amount of surplus
            12 months prior to that date.

      2.    The Reinsurer's policyholders' surplus at any time during the term
            of this Contract has been reduced by more than 25% of the amount of
            surplus at the date of that party's most recent financial statement
            filed with regulatory authorities and available to the public as of
            the inception of this Contract.

      3.    The Reinsurer has become merged with, acquired by or controlled by
            any other company, corporation, or individual(s) not controlling
            that party's operations previously.

      4.    A state insurance department or other legal authority has ordered
            the Reinsurer to cease writing business.

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

      6.    The Reinsurer's A.M. Best's rating has been assigned or downgraded
            below A- and/or its Standard & Poors rating has been assigned or
            downgraded below BBB+.

      7.    The Reinsurer has reinsured its entire liability under this Contract
            without the Company's prior written consent.

      8.    The Reinsurer has voluntarily ceased assuming new and renewal
            property and casualty treaty reinsurance business.

B.    In the event of such termination, the liability of the Reinsurer shall be
      terminated in accordance with the provisions of the Term Article.

                                    ARTICLE 5

TERRITORY

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



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                                   ARTICLE 6

WARRANTY

It is warranted for purposes of this Contract that the maximum Policy limit as
respects Employers' Liability coverages will be $1,000,000, except as respects
the State of Hawaii, which will be $2,000,000, or so deemed.


                                    ARTICLE 7

EXCLUSIONS

This Contract does not cover:

A.   Reinsurance assumed, except where the Policy is originally underwritten by
     the Company and assumed by the Company.

B.   Business excluded by the Nuclear Incident Exclusion Clause - Liability -
     Reinsurance - U.S.A., No. 08-31-.1.

C.   Financial Guarantee and Insolvency.

D.   War, as follows:

     As regards interests which at time of loss or damage are on shore, no
     liability shall attach hereto in respect of any loss or damage which is
     occasioned by war, invasion, hostilities, acts of foreign enemies, civil
     war, rebellion, insurrection, military or usurped power, or martial law or
     confiscation by order of any government or public authority.

     This War Exclusion shall not, however, apply to interests which at time of
     loss or damage are within the territorial limits of the United States of
     America (comprising the fifty States of the Union, the District of
     Columbia, and including bridges between the U.S.A. and Mexico provided they
     are under United States ownership), Canada, St. Pierre and Miquelon,
     provided such interests are insured under Policies containing a standard
     war or hostilities or warlike operations exclusion clause.

E.   Pools, Associations and Syndicates, except losses from Assigned Risk Plans
     or similar plans are not excluded.

F.   All liability of the Company arising by contract, operation of law or
     otherwise, from its participation or membership, whether voluntary of
     involuntary, in any insolvency fund. "Insolvency Fund" includes any
     guarantee fund, plan, pool, association, fund or other arrangement,
     howsoever denominated, established or governed, which 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


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     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.

                                    ARTICLE 8

PREMIUM

A.   The Company will pay the Reinsurer a deposit premium of $5,700,000 for the
     term of this Contract, to be paid in the amount of $1,425,000 on the first
     day of each calendar quarter.

B.   Within 28 months following inception of this Contract (February 1, 2007)
     the Company will calculate a premium at a rate of 3.80% multiplied by the
     Company's Gross Net Written Premium for this Contract. Should the premium
     so calculated exceed the deposit premium paid in accordance with Paragraph
     A. above, the Company will immediately pay the Reinsurer the difference.
     Should the premium so calculated be less than the deposit premium, the
     Reinsurer will immediately pay the Company the difference, subject to a
     minimum premium of $4,560,000.

                                    ARTICLE 9

REINSTATEMENTS

Loss payments under this Contract will reduce the limit of coverage afforded by
the amounts paid, but the limit of coverage will be reinstated from the time of
the occurrence of the loss without payment of additional premium. Nevertheless,
the Reinsurer's liability hereunder will never exceed $500,000 in respect of any
one Loss Occurrence and, subject to the limit in respect of any one Loss
Occurrence, will be further limited to $10,000,000 during the term of this
Contract by reason of any and all claims arising hereunder.


                                   ARTICLE 10

REPORTS

Within 60 days following the expiration of this Contract, the Company will
furnish the Reinsurer with the following information:

A.   Gross Net Earned Premium and Gross Net Written Premium of the Company for
     the term of this Contract.

B.   Any other information which the Reinsurer may require to prepare its Annual
     Statement which is reasonably available to the Company.


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                                   ARTICLE 11

DEFINITIONS

A.   The term "Ultimate Net Loss" as used in this Contract will mean the actual
     loss paid by the Company or for which the Company becomes liable to pay,
     such loss to include 90% of any Extra Contractual Obligation award (and
     expense) as defined in the Extra Contractual Obligations Article, 90% of
     any Loss in Excess of Policy Limits award as defined in the Loss In Excess
     Of Policy Limits Article, expenses of litigation and interest,
     claim-specific declaratory judgment expenses, and all other loss expense of
     the Company including, but not limited to, subrogation, salvage, and
     recovery expenses (office expenses and salaries of officials and employees
     not classified as loss adjusters are not chargeable as expenses for
     purposes of this paragraph), but salvages and all recoveries, including
     recoveries under all insurances or reinsurances which inure to the benefit
     of this Contract (whether recovered or not), will be first deducted from
     such loss to arrive at the amount of liability attaching hereunder.

     All salvages, recoveries or payments recovered or received subsequent to
     loss settlement hereunder will be applied as if recovered or received prior
     to the aforesaid settlement, and all necessary adjustments will be made by
     the parties hereto.

     For purposes of this definition, the phrase "becomes liable to pay" will
     mean the existence of a judgment which the Company does not intend to
     appeal, or a release has been obtained by the Company, or the Company has
     accepted a proof of loss.

     The phrase "claim-specific declaratory judgment expense" as used in this
     Contract will mean all expenses incurred by the Company in connection with
     declaratory judgment actions that are brought to determine the Company's
     defense and/or indemnification obligations and that are allocable to
     specific Policies and claims subject to this Contract. Claim specific
     declaratory judgment expense will be deemed to have been fully incurred by
     the Company on the date of the actual or alleged loss under the Policy
     giving rise to the action.

     Whenever the Company is required, or elects, to purchase an annuity, or to
     negotiate a structured settlement, either in satisfaction of a judgment, or
     in an out-of-court settlement, or otherwise, the sum of:

     1.   the cost of the annuity or the structured settlement, as the case may
          be; and,

     2.   the amount of any expense or interest recoverable from the Reinsurer,
          in accordance with the first paragraph of this definition,

     will, subject to the other provisions of the Loss Occurrence
     definition, be deemed the Company's Ultimate Net Loss; however, the
     cost of any annuity may be included only if


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     the issuer of the annuity has, at the time of the purchase of such annuity,
     a rating of B+ or better assigned by A. M. Best Co. Inc.

     The terms "annuity" or "structured settlement" will be understood to mean
     any insurance policy, lump sum payment, agreement or device of whatever
     nature resulting in the payment of a lump sum by the Company in settlement
     of all future liabilities which may attach to it as a result of a Loss
     Occurrence.

     In the event the Company purchases an annuity which inures in whole or in
     part to the benefit of the Reinsurer, it is understood that the liability
     of the Reinsurer is not released thereby. In the event the Company is
     required to provide benefits not provided by the annuity, for whatever
     reason, the Reinsurer will pay its proportional share of any loss.

     Errors and Omissions Insurance which may now or in the future be carried by
     the Company will inure to the benefit of this Contract, and any recoveries
     therefrom will first be deducted in arriving at the Ultimate Net Loss
     hereunder.

     Nothing in this clause will be construed to mean that losses are not
     recoverable hereunder until the Company's Ultimate Net Loss has been
     ascertained.

B.   The term "Loss Occurrence" as used in this Contract will mean any one
     disaster or casualty or accident or loss or series of disasters or
     casualties or accidents or losses arising out of or caused by one event,
     except that:

     1.  With respect to an occupational disease or other disease or cumulative
         trauma suffered by an employee, and for which an employer is liable,
         such occupational disease or other disease or cumulative trauma will be
         deemed a separate Loss Occurrence. The date of loss will be the date
         when compensable disability begins and at no other date.

         If the Company shall sustain more than one loss arising from an
         occupational or other disease or cumulative trauma from one specific
         kind or class, suffered by more than one employee of the same employer,
         the Company will aggregate into the same Loss Occurrence all of the
         occupational or other disease or cumulative trauma losses on an each
         employer, claims made basis. The date of loss for each Loss Occurrence
         will be the date the first claim is made to the Company. The term "one
         specific kind or class" as used in this Contract will be defined as
         each chemical, physical or biological factor or condition actively
         causing a disease or injury.

         Occupational disease or other disease or cumulative trauma claims must
         be made to the Company during the period 12:01 a.m., Local Standard
         Time, October 1, 2004 to 12:01 a.m., Local Standard Time, October 1,
         2005 in order for coverage to apply herein.


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         Occupational or other disease or cumulative trauma coverage is afforded
         hereunder only to claims made under the Company's first Policy written
         for an insured or to Policies written 36 months prior to the inception
         of this Contract, whichever is less.

         The terms "occupational or other disease" and "cumulative trauma" as
         used in this Contract will be as defined by applicable state statutes,
         regulations or Federal Law.

     2.  Additional employee claims attributable to the same Loss Occurrence
         will be included only if reported to the Reinsurer on or before 36
         months following the date of loss. However, in the event a claim is
         presented in accordance with this section, the Reinsurer will not be
         liable for any additional employee claims in subsequent Contract
         periods for the same disease/employer.

C.   The term "Gross Net Written Premium" as used in this Contract will mean the
     Gross Written Premium of the Company for the Policies reinsured hereunder,
     after adjustments for applicable rating bureau experience debits or
     credits, schedule or other underwriting credits or debits, Compensating
     Balance Plan credits, and premium discount; however, prior to dividends,
     deductible credits, self-insured retention credits for excess Policies over
     self-insured retentions, and any premium adjustments for loss sensitive
     Policies, less returned premium for cancellation and reductions, and less
     premium for reinsurance that inures to the benefit of this Contract.

D.   The term "Gross Net Earned Premium" as used in this Contract will mean the
     Gross Earned Premium of the Company's Policies reinsured hereunder, after
     adjustments for applicable rating bureau experience debits or credits,
     schedule or other underwriting credits or debits, Compensating Balance Plan
     credits, and premium discount; however, prior to dividends, deductible
     credits, self-insured retention credits for excess Policies over
     self-insured retentions, and any premium adjustments for loss sensitive
     Policies, less returned premium for cancellation and reductions, and less
     premium for reinsurance that inures to the benefit of this Contract.

E.   The term "Policy" as used in this Contract will mean any binder, policy, or
     contract of insurance or reinsurance issued, accepted or held covered
     provisionally or otherwise, by or on behalf of the Company.

                                   ARTICLE 12

NET RETAINED LINES

This Contract applies only to that portion of any insurances or reinsurances
covered by this Contract which the Company retains net for its own account, and
in calculating the amount of any loss hereunder and also in computing the amount
in excess of which this Contract attaches, only loss or losses in respect of
that portion of any insurances or reinsurances which the Company retains net for
its own account will be included, it being understood and agreed that the amount
of the Reinsurer's liability hereunder in respect of any loss or losses will not
be increased


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by reason of the inability of the Company to collect from any other reinsurers,
whether specific or general, any amounts which may have become due from them
whether such inability arises from the insolvency of such other reinsurers or
otherwise. It is also understood that the Company may carry Quota Share
reinsurance and underlying Excess of Loss reinsurance on its net retained
liability, recoveries from which will be disregarded for purposes of this
Contract.

The Company is granted permission to purchase facultative reinsurance for an
amount in excess of its net retained liability, recoveries from which will inure
to the benefit of the Reinsurer hereon.


                                   ARTICLE 13

EXTRA CONTRACTUAL OBLIGATIONS

This Contract will protect the Company, subject to the Reinsurer's limit of
liability appearing in the Retention and Limit Article of this Contract, where
the loss includes any Extra Contractual Obligations as provided for in the
definition of Ultimate Net Loss. "Extra Contractual Obligations" are defined as
those liabilities not covered under any other provision of this Contract and
which arise from handling of any claim on business covered hereunder, such
liabilities arising because of, but not limited to, the following: failure by
the Company to settle within the Policy limit, or by reason of alleged or actual
negligence, fraud or bad faith in rejecting an offer of settlement or in the
preparation of the defense or in the trial of any action against its insured or
in the preparation or prosecution of an appeal consequent upon such action.

The date on which any Extra Contractual Obligation is incurred by the Company
will be deemed, in all circumstances, to be the date of the original Loss
Occurrence.

However, this Article will not apply where the loss has been incurred due to the
fraud of a member of the Board of Directors or a corporate officer of the
Company acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.


                                   ARTICLE 14

LOSS IN EXCESS OF POLICY LIMITS

In the event the Ultimate Net Loss includes an amount in excess of the Company's
Policy limit, the amount of such loss, as provided for in the definition of
Ultimate Net Loss, in excess of the Company's Policy limit will be added to the
amount of the Company's Policy limit, and the sum thereof will be considered as
one Loss Occurrence, subject to the Reinsurer's limit of liability for one Loss
Occurrence appearing in the Retention and Limit Article of this Contract.
Coverage under this paragraph extends only to loss that would have been covered
had the limit of liability of the insured's Policy been adequate.


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"Loss in Excess of Policy Limits" is defined as loss in excess of the Company's
original Policy, such loss in excess of the original Policy having been incurred
because of, but not limited to, failure by it to settle within the Policy limit
or by reason of alleged or actual negligence, fraud or bad faith in rejecting an
offer of settlement or in the preparation of the defense or in the trial of any
action against its insured or reinsured or in the preparation or prosecution of
an appeal consequent upon such action.

However, coverage under this Contract for Loss in Excess of Policy Limits will
not apply where such loss in excess of the original Policy limits has been
incurred due to fraud by a member of the Board of Directors or of a corporate
officer of the Company acting individually or collectively or in collusion with
any other organization or party involved in the presentation, defense or
settlement of any claim covered under this Contract.


                                   ARTICLE 15

LEGALITY

Should the law of a political entity having jurisdiction over a party to this
Contract be in conflict with a portion or portions of this Contract such portion
or portions will be amended to the extent necessary to conform with the law, and
the balance of this Contract will remain unaltered and binding between the
parties.


                                   ARTICLE 16

LOSS AND UNEARNED PREMIUM RESERVE FUNDING

This Article is only applicable to those Reinsurers who cannot qualify for
credit by the State having jurisdiction over the Company's loss reserves and
unearned premium reserves.

As regards Policies issued by the Company coming within the scope of this
Contract, the Company agrees that when it shall file with the insurance
department or set up on its books reserves for losses covered hereunder, or
unearned premium reserves on policies subject to this Contract, which it shall
be required to set up by law it will forward to the Reinsurer a statement
showing the proportion of such loss reserves and unearned premium reserves which
is applicable to them.

The Reinsurer hereby agrees that it will apply for and secure delivery to the
Company of a clean, irrevocable and unconditional Letter of Credit issued by a
bank chosen by the Reinsurer and acceptable to the appropriate insurance
authorities, in an amount equal to the Reinsurer's proportion of the loss
reserves in respect of known outstanding losses that have been reported to the
Reinsurer and allocated loss expenses relating thereto, unearned premium
reserves, and Incurred But Not Reported loss and loss expense as shown in the
statement prepared by the Company.


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The Letter of Credit shall be "Evergreen" and shall be issued for a period of
not less than one year, and shall be automatically extended for one year from
its date of expiration or any future expiration date unless thirty (30) days
prior to any expiration date, the bank shall notify the Company by certified or
registered mail that it elects not to consider the Letter of Credit extended for
any additional period.

The Company, or its successors in interest, undertakes to use and apply any
amounts which it may draw upon such Credit pursuant to the terms of the Contract
under which the Letter of Credit is held, and for the following purposes only:

     (a)  To pay the Reinsurer's share or to reimburse the Company for the
          Reinsurer's share of any liability for loss reinsured by this
          Contract, or any unearned premium reserves, the payment of which has
          been agreed by the Reinsurer and which has not otherwise been paid.

     (b)  To make refund of any sum which is in excess of the actual amount
          required to pay the Reinsurer's share of any liability reinsured by
          this Contract, or any unearned premium reserves.

     (c)  In the event of expiration of the Letter of Credit as provided for
          above, to establish deposit of the Reinsurer's share of known and
          reported outstanding losses and allocated expenses relating thereto,
          any unearned premium reserves, and Incurred But Not Reported loss and
          loss expense under this Contract. Such cash deposit shall be held in
          an interest bearing account separate from the Company's other assets,
          and interest thereon shall accrue to the benefit of the Reinsurer. It
          is understood and agreed that this procedure will be implemented only
          in exceptional circumstances and that, if it is implemented, the
          Company will ensure that a rate of interest is obtained for the
          Reinsurer on such a deposit account that is at least equal to the rate
          which would be paid by Citibank N.A. in New York, and further that the
          Company will account to the Reinsurer on an annual basis for all
          interest accruing on the cash deposit account for the benefit of the
          Reinsurer.

The bank chosen for the issuance of the Letter of Credit shall 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.

At annual intervals, or more frequently as agreed but never more frequently than
semiannually, the Company shall prepare a specific statement, for the sole
purpose of amending the Letter of Credit, of the Reinsurer's share of known and
reported outstanding losses and allocated expenses relating thereto, unearned
premium reserves and Incurred But Not Reported loss and loss expense on Policies
subject to this Contract. If the statement shows that the Reinsurer's share of
such losses and allocated loss expenses, and/or the unearned premium reserves,
exceeds the balance of credit as of the statement date, the Reinsurer shall,
within thirty (30) days after receipt

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of notice of such excess, secure delivery to the Company of an amendment of the
Letter of Credit increasing the amount of credit by the amount of such
difference. If, however, the statement shows that the Reinsurer's share of known
and reported outstanding losses plus allocated loss expenses, unearned premium
reserves, and Incurred But Not Reported loss and loss expense relating thereto
is less than the balance of credit as of the statement date, the Company shall,
within thirty (30) days after receipt of written request from the Reinsurer,
release such excess credit by agreeing to secure an amendment to the Letter of
Credit reducing the amount of credit available by the amount of such excess
credit.

NOTE:--Wherever used herein the term "State" shall be understood to mean the
state, province or Federal authority having jurisdiction over the Company's loss
reserves.


                                   ARTICLE 17

CALIFORNIA SB 2093 COMPLIANCE

Those Reinsurers that have gained admission to transact workers compensation
reinsurance business in the state of California, or that are reinsuring the
injury, disablement, or death portions of policies of workers compensation
insurance in the state of California under the class of disability insurance,
warrant that they will comply with all applicable provisions of California SB
2093 (California Insurance Code Sections 11690-11703, revised).


                                   ARTICLE 18

DELAYS, ERRORS OR OMISSIONS

Any inadvertent delay, omission or error will not be held to relieve either
party hereto from any liability which would attach to it hereunder if such
delay, omission or error had not been made, providing such delay, omission or
error is rectified upon discovery. Nevertheless, this Article shall not apply
with respect to loss reports rendered to the Reinsurer beyond the period
required to afford coverage in accordance with the Retention and Limit Article.


                                   ARTICLE 19

ENTIRE AGREEMENT/AMENDMENTS

This Contract constitutes the entire agreement between the parties with respect
to the business reinsured hereunder, and there are no understandings between the
parties other than as expressed in this Contract. Any change or modification to
this Contract will be made by written amendment to this Contract and signed by
the parties hereto.


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                                   ARTICLE 20

ACCESS TO RECORDS

The Reinsurer or its duly accredited representatives will have access to the
books and records in the possession of the Company on matters reasonably
relating to this Contract at all reasonable times for the purpose of obtaining
information concerning this Contract or the subject matter hereof.

                                   ARTICLE 21

INSOLVENCY

In the event of the insolvency of the Company, reinsurance under this Contract
shall be payable by the Reinsurer on the basis of the liability of the Company
under Policy or Policies reinsured without diminution because of the insolvency
of the Company, to the Company or to its liquidator, receiver or statutory
successor, except as provided by Section 4118(a) of the New York Insurance Law
or except when the Contract specifically provides another payee of such
reinsurance in the event of the insolvency of the Company or when the Reinsurer
with the consent of the direct insured or insureds has assumed such Policy
obligations of the Company as direct obligations of the Reinsurer to the payees
under such Policies and in substitution for the obligations of the Company to
such payees.

It is agreed, however, that the liquidator or receiver or statutory successor of
the insolvent Company shall give written notice to the Reinsurer of the pendency
of a claim against the insolvent Company on the Policy or Policies reinsured
within a reasonable time after such claim is filed in the insolvency proceeding
and that during the pendency of such claim, the Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding when such claim is to
be adjudicated, any defense or defenses which it may deem available to the
Company or its liquidator or receiver or statutory successor. The expense thus
incurred by the Reinsurer shall be chargeable, subject to court approval,
against the insolvent Company as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to the Company
solely as a result of the defense undertaken by the Reinsurer.

When two or more reinsurers are involved in the same claim and a majority in
interest elect to interpose defense to such claim, the expense shall be
apportioned in accordance with the terms of this Contract as though such expense
had been incurred by the insolvent Company.

Should the Company go into liquidation or should a receiver be appointed, the
Reinsurer shall be entitled to deduct from any sums which may be due or may
become due to the Company under this reinsurance Contract any sums which are due
to the Reinsurer by the Company under this reinsurance Contract and which are
payable at a fixed or stated date as well as any other sums due the Reinsurer
which are permitted to be offset under applicable law.


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                                   ARTICLE 22

ARBITRATION

As a condition precedent to any right of action hereunder, any irreconcilable
dispute between the parties to this Contract will be submitted for decision to a
board of arbitration composed of two arbitrators and an umpire meeting in
Seattle, Washington.

Arbitration shall be initiated by the delivery of a written notice of demand for
arbitration by one party to the other within a reasonable time after the dispute
has arisen.

The members of the board of arbitration shall be active or retired disinterested
officials of insurance or reinsurance companies, or Underwriters at Lloyd's,
London, not under the control or management of either party to this Contract.
Each party shall appoint its arbitrator, and the two arbitrators shall choose an
umpire before instituting the hearing. If the respondent fails to appoint its
arbitrator within four weeks after being requested to do so by the claimant, the
latter shall also appoint the second arbitrator. If the two arbitrators fail to
agree upon the appointment of an umpire within four weeks after their
nominations, each of them shall name three of whom the other shall decline two,
and the decision shall be made by drawing lots.

The claimant shall submit its initial brief within 45 days from appointment of
the umpire. The respondent shall submit its brief within 45 days thereafter, and
the claimant may submit a reply brief within 30 days after filing of the
respondent's brief.

The board shall make its decision with regard to the custom and usage of the
insurance and reinsurance business. The board shall issue its decision in
writing based upon a hearing in which evidence may be introduced without
following strict rules of evidence but in which cross-examination and rebuttal
shall be allowed. The board shall make its decision within 60 days following the
termination of the hearings unless the parties consent to an extension. The
majority decision of the board shall be final and binding upon all parties to
the proceeding. Judgment may be entered upon the award of the board in any court
having jurisdiction.

Each party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other party the expense of the umpire. The remaining costs
of the arbitration proceedings shall be allocated by the board.


                                   ARTICLE 23

TAXES

A.   In consideration of the terms under which this Contract is issued, the
     Company undertakes not to claim any deduction of the premium hereon when
     making tax returns, other than


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     Income or Profits Tax returns, to any state or territory of the United
     States of America or to the District of Columbia.

B.

     1.   Each Subscribing Reinsurer has agreed to allow, for the purpose of
          paying the Federal Excise Tax, 1% of the premium payable hereon to the
          extent such premium is subject to Federal Excise Tax.

     2.   In the event of any return of premium becoming due hereunder, the
          Subscribing Reinsurer shall deduct 1% from the amount of the return,
          and the Company or its agent should take steps to recover the Tax from
          the U.S. Government.

                                   ARTICLE 24

CURRENCY

The currency to be used for all purposes of this Contract will be United States
of America currency.


                                   ARTICLE 25

SERVICE OF SUIT

This Article applies if the Reinsurer is not domiciled in the United States of
America and/or is not authorized in any State, Territory or District of the
United States where authorization is required by insurance regulatory
authorities.

It is agreed that in the event of the failure of the Reinsurer hereon to pay any
amount claimed to be due hereunder, the Reinsurer hereon, at the request of the
Company, will submit to the jurisdiction of a court of competent jurisdiction
within the United States. Nothing in this Article constitutes or should be
understood to constitute a waiver of the Reinsurer's right to commence an action
in any court of competent jurisdiction in the United States, to remove an action
to a United States district court or to seek a transfer of a case to another
court as permitted by the laws of the United States or of any state in the
United States.

It is further agreed that service of process in such suit may be made upon
Messrs. Mendes & Mount, 750 Seventh Avenue, New York, New York 10019-6829 and
that in any suit instituted against the Reinsurer upon this Contract, the
Reinsurer will abide by the final decision of such court or of any appellate
court in the event of an appeal.

The above-named are authorized and directed to accept service of process on
behalf of the Reinsurer in any such suit and/or upon the request of the Company
to give a written undertaking to the Company that they will enter a general
appearance upon the Reinsurer's behalf in the event such a suit shall be
instituted.


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Further, pursuant to any statute of any state, territory or district of the
United States which makes provision therefor, the Reinsurer hereon hereby
designates the superintendent, commissioner or director of insurance or other
officer specified for that purpose in the statute or his successor or successors
in office as its true and lawful attorney upon whom may be served any lawful
process in any action, suit or proceeding instituted by or on behalf of the
Company or any beneficiary hereunder arising out of this Contract, and hereby
designates the above-named as the person to whom the said officer is authorized
to mail such process or a true copy thereof.


                                   ARTICLE 26

OFFSET

The Company or the Reinsurer shall have and may exercise, at any time and from
time to time, the right to offset any balance or balances whether on account of
premiums or on account of losses or otherwise, due from one party to the other
party hereto under the terms of this Contract. The party asserting the right of
offset shall have and may exercise such right whether acting in the capacity of
assuming reinsurer or as ceding insurer.


                                   ARTICLE 27

LOSS NOTICES AND SETTLEMENTS

The Company will advise the Reinsurer promptly of all claims which in the
opinion of the Company may involve the Reinsurer and of all subsequent
developments on these claims which may materially affect the position of the
Reinsurer, such advices to include any claim for which the reserve is 50% or
more of the Company's retention and, irrespective of the reserve or of any
question on liability or coverage, any claim falling within the following
categories:

A.   Fatalities.

B.   Bodily injuries involving:

     1.   brain injuries resulting in impairment of physical functions,

     2.   spinal injuries resulting in partial or total paralysis of upper or
          lower extremities,

     3.   amputations of major limbs or permanent loss of use of upper or lower
          extremities,

     4.   severe burn cases.

C.   The Company will also advise the Reinsurer promptly as respects all other
     injuries which are likely to result in a permanent disability rating of 50%
     or more, if in the Company's opinion such injuries will involve the
     Reinsurer.


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Inadvertent omission in dispatching the aforementioned notices will in no way
affect the obligation of the Reinsurer under this Contract, provided the Company
informs the Reinsurer of such omission promptly upon discovery.

The Reinsurer agrees to abide by the loss settlements of the Company, it being
understood, however, that when so requested the Company will afford the
Reinsurer an opportunity to be associated with the Company, at the expense of
the Reinsurer, in the defense of any claim or suit or proceeding involving this
reinsurance and the Company will cooperate in every respect in the defense of
such claim, suit or proceeding.

The Reinsurer will pay its share of loss settlements immediately upon receipt of
proof of loss from the Company.

The Company may give the Reinsurer written notice of its intentions to pay a
loss on a certain date, and may demand payment of the Reinsurer's share of same
concurrently with payment by the Company to its insured(s), provided however,
the Company gives at least 15 days advance written notice of the date on which
the Company intends to pay the loss to its insured(s), demanding receipt of the
Reinsurer's share of such loss by such day.

The Reinsurer will pay its share of such loss notwithstanding any question or
objection it might have as to whether it is liable for its respective share of
such loss under the terms and conditions of this Contract, provided that the
Company has provided such information as is required to complete the loss
memorandum form with respect to such loss. Notwithstanding the foregoing,
payment of such an amount claimed due by the Company will not constitute a
waiver of a Reinsurer's right to request any amount so paid be returned to the
Reinsurer if it is later found that under the terms and conditions of this
Contract the Reinsurer was not liable for such amount claimed to be due by the
Company. The Company immediately will return to any such Reinsurer any such
amount paid by the Reinsurer that the Reinsurer was not liable to pay under
terms and conditions of this Contract.


                                   ARTICLE 28

FEDERAL TERRORISM EXCESS RECOVERY

A.   A pro rata share of the amount, if any, by which financial assistance paid
     to the Company under the Terrorism Risk Insurance Act of 2002 ("TRIA") for
     Acts of Terrorism occurring during any one Program Year, combined with the
     Company's total private-sector reinsurance recoveries for such Acts of
     Terrorism, exceeds the amount of Insured Losses paid by the Company for
     such Acts of Terrorism, shall be reimbursed by the Company to the
     Reinsurer. Such pro rata share shall be calculated by dividing:

     1.   the Reinsurer's payment under this Contract of Insured Losses for the
          Program Year; by


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     2.   the Company's total private-sector reinsurance recoveries arising from
          all Act(s) of Terrorism covered under TRIA during the Program Year.

B.   Payment shall be made as promptly as possible after the Company's receipt
     of any recovery in excess of its Insured Losses. The Company shall provide
     the Reinsurer with all necessary data respecting the transactions covered
     under this Article.

C.   Such payment to the Reinsurer shall apply unless disallowed by the U.S.
     Department of the Treasury.

D.   "Act of Terrorism", "Insured Losses" and "Program Year" shall follow the
     definitions provided in TRIA.

                                   ARTICLE 29

COMMUTATION

This Article will only take effect should the parties hereto mutually agree to
commute losses under this Contract. There will be no obligation on the part of
either party to so commute.

In respect of all losses known to the Company which may have not been finally
settled and which have exceeded the Company's retention under this Contract, at
any time after ten years following the expiration of this Contract and upon
mutual agreement of the Company and the Reinsurer, said loss (including loss
expenses) may be commuted. The amount so commuted will be based on the amount of
loss which exceeds the Company's retention, and will be determined by employing
one of the following alternatives:

A.   A present value calculation based on the following:

     1.  Indemnity benefits discounted for mortality and the time value of
         money. Medical benefits based upon the Company's evaluation of
         long-term medical care and rehabilitation requirements valued at
         current cost levels, escalated at the average Medical Care Consumer
         Price Index for the applicable region (CPIMC) and discounted for
         mortality and the time value of money. The average CPIMC will be taken
         over the five most recent (as of the time of commutation) September
         30th values of the CPIMC.

     2.  The time value of money will be taken as the average five-year U.S.
         Treasury Note yield. The average will be taken over the five most
         recent (as of the time of commutation) September 30th values of the
         yield.

     3.  Mortality will be based on the most recent U.S. Life Table (at the time
         of commutation) unless medical evidence specific to an individual case
         indicates that a reduced life expectancy would be appropriate.


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B.   The Company may purchase (or obtain a quotation for) an annuity from any
     carrier who is "A" Class VIII or better rated by A. M. Best Company.

The Reinsurer's proportion of the amount determined will be considered their
total liability for such loss and the lump sum payment thereof will constitute a
complete release of the Reinsurer from their liability for such loss.

The Company and the Reinsurer agree that, should a loss not in excess of the
Company's retention at the time of commutation subsequently exceed the Company's
retention at some future date, such loss may be subject to commutation on the
basis outlined above.

This Commutation Article will survive the expiration of this Contract.


                                   ARTICLE 30

SPECIAL ACCEPTANCES

The Company may submit to the Reinsurer, for special acceptance hereunder,
business not covered by this Contract. If said business is accepted by the
Reinsurer, it will be subject to the terms of this Contract, except as such
terms are modified by such acceptance. Any special acceptance business covered
under the reinsurance agreement being replaced by this Contract will be
automatically covered hereunder. Further, should the Reinsurer become a party to
this Contract subsequent to the acceptance of any business not normally covered
hereunder, they will automatically accept same as being a part of this Contract.


                                   ARTICLE 31

MODE OF EXECUTION

 1.  This Contract may be executed by:

     a.   An original written ink signature of paper documents.

     b.   An exchange of facsimile copies showing the original written ink
          signature of paper documents.

     c.   Electronic signature technology employing computer software and a
          digital signature or digitizer pen pad to capture a person's
          handwritten signature in such a manner that the signature is unique to
          the person signing, is under the sole control of the person signing,
          is capable of verification to authenticate the signature and is linked
          to the document signed in such a manner that if the data is changed,
          such signature is invalidated.


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2.   The use of any one or a combination of these methods of execution will
     constitute a legally binding and valid signing of this Contract. This
     Contract may be executed in one or more counterparts, each of which, when
     duly executed, will be deemed an original.

                                   ARTICLE 32

INTERMEDIARY

Guy Carpenter & Company, Inc. is hereby recognized as the Intermediary
negotiating this Contract for all business hereunder. All communications,
including notices, premiums, return premiums, commissions, taxes, losses, loss
adjustment expenses, salvages and loss settlements relating thereto will be
transmitted to the Reinsurer or the Company through Guy Carpenter & Company,
Inc., One Convention Place, 701 Pike Street, Suite 2000, Seattle, Washington
98101. Payments by the Company to the Intermediary will be deemed to constitute
payment to the Reinsurer. Payments by the Reinsurer to the Intermediary will be
deemed only to constitute payment to the Company to the extent that such
payments are actually received by the Company.



IN WITNESS WHEREOF, THE COMPANY HAS CAUSED THIS CONTRACT TO BE EXECUTED BY ITS
DULY AUTHORIZED REPRESENTATIVE(S) THIS 2ND DAY OF DECEMBER, IN THE YEAR OF 2004.

                          SEABRIGHT INSURANCE COMPANY

                            /s/ Richard J. Gergasko
--------------------------------------------------------------------------------

 WORKERS' COMPENSATION AND EMPLOYERS' LIABILITY $500,000 EXCESS OF $500,000 PER
                 OCCURRENCE EXCESS OF LOSS REINSURANCE CONTRACT

                                    22 of 25
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      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.

(Wherever the word "Reassured" appears in this clause, it shall be deemed to
read "Reassured," "Reinsured," "Company," or whatever other word is employed
throughout the text of the reinsurance agreement to which this clause is
attached to designate the company or companies reinsured.)

      (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,

<TABLE>
<S>                      <C>                                                  <C>
                  to {   injury, sickness, disease, death or destruction      with respect to which an insured under the policy
                     {   bodily injury or property damage                     is also an insured under a nuclear
</TABLE>

                  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 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:

<TABLE>
<S>                                                     <C>
         I.       Under any Liability Coverage, to      { injury, sickness, disease, death or destruction
                                                        { bodily injury or property damage
</TABLE>


                  (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


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                  (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

<TABLE>
<S>              <C>                                                            <C>
                     { Immediate medical or surgical relief                      to expenses incurred with respect
                  to { first aid,
</TABLE>

<TABLE>
<S>              <C>                                                            <C>
                     { Bodily injury, sickness, disease or death                 resulting from the hazardous properties of nuclear
                  to { bodily injury                                             material and
</TABLE>

                  arising out of the operation of a nuclear facility by any
                  person or organization.

<TABLE>
<S>                                               <C>
                                                  { injury, sickness, disease, death or destruction
         III. Under any Liability Coverage, to    { bodily injury or property damage
</TABLE>

                  resulting from the hazardous properties of nuclear material,
                  if

                  (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

<TABLE>
<S>                                                                              <C>
                            { injury, sickness, disease, death or destruction    arises out of the furnishing by an insured of
                  (c)   the { bodily injury or property damage                   services,
</TABLE>


                        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


<TABLE>
<S>                      <C>
                       { injury to or destruction of property at such nuclear facility.
                   to  { property damage to such nuclear facility and any property thereat.
</TABLE>

         IV.      As used in this endorsement:

                  "HAZARDOUS PROPERTIES" include radioactive, toxic or explosive
                  properties; "NUCLEAR MATERIAL" means source material, 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 other than
                  tailings or wastes produced by the extraction or concentration
                  of uranium or thorium from any ore processed primarily for its
                  source material content, and (2) 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; "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,

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                  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 "property damage" includes all forms
                  of radioactive contamination of property. includes all forms
                  of radioactive contamination of property.

         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.

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*    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.
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