<PAGE>

                                                                    EXHIBIT 10.6


                        QUOTA SHARE REINSURANCE AGREEMENT

                                 By and Between

                      ROYAL SURPLUS LINES INSURANCE COMPANY

                                   (as Cedent)

                                       and

                        UNDERWRITERS REINSURANCE COMPANY

                                 (as Reinsurer)

                               DATED: July 1, 2003

<PAGE>

                                TABLE OF CONTENTS

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                                     ARTICLE I DEFINITIONS

Section 1.1         Definitions.......................................................     2

                                ARTICLE II BASIS OF REINSURANCE

Section 2.1         Cession...........................................................     7
Section 2.2         Basis of Reinsurance..............................................     7
Section 2.3         Effect of Reinsured Contracts.....................................     7
Section 2.4         Other Reinsurance.................................................     7

                             ARTICLE III PREMIUMS AND ALLOWANCES

Section 3.1         Cedent's Payment Obligations.......................................    8
Section 3.2         Reinsurer's Payment Obligations....................................    8
Section 3.3         Reinsurance Administration.........................................    8

                                  ARTICLE IV CONSIDERATION

Section 4.1         Consideration......................................................    9

                       ARTICLE V ACCOUNTING AND REINSURANCE SETTLEMENT

Section 5.1         Delivery of Accounting and Settlement Reports......................    9
Section 5.2         Report of Allowances...............................................    9
Section 5.3         Payment of Amounts Indicated in Accounting and Settlement Reports..   10

                        ARTICLE VI REINSURED CONTRACT ADMINISTRATION

Section 6.1         Administrative Services............................................   10

                                   ARTICLE VII INSOLVENCY

Section 7.1         Insolvency.........................................................   10
Section 7.2         Notice of Pendency of Claim........................................   11
Section 7.3         Notice of Insolvency...............................................   11

                            ARTICLE VIII DURATION AND TERMINATION

Section 8.1         Effective Date.....................................................   11
Section 8.2         Termination........................................................   11

                                ARTICLE IX COLLATERALIZATION

Section 9.1         Collateralization..................................................   12
Section 9.2         The Trust Account..................................................   12
Section 9.3         Reporting and Payment..............................................   13
Section 9.4         Withdrawals from Trust Account.....................................   14
</TABLE>

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<TABLE>
<S>                                                                                       <C>
                                  ARTICLE X DUTY OF COOPERATION

Section 10.1        Full Cooperation...................................................   15
Section 10.2        Furnishing of Relevant Information.................................   15

                                   ARTICLE XI INDEMNIFICATION

Section 11.1        Indemnification by Reinsurer.......................................   16
Section 11.2        Indemnification by Cedent..........................................   16

                                 ARTICLE XII REINSURANCE CREDIT

Section 12.1        Reinsurance Credit.................................................   16
Section 12.2        Notification.......................................................   16

                                   ARTICLE XIII ARBITRATION

Section 13.1        Arbitration........................................................   17
Section 13.2        Notice of Arbitration..............................................   17
Section 13.3        Arbitration Panel..................................................   17
Section 13.4        Submission of Briefs...............................................   17
Section 13.5        Arbitration Board's Decision.......................................   18
Section 13.6        Jurisdiction.......................................................   18
Section 13.7        Expenses...........................................................   18
Section 13.8        Production of Documents and Witnesses..............................   18
Section 13.9        Relief Available...................................................   19
Section 13.10       Consolidation......................................................   19

                             ARTICLE XIV MISCELLANEOUS PROVISIONS

Section 14.1        Amendment, Modification and Waiver.................................   19
Section 14.2        Entire Agreement...................................................   19
Section 14.3        Governing Law......................................................   19
Section 14.4        Severability.......................................................   19
Section 14.5        Counterparts.......................................................   20
Section 14.6        Consent to Jurisdiction............................................   20
Section 14.7        Third Party Beneficiaries..........................................   20
Section 14.8        Binding; Assignment................................................   20
Section 14.9        Specific Performance...............................................   20
Section 14.10       Descriptive Headings...............................................   21
Section 14.11       Waiver of Doctrine of Utmost Good Faith............................   21
Section 14.12       Expenses...........................................................   21
Section 14.13       Survival...........................................................   21
Section 14.14       Notices............................................................   21
Section 14.15       Interpretation.....................................................   22
Section 14.16       Construction.......................................................   23
Section 14.17       Territory..........................................................   23
Section 14.18       Confidentiality....................................................   23
</TABLE>

                                       ii

<PAGE>

                                    EXHIBITS

EXHIBIT A           Form of Accounting and Settlement Reports

EXHIBIT B           Form of Trust Agreement

EXHIBIT C           Assignment of Net Premium Receivables

EXHIBIT D           Assignment of Reinsurance Recoverables

EXHIBIT E           URC Investment Guidelines

                                    SCHEDULES

Schedule 2.1        Terrorism Allocation Methodology

Schedule 2.4        Reinsurance Contracts

                                      iii

<PAGE>

                    QUOTA SHARE REINSURANCE AGREEMENT

                  THIS QUOTA SHARE REINSURANCE AGREEMENT (together with all
Exhibits hereto, this "RSLIC Quota Share Reinsurance Agreement") is made as of
the Effective Date (as defined herein), by and between Royal Surplus Lines
Insurance Company, a Connecticut company ("Cedent"), and Underwriters
Reinsurance Company, a property and casualty insurance company organized under
the laws of the State of New Hampshire ("Reinsurer").

                  WHEREAS, Cedent is a wholly-owned subsidiary of Royal Group,
Inc., a Delaware corporation ("Royal"), and Reinsurer is a wholly-owned
subsidiary of Alleghany Insurance Holdings LLC, a Delaware limited liability
company ("AIHL");

                  WHEREAS, Royal and AIHL have entered into an Acquisition
Agreement, dated as of June 6, 2003 (the "Acquisition Agreement"), pursuant to
which AIHL will purchase all of the issued and outstanding shares of common
stock of Royal Specialty Underwriting, Inc., a Georgia corporation and
wholly-owned subsidiary of Royal ("RSUI"), and certain other assets of Royal and
its Affiliates, including the renewal rights to insurance contracts underwritten
by RSUI;

                  WHEREAS, pursuant to the Assignment and Assumption Agreement
dated as of June 30, 2003 (the "Assignment Agreement"), AIHL assigned to RSUI
Group, Inc., a Delaware corporation and a wholly-owned subsidiary of AIHL ("RSUI
Group"), and RSUI Group assumed from AIHL, all of AIHL's rights and obligations
under the Acquisition Agreement;

                  WHEREAS, pursuant to the terms of the Acquisition Agreement
and the Assignment Agreement, Royal and RSUI Group have agreed that Royal shall
cause Cedent, and RSUI Group shall cause Reinsurer, to enter into this RSLIC
Quota Share Reinsurance Agreement, pursuant to which Cedent will cede, and
Reinsurer will assume, on a 100% quota share basis, the liabilities and
obligations arising out of (i) the insurance contracts issued by RSUI, as agent,
in Cedent's name with an effective date (new or renewal) on or after the
Effective Date; and (ii) the RSUI-Produced Insurance Contracts (as defined
below) which are in force on the Effective Date, but only to the extent they
arise out of, or relate to, periods on or after the Effective Date;

                  WHEREAS, Cedent wishes to cede to Reinsurer certain
liabilities relating to such insurance contracts and Reinsurer desires to assume
such liabilities, subject to the terms and conditions of this RSLIC Quota Share
Reinsurance Agreement; and

                  WHEREAS, RSUI will administer all aspects of the Reinsured
Contracts and the Reinsured Liabilities (all as defined below) subject to the
terms and conditions of the RSLIC Administrative Services Agreement (as defined
below).

                  NOW, THEREFORE, for and in consideration of the premises and
the promises and the mutual agreements hereinafter set forth and set forth in
the Acquisition Agreement and RSLIC Administrative Services Agreement, the
parties hereto, intending to be legally bound, covenant and agree as follows:

<PAGE>

                                   ARTICLE I

                                   DEFINITIONS

                  Section 1.1 Definitions. Capitalized terms used but not
defined herein and which are defined in the Acquisition Agreement shall have the
meanings ascribed to them in the Acquisition Agreement. As used in this RSLIC
Quota Share Reinsurance Agreement, the following terms shall have the meanings
set forth herein:

                  "AAA" shall have the meaning set forth in Section 13.3.

                  "Acquisition Agreement" shall have the meaning set forth in
the recitals.

                  "Affiliate" of any Person means another Person that from time
to time, directly or indirectly controls, is controlled by, or is under common
control with, such first Person, where "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
contract, as trustee or executor, or otherwise. For the purposes of this RSLIC
Quota Share Reinsurance Agreement, the term "Affiliated" has a meaning
correlative to the foregoing.

                  "AIHL" shall have the meaning set forth in the recitals.

                  "Administrative Services Agreements" shall mean the RSLIC
Administrative Services Agreement, the RIC Administrative Services Agreement,
the RICA Administrative Services Agreement and the Landmark Administrative
Services Agreement, collectively.

                  "Aggregate Ceding Commission" shall have the meaning set forth
in the Acquisition Agreement.

                  "Ancillary Agreements" means this RSLIC Quota Share
Reinsurance Agreement and the other agreements identified as Ancillary
Agreements in the Acquisition Agreement.

                  "Applicable Law" means any applicable order, law, statute,
regulation, rule, ordinance, writ, injunction, directive, judgment, decree,
principal of common law, constitution or treaty enacted, promulgated, issued,
enforced or entered by any Governmental Entity, including any amendments thereto
that may be adopted from time to time.

                  "Assignment Agreement" shall have the meaning set forth in the
recitals.

                  "Assignment of Reinsurance Recoverables Agreement" shall have
the meaning set forth in the Acquisition Agreement.

                  "Assumed Contracts" shall mean the RSUI-Produced Insurance
Contracts which are in-force on the Effective Date, the actual or contingent
liabilities and

                                       2

<PAGE>

obligations of which are assumed by Reinsurer pursuant to this RSLIC Quota Share
Reinsurance Agreement, to the extent such liabilities and obligations arise out
of, or relate to, periods on and after the Effective Date.

                  "Board" shall have the meaning set forth in Section 13.1.

                  "Business Day" means a Monday, Tuesday, Wednesday, Thursday or
Friday on which banking institutions in the State of New York are not authorized
or obligated by Applicable Law to close.

                  "Cat Cover Reinsurance Recoverables" shall have the meaning
set forth in Section 9.2(a)(iv).

                  "Claims Servicing Agreement" shall mean the claims servicing
agreement entered into as of the date hereof by and between RSUI, RIC, RSLIC and
other insurer Affiliates of Royal.

                  "Closing" means the closing of the transactions contemplated
by the Acquisition Agreement.

                  "Closing Date" shall mean the date on which the Closing takes
place.

                  "Collected Net Premium" shall have the meaning set forth in
Section 9.2(a)(ii).

                  "Damages" means all costs, expenses, fines, penalties, losses,
judgments, damages, Reinsured Liabilities and other amounts (including
attorneys', actuaries', accountants' and experts' fees and settlement amounts)
arising out of any suit, claim or proceeding.

                  "Effective Date" means July 1, 2003.

                  "Excluded Liabilities" means any liability or obligation of
Cedent for:

                  (1)      Extra Contractual Liabilities and any related
         attorneys' fees and other expenses incurred by Cedent (i) to the extent
         caused by acts, errors or omissions by Cedent or any of its officers,
         employees, agents or representatives that occurred prior to the
         Effective Date, (ii) to the extent arising in respect of the
         RSUI-Produced Insurance Contracts other than the Reinsured Contracts,
         or (iii) as a result of assuming the administration of Excluded
         Liabilities as provided in Section 5.2 of the RSLIC Administrative
         Services Agreement.

                  (2)      any losses and expenses incurred under the
         RSUI-Produced Insurance Contracts other than the Reinsured Contracts,
         including any and all loss development relating thereto; and

                  (3)      any liability or obligation arising out of or
         relating to Cedent's failure to follow in all material respects any
         written recommendation made by the

                                       3

<PAGE>

         Administrator (as defined in the RSLIC Administrative Services
         Agreement) pursuant to the RSLIC Administrative Services Agreement
         unless by following such recommendation Cedent, in its reasonable
         judgment, would not comply in all material respects with Applicable Law
         or the terms of the Reinsured Contracts, in which case all liabilities
         and obligations arising from changes necessary to conform the conduct
         contemplated by such recommendation in all material respects to
         Applicable Law and the terms of the Reinsured Contracts shall be
         considered Reinsured Liabilities.

                  "Extra Contractual Liabilities" means all liabilities or
obligations, other than those arising under the express terms of and within the
express limits of the RSUI-Produced Insurance Contracts, whether to
policyholders, Governmental Entities or any other Person, which liabilities and
obligations shall include, without limitation, any liability for punitive,
exemplary, special or any other form of extra-contractual damages relating to
the RSUI-Produced Insurance Contracts which arises from any act, error or
omission, whether or not intentional, in bad faith or otherwise, including,
without limitation, any act, error or omission relating to (i) the
investigation, coverage analysis, defense, trial, settlement or handling of
claims, benefits, or payments arising out of or relating to the RSUI-Produced
Insurance Contracts or (ii) the failure to pay or the delay in payment of
benefits, claims or any other amounts due or alleged to be due under or in
connection with the RSUI-Produced Insurance Contracts.

                  "Landmark" means Landmark American Insurance Company.

                  "Landmark Quota Share Reinsurance Agreement" means the Quota
Share Reinsurance Agreement being entered into by Landmark, as cedent, and
Underwriters Reinsurance Company, as reinsurer, effective July 1, 2003.

                  "Governmental Entity" means any foreign, domestic, federal,
territorial, state or local U.S. or non-U.S. governmental authority,
quasi-governmental authority, instrumentality, court or government
self-regulatory organization, commission, tribunal or organization or any
political or other subdivision, department, branch or representative of any of
the foregoing.

                  "Market Value" shall have the meaning set forth in Section
9.2(b).

                  "Net Premium Receivables" shall have the meaning set forth in
Section 9.2(a)(ii).

                  "Net Unearned Premium Reserves" shall mean the aggregate
amount of all unearned premium reserves, calculated as of the Effective Date,
related to all Assumed Contracts, less the unearned premiums to be ceded to
Unaffiliated Reinsurers with respect to such Assumed Contracts.

                  "Neutral Auditors" shall have the meaning set forth in the
Acquisition Agreement.

                                       4

<PAGE>

                  "90-Day Treasury Rate" means the annual yield rate, as of any
given date, of actively traded U.S. Treasury securities having remaining
duration to maturity of three months, as such rate is published under "Treasury
Constant Maturities" in Federal Reserve Statistical Release H.15(519).

                  "Person" means an individual, corporation, partnership, joint
venture, association, limited liability company, trust, unincorporated
organization, or other entity.

                  "Policyholder(s)" means, as applicable, the named insureds
under, or policyholders with respect to, the Reinsured Contracts or any other
person entitled to payment under the Reinsured Contracts.

                  "Premium Receivables" means premium receivables relating to
the Reinsured Contracts.

                  "Qualifying Assets" shall have the meaning set forth in
Section 9.2(a)(i).

                  "Quota Share Reinsurance Agreements" shall mean this RSLIC
Quota Share Reinsurance Agreement, the RIC Quota Share Reinsurance Agreement and
the Landmark Quota Share Reinsurance Agreement, collectively.

                  "Reinsurance Recoverables" means all amounts due under
reinsurance agreements entered into with Unaffiliated Reinsurers relating to the
Reinsured Contracts, including all receivables, recoverables, returns, amounts
in respect of profit sharing and all other sums to which Cedent may be entitled
under the third party reinsurance agreements except to the extent related to
reinsurance recoverables for Excluded Liabilities.

                  "Reinsured Contracts" means (i) all policies, binders and
contracts of insurance written and issued in Cedent's name by or on behalf of
RSUI, as agent, with an effective date, new or renewal, on or after the
Effective Date; and (ii) Assumed Contracts.

                  "Reinsured Liabilities" means all liabilities and obligations
of any nature arising out of or relating to the Reinsured Contracts, including
without limitation (i) any loss or allocated loss expense or unearned premium
obligation, (ii) Extra Contractual Liabilities and any related attorney fees and
other expenses, and (iii) any liabilities and obligations arising out of or
relating to a right to purchase additional coverage and obligations arising
under legal or regulatory requirements, but excluding Excluded Liabilities.

                  "Required Balance" shall have the meaning set forth in Section
9.1.

                  "RIC" means Royal Indemnity Company.

                  "RIC (Landmark) Quota Share Reinsurance Agreement" means the
RIC (Landmark) Quota Share Reinsurance Agreement being entered into between
Landmark, as cedent, and RIC, as reinsurer, subsequent to the date hereof.

                                       5

<PAGE>

                  "RIC Quota Share Reinsurance Agreement" means the Quota Share
Reinsurance Agreement being entered into between Royal Indemnity Company, as
cedent, and Underwriters Reinsurance Company, as reinsurer, effective July 1,
2003.

                  "RICA" means Royal Insurance Company of America, an Illinois
company.

                  "Royal" shall have the meaning set forth in the recitals.

                  "Royal Intercompany Reinsurance Pooling Agreement" means the
Royal Insurance 1989 Reinsurance Pooling Agreement, as amended, made by and
among American and Foreign Insurance Company, Globe Indemnity Company, Royal
Indemnity Company, Royal Insurance Company of America, Safeguard Insurance
Company, Security Insurance Company of Hartford, Employee Benefits Insurance
Company, Design Professionals Insurance Company, The Connecticut Indemnity
Company, The Fire and Casualty Insurance Company of Connecticut, EBI Indemnity
Company, Guaranty National Insurance Company, Phoenix Assurance Company of New
York, The Sea Insurance Company of America and Viking Insurance Company of
Wisconsin.

                  "RSLIC Administrative Services Agreement" means the RSLIC
Administrative Services Agreement being entered into between Reinsurer and
Cedent relative to this RSLIC Quota Share Reinsurance Agreement.

                  "RSUI Group" shall have the meaning set forth in the recitals.

                  "RSUI-Produced Insurance Contracts" shall mean all policies,
binders and contracts of insurance (both direct and assumed) underwritten by
RSUI and issued by a Royal Insurer Affiliate (as such term is defined in the
Acquisition Agreement).

                  "Tax" or "Taxes" means all federal, state, county, local,
municipal, foreign and other taxes, assessments, duties or similar charges of
any kind whatsoever, including all corporate franchise, income, gross receipts,
occupation, windfall profits, sales, use, ad valorem, value-added, profits,
license, withholding, payroll, employment, excise, insurance premium, real
property, personal property, customs, net worth, capital gains, transfer, stamp,
documentary, social security, disability, environmental, alternative minimum,
estimated, recapture and other taxes, and including all interest, penalties and
additions imposed with respect thereto.

                  "Terrorism Loss Allocation Methodology" shall have the meaning
set forth in Section 2.1.

                  "Terrorism Treaty" shall have the meaning set forth in the
Acquisition Agreement

                  "Trust Account" shall have the meaning set forth in Section
9.1.

                  "Trust Agreement" shall have the meaning set forth in Section
9.1.

                                       6

<PAGE>

                  "Trustee" shall have the meaning set forth in Section 9.3(a).

                  "Unaffiliated Reinsurers" shall mean reinsurers unaffiliated
with Cedent other than Reinsurer under this RSLIC Quota Share Reinsurance
Agreement.

                  "URC Investment Guidelines" shall have the meaning set forth
in Section 9.3(a).

                                   ARTICLE II

                              BASIS OF REINSURANCE

                  Section 2.1 Cession. As of the Effective Date, Cedent hereby
cedes to Reinsurer, and Reinsurer hereby accepts and agrees to reinsure and
indemnify Cedent for, one hundred percent (100%) of all Reinsured Liabilities,
net of (i) collectible reinsurance from Unaffiliated Reinsurers and (ii)
collectible allocated reinsurance recoveries under the Terrorism Treaties as
allocated pursuant to the loss allocation methodology set forth on SCHEDULE 2.1
(the "Terrorism Loss Allocation Methodology"). The Reinsurer shall follow in all
respects the fortunes of the Cedent with respect to the Reinsured Contracts and
the Reinsured Liabilities being assumed by the Reinsurer under this RSLIC Quota
Share Reinsurance Agreement.

                  Section 2.2 Basis of Reinsurance. The reinsurance provided by
this RSLIC Quota Share Reinsurance Agreement applies prior to any cession and
retrocession by Cedent of pool liabilities to the other parties to the Royal
Intercompany Reinsurance Pooling Agreement.

                  Section 2.3 Effect of Reinsured Contracts. Except as otherwise
set forth in this RSLIC Quota Share Reinsurance Agreement, the reinsurance
provided under this RSLIC Quota Share Reinsurance Agreement shall be subject to
the same clauses, terms, limits, conditions, endorsements, modifications, and
waivers of or affecting the Reinsured Contracts, it being the intent of the
parties that Reinsurer shall follow the fortunes and settlements made by or on
behalf of the Cedent in all respects.

                  Section 2.4 Other Reinsurance. In the event that there is
reinsurance provided by Unaffiliated Reinsurers that relates to the Reinsured
Contracts or the Reinsured Liabilities, the amount of Reinsurer's liability
under this RSLIC Quota Share Reinsurance Agreement will be increased by reason
of the inability of Cedent to collect any reinsurance from any such Unaffiliated
Reinsurer, whether specific or general, that may have become due from them,
whether that inability arises from insolvency or otherwise, except that
Reinsurer's liability under this RSLIC Quota Share Reinsurance Agreement will
not be increased due to Cedent's inability to collect under the reinsurance
contracts listed on SCHEDULE 2.4 hereto.

                                       7

<PAGE>

                                  ARTICLE III

                             PREMIUMS AND ALLOWANCES

                  Section 3.1 Cedent's Payment Obligations. Cedent agrees to pay
or, if received by RSUI as agent, to cause RSUI in its capacity as Administrator
under the RSLIC Administrative Services Agreement to pay, to Reinsurer one
hundred percent (100%) of the following amounts which are actually received by
Cedent or RSUI in respect of the Reinsured Contracts:

                  (a)      premiums and other receivables to the extent they
relate to the Reinsured Contracts;

                  (b)      litigation and claim recoveries from third parties to
the extent they relate to the Reinsured Contracts and/or the Reinsured
Liabilities;

                  (c)      any and all amounts paid by Reinsurer relating to the
Reinsured Contracts which are not Reinsured Liabilities; and

                  (d)      any refunds or tax credits actually received by
Cedent based upon such taxes and assessments for which Reinsurer has paid to, or
on behalf of, Cedent pursuant to Sections 3.2(a)(ii) and 3.2(a)(iii).

                  Section 3.2 Reinsurer's Payment Obligations. Reinsurer agrees
to reimburse, or pay on behalf of, Cedent the following:

                  (a)      (i) any and all state and local premium, surplus
lines, unauthorized insurance or other similar taxes imposed on premiums
written, collected or received, as applicable under the law of the applicable
jurisdiction, on or after the Effective Date relating to the Reinsured
Contracts; (ii) any and all guaranty fund or other residual market assessments
incurred by Cedent with respect to premiums relating to the Reinsured Contracts
and the Reinsured Liabilities; and (iii) any and all state or local Taxes
imposed on Cedent in connection with the performance of the parties' obligations
pursuant to any of the Ancillary Agreements, to the extent that such obligations
relate to the Reinsured Contracts;

                  (b)      producer compensation paid by the Cedent to the
extent based on premiums arising from the Reinsured Contracts;

                  (c)      any and all amounts actually paid by Cedent, other
than by Administrator on Cedent's behalf under the RSLIC Administrative Services
Agreement, relating to the Reinsured Contracts which are Reinsured Liabilities;
and

                  (d)      dividends actually paid to Policyholders by Cedent at
the request of Reinsurer.

                  Section 3.3 Reinsurance Administration.

                                       8

<PAGE>

                  (a)      Except for catastrophe excess of loss and property
per risk excess of loss reinsurance which shall be purchased in the name of
Reinsurer and except for the Terrorism Treaty which is purchased by Cedent,
Reinsurer shall purchase all other reinsurance relating to the Reinsured
Contracts in the name, and for the account, of Cedent. Except as provided in the
Terrorism Treaty Allocation Agreement, the cost of all such reinsurance shall be
born by Reinsurer.

                  (b)      Reinsurer and RSUI, as Administrator under the RSLIC
Administrative Services Agreement, shall have the responsibility and authority
to take all steps reasonably necessary to administer the third party reinsurance
contracts insofar as they relate to the Reinsured Liabilities other than the
Terrorism Treaties and the reinsurance contracts listed as Schedule 2.2 hereto.

                  (c)      Reinsurer shall have a continuing obligation during
the term of this Quota Share Reinsurance Agreement to fund the Bank Accounts (as
such term is defined in the RSLIC Administrative Services Agreement) in an
amount sufficient to satisfy all Reinsured Liabilities as such liabilities
become due. Notwithstanding any other provisions of the RSLIC Quota Share
Reinsurance Agreement to the contrary, Cedent shall have no responsibility
whatsoever to provide funds to satisfy the Reinsured Liabilities or fund the
Bank Accounts.

                                   ARTICLE IV

                                  CONSIDERATION

                  Section 4.1 Consideration. The consideration to be paid to the
Reinsurer for assuming the Reinsured Liabilities under the terms of this RSLIC
Quota Share Reinsurance Agreement is set forth in Section 3.1 hereof and Section
1.19 of the Acquisition Agreement.

                                   ARTICLE V

                      ACCOUNTING AND REINSURANCE SETTLEMENT

                  Section 5.1 Delivery of Accounting and Settlement Reports.
Within thirty (30) days following the end of each calendar month, Reinsurer
shall cause RSUI, in its capacity as Administrator for Cedent under the RSLIC
Administrative Services Agreement, to provide Cedent and Reinsurer with
accounting and settlement reports (including underlying journal entries
contemplated by the RSLIC Administrative Services Agreement) substantially in
the format set forth in EXHIBIT A. Reinsurer and Cedent shall have the right to
change the format of the reports upon thirty (30) days' prior written notice to
RSUI; provided, however, that the change shall involve no material additional
cost to Cedent.

                  Section 5.2 Report of Allowances. Within thirty (30) days
following receipt of the report required to be provided to Cedent and Reinsurer
by RSUI under

                                       9

<PAGE>

Section 5.1 hereof, RSUI shall provide Cedent and Reinsurer with a report of the
allowances set forth in Section 3.2 in a format to be mutually agreed upon by
the parties.

                  Section 5.3 Payment of Amounts Indicated in Accounting and
Settlement Reports. Simultaneously with RSUI's delivery of the accounting and
settlement reports required to be provided under Section 5.1 hereof, Reinsurer
shall pay any amounts due to Cedent indicated by such accounting and settlement
reports. Cedent shall pay any amount due to Reinsurer on or before the thirtieth
(30th) Business Day following its receipt of the accounting and settlement
reports required to be provided to Cedent by RSUI under Section 5.1 hereof. Any
late payment of an amount required by this RSLIC Quota Share Reinsurance
Agreement to be paid or remitted by Cedent to Reinsurer or by Reinsurer to
Cedent shall bear simple interest from and including the date such payment is
due under this provision until, but excluding, the date of payment, at a rate
per annum equal to the 90-Day Treasury Rate.

                                   ARTICLE VI

                        REINSURED CONTRACT ADMINISTRATION

                  Section 6.1 Administrative Services.

                  (a)      The Reinsured Contracts shall be administered by RSUI
pursuant to the terms and conditions of the RSLIC Administrative Services
Agreement. Reinsurer acknowledges that RSUI, in acting as Administrator for
Cedent under the RSLIC Administrative Services Agreement, is acting on
Reinsurer's behalf. Reinsurer further acknowledges that it shall not assert that
any action or inaction of RSUI under the RSLIC Administrative Services Agreement
as grounds for denying Cedent coverage under this RSLIC Quota Share Reinsurance
Agreement or seeking indemnification from Cedent pursuant to Article XI hereof.

                  (b)      Notwithstanding any other provision of this RSLIC
Quota Share Reinsurance Agreement to the contrary, in no event shall the Cedent
have any obligation or liability to the Reinsurer hereunder for any default of
its obligations under this RSLIC Quota Share Reinsurance Agreement caused by the
failure of the Administrator to perform its obligations under the RSLIC
Administrative Services Agreement.

                                  ARTICLE VII

                                   INSOLVENCY

                  Section 7.1 Insolvency. In the event of the insolvency of
Cedent, all reinsurance under this RSLIC Quota Share Reinsurance Agreement shall
be payable by Reinsurer on the basis of the liability of Cedent under the
Reinsured Contracts without diminution because of the insolvency of Cedent. In
the event of insolvency and the appointment of a conservator, liquidator or
statutory successor of Cedent, all amounts

                                       10

<PAGE>

payable by Reinsurer hereunder to Cedent shall be payable directly to Cedent or
to such conservator, liquidator or statutory successor.

                  Section 7.2 Notice of Pendency of Claim. It is understood,
however, that in the event of the insolvency of Cedent, the liquidator or
receiver or statutory successor of Cedent shall give written notice to Reinsurer
of the pendency of a claim against Cedent on the Reinsured Contracts reinsured
hereunder within a reasonable time after such claim is filed in the insolvency
proceeding and during the pendency of such claim. Reinsurer may investigate such
claim and interpose, at its own expense, in the proceeding where such claim is
to be adjudicated, any defense or defenses which it may deem available to Cedent
or its liquidator or receiver or statutory successor. It is further understood
that the expense thus incurred by Reinsurer shall be chargeable, subject to
court approval, against Cedent as part of the expense of liquidation to the
extent of a proportionate share of the benefit which may accrue to Cedent as a
result of the defense undertaken by Reinsurer.

                  Section 7.3 Notice of Insolvency. If either Cedent or
Reinsurer becomes insolvent, such party shall notify the other party of the
insolvency within five (5) Business Days thereof.

                                  ARTICLE VIII

                            DURATION AND TERMINATION

                  Section 8.1 Effective Date. This RSLIC Quota Share Reinsurance
Agreement shall commence on the Effective Date. This RSLIC Quota Share
Reinsurance Agreement shall remain in effect until all Reinsured Liabilities
have been finally settled or expire unless earlier terminated according to the
provisions of Section 8.2.

                  Section 8.2 Termination.

                  (a)      This RSLIC Quota Share Reinsurance Agreement may be
terminated by a writing stating the effective date of termination:

                           (i)      by mutual written agreement of the parties
         at the time specified in such written agreement; or

                           (ii)     at the option of Cedent, upon the issuance
         of an order of liquidation or rehabilitation against Reinsurer;
         provided, however, that in the event an order of liquidation or
         rehabilitation is issued against Reinsurer, before Cedent may terminate
         this RSLIC Quota Share Reinsurance Agreement, Reinsurer shall have an
         opportunity to contest or appeal such order for a period of sixty (60)
         days from the date of issuance.

                  (b)      In the event that this RSLIC Quota Share Reinsurance
Agreement is terminated under Section 8.2(a)(ii), Reinsurer shall return or
cause to be returned, within twenty (20) days by wire transfer of immediately
available funds to an account

                                       11

<PAGE>

designated by Cedent in writing, all Reinsured Liabilities, evaluated as of the
effective date of termination, and assets equal to those Reinsured Liabilities,
less any amounts actually allowed to Cedent by Reinsurer as a ceding commission
on that portion of the Reinsured Liabilities being returned as unearned premium
reserve, and upon payment of such, Reinsurer shall be released of all liability
for its Reinsured Liabilities under this RSLIC Quota Share Reinsurance
Agreement.

                                   ARTICLE IX

                                COLLATERALIZATION

                  Section 9.1 Collateralization. On or prior to the date hereof,
Reinsurer shall establish, pursuant to the trust agreement attached hereto as
EXHIBIT B (the "Trust Agreement"), a grantor trust of Reinsurer naming Cedent as
beneficiary with a Delaware bank that is a member of the Federal Reserve System
which is reasonably satisfactory to Cedent (the "Trust Account"). The aggregate
amount of assets (consisting of cash and other investment assets permitted by
the Trust Agreement) required to be maintained by Reinsurer in the Trust Account
in accordance with Section 9.3 hereof shall be, at all times on and after the
Closing Date, an amount equal to the sum of (i) Reinsurer's aggregate
obligations to Cedent under this RSLIC Quota Share Reinsurance Agreement, net of
collectible Reinsurance Recoverables and collectible Net Premium Receivables,
plus (ii) at all times Landmark is an Affiliate of RIC, Reinsurer's aggregate
obligations under the Landmark Quota Share Reinsurance Agreement, net of
collectible Reinsurance Recoverables and collectible Net Premium Receivables (as
such terms are defined in such agreement), plus (iii) Reinsurer's aggregate
obligations under the RIC Quota Share Reinsurance Agreement, net of collectible
Reinsurance Recoverables and collectible Net Premium Receivables (as such terms
are defined in such agreement), less (iv) RIC's aggregate obligations to
Landmark under the RIC (Landmark) Quota Share Reinsurance Agreement (such
amount, the "Required Balance").

                  Section 9.2 The Trust Account.

                  (a)      On the Closing Date, the Trust Account shall be
funded as follows:

                           (i)      Cedent shall place in the Trust Account cash
         and/or "Acceptable Investments" (as such term is defined under the
         Trust Agreement, and together with cash, "Qualifying Assets") in an
         amount equal to Royal's estimate of the Net Unearned Premium Reserve
         less the amount of the Aggregate Ceding Commission; provided, however,
         Cedent shall not be required to place Qualifying Assets into the Trust
         Account in excess of the amount actually collected in respect of the
         Net Unearned Premium Reserve by Cedent at or prior to the Closing Date
         less the amount of the Aggregate Ceding Commission; and provided,
         further, with respect to premium actually collected by RSUI at or prior
         to the Closing Date in respect of the Net Unearned Premium Reserve and
         not paid to Cedent, Cedent shall cause RSUI to place, on the Closing
         Date, Qualifying Assets in such amount into the Trust Account.

                                       12

<PAGE>

                           (ii)     Cedent shall assign to the Trust Account all
         Premium Receivables net of premium receivables to be ceded to the
         Unaffiliated Reinsurers with respect to such Reinsured Contracts (the
         "Net Premium Receivables") in accordance with the Assignment of Net
         Premium Receivables Agreement attached hereto as EXHIBIT C. Net Premium
         Receivables which are actually collected shall be referred to herein as
         the "Collected Net Premium."

                           (iii)    Reinsurer shall place in the Trust Account
         Qualifying Assets in an amount equal to the Aggregate Ceding
         Commission.

                           (iv)     Reinsurer shall assign to the Trust Account
         all reinsurance recoverables of the Reinsurer relating to the
         catastrophe excess of loss reinsurance purchased with respect to the
         Reinsured Contracts (the "Cat Cover Reinsurance Recoverables") in
         accordance with the Assignment of Reinsurance Recoverables Agreement
         attached hereto as EXHIBIT D.

                  (b)      At any time on and after the Closing Date, until the
Trust Agreement is terminated pursuant to the provisions found therein, Cedent
and Reinsurer agree to the following:

                           (i)      Cedent shall, and Reinsurer shall cause RSUI
         to place in the Trust Account all Collected Net Premium as soon as
         practicable upon receipt of the Collected Net Premium, but no later
         than five (5) Business Days after receipt of such Collected Net
         Premium.

                           (ii)     In the event Cedent reasonably determines
         that any portion of the Net Premium Receivables is uncollectible,
         Reinsurer shall place in the Trust Account Qualifying Assets equal to
         the amount of the Net Premium Receivables which is deemed
         uncollectible. Net Premium Receivables shall be deemed uncollectible if
         they become due and owing for 90 days or more.

                           (iii)    In the event Cedent reasonably determines
         that any Reinsurance Recoverables from Unaffiliated Reinsurers relating
         to the Reinsured Contracts are uncollectible, Reinsurer shall place in
         the Trust Account Qualifying Assets equal to the amount of Reinsurance
         Recoverables which are deemed uncollectible, but only to the extent the
         obligations relate to the Reinsured Liabilities. If such
         uncollectiblity is due to the creditworthiness of Unaffiliated
         Reinsurers, Cedent shall make such determination consistent with the
         treatment of other recoverables from such reinsurers in its own
         financial statements.

                           (iv)     In the event the aggregate fair market value
         of the assets held in the Trust Account, determined pursuant to the
         Trust Agreement (the "Market Value"), is below the Required Balance,
         Reinsurer shall deposit in the Trust Account such additional Qualifying
         Assets as may be necessary to increase the Market Value of the Trust
         Account assets to the Required Balance.

                  Section 9.3 Reporting and Payment.

                                       13

<PAGE>

                  (a)      The assets held in the Trust Account shall be
invested in permissible investments under the investment provisions of the
insurance laws of Delaware and New Hampshire and in accordance with the
investment guidelines of Reinsurer attached hereto as EXHIBIT E (the "URC
Investment Guidelines"). As long as the Trust Agreement remains in force, no
amendments to the URC Investment Guidelines shall be made without the express
written consent of Cedent, which consent shall not be unreasonably denied or
delayed. Reinsurer shall calculate the Required Balance and the Market Value as
of the last day of each month and report the amount of the Required Balance and
the Market Value, together with supporting detail, to Cedent and the Trustee of
the Trust Account (the "Trustee") within fifteen (15) days after the end of such
month. The parties hereto shall agree upon mutually satisfactory procedures for
the calculation of the Required Balance and the Market Value.

                  (b)      No later than five (5) Business Days after
Reinsurer's delivery of such report (or within 2 Business Days of agreement or
determination of any dispute pursuant to Section 9.3(c)), Reinsurer shall
deposit in the Trust Account such additional Qualifying Assets as may be
necessary to increase the Market Value of the Trust Account assets to the
Required Balance. No later than five (5) Business Days after Cedent's receipt of
such report (or within 2 Business Days of agreement or determination of any
dispute pursuant to Section 9.3(c)), Cedent shall direct Trustee to pay to
Reinsurer any amount by which the aggregate Market Value of the Trust Account
assets exceeds the Required Balance. Prior to delivering any assets for deposit
in the Trust Account, Reinsurer shall execute assignments or endorsements in
blank of all of Reinsurer's right, title and interest in such assets, so that,
upon the direction of Cedent, Trustee may negotiate any such assets without
consent or signature of Reinsurer or any person or entity.

                  (c)      In the event that Cedent disagrees with Reinsurer's
calculation of the Required Balance and/or the Market Value other than in
respect of incurred but not reported reserves, it shall notify the Reinsurer of
such disagreement in writing. If the dispute cannot be agreed between Cedent and
Reinsurer within five (5) Business Days of notification, the dispute shall be
resolved by the Neutral Auditors in accordance with the provisions of Section
1.10 of the Acquisition Agreement.

                  (d)      For the duration of this RSLIC Quota Share
Reinsurance Agreement, Reinsurer agrees to deliver to Cedent, in addition to the
monthly report described in Section 9.3(a), (i) within thirty (30) days after
the end of every calendar quarter, a review prepared by a nationally recognized
independent actuarial firm of Reinsurer's loss and expenses reserves supporting
Reinsurer's calculations of the Required Balance and the Market Value; and (ii)
within sixty (60) days after the end of each calendar year, an opinion issued by
a nationally recognized independent actuarial firm, supporting Reinsurer's
calculation of the Required Balance and the Market Value.

                  Section 9.4       Withdrawals from Trust Account.

                  (a)      Cedent, as beneficiary of the Trust Account, may
withdraw assets from the Trust Account at any time and from time to time,
notwithstanding any other

                                       14

<PAGE>

provisions of this RSLIC Quota Share Reinsurance Agreement or the Trust
Agreement, and such assets may be utilized and applied by Cedent, or any
successor by operation of law of Cedent, including any liquidator,
rehabilitator, receiver of conservator of Cedent, without diminution because of
insolvency on the part of Cedent or Reinsurer; provided, however, that Cedent
may only withdraw such assets for one or more of the following purposes:

                           (i)      to reimburse Cedent for any Reinsured
         Liabilities paid by Cedent to the extent not paid by Reinsurer when
         due;

                           (ii)     to make payment to Reinsurer of any amounts
         that exceed the Required Balance;

                           (iii)    to pay any other amounts that are due to
         Cedent to the extent not paid directly to Cedent by Reinsurer when due;
         or

                           (iv)     to secure the Trust Account assets upon any
         attempt by Reinsurer to terminate the Trust Account without
         establishing other collateral acceptable to Cedent, other than in
         accordance of the terms of the Trust.

                  (b)      Cedent shall withdraw assets from the Trust to (i)
make payment to Reinsurer of any amounts that exceed the Required Balance and
(ii) at the request of Reinsurer, to reimburse Cedent for any Reinsured
Liabilities paid by Cedent.

                                   ARTICLE X

                               DUTY OF COOPERATION

                  Section 10.1 Full Cooperation. The parties hereto shall
cooperate in a commercially reasonable manner in order to accomplish the
objectives of this RSLIC Quota Share Reinsurance Agreement including, without
limitation, making available to each other their respective officers and
employees for interviews and meetings with governmental authorities and
furnishing any additional assistance, information and documentation as may be
reasonably requested by the other party from time to time.

                  Section 10.2 Furnishing of Relevant Information. Upon request,
each party hereto shall furnish to the other relevant information concerning the
Reinsured Contracts and Reinsured Liabilities, including but not limited to
studies used in the determination of reserves and other Reinsured Liabilities,
and each shall have the right to review and copy the books and records of the
other concerning such Reinsured Contracts and Reinsured Liabilities upon
reasonable notice, during normal business hours and at the requesting party's
own cost and expense.

                                   ARTICLE XI

                                 INDEMNIFICATION

                                       15

<PAGE>

                  Section 11.1 Indemnification by Reinsurer. Reinsurer hereby
indemnifies Cedent and its Affiliates and its and their respective officers,
directors, employees, agents and representatives against and agrees to hold each
of them harmless from any and all Damages incurred or suffered by any of them
arising out of or relating to (i) the Reinsured Contracts, (ii) the Reinsured
Liabilities, (iii) any breach or nonfulfillment by Reinsurer of, or any failure
by Reinsurer to perform, any of the terms or conditions of, or any duties or
obligations under, this RSLIC Quota Share Reinsurance Agreement, and (iv) any
enforcement of this indemnity.

                  Section 11.2 Indemnification by Cedent. Cedent hereby
indemnifies Reinsurer and its Affiliates and its and their respective officers,
directors, employees, agents and representatives against and agrees to hold each
of them harmless from any and all Damages incurred or suffered by any of them
arising out of or relating to (i) Excluded Liabilities, (ii) any breach or
nonfulfillment by Cedent of, or any failure by Cedent to perform, any of the
terms or conditions of, or any duties or obligations under, this RSLIC Quota
Share Reinsurance Agreement or the RSLIC Administrative Services Agreement other
than breaches or nonfulfillments which result, directly or indirectly, from the
failure of the Administrator to perform its obligations under RSLIC
Administrative Services Agreement, and (iii) any enforcement of this indemnity;
provided, however, notwithstanding anything to the contrary in this Article XI,
Cedent shall not be required to indemnify RSUI to the extent RSUI has any
indemnification obligation towards Cedent under the other Quota Share
Reinsurance Agreements, the Administrative Services Agreement and the Claims
Servicing Agreement.

                                  ARTICLE XII

                               REINSURANCE CREDIT

                  Section 12.1 Reinsurance Credit. Notwithstanding any other
provision of this RSLIC Quota Share Reinsurance Agreement to the contrary, if
Reinsurer becomes unauthorized or otherwise unaccredited in any State, the
District of Columbia, Canada or any other jurisdiction where authorization or
accreditation is required by insurance regulatory authorities in order for
Cedent to obtain full credit on its statutory quarterly and annual statements
filed with such jurisdiction for the reinsurance being provided under this RSLIC
Quota Share Reinsurance Agreement, Reinsurer, upon the request of Cedent, will
immediately establish, at its sole cost and option, a Trust Agreement and/or a
Qualifying Letter of Credit in an amount necessary to permit Cedent to obtain
full credit for such reinsurance in such jurisdiction.

                  Section 12.2 Notification. Reinsurer shall notify Cedent
within five (5) Business Days of any loss of license or authorization or other
change or condition that may affect the ability of Cedent to obtain full credit
for the reinsurance being provided under this RSLIC Quota Share Reinsurance
Agreement.

                                       16

<PAGE>

                                  ARTICLE XIII

                                   ARBITRATION

                  Section 13.1 Arbitration. As a condition precedent to any
cause of action, any and all disputes between Cedent and Reinsurer arising out
of, relating to, or concerning this RSLIC Quota Share Reinsurance Agreement,
whether sounding in contract or tort and whether arising during or after
termination of this RSLIC Quota Share Reinsurance Agreement, including whether
the dispute is subject to arbitration, shall be submitted to the decision of a
board of arbitration composed of two arbitrators and an umpire ("Board") meeting
at a site in Wilmington, Delaware. The arbitration shall be conducted under the
Federal Arbitration Act and shall proceed as set forth below.

                  Section 13.2 Notice of Arbitration. A notice requesting
arbitration, or any other notice made in connection therewith, shall be in
writing and shall be sent certified or registered mail, return receipt requested
to the affected parties. The notice requesting arbitration shall state in
particulars all issues to be resolved in the view of the claimant, shall appoint
the arbitrator selected by the claimant and shall set a tentative date for the
hearing, which date shall be no sooner than ninety (90) days and no later than
one hundred fifty (150) days from the date that the notice requesting
arbitration is mailed. Within thirty (30) days of receipt of claimant's notice,
the respondent shall notify claimant of any additional issues to be resolved in
the arbitration and of the name of its appointed arbitrator.

                  Section 13.3 Arbitration Panel. Unless otherwise mutually
agreed, the members of the Board shall be impartial and disinterested and shall
be active or former executive officers of property-casualty insurance companies,
reinsurance companies, or Lloyd's Underwriters or active or inactive lawyers
with at least twenty (20) years of experience in insurance and reinsurance.
Cedent and Reinsurer shall each appoint an arbitrator and the two (2)
arbitrators shall choose an umpire before instituting the hearing. If the
respondent fails to appoint its arbitrator within thirty (30) days after having
received claimant's written request for arbitration, the claimant is authorized
to and shall appoint the second arbitrator. If the two arbitrators fail to agree
upon the appointment of an umpire within thirty (30) days after notification of
the appointment of the second arbitrator, within ten (10) days thereof, the two
(2) arbitrators shall request the American Arbitration Association ("AAA") to
appoint an umpire for the arbitration with the qualifications set forth in this
Article. If the AAA fails to name an umpire, either party may apply to the court
named below to appoint an umpire with the above required qualifications. The
umpire shall promptly notify in writing all parties to the arbitration of his
selection and of the scheduled date for the hearing. Upon resignation or death
of any member of the Board, a replacement shall be appointed in the same fashion
as the resigning or deceased member was appointed.

                  Section 13.4 Submission of Briefs. The claimant and respondent
shall each submit initial briefs to the Board outlining the issues in dispute
and the basis, authority and reasons for their respective positions within
thirty (30) days of the date of notice of appointment of the umpire. The
claimant and the respondent may submit reply

                                       17

<PAGE>

briefs to the Board within ten (10) days after filing of the initial brief(s).
Initial and reply briefs may be amended by the submitting party at any time, but
not later than ten (10) days prior to the date of commencement of the
arbitration hearing. Reasonable responses shall be allowed at the arbitration
hearing to new material contained in any amendments filed to the briefs but not
previously responded to.

                  Section 13.5 Arbitration Board's Decision. The Board shall
make a decision and award with regard to the terms of this RSLIC Quota Share
Reinsurance Agreement and the original intentions of the parties to the extent
reasonably ascertainable. The Board's decision and award shall be in writing and
shall state the factual and legal basis for the decision and award. The decision
and award shall be based upon a hearing in which evidence shall be allowed and
which the formal rules of evidence shall not strictly apply but in which cross
examination and rebuttal shall be allowed. At its own election or at the request
of the Board, either party may submit a post-hearing brief for consideration of
the Board within twenty (20) days of the close of the hearing. The Board shall
make its decision and award within thirty (30) days following the close of the
hearing or the submission of post-hearing briefs, whichever is later, unless the
parties consent to an extension. Every decision by the Board shall be by a
majority of the members of the Board and each decision and award by the majority
of the members of the Board shall be final and binding upon all parties to the
proceeding.

                  Section 13.6 Jurisdiction. Either party may apply to the
Chancery Court of the State of Delaware for an order compelling arbitration or
confirming any decision and the award; a judgment of that Court shall thereupon
be entered on any decision or award. If such an order is issued, the attorneys'
fees of the party so applying and court costs will be paid by the party against
whom confirmation is sought. The Board may award interest calculated from the
date the Board determines that any amounts due the prevailing party should have
been paid to the prevailing party.

                  Section 13.7 Expenses. Each party shall bear the expense of
the one arbitrator appointed by it and shall jointly and equally bear with the
other party the expense of any stenographer requested, and of the umpire.

                  Section 13.8 Production of Documents and Witnesses. Subject to
customary and recognized legal rules of privilege, each party participating in
the arbitration shall have the obligation to produce those documents and as
witnesses to the arbitration those of its employees as any other participating
party reasonably requests providing always that the same witnesses and documents
be obtainable and relevant to the issues before the arbitration and not be
unduly burdensome or excessive. The parties may mutually agree as to pre-hearing
discovery prior to the arbitration hearing and in the absence of agreement, upon
the request of any party, pre-hearing discovery may be conducted as the Board
shall determine in its sole discretion to be in the interest of fairness, full
disclosure, and a prompt hearing, decision and award by the Board. The Board
shall be the final judge of the procedures of the Board, the conduct of the
arbitration, of the rules of evidence, the rules of privilege and production and
of excessiveness and relevancy of any witnesses and documents upon the petition
of any

                                       18

<PAGE>

participating party. To the extent permitted by law, the Board shall have
the authority to issue subpoenas and other orders to enforce their decisions.

                  Section 13.9 Relief Available. Nothing herein shall be
construed to prevent any participating party from applying to the Chancery Court
of the State of Delaware to issue a restraining order or other equitable relief
to maintain the "status quo" of the parties participating in the arbitration
pending the decision and award by the Board or to prevent any party from
incurring irreparable harm or damage at any time prior to the decision and award
of the Board. The Board shall also have the authority to issue interim decisions
or awards in the interest of fairness, full disclosure, and a prompt and orderly
hearing and decision and award by the Board.

                  Section 13.10 Consolidation. In the event that there is a
dispute between the Cedent and Reinsurer which implicates the provisions of this
RSLIC Quota Share Reinsurance Agreement and the RSLIC Administrative Services
Agreement, Cedent and Reinsurer hereby agree to consolidate any such dispute
under such agreements in a single arbitration proceeding.

                                  ARTICLE XIV

                            MISCELLANEOUS PROVISIONS

                  Section 14.1 Amendment, Modification and Waiver. This RSLIC
Quota Share Reinsurance Agreement may not be amended, modified or waived except
by an instrument or instruments in writing signed and delivered on behalf of
each of the parties hereto. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privileged. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.

                  Section 14.2 Entire Agreement. This RSLIC Quota Share
Reinsurance Agreement (together with the exhibits hereto and the other
agreements, documents and instruments delivered in connection herewith) the
Acquisition Agreement, the RSLIC Administrative Services Agreement and the other
Ancillary Agreements constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all other prior
agreements and understandings, both written and verbal, among the parties or any
of them with respect to the subject matter hereof.

                  Section 14.3 Governing Law. This RSLIC Quota Share Reinsurance
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.

                  Section 14.4 Severability. Any term or provision of this RSLIC
Quota Share Reinsurance Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability

                                       19

<PAGE>

without rendering invalid or unenforceable the remaining terms and provisions of
this RSLIC Quota Share Reinsurance Agreement or affecting the validity or
enforceability of any of the terms or provisions of this RSLIC Quota Share
Reinsurance Agreement in any other jurisdiction. If any provision of this RSLIC
Quota Share Reinsurance Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as would be enforceable.

                  Section 14.5 Counterparts. This RSLIC Quota Share Reinsurance
Agreement may be executed in counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same agreement.

                  Section 14.6 Consent to Jurisdiction. Each of the parties
hereto irrevocably and unconditionally submits to the exclusive jurisdiction of
the state and federal courts located in the State of Delaware for the purposes
of enforcing this RSLIC Quota Share Agreement or the RSLIC Administrative
Services Agreement. If any action is brought in a state court, the parties shall
take such actions as are within their control to cause any matter contemplated
hereby to be assigned to the Chancery Court of the State of Delaware. In any
action, suit or other proceeding, each of the parties hereto irrevocably and
unconditionally waives and agrees not to assert by way of motion, as a defense
or otherwise any claims that it is not subject to the jurisdiction of the above
courts, that such action or suit is brought in an inconvenient forum or that the
venue of such action, suit or other proceeding is improper. Each of the parties
hereto also agrees that any final and unappealable judgment against a party
hereto in connection with any action, suit or other proceeding shall be
conclusive and binding on such party and that such award or judgment may be
enforced in any court of competent jurisdiction, either within or outside of the
United States. A certified or exemplified copy of such award or judgment shall
be conclusive evidence of the fact and amount of such award or judgment.

                  Section 14.7 Third Party Beneficiaries. Except for the
provisions of Article XI, nothing in this RSLIC Quota Share Reinsurance
Agreement, express or implied, is intended to or shall confer upon any person,
other than the parties hereto any rights, benefits or remedies of any nature
whatsoever under or by reason of this RSLIC Quota Share Reinsurance Agreement.

                  Section 14.8 Binding; Assignment. This RSLIC Quota Share
Reinsurance Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Neither this RSLIC
Quota Share Reinsurance Agreement, nor any rights, interests or obligations
hereunder, may be directly or indirectly assigned, delegated, sublicensed or
transferred by any party to this RSLIC Quota Share Reinsurance Agreement, in
whole or in part, to any other person (including any bankruptcy trustee) by
operation of law or otherwise, whether voluntarily or involuntarily, without the
prior written consent of the parties hereto.

                  Section 14.9 Specific Performance. The parties recognize and
agree that if for any reason any of the provisions of this RSLIC Quota Share
Reinsurance Agreement are not performed in accordance with their specific terms
or are otherwise breached, immediate and irreparable harm or injury would be
caused for which money

                                       20

<PAGE>

damages would not be an adequate remedy. Accordingly, each party agrees that, in
addition to any other available remedies, each other party shall be entitled to
an injunction restraining any violation or threatened violation of any of the
provisions of this RSLIC Quota Share Reinsurance Agreement without the necessity
of posting a bond or other form of security pending the outcome of any
arbitration. In the event that any action should be brought in equity to enforce
any of the provisions of this RSLIC Quota Share Reinsurance Agreement, no party
will allege, and each party hereby waives the defense, that there is an adequate
remedy at law.

                  Section 14.10 Descriptive Headings. The descriptive article
and section headings herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this RSLIC Quota Share Reinsurance Agreement.

                  Section 14.11 Waiver of Doctrine of Utmost Good Faith.
Reinsurer absolutely and irrevocably waives resort to the doctrine of "utmost
good faith" or any similar doctrine in connection with the formation or
performance of this Agreement.

                  Section 14.12 Expenses. Unless otherwise specifically provided
herein, all costs and expenses incurred in connection with this RSLIC Quota
Share Reinsurance Agreement shall be paid by the party incurring such cost or
expense.

                  Section 14.13 Survival. The provisions of Articles XI, XIII
and XIV hereof shall survive the termination of this RSLIC Quota Share
Reinsurance Agreement.

                  Section 14.14 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
facsimile (which is confirmed), by courier (delivery of which is confirmed), or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties to this RSLIC Quota Share Reinsurance Agreement as
follows:

                  If to Cedent:

                           Laura S. Lawrence, Esq.
                           General Counsel
                           Royal Indemnity Company
                           9300 Arrowpoint Blvd.
                           Charlotte, NC  28273
                           Telephone No.: (704) 522-2851
                           Facsimile No.: (704) 522-2313

                  With a copy to (which shall not constitute notice to Cedent
for purposes of this Section 14.14):

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<PAGE>

                           Robert J. Sullivan, Esq.
                           Skadden, Arps, Slate, Meagher & Flom LLP
                           Four Times Square
                           New York, New York  10036
                           Telephone No.: 212-735-2930
                           Facsimile No.: 212-735-2000

                  If to Reinsurer:

                           Underwriters Reinsurance Company
                           Mr. David E. Leonard
                           Executive Vice President
                           c/o Royal Specialty Underwriting, Inc.
                           945 East Paces Ferry Road
                           Atlanta, GA  30326
                           Telephone No.: (404) 231-2366
                           Facsimile No.: (404) 231-3755

                  With copies to (which shall not constitute notice to Reinsurer
for purposes of this Section 14.14):

                           Robert M. Hart, Esq.
                           General Counsel
                           Alleghany Corporation
                           375 Park Avenue
                           Suite 3201
                           New York, New York 10152
                           Telephone No.: (212) 752-1356
                           Facsimile No.: (212) 759-8149

                           and

                           Aileen C. Meehan, Esq.
                           William W. Rosenblatt, Esq.
                           Dewey Ballantine LLP
                           1301 Avenue of the Americas
                           New York, New York 10019
                           Telephone No.: (212) 259-8000
                           Facsimile No.: (212) 259-6333

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. In
no event shall the provision of notice pursuant to this Section 14.14 constitute
notice for service of any writ, process or summons in any suit, action or other
proceeding.

                  Section 14.15 Interpretation.

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                  (a)      When a reference is made in this RSLIC Quota Share
Reinsurance Agreement to a Section or Article, such reference shall be to a
section or article of this RSLIC Quota Share Reinsurance Agreement unless
otherwise clearly indicated to the contrary. Whenever the words "include",
"includes" or "including" are used in this RSLIC Quota Share Reinsurance
Agreement, they shall be deemed to be followed by the words "without
limitation." The words "hereof," "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this RSLIC Quota
Share Reinsurance Agreement as a whole and not to any particular provision of
this RSLIC Quota Share Reinsurance Agreement. The meaning assigned to each term
used in this RSLIC Quota Share Reinsurance Agreement shall be equally applicable
to both the singular and the plural forms of such term, and words denoting any
gender shall include all genders. Where a word or phrase is defined herein, each
of its other grammatical forms shall have a corresponding meaning.

                  (b)      The parties have participated jointly in the
negotiation and drafting of this RSLIC Quota Share Reinsurance Agreement;
consequently, in the event an ambiguity or question of intent or interpretation
arises, this RSLIC Quota Share Reinsurance Agreement shall be construed as if
drafted jointly by the parties thereto, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this RSLIC Quota Share Reinsurance Agreement.

                  Section 14.16 Construction. This RSLIC Quota Share Reinsurance
Agreement is the result of arms-length negotiations between the parties hereto
and has been prepared jointly by the parties. In applying and interpreting the
provisions of this RSLIC Quota Share Reinsurance Agreement, there shall be no
presumptions that this RSLIC Quota Share Reinsurance Agreement was prepared by
any one party or that this RSLIC Quota Share Reinsurance Agreement shall be
construed in favor of or against any one party.

                  Section 14.17 Territory. This RSLIC Quota Share Reinsurance
Agreement applies only to losses arising out of Reinsured Contracts written in
the United States of America, its territories and possessions.

                  Section 14.18 Confidentiality. Each party hereto will hold,
and will use its reasonable best efforts to cause its Affiliates, and their
respective representatives to hold, in strict confidence from any Person (other
than any such Affiliates or representatives), except with the prior written
consent of the other party or unless (i) compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of governmental or regulatory authorities) or by other
requirements of Applicable Law or (ii) disclosed in an action or proceeding
brought by a party hereto in pursuit of its rights or in the exercise of its
remedies hereunder, this RSLIC Quota Share Reinsurance Agreement, the terms and
conditions hereof, and all documents and information concerning the other party
or any of its Affiliates furnished to it by the other party or such other
party's representatives in connection with the transactions contemplated hereby,
except to the extent that such documents or information can be shown to have
been (a) previously known by the party receiving such

                                       23

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documents or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential.

                                       24

<PAGE>
                  IN WITNESS WHEREOF, Cedent and Reinsurer have caused their
names to be subscribed by their respective authorized officers.

                                    ROYAL SURPLUS LINES INSURANCE COMPANY

                                    By: /s/ Stephen M. Mulready
                                        ----------------------------
                                         Name:  Stephen M. Mulready
                                         Title: President and Chief
                                                Executive Officer

                                    UNDERWRITERS REINSURANCE COMPANY

                                    By: /s/ James P. Slattery
                                        ----------------------------
                                         Name:  James P. Slattery
                                         Title: President