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                                                                   EXHIBIT 10.23
                     FIRST AMENDMENT TO EMPLOYMENT AGREEMENT


     THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is entered
into as of the 18th day of March, 1999, by and between Peter W. Nauert
("Nauert") and Ceres Group, Inc., a Delaware corporation, as successor to
Central Reserve Life Corporation, an Ohio corporation (the "Company") and amends
the Employment Agreement entered into by such parties dated June 30, 1998 (the
"Agreement").

     WHEREAS, Nauert and the Company desire to amend and restate certain
provisions of the Agreement to include certain performance-based compensation
provisions and to provide for other compensation related terms.

     NOW THEREFORE, in consideration of the covenants set forth herein, the
parties hereto agree as follows:

     1. Restatement of Section 2.

     Section 2 of the Agreement shall be deleted in whole and shall be replaced
and superseded by the following new Section 2:

     2. Compensation.

     (a) Stock Award. As an inducement for Nauert to remain employed by the
Company through the third anniversary of the Commencement Date, the Company
shall pay Nauert a stock award (the "Stock Award") payable in shares of common
stock of the Company (the "Common Stock") in each of 1999, 2000 and 2001,
together with a cash payment equal to the federal, state and local taxes (the
"Tax Payment") payable by Nauert with respect to the Stock Award; provided,
however, in no event shall a Tax Payment with respect to the taxes for any year
exceed 50% of the "Fair Market Value" of the Stock Award received by Nauert in
such year as determined under Section 2(h) of this Agreement. The amount and
payment of the Stock Award shall be as follows: (i) on July 1, 1999, Nauert
shall receive 166,667 shares of Common Stock, and (ii) on the 1st day after the
close of each three-month period thereafter, the first of which such periods
shall commence on July 1, 1999 and end on September 30, 1999, Nauert shall
receive a number of shares of Common Stock equal to $250,000 divided by the
average closing price of the Common Stock for such three-month period. The
three-month periods thereafter shall commence on the first day of January,
April, July and October of the following year(s) with the last three-month
period ending on June 30, 2001. The number of shares of Common Stock granted
pursuant to the Stock Award shall be adjusted to account for stock splits, stock
dividends or other reclassifications of the Common Stock following the
Commencement Date. Nauert shall receive the Tax Payment prior to April 15 of the
year following the year of payment of the


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Stock Award to which such Tax Payment relates. All Common Stock paid to Nauert
pursuant to this Paragraph 2(a) shall be fully vested immediately upon issuance;
provided, however, that Nauert shall forfeit all rights to any unpaid Stock
Award and the Tax Payment related thereto if his employment with the Company is
terminated prior to June 30, 2001, for any reason other than a Severenceable
Event (as hereinafter defined). A "Severenceable Event" shall mean any of the
following: (i) termination by the Company for any reason other than for Cause,
(ii) termination upon a Change of Control, (iii) termination by Nauert for Good
Reason, or (iv) termination due to the death or total or partial disability of
Nauert. All stock certificates issued to Nauert in 1999, 2000, and 2001 pursuant
to this Section 2(a), shall, if deemed necessary by the Company, contain the
following legends and any others deemed reasonably necessary by the Company:

                                     NOTICE

          THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE SUBJECT TO
          TRANSFER RESTRICTIONS, VOTING LIMITATIONS, AND OTHER TERMS AND
          CONDITIONS CONTAINED IN A VOTING AGREEMENT DATED JULY 1, 1998, BY AND
          AMONG THE COMPANY AND CERTAIN OF ITS STOCKHOLDERS, A COPY OF WHICH IS
          ON FILE WITH THE SECRETARY OF THE COMPANY.

          THIS SECURITY IS SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS SET FORTH
          IN THE STOCKHOLDERS AGREEMENT DATED AS OF JULY 1, 1998, A COPY OF
          WHICH MAY OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE
          OFFICES.

          THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
          UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
          OR UNDER THE SECURITIES LAWS OF ANY STATE. THE SHARES EVIDENCED BY
          THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
          RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
          THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT
          TO REGISTRATION OR EXEMPTION THEREFROM. THE COMPANY MAY REQUIRE AN
          OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY
          TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE
          WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.


               (b) Stock Options.

               (i) As an inducement to Nauert to enter into this Agreement, the
          Company will grant to Nauert on the closing date of the Amended and
          Restated Stock Purchase, dated as of March 30, 1998, by and among
          Insurance Partners, L.P., Insurance Partners Offshore (Bermuda), L.P.,
          Strategic Acquisition Partners, LLC and the Company (the "Stock
          Purchase Closing Date"), options to purchase an


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          aggregate of 500,000 shares of Common Stock (the "Options"). The
          exercise price of the Options shall be as follows:

<TABLE>
<CAPTION>
               Number of Options                  Exercise Price
               -----------------                  --------------
<S>                                                <C>
                  100,000                            $  6.50
                  100,000                            $  7.50
                  100,000                            $  8.50
                  100,000                            $  9.50
                  100,000                            $ 10.50
</TABLE>

               (ii) Thirty percent (30%) of the Options will vest immediately
          upon issuance. The remainder of the Options shall vest as follows: (i)
          twenty percent (20%) shall vest on the first anniversary of the
          Commencement Date, (ii) twenty percent (20%) shall vest on the second
          anniversary of the Commencement Date, and (iii) thirty percent (30%)
          shall vest on the third anniversary of the Commencement Date. The
          vesting of all Options shall occur pro rata among the various exercise
          price levels. All unvested Options shall vest immediately upon the
          occurrence of a Severenceable Event. Nauert shall forfeit all unvested
          Options if his employment with the Company is terminated for any
          reason other than a Severenceable Event. The Options shall have the
          same anti-dilution protections as contained in the warrants issued to
          Nauert in connection with his equity investment in the Company.

               (iii) This Section 2(b) of the Agreement constitutes a plan (the
          "Plan") under which the Options are granted for purposes of Section
          162(m) of the Internal Revenue Code. At the close of the market on the
          date immediately preceding the Stock Purchase Closing Date, the fair
          market value of one (1) share of Common Stock was less than $6.50. The
          maximum number of shares of Common Stock subject to this Plan on which
          options to purchase may be granted is 500,000, all of which are
          granted to Nauert in this Section 2(b).

          (c) Incentive Pay. Nauert shall receive, with respect to each year of
     employment, an amount equal to five percent (5%) of the amount by which the
     Company's pretax income for such year exceeds the base case for each year
     of employment as set forth on Exhibit A to the Agreement.

          (d) Other Compensation. Nauert may also receive such cash bonuses or
     such other incentive compensation as the Board of Directors of the Company
     may approve from time to time in its sole discretion.

          (e) Assignment by Nauert. Notwithstanding anything herein to the
     contrary, Nauert may assign up to 25% of his right to receive payments
     pursuant to this


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     Paragraph 2 to a third party; provided, however, that such assignment does
     not violate any restrictions on transferability and assignability of Common
     Stock awarded under Section 2(a) of this Agreement.

          (f) Performance Goal.Nauert's right to and receipt of any Tax Payment
     as provided under Section 2(a) of this Agreement is subject to the
     satisfaction of the Performance Goal as set forth on Exhibit B of the
     Agreement.

          (g) Certification of Performance. Prior to Nauert's receipt of any Tax
     Payment or incentive pay under Section 2(c) of this Agreement, the Board of
     Directors of the Company or the Compensation Committee thereof shall
     certify whether or not the Performance Goal was satisfied.

          (h) Fair Market Value of Stock Award. For purposes of Section 162 of
     the Internal Revenue Code, the "Fair Market Value" of a Stock Award shall
     be equal to the product of (i) the number of shares of Common Stock,
     including fractional shares, paid to Nauert multiplied by (ii) the closing
     price of one (1) share of Common Stock on the date of payment.

     2. Deletion of Section of 9. Section 9 of the Agreement shall be deleted in
whole.

     3. Correction to Section 10(f). References in Section 10(f) to "Section 9"
are deleted and substituted with "Section 10."

     4. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Illinois, without regard to its
principles of conflicts of law.

     5. Severability. If any provision of this Amendment is held for any reason
to be invalid, it will not invalidate any other provisions of this Amendment
which are in themselves valid, nor will it invalidate the provisions of any
other agreement between the parties hereto. Rather, such invalid provision shall
be construed so as to give it the maximum effect allowed by applicable law.

     6. Headings. Paragraph headings hereunder are for convenience only and
shall not affect the meaning or interpretation of the provisions of this
Amendment.

     7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original without production of
the others.


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     8. Full Force and Effect. Except as expressly stated in this Amendment, all
terms and provisions of the Agreement remain in full force and effect.

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.

                                     CERES GROUP, INC.


                                     By: /s/ Charles E. Miller, Jr.
                                        ---------------------------
                                     Its: Chief Financial Officer
                                         --------------------------

                                     /s/ Peter W. Nauert
                                     ------------------------------
                                         Peter W. Nauert




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                                    EXHIBIT B


     5% year over year increase in the direct premium revenue of Central Reserve
Life Insurance Company, an Ohio corporation, based on 1998 revenues of
$264,868,186, as follows:

<TABLE>
<S>                           <C>
     1999                       $278,112,000

     2000                       $292,018,000

     2001                       $306,619,000
</TABLE>