<PAGE>

                                                                    Exhibit 10.3

P06-0091

                       INTERESTS AND LIABILITIES AGREEMENT

                                     between

                         PHILADELPHIA INSURANCE COMPANY
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                                       of
                            Bala Cynwyd, Pennsylvania
                       (hereinafter called the "COMPANY")

                                       and

                        EMPLOYERS REINSURANCE CORPORATION
                                       of
                              Overland Park, Kansas
                  (hereinafter called "SUBSCRIBING REINSURER")

It is hereby agreed that the SUBSCRIBING REINSURER shall have a 20%
participation in the interests and liabilities of the Reinsurer as set forth in
the Casualty Excess of Loss Reinsurance Contract of January 1, 2006 (hereinafter
"Reinsurance Contract"), a copy of which is attached hereto.

Such participation shall be several and not joint with the participation of
other subscribing reinsurers and the SUBSCRIBING REINSURER shall under no
circumstances participate in the interests and liabilities, if any, of the other
reinsurers in said instrument.

The COMPANY shall pay to the SUBSCRIBING REINSURER 20% of the reinsurance
premiums due or which may become due the Reinsurer under the Reinsurance
Contract.

This agreement shall become effective January 1, 2006 and shall terminate
January 1, 2007, unless otherwise terminated by mutual consent. Termination
shall be in accordance with the termination provisions of the Reinsurance
Contract.

In all other respects not inconsistent herewith, said agreement shall remain
unchanged.

IN WITNESS WHEREOF, the parties hereto have caused this amendment to be executed


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P06-0091

in duplicate.

PHILADELPHIA INSURANCE COMPANY          EMPLOYERS REINSURANCE CORPORATION
PHILADELPHIA INDEMNITY INSURANCE
COMPANY


/s/ Christopher J. Maguire              /s/ William J. O'Donnell III
-------------------------------------   ----------------------------------------
Christopher J. Maguire                  William J. O'Donnell III
Title: Executive Vice President &       Title: Senior Vice President Officer
       Chief Underwriting Officer


/s/ William McKenna
-------------------------------------   ----------------------------------------
Title: Assistant. Vice President -      Title:
       Reinsurance Officer                     ---------------------------------

Date: June 15, 2006                     Date: June 9, 2006


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<PAGE>

P06-0108

                         PHILADELPHIA INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
        AND ANY ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY

                             CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT

<PAGE>

P06-0108

                        CASUALTY EXCESS OF LOSS AGREEMENT

                                 JANUARY 1, 2006

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                     PAGE
-------                                                                     ----
<S>            <C>                                                          <C>
I              Business Covered. ........................................     1
II             Term. ....................................................     2
III            Special Termination.......................................     2
IV             Definitions...............................................     3
                  Ultimate Net Loss......................................     3
                  Policy or Policies.....................................     4
                  Gross Net Earned Premium Income........................     4
                  Extended Reporting Period Coverage.....................     4
V              Loss In Excess of Policy Limits...........................     5
VI             Extra Contractual Obligations.............................     5
VII            Territory.................................................     6
VIII           Exclusion.................................................     6
IX             Additional Provisions.....................................     8
X              Amount of Coverage and Retention..........................     8
XI             Premium...................................................     9
XII            Notice of Loss and Settlements............................     9
XIII           Agency Agreement (Wage1)..................................     9
XIV            Errors and Omissions......................................    10
XV             Offset....................................................    10
XVI            Currency (BRMA12A)........................................    10
XVII           Taxes (BRMA 50C)..........................................    10
XVIII          Federal Excise Tax (BRMA 17A).............................    11
XIX            Unauthorized Reinsurance (BRMA 55A).......................    11
XX             Net Retained Lines........................................    13
XXI            Third Party Rights (BRMA 52C).............................    13
XXII           Severability..............................................    13
XXIII          Governing Law (BRMA 71A)..................................    13
XXIV           Access to Records.........................................    14
XXV            Insolvency................................................    14
XXVI           Arbitration...............................................    15
XXVII          Confidentiality...........................................    16
XXVIII         Service of Suit (WSOS4)...................................    16
XXIX           Terrorism Risk Insurance Act of 2002......................    17
</TABLE>

RP

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P06-0108

<TABLE>
<S>            <C>                                                          <C>
XXX            Mode of Execution (WMOE1).................................    18
XXXI           Excluded Risks Inadvertently Bound........................    18
Attachments:
               Schedule A................................................    20
               Nuclear Incident Exclusion Clause - Liability -
                  Reinsurance - U.S.A....................................    21
               Nuclear Incident Exclusion Clause - Liability -
                  Reinsurance - Canada...................................    23
               Terrorism Exclusion Endorsement (Reinsurance).............    25
               War Exclusion (Wexc212)...................................    27
</TABLE>

RP

<PAGE>

P06-0108

                             CASUALTY EXCESS OF LOSS
                              REINSURANCE CONTRACT
                                (the "Contract")

                                     between

                         PHILADELPHIA INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
                    PHILADELPHIA INDEMNITY INSURANCE COMPANY
                            BALA CYNWYD, PENNSYLVANIA
        AND ANY ADDITIONAL COMPANY ESTABLISHED OR ACQUIRED BY THE COMPANY
                                 (the "Company")

                                       and

                     THE SUBSCRIBING REINSURER EXECUTING THE
                       INTERESTS AND LIABILITIES AGREEMENT
                            ATTACHED TO THIS CONTRACT
                                (the "Reinsurer")

                                    ARTICLE I

BUSINESS COVERED

A.   This Contract is to indemnify the Company in respect of the net excess
     liability as a result of any loss or losses, which may occur during the
     term of this Contract under any Policies in force at the effective time and
     date hereof or issued or renewed after that time and date by or on behalf
     of the Company and classified by the Company as Casualty, Fidelity,
     Professional Liability and/or Fiduciary Liability. It is understood and
     agreed, as respects Policies on a claims-made or losses-discovered basis,
     any Extended Reporting Period Coverage provided thereunder shall be
     reinsured hereunder, provided the date of loss is during the term of this
     Contract.

B.   With respect to business classified by the Company as Professional
     Liability and written out of the Company's Specialty Lines Division, the
     following product lines of business, as defined by the Company, shall be
     covered under the scope of this Contract:

          Directors and Officers Liability for For-Profit and Not-For-Profit
          risks
          Miscellaneous Errors and Omissions Liability
          Lawyers Professional Liability
          Accountants Professional Liability


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          Dentists Professional Liability
          Insurance Agents Professional Liability
          Miscellaneous Medical Professional Liability
          Employment Practices Liability
          Educators Legal Liability
          Crime/Fidelity

C.   Furthermore, it is agreed that the Company may add other Professional
     Liability product lines of business to the scope of this Contract with
     prior approval of the Reinsurer.

                                   ARTICLE II

TERM

A.   The term of this Contract shall be from 12:01 a.m., Eastern Standard Time,
     January 1, 2006, to 12:01 a.m., Eastern Standard Time, January 1, 2007.

B.   The Reinsurer shall cease to be liable for Loss Occurrences after the time
     and date of expiration of this Contract but shall remain liable for
     Ultimate Net Loss incurred by the Company with respect to Loss Occurrences
     under the Company's Policies with the date of loss prior to the termination
     date of this Contract.

C.   The Company shall have the option to elect run-off coverage for Policies in
     force at the expiration of this Contract. If the Company chooses to run off
     liability, the Company will notify the Reinsurer prior to January 31, 2007.
     If run-off of liability is chosen, the Reinsurer shall continue to be
     liable for Ultimate Net Loss incurred by the Company under all Policies in
     force at the time and date of expiration until each Policy's next
     anniversary, renewal or expiration, but in no event shall the Reinsurer's
     liability continue for more than 12 months after the expiration date plus
     odd time, not to exceed a total of 18 months. The premium for the run-off
     coverage shall be 10% applied to the unearned subject premium for the
     Policies in force as of December 31, 2006.

                                   ARTICLE III

SPECIAL TERMINATION

A.   The Company may terminate this Contract at any time by the giving of 10
     days' notice in writing to the Reinsurer upon the happening of any one of
     the following circumstances:

     1.   A State Insurance Department or other legal authority orders the
          Reinsurer to cease writing business; or

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


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     3.   The Reinsurer's policyholders' surplus has been reduced by whichever
          is greater, either 25% of the amount of surplus at the inception of
          this Contract or 25% of the amount at the latest anniversary, or has
          lost any part of, or has reduced its paid in capital; or

     4.   The Reinsurer has become merged with, acquired or controlled by any
          company, corporation or individual(s) not controlling the party's
          operations at the inception of this Contract; or

     5.   The Reinsurer has reinsured its entire liability under this Contract
          without the terminating party's prior written consent; or

     6.   The Reinsurer ceases writing new or renewal business; or

     7.   The Reinsurer has been assigned an A.M. Best's rating of less than
          "A-" or a Standard & Poor's Insurer Financial Strength Rating of less
          than "A-".

B.   Notwithstanding any other termination provision of this Contract, if this
     Contract is terminated under the provisions of this Article, the Company
     shall have the right to terminate liability for losses occurring subsequent
     to termination of this Contract. In such event, the Reinsurer shall return
     the unearned portion, if any, less any commission allowed thereon, of
     premiums paid hereunder and the minimum premium provisions, if any, shall
     be waived.

C.   Additionally, the Company, at its sole discretion, may elect to commute the
     Reinsurer's liabilities for loss and loss adjustment expenses, whether
     known and unknown, on Policies covered under this Contract. In the event
     the Company and the Reinsurer cannot agree on the capitalized value of the
     Reinsurer's liabilities on the Policies covered under this Contract, the
     two parties shall mutually appoint an actuary to resolve the matter of
     valuation. If the two parties cannot agree on the appointment of an
     actuary, a selection process based on the ARBITRATION ARTICLE will be
     employed. Payment by the Reinsurer of the amount ascertained will
     constitute full and final release of the Reinsurer's liabilities hereunder.

                                   ARTICLE IV

DEFINITIONS

A.   Ultimate Net Loss

     "Ultimate Net Loss," as used in this Contract, shall mean the actual loss
     paid by the Company or for which the Company becomes liable to pay, such
     loss shall include 100% of any Loss in Excess of Policy Limits as defined
     in the LOSS IN EXCESS OF POLICY LIMITS ARTICLE, 100% of any Extra
     Contractual Obligations as defined in the EXTRA CONTRACTUAL OBLIGATIONS
     ARTICLE, ex-gratia payments subject to prior approval, expenses of
     litigation and interest, claim-specific declaratory judgment expenses, and
     all other loss expense of the Company including 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


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<PAGE>

P06-0108

     all recoveries, including recoveries under all reinsurances, which inure to
     the benefit of this Contract (whether recovered or not), shall be first
     deducted from such loss to arrive at the amount of liability attaching
     hereunder.

     The phrase "ex-gratia payments" shall mean payments made as an
     accommodation by the Company in settlement of a claim for which no coverage
     exists under the Policy reinsured hereunder, subject to the prior approval
     of the Reinsurer.

     The phrase "claim-specific declaratory judgment expenses," as used in this
     Contract will mean all expenses incurred by the Company in connection with
     declaratory judgment actions brought to determine the Company's defense
     and/or indemnification obligations that are allocable to specific Policies
     and claims subject to this Contract. Declaratory judgment expenses will be
     deemed to have been incurred by the Company on the date of the original
     loss (if any) giving rise to the declaratory judgment action.

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

     For purposes of this definition, the phrase "becomes liable to pay" shall
     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.

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

B.   Policy or Policies

     "Policy" or "Policies," as used in this Contract, shall mean any binder,
     policy, or contract of insurance or reinsurance issued, accepted or held
     covered provisionally or otherwise, including any extended reporting
     periods, by or on behalf of the Company.

C.   Gross Net Earned Premium Income

     "Gross Net Earned Premium Income," as used in this Contract, shall mean
     gross earned premium income during the term of this Contract on business
     the subject of this Contract less earned premium income paid for
     reinsurances, recoveries under which would inure to the benefit of this
     Contract.

D.   Extended Reporting Period Coverage

     "Extended Reporting Period Coverage" as used herein shall mean coverage for
     claims made after termination or expiration of the Company's Policy on
     losses that would have been covered under the terminated or expired Policy
     had the claims been made during the term of that Policy. All claims made
     against or reported to the Company during an extended reporting period
     shall be deemed to have been made against or reported to the Company on the
     last full day of the Policy period to which the extended reporting period
     applies. For purposes of this Contract, the date of loss for any claim
     coming within Extended Reporting Period Coverage, whether such coverage is
     automatically extended


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     under the Policy or whether a specific endorsement is issued, will be the
     termination or expiration date of the Policy.

                                    ARTICLE V

LOSS IN EXCESS OF POLICY LIMITS

A.   This Contract shall protect the Company, within the limits hereof, in
     connection with the Ultimate Net Loss in excess of the limit of its
     original Policy, such loss in excess of the limit having been incurred
     because of failure by it to settle within the Policy limit or by reason of
     alleged or actual negligence, criminal act or 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.

B.   For the purpose of this Article, the word "loss" shall mean any amounts for
     which the Company would have been contractually liable to pay had it not
     been for the limit of the original Policy. However, this Article shall not
     apply where the loss has been incurred due to fraud by 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 VI

EXTRA CONTRACTUAL OBLIGATIONS

A.   This Contract shall protect the Company within the limits hereof, where the
     Ultimate Net Loss includes any Extra Contractual Obligations. The term
     "Extra Contractual Obligations" is defined as those liabilities not covered
     under any other provision of this Contract and which arise from the
     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, criminal act or 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.

B.   The date on which any Extra Contractual Obligation is incurred by the
     Company shall be deemed, in all circumstances, to be the date of the
     original disaster and/or casualty.

C.   However, this Article shall not apply where the loss has been incurred due
     to fraud by 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.


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                                   ARTICLE VII

TERRITORY

This Contract shall cover wherever the Company's original Policies cover.

                                  ARTICLE VIII

EXCLUSIONS

This Contract does not cover and specifically excludes:

A.   Policies with per claim or per occurrence limits of $1,000,000 and less.

     When the Company writes a primary Policy and an umbrella Policy for the
     same Insured, and the sum of the per claim or per occurrence limits of the
     two Policies is greater than $1,000,000, this exclusion shall not apply to
     either Policy.

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

C.   Nuclear Incident pursuant to the "Nuclear Incident Exclusion Clause -
     Liability - Reinsurance - U.S.A." attached hereto.

D.   Nuclear Incident pursuant to the "Nuclear Incident Exclusion Clause -
     Liability - Reinsurance - Canada" attached hereto.

E.   Liability of the Company arising by contract, operation of law or otherwise
     from its participation or membership, whether voluntary or involuntary, in
     any insolvency fund. "Insolvency fund" includes any guarantee fund,
     insolvency 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 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.

F.   Financial Guarantee or Insolvency, when written as such.

     However, the liability of the Company under any bond covering losses due to
     negligence of any person or failure of any person to faithfully perform his
     duty or failure to account for and pay over money or other property in his
     custody shall not be considered Financial Guarantee or Insolvency.

     Notwithstanding the foregoing, no claim is to attach hereto in respect of
     any loss or losses arising as a result of:

     1.   The insolvency of any financial institution at which trust moneys are
          deposited or insolvency of any person, firm or company, or


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     2.   The fall in the market value of investments unless such loss is the
          direct result of a) a dishonest, fraudulent, criminal or negligent act
          on the part of the bonded person or b) a dishonest, fraudulent or
          criminal act on the part of any other person or persons or c) unless
          such loss is solely created by a physical damage loss to property
          other than where such physical damage loss could have been recovered
          from a third party but for the insolvency of such third party.

     The above shall not apply as respects claims made under Specialty Lines
     Division Policies issued by the Company.

G.   Pollution liability to the extent excluded in the Company's original
     Policies. However, this exclusion shall not apply:

     1.   When a judicial entity having legal jurisdiction invalidates the
          Company's Pollution exclusion, thereby obligating the Company for
          liability when such liability for Pollution was intended to be
          excluded by the Company's exclusion.

     2.   In respect of any Policy written in a state whose insurance regulatory
          authorities have prohibited the Company from including a Pollution
          liability exclusion in its Policies.

H.   Business classified by the Company as Primary Rental Liability and
     Supplemental Liability.

I.   Liability assumed by the Company under any form of treaty reinsurance;
     however, group intra-company reinsurance (if applicable), local agency
     reinsurance accepted in the normal course of business and/or Policies
     written by another carrier at the Company's request and reinsured 100% by
     the Company, as well as Policies written for the captive of the Company's
     insured, will not be excluded hereunder.

J.   Terrorism pursuant to the "Terrorism Exclusion Endorsement (Reinsurance)"
     attached hereto.

K.   Loss or liability excluded under the provisions of the "War Exclusion"
     attached hereto.

L.   Any losses arising out of the manufacturing of tobacco or tobacco products,
     when written as such.

M.   Any losses arising out of the manufacturing of latex gloves or latex
     products, when written as such.

N.   Business classified by the Company as Nursing Home General Liability or
     Umbrella Liability.

O.   Business classified by the Company as Public Directors and Officers
     Liability (portfolio currently in run-off)

P.   Business classified by the Company as Unsupported Umbrella or Program
     Umbrella Liability with effective dates of 1/1/2006 or later


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Should any judicial or regulatory entity having jurisdiction invalidate any
exclusion in the Company's Policy that is also the subject of one or more of the
exclusions herein(with exception to exclusions A, B, C, D, E, F, I, J and K as
set forth above), then a loss for which the Company is liable because of such
invalidation shall not be excluded hereunder.

                                   ARTICLE IX

ADDITIONAL PROVISIONS

A.   The Company will include, as part of their original Policies, a Mold
     exclusion for business classified as Architects and Engineers, Property
     Managers and Real Estate, as determined by the Company. However, this
     provision will not apply wherever the Company's exclusion has not been
     filed and approved.

B.   Business classified by the Company as Specialty Lines Excess shall be
     limited to a maximum of 1.0% of the total Gross Net Earned Premium Income
     subject to this Contract.

C.   Business classified by the Company as First Party Cyber-Liability, when
     written as such and in conjunction with Miscellaneous Professional
     Liability Policies, shall be subject to a sub-limit in the Company's
     original Policies of $1,000,000 or so deemed.

D.   The Company shall provide the Reinsurer quarterly price monitoring reports
     on all lines of business ceded to the treaty.

                                    ARTICLE X

AMOUNT OF COVERAGE AND RETENTION

A.   With respect to all business covered other than as in paragraph B below,
     the Reinsurer will be liable for $10,000,000 of Ultimate Net Loss in
     respect of each Loss Occurrence, each Insured, in excess of the Company's
     retention of $1,000,000 Ultimate Net Loss, each Loss Occurrence, each
     Insured.

B.   When the Company writes an umbrella Policy, other than umbrella business
     written through McGowan and Associates, Rocky River, Ohio, the Reinsurer
     will be liable for $9,000,000 of Ultimate Net Loss in respect of each Loss
     Occurrence, each Insured, in excess of the Company's retention of
     $2,000,000 Ultimate Net Loss, each Loss Occurrence, each Insured, where the
     Ultimate Net Loss is inclusive of any primary Policy written by the
     Company.

C.   The term "Loss Occurrence" and the term "Insured" as used herein shall have
     the same meaning as in the Company's Policies. However, in the event of any
     ambiguity or dispute relating to these terms, the Company shall be the sole
     judge of what constitutes one Loss Occurrence and one Insured.


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                                   ARTICLE XI

PREMIUM

A.   The premium to be paid by the Company to the Reinsurer for reinsurance
     provided by this Contract shall be calculated by applying the appropriate
     rate from the attached Schedule A to the Gross Net Earned Premium Income
     for the term of this Contract on all business the subject matter hereof,
     subject to a minimum premium of $53,240,000

B.   The Company shall pay to the Reinsurer an annual deposit premium of
     $66,550,000 payable in quarterly installments of $16,637,500 due April 1;
     July 1; and October 1, 2006; and January 1, 2007.

C.   Within 90 days following the expiration of this Contract, the Company shall
     render to the Reinsurer a statement of premium due in accordance with the
     first paragraph of this Article. An adjustment of premium shall thereupon
     be made in accordance with the statement submitted by the Company.

                                   ARTICLE XII

NOTICE OF LOSS AND LOSS SETTLEMENTS

A.   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 amount
     incurred is 50% or more of the Company's retention.

B.   The Reinsurer agrees to abide by the loss settlements of the Company
     provided that retroactive extension of Policy terms or coverages made
     voluntarily by the Company and not in response to court decisions (whether
     such court decision is against the Company or other companies affording the
     same or similar coverages) will not be covered under this Contract.

C.   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.

D.   The Reinsurer will pay its share of loss settlements within 15 days upon
     receipt and verification of proof of loss from the Company.

                                  ARTICLE XIII

AGENCY AGREEMENT (WAGE1)

If more than one reinsured company is named as a party to this Contract, the
first named company will be deemed the agent of the other reinsured companies
for purposes of sending or receiving notices required by the terms and
conditions of this Contract and for purposes of remitting or receiving any
monies due any party.


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                                   ARTICLE XIV

ERRORS AND OMISSIONS

Any inadvertent delay, omission or error shall 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.

                                   ARTICLE XV

OFFSET

The Company and the Reinsurer, each at its option, may offset any balance or
balances, whether on account of premiums, claims and losses, loss expenses or
salvages due from one party to the other under this Contract; provided, however,
that in the event of the insolvency of a party hereto, offsets shall only be
allowed in accordance with applicable statutes and regulations.

                                   ARTICLE XVI

CURRENCY (BRMA 12A)

A.   Whenever the word "Dollars" or the "$" sign appears in this Contract, they
     shall be construed to mean United States Dollars and all transactions under
     this Contract shall be in United States Dollars.

B.   Amounts paid or received by the Company in any other currency shall be
     converted to United States Dollars at the rate of exchange at the date such
     transaction is entered on the books of the Company.

                                  ARTICLE XVII

TAXES (BRMA 50C)

In consideration of the terms under which this Contract is issued, the Company
will not claim a deduction in respect of the premium hereon when making tax
returns, other than income or profits tax returns, to any state or territory of
the United States of America, the District of Columbia or Canada.

                                  ARTICLE XVIII

FEDERAL EXCISE TAX (BRMA 17A)

(Applicable to those Reinsurers, excepting Underwriters at Lloyd's London and
other Reinsurers exempt from Federal Excise Tax, who are domiciled outside the
United States of America.)

A.   The Reinsurer has agreed to allow, for the purpose of paying the Federal
     Excise Tax, the applicable percentage of the premium payable hereon (as
     imposed under Section 4371 of the Internal Revenue Code) to the extent such
     premium is subject to the Federal Excise Tax.


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B.   In the event of any return of premium becoming due hereunder, the Reinsurer
     will deduct the applicable percentage from the return premium payable
     hereon, and the Company or its agent should take steps to recover the tax
     from the United States Government.

                                   ARTICLE XIX

UNAUTHORIZED REINSURANCE (BRMA 55A)

(Applies only to a Reinsurer who does not qualify for full credit with any
insurance regulatory authority having jurisdiction over the Company's reserves.)

A.   As regards Policies or bonds issued by the Company coming within the scope
     of this Contract, the Company agrees that when it shall file with the
     insurance regulatory authority or set up on its books reserves for losses
     covered hereunder which it shall be required by law to set up, it will
     forward to the Reinsurer a statement showing the proportion of such
     reserves which is applicable to the Reinsurer. The Reinsurer hereby agrees
     to fund such reserves in respect of known outstanding losses that have been
     reported to the Reinsurer and allocated loss adjustment expense relating
     thereto, losses and allocated loss adjustment expense paid by the Company
     but not recovered from the Reinsurer, plus reserves for losses incurred but
     not reported, as shown in the statement prepared by the Company
     (hereinafter referred to as "Reinsurer's Obligations") by funds withheld,
     cash advances or a Letter of Credit. The Reinsurer shall have the option of
     determining the method of funding provided it is acceptable to the
     insurance regulatory authorities having jurisdiction over the Company's
     reserves.

B.   When funding by a Letter of Credit, the Reinsurer agrees to apply for and
     secure timely delivery to the Company of a clean, irrevocable and
     unconditional Letter of Credit issued by a bank and containing provisions
     acceptable to the insurance regulatory authorities having jurisdiction over
     the Company's reserves in an amount equal to the Reinsurer's proportion of
     said reserves. Such Letter of Credit 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 30 days (60
     days where required by insurance regulatory authorities) prior to any
     expiration date the issuing bank shall notify the Company by certified or
     registered mail that the issuing bank elects not to consider the Letter of
     Credit extended for any additional period.

C.   The Reinsurer and Company agree that the Letters of Credit provided by the
     Reinsurer pursuant to the provisions of this Contract may be drawn upon at
     any time, notwithstanding any other provision of this Contract, and be
     utilized by the Company or any successor, by operation of law, of the
     Company including, without limitation, any liquidator, rehabilitator,
     receiver or conservator of the Company for the following purposes, unless
     otherwise provided for in a separate Trust Agreement:

     1.   to reimburse the Company for the Reinsurer's Obligations, the payment
          of which is due under the terms of this Contract and which has not
          been otherwise paid;

     2.   to make refund of any sum which is in excess of the actual amount
          required to pay the Reinsurer's Obligations under this Contract;


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     3.   to fund an account with the Company for the Reinsurer's Obligations.
          Such cash deposit shall be held in an interest bearing account
          separate from the Company's other assets, and interest thereon not in
          excess of the prime rate shall accrue to the benefit of the Reinsurer;

     4.   to pay the Reinsurer's share of any other amounts the Company claims
          are due under this Contract.

     In the event the amount drawn by the Company on any Letter of Credit is in
     excess of the actual amount required for 1 or 3 or, in the case of 4, the
     actual amount determined to be due, the Company shall promptly return to
     the Reinsurer the excess amount so drawn. All of the foregoing shall be
     applied without diminution because of insolvency on the part of the Company
     or the Reinsurer.

D.   The issuing bank 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.

E.   At annual intervals or more frequently as agreed, but never more frequently
     than quarterly, the Company shall prepare a specific statement of the
     Reinsurer's Obligations, for the sole purpose of amending the Letter of
     Credit, in the following manner:

     1.   If the statement shows that the Reinsurer's Obligations exceed the
          balance of credit as of the statement date, the Reinsurer shall,
          within 30 days after receipt of notice of such excess, secure delivery
          to the Company of an amendment to the Letter of Credit increasing the
          amount of credit by the amount of such difference.

     2.   If, however, the statement shows that the Reinsurer's Obligations are
          less than the balance of credit as of the statement date, the Company
          shall, within 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.

                                   ARTICLE XX

NET RETAINED LINES

A.   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 shall be
     included.

B.   The Company reserves the right to maintain reinsurance agreement(s) in
     respect of its net retention under this Contract, and recoveries under said
     reinsurance(s) shall be entirely disregarded in determining the Ultimate
     Net Loss hereunder.


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C.   The amount of the Reinsurer's liability hereunder in respect of any loss or
     losses shall not be increased 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.

                                   ARTICLE XXI

THIRD PARTY RIGHTS (BRMA 52C)

This Contract is solely between the Company and the Reinsurer, and in no
instance shall any other party have any rights under this Contract except as
expressly provided otherwise in the INSOLVENCY ARTICLE.

                                  ARTICLE XXII

SEVERABILITY

If any provision of this Contract should be invalid under applicable laws, the
latter shall control but only to the extent of the conflict without affecting
the remaining provisions of this Contract.

                                  ARTICLE XXIII

GOVERNING LAW (BRMA 71A)

This Contract shall be governed as to performance, administration and
interpretation by the laws of the State of Pennsylvania, exclusive of the rules
with respect to conflicts of law, except as to rules with respect to credit for
reinsurance, in which case the applicable rules of all states shall apply.

                                  ARTICLE XXIV

ACCESS TO RECORDS

The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect through its designated
representatives, all books, records and papers of the Company in connection with
any reinsurance hereunder or claims in connection herewith. Rights of access to
records shall survive the termination or expiration of this Contract.

                                   ARTICLE XXV

INSOLVENCY

A.   In the event of the insolvency of the Company, this reinsurance shall be
     payable directly to the Company or to its liquidator, receiver, conservator
     or statutory successor on the basis of the liability of the Company without
     diminution because of the insolvency of the Company or because the
     liquidator, receiver, conservator or statutory successor of the Company has
     failed to pay all or a portion of any claim. It is agreed, however, that
     the liquidator, receiver, conservator or statutory successor of the Company
     shall give written notice to the Reinsurer of the pendency of a claim
     against the Company indicating the Policy or bond


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     reinsured, which claim would involve a possible liability on the part of
     the Reinsurer, within a reasonable time after such claim is filed in the
     conservation or liquidation proceeding or in the receivership and that,
     during the pendency of such claim, the 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 that it may deem available to the
     Company or its liquidator, receiver, conservator or statutory successor.
     The expense thus incurred by the Reinsurer shall be chargeable, subject to
     the approval of the court, against the Company as part of the expense of
     conservation or liquidation to the extent of a pro rata share of the
     benefit, which may accrue to the Company solely as a result of the defense
     undertaken by the Reinsurer.

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

C.   In the event of the insolvency of the Company, the reinsurance under this
     Contract shall be payable directly by the Reinsurer to the Company or to
     its liquidator, receiver, conservator or statutory successor, except as
     provided by Section 4118(a) of the New York Insurance Law or except (a)
     where this Contract specifically provides another payee of such reinsurance
     in the event of the insolvency of the Company or (b) where 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.

D.   Should the Company go into liquidation or should a receiver be appointed,
     all amounts due either Company or Reinsurer under this or any other
     agreement, whether by reason of premium, losses or otherwise under this
     Contract, shall be subject to the right of offset at any time and from time
     to time and, upon the exercise of the same, only the net balance shall be
     due.

E.   In the event of the insolvency of any company or companies included in the
     designation of "Company," this clause will apply only to the insolvent
     company or companies.

                                  ARTICLE XXVI

ARBITRATION

A.   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 Bala Cynwyd, Pennsylvania.

B.   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.

C.   The members of the board of arbitration shall be active or former,
     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


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     the respondent fails to appoint its arbitrator within 4 weeks after being
     requested to do so by the claimant, the latter shall also appoint the
     second arbitrator.

D.   If the two arbitrators are unable to agree upon the umpire within 30 days
     of their appointment, the umpire shall be selected by a judge of any court
     of competent jurisdiction.

E.   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.

F.   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

G.   If more than one reinsurer is involved in the same dispute, all such
     reinsurers shall constitute and act as one party for purposes of this
     clause, and communications shall be made by the Company to each of the
     reinsurers constituting the one party provided, however, that nothing
     therein shall impair the rights of such reinsurers to assert several rather
     than joint defenses or claims, nor be construed as changing the liability
     of the reinsurers under the terms of this Contract from several to joint.

H.   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 XXVII

CONFIDENTIALITY

The Reinsurer, except with the express prior written consent of the Company,
shall not directly or indirectly communicate, disclose or divulge to any third
party, any knowledge or information that may be acquired either directly or
indirectly as a result of the inspection of the Company's books, records and
papers. The restrictions, as outlined in this Article, shall not apply to
communication or disclosures that the Reinsurer is required to make to its
statutory auditors, parent company, retrocessionaires, potential
retrocessionaires, legal counsel, arbitrators involved in any arbitration
procedures under this Contract or disclosures required upon subpoena or other
duly-issued order of a court or other governmental agency or regulatory
authority.

                                 ARTICLE XXVIII

SERVICE OF SUIT (WSOS4)

(This Article is applicable if the subscribing 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


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authorization is required by insurance regulatory authorities. This Article is
not intended to conflict with or override the obligation of the parties to
arbitrate their disputes in accordance with the ARBITRATION ARTICLE.)

A.   In the event of the failure of the subscribing reinsurer to pay any amount
     claimed to be due hereunder, the subscribing reinsurer, at the request of
     the Company, shall 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 subscribing
     reinsurer's rights 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. The subscribing reinsurer, once the appropriate court is selected,
     whether such court is the one originally chosen by the Company and accepted
     by subscribing reinsurer or is determined by removal, transfer, or
     otherwise, as provided for above, shall comply with all requirements
     necessary to give said court jurisdiction and, in any suit instituted
     against it upon this Contract, shall abide by the final decision of such
     court or of any appellate court in the event of an appeal.

B.   Service of process in such suit may be made upon the agent for the service
     of process ("agent") named below, depending on the jurisdiction where the
     Company chooses to bring suit:

     1.   If the suit is brought in the State of California, the law firm of
          Mendes and Mount, 725 South Figueroa, 19th Floor, Los Angeles,
          California 90017 shall be authorized and directed to accept service of
          process on behalf of the subscribing reinsurer in any such suit;

     2.   If the suit is brought in the State of New York, the law firm of
          Mendes and Mount, 750 Seventh Avenue, New York, New York 10019 shall
          be authorized and directed to accept service of process on behalf of
          the subscribing reinsurer in any such suit;

     3.   If the suit is brought in any state other than California or New York,
          either of the agents described in subparagraphs 1 or 2 above shall be
          authorized and directed to accept service of process on behalf of the
          subscribing reinsurer in any such suit; or

     4.   If the subscribing reinsurer has designated an agent in the
          subscribing reinsurer's Interests and Liabilities Agreement attached
          hereto, then that agent shall be authorized and directed to accept
          service of process on behalf of the subscribing reinsurer in any suit.
          However, if an agent is designated in the subscribing reinsurer's
          Interests and Liabilities Agreement and the agent is not located in
          California as respects a suit brought in California or New York as
          respects a suit brought in New York, in keeping with the laws of the
          states of California and New York which require that service be made
          on an agent located in the respective state if a suit is brought in
          that state, the applicable office of Mendes and Mount stipulated in
          subparagraphs 1 and 2 above must be used for service of suit unless
          the provisions of paragraph C of this Article apply.

C.   Further, pursuant to any statute of any state, territory or district of the
     United States that makes provision therefor, the subscribing reinsurer
     hereby designates the Superintendent,


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     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 proceedings 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 XXIX

TERRORISM RISK INSURANCE ACT OF 2002

A.   Any financial assistance the Company receives under the Terrorism Risk
     Insurance Act of 2002 ("TRIA") shall apply as follows:

     1.   Except as provided in subparagraph 2 below, any such financial
          assistance shall inure solely to the benefit of the Company and shall
          be entirely disregarded in applying all of the provisions of this
          Contract.

     2.   If losses occurring hereunder result in recoveries made by the Company
          both under this Contract and under TRIA, and such recoveries, together
          with any other reinsurance recoveries made by the Company applicable
          to said losses, exceed the amount permitted by TRIA, any amount in
          excess thereof shall reduce the Ultimate Net Loss subject to this
          Contract for the losses to which the TRIA financial assistance
          applies.

B.   Nothing herein shall be construed to mean that losses under this Contract
     are not recoverable until the Company has received financial assistance
     under TRIA.

                                   ARTICLE XXX

MODE OF EXECUTION (WMOE1)

This Contract may be executed either by an original written ink signature of
paper documents, by an exchange of facsimile copies showing the original written
ink signature of paper documents, or by electronic signature by either party
employing appropriate software technology as to satisfy the parties at the time
of execution that the version of the document agreed to by each party shall
always be capable of authentication and satisfy the same rules of evidence as
written signatures. The use of any one or a combination of these methods of
execution shall 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, shall be deemed an original.

                                  ARTICLE XXXI

EXCLUDED RISKS INADVERTENTLY BOUND

If the Company becomes bound on a risk specifically excluded in this Contract,
and if notice of such is given by the Company to the Reinsurer within 30 days of
the discovery by an


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underwriting officer of the Company, such reinsurance as would have been
afforded for the risk by this Contract if the risk had not been excluded shall
nevertheless apply:

     (a)  to such risk with respect to occurrences taking place prior to the
          31st day after the discovery by an Underwriting Officer of such
          underwriting department of the Company of the existence of the hazard
          which makes the exclusion applicable; or

     (b)  until the Company is legally able to eliminate its liability under the
          policy.

In case, within such 30 day period, the Company shall have forwarded to the
Reinsurer complete underwriting information and shall have received from the
Reinsurer written notice of its approval of the risk, the reinsurance shall
apply with respect to such risk for the policy period reported in the same
manner as if such risk were not so excluded, subject, however, to the terms of
such notice of approval.


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IN WITNESS WHEREOF, the Company by its duly authorized representative has
executed this Contract as of the date specified below:

PHILADEPHIA INSURANCE COMPANY           EMPLOYERS REINSURANCE CORPORATION
PHILADELPHIA INDEMNITY INSURANCE
COMPANY


/s/ Christopher J. Maguire              /s/ William J. O'Donnell III
-------------------------------------   ----------------------------------------
Title: Executive Vice President &       Title: Senior Vice President Officer
       Chief Underwriting Officer

/s/ William McKenna
-------------------------------------   ----------------------------------------
Title: Assistant Vice President -      Title:
       Reinsurance Officer                     ---------------------------------

Date: June 15, 2006                     Date: June 8, 2006


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                                   SCHEDULE A

<TABLE>
<CAPTION>
                                                 ADJUSTABLE
PRODUCT LINE                                       % RATE
------------                                     ----------
<S>                                              <C>
AUTO LIABILITY                                      0.193
GENERAL LIABILITY                                   0.193
UMBRELLA                                           31.962
SPECIALTY LINES
   Agents E & O                                     8.957
   Non-Profit and Flexi Plus 5 D & O Liability     26.305
   Lawyers E & O                                    3.441
   Professional Liability Excess                   14.505
   Non-Profit Professional Liability                8.957
   Consultant's Liability                           8.957
   Private Company Protection Plus                 26.305
   Mental Health Counselors                         8.957
   Corporate D & O                                 26.305
   Health Care Professionals Liability              8.957
   Accountants E & O                                8.957
   New Programs Professional                        8.957
</TABLE>


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      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - U.S.A.

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

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

                          LIMITED EXCLUSION PROVISION.*

I.   It is agreed that the policy does not apply under any liability coverage,
     to (injury, sickness, disease, death or destruction,
        (bodily injury or property damage

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

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

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

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

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

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

(3) Except for those classes of policies specified in Clause II of paragraph (2)
and without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that for all purposes of this reinsurance
the original liability policies of the Reassured (new, renewal and replacement)
affording the following coverages:

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

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

                           BROAD EXCLUSION PROVISION.*

It is agreed that the policy does not apply:

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

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

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

II.  Under any Medical Payments Coverage, or under any Supplementary Payments
     Provision relating to (immediate medical or surgical relief,
                           (first aid,
                        to expenses incurred with respect
                        to (bodily injury, sickness, disease or death
                           (bodily injury

     resulting from the hazardous properties of nuclear material and arising out
     of the operation of a nuclear facility by any person or organization.


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

     resulting from the hazardous properties of nuclear material, if

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

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

     (c)  the (injury, sickness, disease, death or destruction
              (bodily injury or property damages

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

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 and (2)resulting from the operation by any
     person or organization of any nuclear facility included within the
     definition of nuclear facility under paragraph (a) or (b) thereof; "NUCLEAR
     FACILITY" means

     (a)  any nuclear reactor,

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

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

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

     and includes the site on which any of the foregoing is located, all
     operations conducted on such site and all premises used for such
     operations; "NUCLEAR REACTOR" means any apparatus designed or used to
     sustain nuclear fission in a self-supporting chain reaction or to contain a
     critical mass of fissionable material;

     (With respect to injury to or destruction of property, the word "injury" or
     "destruction"
     ("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 of the Independent Insurance Conference of Canada.

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

21/9/67
N.M.A. 1590


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<PAGE>

P06-0108

      NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE - CANADA

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

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

     Personal Liability.
     Farmers' Liability.
     Storekeepers' Liability.

     which become effective on or after 31st December 1984, shall be deemed to
     include, from their inception dates and thereafter, the following
     provision:

     Limited Exclusion Provision.

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

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

3.   Without in any way restricting the operation of paragraph 1 of this clause
     it is agreed that for all purposes of this Agreement all the original
     liability contracts of the Company, whether new, renewal or replacement, of
     any class whatsoever (other than Personal Liability, Farmers' Liability,
     Storekeepers' Liability or Automobile Liability contracts), which become
     effective on or after 31st December 1984, shall be deemed to include, from
     their inception dates and thereafter, the following provision:

     Broad Exclusion Provision.

     It is agreed that this Policy does not apply:

     (a)  to liability imposed by or arising under The Nuclear Liability Act;
          nor

     (b)  to bodily injury or property damage with respect to which an Insured
          under this Policy is also insured under a contract of nuclear energy
          liability insurance (whether the Insured is unnamed in such contract
          and whether or not it is legally enforceable by the Insured) issued by
          the Nuclear Insurance Association of Canada or any other insurer or
          group or pool of insurers or would be an Insured under any such policy
          but for its termination upon exhaustion of its limit of liability; nor

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

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

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

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


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<PAGE>

P06-0108

As used in this Policy:

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

2.   The term "radioactive material" means uranium, thorium, plutonium,
     neptunium, their respective derivatives and compounds, radioactive isotopes
     of other elements and any other substances that the Atomic Energy Control
     Board may, by regulation, designate as being prescribed substances capable
     of releasing atomic energy, or as being requisite for the production, use
     or application of atomic energy;

3.   The term "nuclear facility" means:

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

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

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

     (d)  any structure, basin, excavation, premises or place prepared or used
          for the storage or disposal of waste radioactive material; and
          includes the site on which any of the foregoing is located, together
          with all operations conducted thereon and all premises used for such
          operations.

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

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

N.M.A. 1979A
01/04/96


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<PAGE>

P06-0108

                  TERRORISM EXCLUSION ENDORSEMENT (REINSURANCE)

Notwithstanding any provision to the contrary within this reinsurance or any
endorsement thereto it is agreed that this reinsurance excludes loss, damage,
cost or expense of whatsoever nature directly or indirectly caused by, resulting
from or in connection with any act of terrorism regardless of any other cause or
event contributing concurrently or in any other sequence to the loss.

For the purpose of this endorsement an act of terrorism means an act, including
but not limited to the use of force or violence and/or the threat thereof, of
any person or group(s) of persons, whether acting alone or on behalf of or in
connection with any organization(s) or government(s), committed for political,
religious, ideological or similar purposes including the intention to influence
any government and/or to put the public, or any section of the public, in fear.

This endorsement also excludes loss, damage, cost or expense of whatsoever
nature directly or indirectly caused by, resulting from or in connection with
any action taken in controlling, preventing, suppressing or in any way relating
to any act of terrorism.

If the Reinsurers allege that by reason of this exclusion, any loss, damage,
cost or expense is not covered by this reinsurance the burden of proving the
contrary shall be upon the Reassured.

In the event any portion of this endorsement is found to be invalid or
unenforceable, the remainder shall remain in full force and effect.

Notwithstanding the above, this terrorism exclusion shall only apply to
liability losses arising directly from the following classes of business, when
written as such.

<TABLE>
<CAPTION>
Class of Business                                                              Coverage
-----------------                                                              --------
<S>                                                                            <C>
Airports (Including Any Related Services or Operations)                         CGL/UMB
Amusement Parks                                                                 CGL/UMB
Animal Feed Mills                                                               CGL/UMB
Bridges and Tunnels, with exception to Bridges owned or maintained by
   municipalities with less than 75,000 in population.                          CGL/UMB
Buildings in which U.S. Government is Owner or Largest Tenant                   CGL/UMB
Chemical Manufacturing, Wholesale or Storage                                    CGL/UMB
Convention Centers, with exception to Convention Centers
   when written as a non-profit organization, or as part of a municipality
   with less than 75,000 in population.                                         CGL/UMB
Concert Halls equal to or greater than 1,000 person in capacity,
   with exception to: 1) Concert Halls when written as a
   non-profit organization; 2) Concert Halls when written as part of a
   municipality with less than 75,000 in population.                            CGL/UMB
Dams, with exception to Dams less than fifty feet in height and owned
   by municipalities with less than 75,000 in population.                       CGL/UMB
Drug Manufacturing                                                              CGL/UMB
Electrical Generating Facilities                                                CGL/UMB
Explosives - Manufacture, Distribution or Storage                               CGL/UMB
Mass Transit Systems - Subways, Railways, etc.                                  CGL/UMB
Oil & Gas Pipelines                                                             CGL/UMB
Oil Refineries & Storage Tank Farms                                             CGL/UMB
Pesticides, Herbicides, Insecticides - Manufacture                              CGL/UMB
</TABLE>


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<PAGE>

P06-0108

<TABLE>
<S>                                                                             <C>
Ports (Including Any Related Services or Operations)                            CGL/UMB
Security Services                                                               CGL/UMB
Stadiums and Sports Arenas, with exception to Stadiums and Sports
   Arenas with less than 10,000 in seating capacity and written as part of
   Philadelphia Insurance Company's Amateur Sports Facility program,
   or written as part of a municipality with less than 75,000 in population.    CGL/UMB
Telecommunications Services - Telephone, Radio, TV, Internet                    CGL/UMB
Water & Sewage Treatment Plants, with exception to Water & Sewage
   Treatment Plants owned by municipalities with less than 75,000 in
   population, or Water & Sewage Treatment Authorities serving
   populations with less than 250,000 in population.                            CGL/UMB
</TABLE>

However, the maximum liability to the Reinsurer for all Terrorism losses during
the term of this Contract shall be limited to $10,000,000.


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<PAGE>

                             WAR EXCLUSION (WEXC212)

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 Clause 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 and the District of Columbia,
its territories and possessions, including the Commonwealth of Puerto Rico and
including Bridges between the United States of America and Mexico provided they
are under United States ownership), Canada, St. Pierre and Miquelon, provided
such interests are insured under original policies, endorsements or binders
containing a standard war or hostilities or warlike operations exclusion clause.

Nevertheless, this clause shall not be construed to apply to loss or damage
occasioned by riots, strikes, civil commotion, vandalism, malicious damaged.