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                                                                  EXHIBIT 10(13)


October 1, 1997


Mr. Dan L. Kirby
2 Riverview Heights
Sioux Falls, SD  57105

Re:  Terms of Your Employment

Dear Mr. Kirby:

         As the future ultimate parent of Western Surety Company ("Western"),
         Continental Casualty Company ("CCC") wishes to extend our warmest
         welcome to you as the future General Counsel of Western a South Dakota
         domiciled insurance company.  After the merger of Capsure Holdings,
         Corp., Western's current ultimate parent, and Surety Acquisition
         Corporation, a subsidiary of CNA Surety Corporation ("Surety"),
         pursuant to the Reorganization Agreement executed contemporaneously
         with this employment agreement, CCC or one of its affiliates will have
         a controlling interest in Capsure and Western.

         1.      Assignment of this Agreement.  On the Closing Date, (as that
         term is defined in the Reorganization Agreement) of the transactions
         contemplated by the Reorganization Agreement, CCC shall assign all of
         its rights and obligations under this agreement to Surety or one of
         Surety's direct or indirect subsidiaries.  By your execution of this
         Agreement you acknowledge CCC's intent to assign this Agreement and
         specifically consent to such assignment.

         2.      Title and Duties.  You agree to serve as General Counsel
         Secretary, and Executive Vice President of Western and Vice President
         of Surety, subject to the general supervision of the Chief Executive
         Officer  of Surety ("Surety CEO") and Western and Surety's Boards of
         Directors.  CCC agrees that it will cause Surety to employ you subject
         to the terms of this Agreement and will exert its best efforts to
         cause you to be elected Chairman of the Board of Western.  At Western,
         you will serve as an employee in an executive capacity, and will
         perform such duties as are assigned to you by the Surety CEO and the
         Boards of Directors of Western and Surety, including civic, political,
         philanthropic, recreational, social and promotional activities as is
         commensurate with past practices.  You agree to discharge your duties
         in a manner satisfactory to the Surety CEO and Boards of Directors of
         Western and Surety, and when working for Western and Surety to use
         your best efforts to further the business interests of Western and
         Surety.
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Dan L. Kirby                                                      EXHIBIT 10(13)
Terms of Your Employment
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         You agree to devote all of your working time to the affairs of Western
         and Surety.  If requested by Western and Surety, you agree to serve as
         a member of the board of directors, any corporation under common
         ownership or control with Surety, without additional compensation or
         consideration. CCC agrees that Surety shall agree that your place of
         employment and office will be located in Sioux Falls, South Dakota
         during the term of this Agreement, provided, however, that you may be
         required to travel for business reasons in connection with your
         performance of your duties to the extent reasonable and customary
         during your prior tenure as the General Counsel of Western.

         3.      Term of Employment.  This Agreement shall be effective upon
         the Closing Date (as that term is defined in the Reorganization
         Agreement) of the Reorganization Agreement and remain in effect for 24
         months unless (a) this Agreement is terminated by mutual agreement of
         the parties, or (b) this Agreement is terminated pursuant to paragraph
         10, 11, 12, 13 or 14 hereof.

         4.      Appointment to Western Board of Directors.  CCC agrees that so
         long as you are employed under this Agreement, all voting rights held,
         directly or indirectly, by CCC or Surety, their nominees or assignees,
         shall all be voted in favor of you to be nominated to the Board of
         Directors of Western and SBCA, to be elected to such Boards at each
         meeting of stockholders at which the class of Directors to which you
         are assigned is to be elected, and to be elected Chairman of the Board
         of Western.

         5.      Compensation.  You will be paid an annual salary by Western or
         Surety  of not less than the amount provided in Schedule 1 to this
         Agreement.  The salary will be paid in installments according to the
         administrative convenience of Western or  Surety, but not less often
         than monthly.  You may  be eligible to  be paid an annual incentive
         bonus.  Any such bonus shall be determined and paid in March  of the
         following year.  For example the annual incentive bonus for 1997 will
         be paid in March 1998.  The amount of such bonus shall be no less than
         $0 and no more than 1 times your annual base salary and shall be
         determined by the Compensation Committee of Surety or Western.  Surety
         or Western also will make available to you, to the extent that you
         satisfy the eligibility requirements thereof and the extent permitted
         by law, any fringe or employee benefit program introduced generally to
         officers with commensurate responsibilities.  Those benefits include
         annual paid vacation time commensurate with prior practices,
         reimbursement of existing club membership dues and other benefits as
         set forth specifically in Surety's Human Resources policy.  You shall
         be reimbursed for first class travel and accommodation costs when you
         travel in furtherance of Western business and your entertainment
         expenses will be reimbursed according to Western or Surety's standard
         expense policy for senior executives.


         6.      Other Employment Benefits.  You will be eligible for
         participation in all employment benefits offered according to the
         terms of each benefit plan or program.  No
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Dan L. Kirby                                                      EXHIBIT 10(13)
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         provision of this Agreement is intended to or shall increase or extend
         such benefits except as expressly provided herein, provided, however,
         that this Agreement is intended to and shall control and take
         precedence over the terms of  such benefits with respect to any
         conditions applicable to suspension or termination of your employment.

         7.      Noncompetition Agreement.  When this Agreement is in effect
         and for a period of  two years following a termination of this
         Agreement (i) for cause under paragraph 12 or (ii) upon your voluntary
         separation from, you agree not to engage in activity competitive with
         that of Western or Surety.  "Activity competitive with" shall include,
         but not be limited to, employment by, or serving as a director,
         officer, agent or contractor of, any entity which engages (or engages
         through an affiliated entity) in the business of underwriting or
         issuing surety bonds within the United States of America.
         Notwithstanding any provision of this Agreement to the contrary,
         "Activity competitive with" shall not include ownership of less than
         1% of the issued and outstanding capital stock of any competitor of
         Surety that is listed on a national securities exchange or in the
         Nasdaq system.  Following a termination of this Agreement, "activity
         competitive with" shall also include the activities described in this
         paragraph carried on in any geographic area into which Surety or
         Western planned to expand its marketing and administrative activities
         according to its most recent business plan adopted prior to your
         termination of employment.

         8.      Nonsolicitation Agreement.  When this Agreement is in effect
         and for a period of two years following a termination of this
         Agreement, you agree not to solicit, or attempt to solicit, or provide
         names or recommendations to another party that will solicit, any
         employee or independent contractor of Surety or Western to leave his
         or her engagement with  Surety or Western.

         9.      Confidential and Proprietary Information.  When this Agreement
         is in effect and thereafter, you agree to use your best efforts to
         keep confidential the confidential and proprietary business
         information of Surety and Western (the "Confidential Information").
         The Confidential Information shall include, without limitation,
         operational methods, market research, strategic plans, agreement
         texts, trade secrets, customer lists, sales techniques, pricing
         techniques and policies, and financial and actuarial information,
         techniques and projections, if any.  The Confidential Information
         shall not include any information which is at the time of any alleged
         violation of this paragraph (i) generally known to the public without
         any violation of this Agreement, or (ii) is in the public domain
         without any violation of this Agreement, or any other agreement under
         which the disclosing party had an obligation to Surety or Western to
         maintain the confidentiality of such information.

         10.     Termination for Death or Disability.  This Agreement shall
         terminate upon your death or disability (as defined herein).  However,
         should this Agreement be terminated pursuant to this section your base
         salary shall be paid through the end of the Surety or Western's next
         regular pay period Disability for purposes of this paragraph shall
         mean your
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Dan L. Kirby                                                      EXHIBIT 10(13)
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         inability by reason of physical or mental disability to serve as
         GENERAL COUNSEL of Western  during the term of this Agreement after
         reasonable accommodation of Western and Surety  to such disability (a
         "Termination Disability").

         11.     Termination or Sale of Surety's Business Operations.  If in
         the business judgment of Surety  or Surety's parent corporation,
         continuing the business of Surety or Western  is likely (i) to result
         in net operating losses for two or more fiscal years, (ii) to require
         continuing contributions of working capital after the Closing Date, or
         (iii) to result in significant net operating losses, negative net
         worth, or liabilities to Western or Surety in a future fiscal year,
         then Surety or Western may terminate and close the business of Surety
         or Western or both, or Surety or Surety's parent corporation may
         transfer ownership of Surety or Western (a "Business Termination").
         In the event of a Business Termination, this Agreement and Western and
         Surety's future obligations thereunder shall terminate as of the
         effective date of the Business Termination.

         12.     Termination for Cause by Surety.  This Agreement may be
         terminated for cause by  Western or Surety if you shall engage in any
         conduct that the Board of Directors of Surety or Western, in its sole
         discretion, upon reasonable notice and opportunity for you to cure,
         shall determine to be a substantial breach of any material provision
         of this Agreement or of any other agreement between you and Surety or
         Western, or to be fraudulent, willful malfeasance or gross negligence
         or inconsistent with the dignity and character of a senior officer of
         Western, this entire Agreement shall be immediately terminated and
         Surety and Western  shall thereafter have no obligation to make any
         payment to you under any Section of this Agreement.

         13.     Termination for Cause by You.  You shall have the right to
         terminate this Agreement for cause upon failure of Surety or Western
         to make payments of salary or incentive compensation to you as
         provided hereunder or for a substantial breach by Surety or Western
         of the material terms and conditions of your employment as described
         in this Agreement.  If you shall determine that this Agreement should
         be terminated for cause, you shall notify Surety and Western in
         writing of the reasons for such termination and the proposed
         termination date, which shall not be less than thirty days from the
         date of such notice.

         14.     Not For Cause Termination.  If Surety or Western terminates
         this Agreement for reasons other than those set forth in sections 10,
         11, 12 or 13 of this Agreement, then Surety or Western shall pay you
         within thirty (30) days of said termination, one lump sum payment
         representing the discounted present value (using an eight percent (8%)
         interest rate) of the balance of the salary that Surety or Western
         would have paid you during the term of this Agreement, if your
         employment had not been so terminated.


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Dan L. Kirby                                                      EXHIBIT 10(13)
Terms of Your Employment
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         15.     Transactions Contemplated by the Reorganization Agreement not
         Consummated.  Should any or all of the transactions referenced in the
         Reorganization Agreement not close or be consummated pursuant to the
         terms of the Reorganization Agreement this employment agreement shall
         be null and void and will have no effect.

         16.     Notices.  Notices hereunder, to be effective, shall be in
         writing and shall be delivered by hand, by overnight express service
         or facsimile, as follows:

                 If to Surety:             President and CEO
                                           CNA Surety Corporation
                                           CNA Plaza
                                           Chicago, Illinois 60685

                 If to you:                Dan L. Kirby
                                           2 Riverview Heights
                                           Sioux Falls, South Dakota 57105

         or to such other address as a party may notify the other pursuant to a
         notice given in accordance with this paragraph.

         17.     Remedies.  You agree that monetary damages for any breach of
         your obligations under paragraphs 7, 8 and 9 of this Agreement will
         not be adequate to protect legitimate interests of Surety and Western,
         and therefore you agree that pending resolution of any dispute
         involving a breach by you of your obligations under paragraphs 7, 8
         and 9, Surety or Western shall be entitled to seek an order of a court
         having jurisdiction which requires you to cease any conduct which is
         in breach of such paragraphs.

         18.     General.  If you or Surety or Western shall ignore or waive
         any breach of this Agreement, such action shall not prevent you or
         Surety or Western from taking action according to this Agreement with
         respect to any subsequent breach.  If any provision of this Agreement
         is determined to be unenforceable, you, Western and Surety intend and
         agree that such provision shall nevertheless be deemed to be modified
         to apply to the maximum extent for which enforcement may be allowed
         pursuant to applicable law.  If any provision of this Agreement shall
         be determined to be entirely unenforceable, the remainder of this
         Agreement shall nevertheless remain in full force and effect.  This
         Agreement shall not be terminated by the merger or consolidation of
         Surety or Western with any other business entity, or by the sale of
         any part of the capital stock of Surety or Western, or of any other
         entity controlling or controlled by Surety, provided, however, that if
         Surety or Western cease to be 50% or more subsidiary (at any tier) of
         CNA Financial Corporation, you shall have the right to terminate this
         Employment Agreement upon written notice to Surety and Western without
         incurring any liability to Surety for damages arising from such
         termination.  You may not assign your rights or obligations under this
         Agreement, nor may you grant to
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Dan L. Kirby                                                      EXHIBIT 10(13)
Terms of Your Employment
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         any other person an interest (including a lien or security interest)
         in the payments made to you under this Agreement.  This Agreement
         shall be interpreted according to the substantive law of Illinois
         applicable to contracts entered into therein, without regard to
         principles of choice of law or conflicts of laws.

         If the terms of this Agreement are acceptable to you, please indicate
         your acceptance thereof by signing the enclosed extra copy, and
         returning it to the undersigned.


                                        Sincerely yours,
                                        
                                        CNA Surety Corporation
                                        
                                        
                                        By:  /s/ Mark C. Vonnahme             
                                             ---------------------------------
                                              Mark C. Vonnahme
                                              President and Chief Executive 
                                              Officer
                                        
    Accepted and agreed to.             

    /s/  Dan L. Kirby           
    ------------------------------
    Dan L. Kirby

    Dated   10-24-97              
          ------------------------
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Dan L. Kirby                                                      EXHIBIT 10(13)
Terms of Your Employment
10/01/97
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                                   SCHEDULE 1

                    EMPLOYMENT AGREEMENT WITH  DAN L. KIRBY





Salary is payable under this Agreement to Dan L. Kirby at the annual rate of
$200,000.