**Exhibit
10(dddd.1)**
 
 ATTORNEY-IN-FACT
AGREEMENT
 
 This
Attorney-in-Fact Agreement (this “Agreement”) is made and entered into by and
between Pennsylvania Physicians Reciprocal Insurers (the “Exchange”), a
reciprocal insurance exchange organized under Article X of the Insurance Company
Law of the Commonwealth of Pennsylvania with its principal office located at 2
North Second Street, 7 th Floor,
Harrisburg, PA, and Physicians Reciprocal Managers, Inc. (the “Company”), a
Pennsylvania corporation with its principal office located at 2 North Second
Street, 7 th Floor,
Harrisburg, PA.
 
 WITNESSETH:
 
 WHEREAS,
the subscribers will, pursuant to subscriber agreements, appoint the Company to
act as their Attorney-in-Fact with power to exchange reciprocal insurance
contracts among the subscribers to the Exchange and to manage and conduct the
business of the Exchange; and
 
 WHEREAS,
the Company and the Exchange desire to set forth the terms and conditions upon
which the Company will accept its appointment as Attorney-in-Fact for the
subscribers to exchange their reciprocal insurance contracts and to manage and
conduct the business of the Exchange;
 
 NOW,
THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound hereby, the Company and the Exchange agree as
follows:
 
 1. Acceptance
of Appointment as Attorney-in-Fact . The
Company hereby accepts its appointment as Attorney-in-Fact in subscriber
agreements to be executed by subscribers to the Exchange and agrees, as
Attorney-in-Fact, to exchange reciprocal insurance contracts among the
subscribers as provided in the subscriber agreements.
 
 2. Management
Services . The
Company agrees to provide sufficient personnel and supplies so that it can
perform or provide for the performance of all necessary and appropriate
management services to the Exchange. It is understood that all such management
services shall be performed in accordance with such policies and standards as
may be established from time to time by the Attorney-in-Fact, as well as in
accordance with sound insurance and actuarial practices and procedures and any
applicable laws. Those management services include, without limitation by reason
of specification, the following functions:
 
 2.1 The
administration and management of the day-to-day insurance business of the
Exchange including, without limitation, underwriting and the administration of
claims;
 
 2.2 The
underwriting of applications for insurance, including passing upon the
desirability of risks, the issuance of premium quotes and policies or binders,
all in accordance with sound insurance underwriting guidelines and practices
established by the Company;
 
 
 2.3 The
establishment and maintenance for the Exchange of complete and accurate records
of all reciprocal insurance contracts exchanged by the Exchange, as well as all
financial and business records, consistent with sound business practices and in
compliance with regulatory requirements; the supervision of outside consultants
and professionals retained at the expense of the Exchange to provide all
accounting, actuarial and auditing services, including, but not limited to the
establishment and monitoring of loss reserves, compiling financial statements
and the preparation of all reports required by governmental and nongovernmental
regulatory and supervisory authorities;
 
 2.4 The
collection, receipt and processing of all funds received as payments of
insurance premiums, contributions to surplus and other receipts of the Exchange,
and the timely deposit of all such funds in a bank or banks in the name of the
Exchange; the maintenance of all funds of the Exchange and the investment of the
Exchange’s investable assets in accordance with the advice or instructions of
any investment advisors retained by the Attorney-in-Fact on behalf of the
Exchange;
 
 2.5 The
placement of reinsurance, the payment of reinsurance premiums at the expense of
the Exchange, the maintenance of all records in connection with such
reinsurance, and the taking of all actions or the making of any claims required
or permitted by such reinsurance;
 
 2.6 The
provision and maintenance, including through a third party claims administrator,
of claims supervision and facilities for the timely processing of all claims,
notices and proofs of loss against the Exchange and for the timely payment of
claims on behalf of and at the expense of the Exchange, including the employment
of personnel to handle claims on behalf of the Exchange, it being understood
that all unallocated claims expenses shall be borne by the Attorney-in-Fact and
all allocated claims expenses shall be borne by the Exchange. Allocated and
unallocated claims expenses shall have the meanings assigned thereto in the
National Association of Insurance Commissioners’ *Accounting
Practices and Procedures Manual;*
 
 2.7 The
retention of investment advisors for and on behalf of the Exchange at the
expense of the Exchange;
 
 2.8 The
preparation of promotional material for and on behalf of the
Exchange;
 
 2.9 The
monitoring of the legal affairs of the Exchange, including the making of
required filings with the Insurance Department of the Commonwealth of
Pennsylvania and all other governmental authorities having jurisdiction over the
Exchange;
 
 2.10 The
appointment, supervision and termination of agents on behalf of the Exchange,
and the payment to them of commissions at the expense of the Exchange, for
insurance coverages placed with the Exchange in such amounts as shall be
determined by the Attorney-in-Fact;
 
 
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 2.11 The
commencement and defense, at the expense of the Exchange, of legal and
administrative proceedings brought by or against the Exchange including
acceptance of service of process on behalf of the Exchange, entering legal
appearances on behalf of the Exchange and the compromise, prosecution, defense
and settlement of losses and claims; and
 
 2.12 The
taking of all such other actions and things as the Attorney-in-Fact shall
determine to be necessary, convenient, advisable, or proper in order to
discharge properly and in good faith the responsibilities and duties of the
Attorney-in-Fact under the Declaration of Organization of the Exchange and this
Attorney-in-Fact Agreement.
 
 3. Management
Fee . As
compensation for the management services to be performed by the Company as
Attorney-in-Fact on behalf of the Exchange as set forth in Section 2 hereof, the
Exchange agrees that the Company shall retain a percentage of the Exchange’s
gross direct written premiums, less return premiums, not to exceed *21%* (the
“Retention Percentage”), and that, in consideration thereof, the Company shall
pay all costs of providing such management services including, without
limitation by reason of specification, the salaries and benefit expenses of the
Company’s employees, rent and other occupancy expenses, supplies and data
processing.
 
 4. Payment
of Expenses of Exchange . The
Company, on behalf of the Exchange, shall utilize the funds of the Exchange to
pay all of the expenses of the Exchange including, without limitation by reason
of specification, losses, allocated loss adjustment expenses, commissions to
producers, investment expenses, damages, legal expenses, court costs, taxes,
assessments, license fees, the fees of attorneys, actuaries, accountants and
investment and other advisors, governmental fines and penalties, the
establishment and maintenance of loss and unearned premium reserves and surplus,
reinsurance premiums and costs, audit fees, and guaranty fund
assessments.
 
 5 *.* Records;
Right to Audit . The
Company shall keep sufficient records for the express purpose of recording
therein the nature and details of the management services and financial
transactions undertaken for the Exchange pursuant to this Attorney-in-Fact
Agreement. All books and records maintained by the Company that pertain to the
management services performed by the Company as Attorney-in-Fact for the
subscribers to the Exchange pursuant to this Agreement shall be owned by the
Company, but such books and records shall be maintained in a fiduciary capacity
for the Exchange. The Exchange, and any regulatory authority having jurisdiction
over the Exchange, shall have the right to examine and audit, at the offices of
the Company, at all reasonable times, all books and records of the Company that
pertain to the management services performed by the Company as Attorney-in-Fact
for the subscribers to the Exchange pursuant to this Agreement. This right of
examination and audit shall survive the termination of this Agreement and shall
remain in effect for so long as either the Company or the Exchange has any
rights or obligations under this Agreement.
 
 6. Term
and Termination . This
Agreement shall become effective as of the effective date of the approval of the
Declaration of Organization of the Exchange and shall continue in effect for an
indefinite term thereafter, subject only to the right of the Exchange and the
Company to terminate this Agreement by mutual agreement.
 
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 7. Arbitration . In the
event of any dispute or difference of opinion hereafter arising with respect to
this Agreement, the Company and the Exchange agree that any dispute or
difference of opinion shall be submitted to arbitration before a panel of three
arbitrators, each of whom shall be an active or retired disinterested officer of
a property and casualty insurance company. One such arbitrator shall be chosen
by the Company, one such arbitrator shall be chosen by the Exchange and the
third arbitrator shall be chosen by the other two arbitrators. In the event any
party hereto refuses or neglects to appoint an arbitrator within 60 days after
the other party requests it to do so, or if the two arbitrators selected by the
Company and the Exchange fail to agree upon a third arbitrator within 30 days of
the appointment of the second arbitrator to be appointed, such arbitrator or
arbitrators, as the case may be, shall, upon the application of any party, be
appointed by the Philadelphia office of the American Arbitration Association and
the arbitrators shall thereupon proceed. The arbitrators shall consider this
Agreement as an honorable engagement rather than merely as a legal obligation
and they are relieved of all judicial formalities and may abstain from following
the strict rules of law. The decision of the majority of the arbitrators shall
be final and binding on all parties. Each party shall bear the expense of its
own arbitrator and shall bear one-half of the expenses of the third arbitrator
and of the arbitration. Any such arbitration shall take place in Philadelphia,
Pennsylvania unless otherwise agreed by the parties hereto.
 
 8. Indemnification .
 
 (a) The
Exchange shall indemnify, defend and hold harmless the Company and each
director, officer, employee, member of an advisory committee, if any and agent
thereof (each an “Indemnified Party”), from and against all claims, losses,
damages, liabilities and expenses (including, without limitation, settlement
costs and any reasonable legal fees and expenses or other expenses for
investigation and defending any actions or threatened actions) incurred by such
Indemnified Party as a result of any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
including an action by or in the right of the Exchange, relating to or arising
out of the services provided by the Company hereunder, except to the extent the
act or failure to act giving rise to the claim for indemnification is determined
by a court to have constituted the willful misconduct or recklessness of the
Indemnified Party. The foregoing indemnification right shall be in addition to
the indemnification provided for in the Exchange’s Declaration of Organization
(the “Declaration”) as filed with the Pennsylvania Insurance Department and such
indemnification provision is hereby made a part of and incorporated into this
Agreement and can be enforced hereunder.
 
 (b) The
Exchange shall pay expenses incurred by an Indemnified Party in defending any
action or proceeding referred to in this Section 8 in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Exchange.
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 (c) As soon
as practicable after receipt by any Indemnified Party of notice of the
commencement of any action, suit or proceeding specified in Section 8(a), such
person shall, if a claim with respect thereto may be made against the Exchange
under this Section 8, notify the Exchange in writing of the commencement or the
threat thereof; however, the omission to so notify the Exchange shall not
relieve the Exchange of any liability under this Section 8 unless
the Exchange shall have been prejudiced thereby or from any other liability
which it may have to such person other than under this Section 8. With respect
to any such action as to which such person notifies the Exchange of the
commencement or threat thereof, the Exchange may participate therein at its own
expense and, except as otherwise provided herein to the extent that it desires,
the Exchange, jointly with any other indemnifying party similarly notified,
shall be entitled to assume the defense thereof, with counsel selected by the
Exchange to the reasonable satisfaction of such person. After notice from the
Exchange to such person of its election to assume the defense, the Exchange
shall not be liable to such person under this Section 8 for any legal or other
expenses subsequently incurred by such person in connection with the defense
thereof otherwise than as provided herein. Such person shall have the right to
employ his own counsel in such action, but the fees and expenses of such counsel
incurred after notice from the Exchange of its assumption of the defense thereof
shall be at the expense of such person unless: (i) the employment of counsel by
such person shall have been authorized by the Exchange, (ii) such person shall
have reasonably concluded that there may be a conflict of interest between the
Exchange and such person in the conduct of the defense of such proceeding or
(iii) the Exchange shall not in fact have employed counsel to assume the defense
of any proceeding brought by or on behalf of the Exchange or as to which such
person shall have reasonably concluded that there may be a conflict of interest.
If indemnification under this Section 8 is not paid or made by the Exchange, or
on its behalf, within 90 days after a written claim for indemnification has been
received by the Exchange, such person may, at any time thereafter, bring suit
against the Exchange to recover the unpaid amount of the claim. The right to
indemnification and the right to advancement of expenses provided hereunder
shall be enforceable by such person in any court of competent jurisdiction. The
burden of proving that indemnification is not appropriate shall be on the
Exchange. Expenses reasonably incurred by such person in connection with
successfully establishing the right to indemnification or advancement of
expenses, in whole or in part, shall also be indemnified by the
Exchange.
 
  (d) Additional
Rights . The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Section 8 shall not be deemed exclusive of any other rights to which an
Indemnified Party may be entitled under any bylaw, agreement, contract or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. It is the policy of the Exchange
that indemnification of, and advancement of expenses to, an Indemnified Party
shall be made to the fullest extent permitted by law. To this end, the
provisions of this Section 8 shall be deemed to have been amended for the
benefit of an Indemnified Party effective immediately upon any modification of
the BCL or the Pennsylvania Insurance Company Law or any modifications or
adoption of any other law that expands or enlarges the power or obligation of
companies governed by the BCL to indemnify or advance expenses to any
Indemnified Party, including directors and officers of the
Attorney-in-Fact.
 
 5
 
 9. Miscellaneous .
 
 (a) This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to its conflicts of law
principles.
 
 (b) The
Company is authorized, at the Company’s expense, from time to time in its
discretion to contract with others for the performance of the management
services the Company has agreed to provide to the Exchange under this Agreement,
provided, however, that the Company shall remain responsible to the Exchange for
the proper and timely performance of all management services contemplated by
this Agreement.
 
 (c) The
headings in this Agreement are for convenience of reference only, and should not
be referred to in connection with the interpretation of this
Agreement.
 
 (d) This
Agreement may not be amended or supplemented except by means of a written
agreement executed on behalf of each of the parties to this
Agreement.
 
 (e) Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any one or more of the
provisions or a portion of any of the provisions of this Agreement shall be
deemed to be contrary to law, invalid, illegal, unenforceable or unreasonable in
any respect by any governmental authority, court of law or arbitrator having
competent jurisdiction over the subject matter of and over the parties to this
Agreement, the remaining provisions, portions of such provisions or reasonable
scope of such provisions shall be severable and enforceable in accordance with
their terms.
 
 (f) No
failure on the part of any party to this Agreement to exercise any right or
remedy under this Agreement, and no delay on the part of any party to this
Agreement in exercising any right or remedy under this Agreement, shall
constitute a wavier of such right or remedy, and no single or partial exercise
of any such right or remedy shall preclude any other or further exercise of such
right or remedy or of any other right or remedy.
 
 (g) No party
to this Agreement may assign any of its rights or delegate any of its
obligations under this agreement by contract, operation of law or otherwise
without the prior written consent of the other party. This Agreement shall be
binding upon and except as otherwise provided in this Agreement, shall inure to
the benefit of the parties to this Agreement and their respective permitted
successors and assigns, if any.
 
 (h) This
Agreement may be executed in counterparts, including by means of telefaxed
signatures, each of which shall constitute an original and all of which, when
taken together, shall constitute the Agreement.
 
 (i) In the
event that any provision of this Agreement is inconsistent with any provision of
the Declaration, the Declaration’s subject provision shall prevail.
 
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 IN
WITNESS WHEREOF, the parties hereto have executed this Attorney-in-Fact
Agreement on the day and year first above written by the undersigned thereunto
duly authorized.
 
 PHYSICIANS RECIPROCAL
      MANAGERS, INC.By:
    /s/ Anthony
      J. Bonomo
PENNSYLVANIA PHYSICIANS RECIPROCAL
      INSURERSBY IT'S ATTORNEY-IN-FACT,
      PHYSICIANS RECIPROCAL MANAGERS,
    INC.By:
    /s/ Gerald Dolman
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