Exhibit 10.12


















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                                    SUBLEASE

                                     between


       INSPIRE INSURANCE SOLUTIONS, INC., debtor and debtor-in-possession,

                                       And

                    ARROWHEAD GENERAL INSURANCE AGENCY, INC.



                            Dated as of May 14, 2002

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<PAGE>


                                    SUBLEASE

         This Sublease ("Sublease") is made and entered into as of May 14, 2002,
by and between INSPIRE INSURANCE SOLUTIONS, INC., a Texas corporation and debtor
and  debtor-in-possession   (hereafter   "Sublessor"),   and  Arrowhead  General
Insurance Agency, Inc., a Minnesota corporation  (hereafter  "Sublessee"),  with
reference to the following facts:

                                    RECITALS
              A.  Sublessor,  as   successor-in-interest  to  Arrowhead  General
Insurance Agency, Inc., and Kilroy Realty, L.P., a Delaware limited partnership,
as successor-in-interest to ADI Arrow Partners, L.P ("Master Landlord"), entered
into a Lease dated as of April 10, 1996 (the "Master  Lease"),  attached to this
Sublease as Exhibit "B" and incorporated  herein by reference.  The Master Lease
covers the building containing approximately 93,000 rentable square feet located
at 6055 Lusk Boulevard, San Diego, California ("Building" or "Master Premises"),
as more  particularly  described in Exhibit "A",  attached to this  Sublease and
incorporated herein by reference..

              B. On February 15, 2002,  Sublessor filed a voluntary petition for
relief under Chapter 11 of the United  States  Bankruptcy  Doe (the  "Bankruptcy
Code") in the United States Bankruptcy Court for the Northern District of Texas,
Fort Worth Division (the "Bankruptcy  Court"),  under Case No. 02-41228-DML (the
"Bankruptcy Case").

              C. Sublessor  desires to assume the Master Lease in the Bankruptcy
Court pursuant to Section 365 of the Bankruptcy Code.

              D.  Sublessor and Sublessee  desire to enter into this Sublease in
order  for   Sublessee  to  sublease  a  portion  of  the  Building   containing
approximately  40,000 rentable square feet and as depicted on Exhibit A attached
hereto (the "Premises"), on the terms and conditions set forth herein.

              E.  Sublessor  and Sublesee are also  entering  into various other
agreements in conjunction with this Sublease,  including,  but not limited to, a
Software License Agreement, a Policy Processing and Administration  Agreement, a
Claims Administration  Agreement,  a Professional  Services Agreement,  an Asset
Purchase Agreement and a Comprehensive Preferred Escrow Agreement (collectively,
the "Other Agreements").

              F. Sublessor and Sublessee  desire that this Sublease,  as well as
the  other  agreements  referenced  in the  preceding  Recital,  shall  only  be
effective  and binding on them if (1) all of such  agreements  are approved by a
final order of the Bankruptcy Court as provided for herein,  and (2) Sublessor's
rejection of the Policy Administration Agreement is approved by a final order of
the Bankruptcy Court acceptable in form and substance to Sublessee.

         NOW,  THEREFORE,  in consideration  of the mutual  agreements set forth
herein  and  for  other  good  and  valuable  consideration,   the  receipt  and
sufficiency  of which are hereby  acknowledged,  the parties  agree as set forth
below.

         1. DEFINED  TERMS.  Terms with initial  capital  letters not  otherwise
defined herein shall have the respective meanings set forth in the Master Lease.

                                       2
<PAGE>

         2.  PREMISES.  Sublessor  hereby  subleases to Sublessee  and Sublessee
hereby  hires  from  Sublessor,  on and  subject to the  terms,  conditions  and
covenants  hereinafter  set forth,  the  Premises.  Sublessee  agrees to use the
Premises  solely for the office uses and for no other use or purpose without the
prior  written  consent of Master  Landlord.  Sublessor  agrees to  deliver  the
Premises in a clean and orderly state to Sublessee.  This shall include  cleaned
carpets, items removed from walls and any holes in walls repaired.

         3.  WARRANTY  BY  SUBLESSOR.   Sublessor  warrants  and  represents  to
Sublessee that Sublessor is not now, and as of the  commencement of the Term (as
defined  below)  will  not be,  in  default  or  material  breach  of any of the
provisions  of the Master  Lease,  and the Sublessor has received no notice from
Master  Landlord that Sublessor is in default or breach of any of the provisions
of the Master Lease.  Sublessor further  represents and warrants that (a) a true
and correct copy of the Master Lease,  as amended to date, is attached hereto as
Exhibit B, (b) the Master Lease has not been otherwise  amended or modified,  is
in full force and effect,  and represents the entire agreement between Sublessor
and Master Landlord  relating to the Premises and (c) to the best of Sublessor's
actual  knowledge,  Master Landlord is not in default with respect to the Master
Lease. From and after the date of this Agreement,  Sublessor agrees that it will
not amend or terminate  the Master Lease in any way that affects the Premises or
Sublessee's  rights  under this  Sublease  without  the  written  consent of the
Sublessee,  which shall not be unreasonably withheld or delayed. Sublessor shall
perform  all  obligations  under the  Master  Lease  except to the  extent  such
obligations  are expressly  required to be performed by the Sublessee under this
Sublease.  Sublessor  shall seek to assume the  Master  Lease in the  Bankruptcy
Case,  pursuant  to Section  365 of the  Bankruptcy  Code.  Sublessor  agrees to
indemnify,  defend and hold sublessee harmless from any and all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees and costs)
arising  from or  relating  to any  breach of  Sublessor's  representations  and
warranties or breach of any or its other obligations under this section.

         4. TERM.  The term of this Sublease  shall  commence on the 5th day (or
such sooner or later day as the parties may agree) after this  sublease has been
approved by a final order of the Bankruptcy  Court  ("Commencement  Date"),  and
shall  expire  on April 13,  2007,  unless  sooner  terminated  pursuant  to the
provisions hereof.

         5. RENT. Sublessee shall pay to Sublessor $60,000 per month as rent for
the  Premises  ("Rent"),  at the address for  Sublessor  set forth in Section 21
below,  or at such other place as Sublessor shall designate from time to time by
written notice to Sublessee,  in advance on the first day of each calendar month
of the  term  of this  Sublease,  starting  on the  Commencement  Date,  without
deduction, offset, prior notice or demand.

                  5.1 FULL SERVICE RATE.  The Rent is on a "full service  gross"
basis and  Sublessee  shall not be  responsible  for any charges for  Additional
Rent,  including,  without  limitation,  any  Impositions,  insurance  premiums,
utility costs or any other operating expenses; provided, however, that Sublessor
shall  have the  right to  increase  the Rent by an  amount  equal to 43% of any
unforeseen  increases in electricity  costs  applicable  during the term of this
Sublease to the extent such increases  result in the  electricity  costs for the
Premises exceeding one hundred five percent (105%) of such electricity costs for
the prior calendar year, on a cumulative basis.

                                       3
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                  5.2 SECURITY DEPOSIT. Upon obtaining Master Landlord's consent
to this Sublease,  Sublessee shall deliver into an escrow account in the name of
Sublessor a security  deposit in the amount of $60,000,  which  amount  shall be
funded in equal payments over the course of five (5) months ($12,000 per month).
Sublessee  shall retain the interest  payments from the escrow  account.  In the
event of a  default  on the  part of  Sublessee,  funds  shall  be  released  to
Sublessor  to the extent of the default and  Sublessee  shall,  within three (3)
business  days  replenish  the  escrow  account  with the  amount  withdrawn  by
Sublessor.  The security deposit shall not constitute the last months rent; such
funds  shall be  dispersed  to  Sublessee  within  thirty  (30)  days  after the
expiration or termination of this Sublease.

                  5.3 INTEREST ON PAYMENTS DUE. Any sum due  Sublessor  pursuant
to this  Agreement  that is not paid by the date on which  payment  is due shall
bear  interest  from that date  until the date such sum is paid at the lesser of
1.5 % per month or the  maximum  rate of  interest  allowed by  applicable  law.
Sublessee  will  also  pay  Sublessor  for any  reasonable  expenses,  including
attorney's fees,  incurred by Sublessor in the collection of any amounts due and
payable under this Agreement.

                  5.4  ELECTRONIC   FUNDS   TRANSFER.   Sublessor  will  provide
Sublessee bank routing information.  All payments are to be via Electronic Funds
Transfer (EFT),  unless  otherwise  agreed to in writing by the parties,  to the
account specified in writing by Sublessor.

                  5.5 PAYMENT OF UNDISPUTED  AMOUNTS. In the event that there is
an amount in dispute, Sublessee is still obligated to pay all undisputed amounts
on all invoices.

         6. OTHER  PROVISIONS  OF  SUBLEASE.  This  Sublease is made subject and
subordinate  to all of the  terms  and  conditions  of  the  Master  Lease.  All
applicable  terms and conditions of the Master Lease are  incorporated  into and
made a part of  this  Sublease  as if  Sublessor  were  the  lessor  thereunder,
Sublessee the lessee thereunder,  and the Premises the Master Premises, but only
to the extent relating to the Premises and  Sublessee's use thereof,  except for
the  following  ("Excluded  Provisions"):  Sections  1.1 and  1.2,  Article  II,
Sections 3.1 through 3.6, inclusive, Article V, Sections 6.1, 6.2(b) and 6.2(c),
Article VII,  Section 8.2,  Section 9.3,  Section 11.1,  Article  XIII,  Article
XVIII, and Sections 20.8 and 20.20.  Sublessee assumes and agrees to perform the
Tenant's obligations under the Master Lease (other than the Excluded Provisions)
during  the term of this  Sublease  to the  extent  that  such  obligations  are
applicable  to the  Premises,  except that the  obligation to pay rent to Master
Landlord  under the Master Lease shall be  considered  performed by Sublessee to
the  extent and in the  amount  Rent is paid to  Sublessor  in  accordance  with
Section 5 of this  Sublease.  Sublessee  shall not  commit or suffer  any act or
omission that will violate or cause  Sublessor to violate any of the  provisions
of the Master  Lease.  Sublessor  shall  exercise due diligence in attempting to
cause Master Landlord to perform its obligations  under the Master Lease for the
benefit of  Sublessee.  If the Master  Lease  terminates,  this  Sublease  shall
terminate  and the  parties  shall  be  relieved  of any  further  liability  or
obligation under this Sublease, unless such termination is due to Sublessor's or
Sublessee's default or breach. Sublessee shall be entitled to all rights against
Sublessor under this Sublease as Sublessor  enjoys against Master Landlord under
the  Master  Lease,  and  Sublessor  shall be  entitled  to all  rights  against
Sublessee under this Sublease as Master Landlord enjoys against  Sublessor under
the Master Lease.

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                  6.1 ATTORNMENT.  At the Master Landlord's option, in the event
of  cancellation  or  termination  of the Master  Lease for any reason,  whether
voluntarily,  involuntarily,  by  operation  of law or  otherwise,  prior to the
expiration  of this  Sublease,  Sublessee  shall  attorn to the Landlord for the
balance of the Term.

         7.  ASSIGNMENT  AND  SUBLETTING.  Sublessee  shall  have  the  right to
sub-sublease  any portion of their  Premises  or to assign this  Sublease to any
related entity,  subsidiary,  or purchaser of  substantially  all of Sublessee's
assets  or equity  ("Affiliate"),  subject  to the  Sublessor's  consent,  which
consent  shall not be  unreasonably  withheld,  conditioned  or delayed,  and to
Master Landlord's  consent.  Any such sub-sublease or assignment to an Affiliate
shall not relieve Sublessee from liability under this Sublease.  In the event of
any  sub-subleasing or assignment to a party other than an Affiliate,  Sublessor
shall have the right to re-capture the Premises as provided below and shall have
the right to fifty percent  (50%) of any rents payable by any such  sublessee or
assignee  in excess of (a) the Rent under this  Sublease,  plus (b)  Sublessee's
reasonable costs of sub-subleasing or assigning,  including, without limitation,
commissions,   legal  fees,  tenant   improvements  and  any  other  concessions
reasonably  required to induce a sub-subtenant  or assignee,  and the balance of
such excess  rents may be retained by  Sublessee.  Sublessor  may  exercise  its
recapture  right by delivering  written notice  thereof to Sublessee  within ten
(10) days after  Sublessee  requests  Sublessor's  consent to a sub-sublease  or
assignment to a party other than an Affiliate. If Sublessor timely exercises its
recapture  right,  then this Sublease  shall  terminate and the parties shall be
released  from all further  liabilities  and  obligations  hereunder;  provided,
however,  that,  if Sublessee  withdraws its request for consent to the proposed
sub-sublease  or assignment  within ten (10) days after  receipt of  Sublessor's
election to exercise its recapture  right,  then this  Sublease  shall remain in
full force and effect and  Sublessor  shall not be  entitled  to  recapture  the
Premises.

         8. SIGNAGE.  To the extent permitted under the Master Lease,  Sublessee
shall be allowed to install  outside  building  signage on the  Building  and to
display  Sublessee's  logo  in  the  main  suite  entrance  to the  Building  at
Sublessee's sole expense. The costs associated with the purchase,  installation,
maintenance  and eventual  removal of such signage  shall be borne by Sublessee.
All  such  signage  shall  conform  to  all  zoning  requirements  and  existing
conditions,  covenants and  restrictions  affecting the Building.  Sublessor and
Master Landlord shall have the right to review and approve Sublessee's  signage,
which approval by Sublessor shall not be unreasonably  withheld,  conditioned or
delayed.

         9. PARKING.  Sublessee shall, at no additional  charge,  be entitled to
one hundred thirty (130) parking  spaces during the term of this Sublease.  Such
parking  spaces shall be used on a  non-exclusive  basis,  except that Sublessee
shall have the right to  designate  ten (10) of such parking  spaces  behind the
Premises for use  exclusively by Sublessee and its employees and invitees.  Such
parking  spaces shall be located on the Land in a location  adjacent to the back
entrance to the Premises and  reasonably  acceptable to Sublessor and Sublessee.
Sublessee shall be allowed to share with Sublessor the parking spaces designated
as Visitor in the front of the Premises.  If Sublessee needs additional  parking
spaces  due to  growth,  Sublessor  will work with  Sublessee  to reach a mutual
agreement to provide additional spaces.

                                       5
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         10. RIGHT OF FIRST OFFER.  During the term of this Sublease,  Sublessor
hereby grants to Sublessee a right of first offer ("First  Right") to lease,  on
the same terms and conditions as this Sublease,  including the Rent, any portion
of the Master Premises adjacent to the Premises within the Building that becomes
available  from time to time.  Prior to marketing  any such space,  or making or
accepting any offers to sublease  such space,  Sublessor  shall deliver  written
notice to Sublessee of any such space becoming available for sublease. Sublessee
may exercise its First Right with  respect to such space by  delivering  written
notice to Sublessor within seven (7) business days after delivery of Sublessor's
notice that such space is available.  If Sublessee so exercises the First Right,
then Sublessor  shall sublease to Sublessee,  and Sublessee  shall sublease from
Sublessor, the space described in Sublessor's notice on the terms and conditions
set  forth in this  Sublease,  including  payment  of the same  rent per  square
footage for the additional  space that Sublessee is paying at the time the First
Right is exercised.  In addition,  Sublessee shall increase its security deposit
by a like amount per square foot of such additional space.

         11.  FURNITURE.  Sublessor agrees that,  within thirty (30) days of the
Commencement  Date,  it shall remove at its sole expense all furniture and other
various  assets owned or controlled by Sublessor not attached as fixtures to the
Premises.

         12.  INSURANCE.  In  addition to  Sublessee  maintaining  insurance  as
required by Section 6.2(a) of the Master Lease,  Sublessee will name both Master
Landlord and Sublessor as additional  insureds  under such  liability  insurance
policy,  and Sublessor and Sublessee each hereby release and relieve each other,
and waive their entire right of recovery  against the other,  for loss or damage
arising  out of or  incident  to the perils  insured  against  by any  insurance
policies  maintained  or  required by this  Sublease  or the Master  Lease to be
maintained by the waiving party, which perils occur in, on or about the Premises
or the  Master  Premises.  Sublessee  and  Sublessor  shall  give  notice to its
insurance company of such release and waiver of subrogation contained herein.

         13. DAMAGE OR  DESTRUCTION/CONDEMNATION.  If the Premises, the Building
or the common areas are  materially  damaged or destroyed or taken pursuant to a
condemnation (or a conveyance  under threat  thereof),  all applicable terms and
conditions  of the  Master  Lease  concerning  the  parties  rights  in any such
event(s)  shall are  incorporated  into and made a part of this  Sublease  as if
Sublessor were the lessor thereunder,  Sublessee the lessee thereunder,  and the
Premises the Master  Premises,  but only to the extent  relating to the Premises
and Sublessee's use thereof.

         14.  ATTORNEYS'_FEES.  In the event any action or proceeding is brought
by either party against the other relating to or arising from the subject matter
of this  Sublease,  the prevailing  party shall be entitled,  in addition to any
other relief granted  therein,  to recover from the other party  attorneys' fees
and costs incurred in connection therewith.

         15. SUCCESSORS_AND  ASSIGNS. This Sublease and all terms and conditions
contained  herein,  subject to the  provisions  as to assignment or sublease set
forth herein,  shall be binding upon and inure to the benefit of the  successors
and assigns of all parties  hereto,  including but not limited to any Chapter 11
trustee or Chapter 7 trustee appointed in the Bankruptcy Case.

                                       6
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         16.  AUTOMATIC  STAY. The automatic stay under the Bankruptcy Code will
not in any way  limit or  restrict  Sublessee  from  exercising  its  rights  or
remedies upon default, expiration or termination of this Agreement.

         17.  NO_BROKERS.  Sublessor  and  Sublessee  each hereby  represent and
warrant that they have had no dealings  with any broker or agents in  connection
with the  negotiation of this Sublease.  Each party agrees to indemnify,  defend
and hold harmless the other from any and all claims, costs,  expenses,  damages,
liabilities  (including but not limited to reasonable  attorneys'  fees) arising
from or in  connection  with any claim by any  broker or agent,  whether  or not
licensed,  for a commission or fee or other amount due in  connection  with this
Sublease based upon the action of the indemnifying party.

         18.  PRIOR_AGREEMENTS.  This Sublease and the Master Lease contains all
of the  agreements of the parties  hereto with respect to any matter  covered in
this Sublease,  and no prior agreements or understanding  pertaining to any such
matter shall be effective for any purpose. No provisions of this Sublease may be
amended or added to except by and  agreement  in writing  signed by the  parties
hereto.

         19. COMMON AREAS.  Sublessee shall have the non-exclusive  right to use
all common areas,  including  the reception  area,  break room,  gymnasium,  and
bathrooms and conference  rooms provided such use does not materially  interfere
with Sublessor's right to use such common areas.

         20. JANITOR & MAINTENANCE SERVICES. Janitorial and maintenance services
for the Premises shall be provided to the satisfaction of Sublessee by Sublessor
at no additional cost.

         21. NOTICES.  All notices or demands of any kind required or desired to
be given by Sublessor or  Sublessee  hereunder  shall be in writing and shall be
deemed  delivered  upon  personal  delivery or two (2)  business  days after the
depositing  the  notice  or demand  in the  United  States  mail,  certified  or
registered,  postage  prepaid,  or one (1) business day after timely  sending by
Federal Express or other reputable overnight delivery service,  addressed to the
Sublessor or Sublessee, respectively, at the address set forth below, or to such
other address as Sublessor and  Sublessee  may, from time to time,  designate to
the other in writing.

         For Sublessee:             Attn: Chief Executive Officer
                                    Arrowhead General Insurance Agency, Inc.
                                    402 West Broadway, Suite 1600
                                    San Diego, CA  92101

         For Sublessor:             INSpire Insurance Solutions, Inc.
                                    300 Burnett Street
                                    Fort Worth, TX 76102
                                    Attention:  Don Bohannon


                                       7
<PAGE>


         With copy to:              Steven L. Leshin
                                    Jenkens & Gilchrist, P.C.
                                    1445 Ross Avenue, Suite 3200
                                    Dallas, Texas  75202

         22.  LANDLORD'S  CONSENT.  This  Sublease  and the  obligations  of the
parties  hereunder are conditioned upon Sublessor  obtaining  Master  Landlord's
consent hereto by Master  Landlord  executing the Consent of Master  Landlord at
the  end of  this  Sublease.  If  such  consent  is not  obtained  prior  to the
Commencement Date, either party shall have the right to terminate this Sublease,
in which case  neither  party  shall have any rights or  obligations  under this
Sublease.

         23. BANKRUPTCY COURT APPROVAL. This Sublease and the obligations of the
parties hereunder are further expressly  conditioned upon Sublessor  obtaining a
final order from the Bankruptcy  Court approving (a)  Sublessor's  assumption of
the Master  Lease under  Section 365 of the  Bankruptcy  Code,  (b)  Sublessor's
assumption  of the  Sublease  dated  January  11,  2002  between  Sublessor  and
Arrowhead  Claims  Management,  Inc.,  and  (c)  this  Sublease  and  the  Other
Agreements,  all without  amendment or  modification,  unless such  amendment or
modification  is approved in writing by both  Sublessor  and  Sublessee,  within
forty-five  (45) days after this  Sublessee is entered  into. If the court order
approving  this  Sublease  is not  obtained  within  the  time  specified,  this
Agreement and all of its terms and provisions are and shall be null and void.

         IN WITNESS WHEREOF,  this Sublease is executed as of the date first set
forth above.

                                    SUBLESSEE:

                                    ARROWHEAD GENERAL INSURANCE AGENCY, INC.,
                                    a Minnesota corporation

                                    By:________________________________________
                                            Kieran A. Sweeney, President & CEO




                                    SUBLESSOR:

                                    INSPIRE INSURANCE SOLUTIONS, INC.,
                                    a Texas corporation debtor and
                                    debtor-in-possession


                                    By:________________________________________
                                            Richard Marxen, President & CEO



                                       8
<PAGE>



                           CONSENT OF MASTER LANDLORD


                           The  undersigned  hereby  consents  to the  foregoing
Sublease.


                             KILROY REALTY, L.P., a Delaware limited partnership

                                  By:  Kilroy Realty Corporation,
                                       a Maryland corporation,
                                           general partner

                                       By:  ______________________________

                                       Its:   ____________________________






                                       9
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                                   Exhibit "A"

                                    Premises

                                [To Be Attached]


<PAGE>


                                   Exhibit "B"

                                  Master Lease

                                [To Be Attached]