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                               ENDORSEMENT NO. 2
 
                         Attached to and made a part of
                            AGREEMENT OF REINSURANCE
                                    NO. 8295
                                    between
                        GENERAL REINSURANCE CORPORATION
                                      and
                    AMERICAN COMPENSATION INSURANCE COMPANY
 
    IT IS MUTUALLY AGREED that, retroactive to the inception of this Agreement,
the first paragraph of ARTICLE XIII - CONTINGENT COMMISSION is amended to read:
 
    IT IS FURTHER AGREED that, effective 12:01 A.M., January 1, 1999, this
Agreement is amended as follows:
 
    I -  As respects losses resulting from occurrences taking place at and after
         such time and date, ARTICLE IV is amended to read:
 
"ARTICLE IV - LIABILITY OF THE REINSURER
 
    (a)  Under Cover A, the Reinsurer shall pay to the Company, with respect to
         worker's compensation and employers' liability business of the Company,
         the amount of net loss each occurrence, other than non-sudden and
         accidental occupational disease, in excess of the Company Retention but
         not exceeding the Limits of Liability of the Reinsurer as follows:
 
         The Company Retention shall be $300,000.
 
         The Limits of Liability of the Reinsurer shall be for the:
 
         (1) First Excess Cover, $700,000 excess of $300,000;
 
         (2) Second Excess Cover, $9,000,000 excess of $1,000,000;

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         (3) Third Excess Cover, the difference between statutory limits and
             $10,000,000. However, under this Third Excess Cover, the 
             Reinsurer's liability as respects each earthquake occurrence shall
             not exceed $20,000,000.
 
             For purposes of this provision, the term "earthquake occurrence" 
             shall be deemed to mean an occurrence or series of occurrences 
             arising out of one earthquake, including fire following directly 
             occasioned by the earthquake, provided that only the claims and 
             losses sustained by the Company during the continuous period of 
             168 hours selected by the Company shall be used in the 
             determination of the net loss; and only one such continuous period 
             of 168 hours shall apply with respect to one earthquake.
 
    (b)  Under Cover B, the Reinsurer shall pay to the Company, with respect to
         non-sudden and accidental occupational disease, the amount of net loss
         each occurrence which is first reported by the Company to the Reinsurer
         while this Agreement remains in effect in excess of the Company 
         Retention of $300,000, but not exceeding the Limit of Liability of 
         the Reinsurer $19,700,000. Further, the liability of the Reinsurer 
         shall not exceed $19,700,000 with respect to all occurrences first 
         reported by the Company to the Reinsurer during any one calendar year
         that this Agreement remains in effect.
 
    II -  As respects losses resulting from occurrences taking place at and 
          after such time and date, the first paragraph of ARTICLE V - LOSS IN 
          EXCESS OF POLICY LIMITS is amended to read:
 
    "Notwithstanding the provisions of the article entitled MANAGEMENT OF CLAIMS
AND LOSSES, if a third party claimant is awarded an amount in excess of the
Company's policy limit and, as a result of the Company's or RTW's failure to
settle within the policy limit or of the Company's or RTW's alleged or actual
negligence 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
in the preparation or prosecution of an appeal consequent upon such action, an
action is taken by the insured or assignee which could impose legal liability on
the Company for an amount in excess of the Company's policy limit, 95% of that
portion of the award made to the third party claimant which is in excess of the
Company's policy limit shall be added to the Company's net loss from the
occurrence and the total shall be allocated in accordance with the

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article entitled LIABILITY OF THE REINSURER. However, in no event shall the
Reinsurer's liability for any loss in excess of the Company's policy limit
exceed 95% of $10,000,000."
 
    III - As respects losses resulting from occurrences taking place at and
          after such time and date, the first paragraph of ARTICLE VI - EXTRA
          CONTRACTUAL OBLIGATIONS is amended to read:
 
    "Notwithstanding the provisions of the article entitled MANAGEMENT OF CLAIMS
AND LOSSES, if the Company incurs an extra contractual obligation, 95% of the
extra contractual obligation shall be added to the Company's net loss from the
occurrence and the total shall be allocated in accordance with the article
entitled LIABILITY OF THE REINSURER. However, in no event shall the Reinsurer's
liability for any extra contractual obligation exceed 95% of $10,000,000."
 
    IV -  The third paragraph of ARTICLE VII - COMMENCEMENT AND TERMINATION
          OBLIGATIONS is amended to read:
 
    "Either party may terminate this Agreement at December 31, 2000 or any
subsequent December 31st, by sending to the other, by registered mail to its
principal office, not less than 90 days prior written notice."
 
    V -   As respects losses resulting from occurrences taking place at and 
          after such time and date, ARTICLE VIII is amended to read:
 
"ARTICLE VIII - COMPANY POLICY AMOUNTS
 
    For the purposes of determining the Company Retention and the Limits of
Liability of the Reinsurer, the limits of liability of the Company with respect
to any one policy shall be deemed not to exceed:
 
    (a) Workers' Compensation              Statutory


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    (b)  Employers' Liability
 
         (1) Bodily Injury by Accident    $5,000,000 each accident
         (2) Bodily Injury by Disease     $5,000,000 policy limit
         (3) Bodily Injury by Disease     $5,000,000 each employee"
 
    VI -  As respects losses resulting from occurrences taking place at and 
          after such time and date, the second paragraph of paragraph (d) of 
          ARTICLE IX - DEFINITIONS is amended to read:
 
          "This term shall include declaratory judgment expense incurred by the
          Company in contesting insurance coverage on the policies covered
          hereunder. However, in no event shall the Reinsurer's liability for 
          any declaratory judgment expense exceed $5,000,000."
 
    VII - As respects losses resulting from occurrences taking place at and 
          after such time and date, ARTICLE X is amended to read:
 
"ARTICLE X - EXCLUSIONS
 
    This Agreement shall not apply to:
 
    (a)  Business accepted by the Company as reinsurance from other insurers
         other than its affiliates and through a Specific Retrocessional 
         Agreement No. 2073 between the Company and the Reinsurer;
 
    (b)  "Self-insurance" or "self-insured obligations", howsoever styled, of 
         the Company, its affiliates or subsidiaries, or any insurance wherein 
         the Company, its affiliates or subsidiaries, are named as the insured 
         party, either alone or jointly with some other party, notwithstanding 
         that no legal liability may arise in respect thereof by reason of the 
         fact that the Company, its affiliates or subsidiaries, may not be 
         obligated by law to pay a claim to itself, its affiliates or 
         subsidiaries;
 
    (c)  Any loss or liability accruing to the Company directly or indirectly
         from any insurance written by or through any pool or association
         including pools or associations in which membership by the Company is
         required under any statutes or regulations; however, this exclusion 
         shall not apply to the Company's involuntary participation in assigned
         risk plans in so far as the class of business is one written by the 
         Company;
 
    (d)  Any liability of the Company arising from its participation or
         membership in any insolvency fund;
  
    (e)  Insurance with respect to operations involving:

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          (1) Aircraft flight operations or operations in which the flying 
              hazard is a major part of the insured's operations;
 
          (2) Manufacturing, packing, handling, shipping, or storage of
              explosives, substances intended for use as an explosive,
              ammunitions, fuses, arms, magnesium, propellant charges, 
              detonating devices, fireworks, nitroglycerine, celluloid, or 
              pyroxylin; however, this exclusion shall not apply to the 
              incidental packing, handling or storage of same in connection 
              with the sale of such substances. Firearm manufacturing shall 
              not be excluded;
   
          (3) Gas companies, dealers, or distributors, except those in the
              gasoline service station business; oil or gas operators, lease
              operators or contractors; oil or gas well works; oil or gas
              pipeline construction or operations; oil rig and derrick work;
              onshore or offshore gas or oil drilling operations. Gasoline
              hauling shall not be excluded if the insured's primary operation 
              is retail gasoline distribution and the tankers are used to 
              distribute to the risk's own locations only;
 
          (4) Production, refining, handling, shipping or storage of "flammable
              liquids" or "flammable gases" as defined by the National Fire
              Protection Association; however, this exclusion shall not apply to
              the incidental handling or storage of same in connection with the
              sale of such substances;
 
          (5) Railroad operation or construction of railroads;
 
          (6) Maritime or federal employments; steamship lines, agencies, or
              stevedoring, navigation or operation of vessels; operation of
              drydocks; marine wrecking; and including all United States
              Longshoremen's and Harbor Workers' exposures except as incidental
              and necessary to the primary operation;
  
          (7) Sewer and subway construction, shaft sinking, or tunnelling;
  
          (8) Wrecking or demolition;
 
          (9) Underground mining, strip mining, or quarrying;
 
         (10) Off-shore or subaqueous work;
 
         (11) Caisson or coffer dam work; dam, dike, lock or revetment
              construction;
 
         (12) Chemical manufacturing, which includes the following class codes
              promulgated by NCCI. In the event the NCCI class

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              codes don't apply, the corresponding state specific code is
              excluded. Any new codes developed by combining or subdividing 
              these codes are also excluded:
  
              4536 Acid Mfg.
              4585 Ammonia Mfg.
              4586 Ammonium Nitrate Mfg.
              4741 Asphalt or Tar Distilling or Refining
              4828 Chemical Blending or Mixing
              4829 Chemical Mfg. NOC
              4703 Dextrine Mfg.
              1472 Distillation - Wood
              1474 Distillation - Wood - Destructive Process & Drivers
              2130 Distillery - Spiritous Liquor
              4771 Explosives or Ammunition Mfg. NOC
              4583 Fertilizer Mfg.
              4653 Glue Mfg.
              4557 Ink Mfg.
              4439 Lacquer or Spirit Varnish Mfg.
              4740 Oil Refining - Petroleum
              4558 Paint Mfg.
                   Pulp Mfg. - Chemical Process
              4758 Rocket Engine Ignitor Mfg. & Drivers
              4759 Rocket Engine Mfg. - Solid Propellant & Drivers
              4720 Soap Mfg.
              4751 Synthetic Rubber Mfg.
              1473 Turpentine or Resin Mfg.
              4561 Varnish Mfg.
              2416 Yarn Dyeing or Finishing;
 
         (13) Nuclear Regulatory Commission projects or operations conducted
              under license from the Nuclear Regulatory Commission;
  
         (14) Asbestos removal;
 
         (15) Firefighters and police officers including armed security guards.
 
    If the Company provides insurance for an insured with respect to any
operations listed in exclusion (e), except exclusions (e)(2) and (e)(4), and if
such operations constitute only a minor and incidental part of the total
operations of the insured, such exclusion(s) shall not apply. Minor and
incidental is defined as 10% or less of the total premium for the account.
 
    If the Company is bound, without the knowledge of and contrary to the
instructions of the Company's supervisory underwriting personnel, on any
business falling within the scope of

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one or more of the exclusions set forth in this Article these exclusions, except
(a) through (d), (e)(2) and (e)(3) shall be suspended with respect to such
business until 30 days after an underwriting supervisor of the Company acquires
knowledge of such business."
 
   VIII - As respects new and renewal policies of the Company becoming effective
          at and after such time and date and policies of the Company in force 
          at such time and date, ARTICLE XII is amended to read:
 
    IN WITNESS WHEREOF, the parties hereto have caused this Endorsement to be

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executed in duplicate, 

this   6th   day of   JANUARY   , 1997, 

                                 GENERAL REINSURANCE CORPORATION 

                                   /s/ Tom Collett
                                 -----------------------------
                                         Vice President 

Attest: /s/ E.A. Collins
        -----------------------------

and this 15th day of January, 1999.

                                 AMERICAN COMPENSATION INSURANCE
                                          COMPANY 

                                    /s/ Tim C. Chan
                                 -----------------------------

Attest: /s/ Jeffrey B. Murphy
        -----------------------------


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