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EXHIBIT 10.40
 SERVICE AGREEMENT
       ARTICLE 1  PERFORMANCE OF SERVICES
 1.01
    
    TRM and CPM agree to provide to each other, at each others request,
various insurance companies services (as may be set forth in the
attached schedules) at terms and conditions set forth herein.
 ARTICLE 2  COMPENSATION
 2.01
    
    Any compensation paid by CPM to TRM and by TRM to CPM for services
rendered hereunder shall be as agreed by the parties on a case by
case basis. CPM and TRM agree that such compensation or fees shall be
competitive with prevailing local market rates.2.02
    
    With respect to claims services, to the extent such services are
provided by either company to the other, each agrees to pay for the
allocated loss adjustment expenses incurred by the servicing company
in adjusting and defending claims on the hourly billing rate to be
established by the companies. TRM and CPM agree to utilize the same
billing rate or method of payment established to allocate or assign
unallocated expenses to adjust and defend claims.2.03
    
    Settlement of AccountsEach company shall submit to the other within thirty (30) days of the
end of each calendar quarter a detailed written estimate of the
amount owed for services and the use of facilities pursuant to this
Agreement in that calendar month, and each company shall pay to the
other within fifteen (15) days following receipt of such estimate the
amount set forth in the estimate.




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2.04
    
    Profit SharingWhere CPM and TRM both participated in providing services to third
parties, CPM and TRM agree to share any profits and losses realized
in proportion to their respective participation.
 ARTICLE 3  TERM, INDEPENDENCE AND TERMINATION
 3.01
    
    TermThe term of this Agreement will begin on the date of this Agreement and will continue until terminated by one of parties.3.02
    
    IndependenceServices and facilities shall be provided to CPM by TRM at the request of CPM and to TRM by CPM at the request of TRM,
but the requested party shall provide such services and facilities only to the extent that such arrangements do not
impede either companys business or operations.TRM and CPM shall act hereunder so as to assure the separateness of their respective operating identities. Books and
records shall be maintained separately for each party for services provided by this Service Agreement.3.03
    
    Termination
 (a)
    
    This Agreement may be terminated at any time by the mutual agreement
of the parties, or by either party for any of the following reasons:
 (1)
    
    Immediately by either party in the event of bankruptcy, insolvency,
liquidation or assignment for the benefit of creditors by the other
party;(2)
    
    Upon sixty (60) days written notice by either party in the event of
any material change in the ownership or control of the other party;(3)
    
    Immediately by either party in the event any law or regulation of a
federal, state or local government has rendered this Agreement
illegal, but only insofar as that law or regulation applies to this
Agreement;(4)
    
    Immediately by either party in the event of fraud, abandonment, gross
or willful misconduct, insolvency, or lack of legal capacity to act on
the part of either party;(5)
    
    Upon sixty (60) days written notice by either party in the event of
default in any material term of this Agreement, unless the default is
cured prior to the end of the end of the sixty (60) day period.
 (b)
    
    In the event of termination of this Agreement:
 (1)
    
    TRM and CPM shall promptly cease performing any services being provided under this agreement;(2)
    
    Neither party shall have any claim against the other for loss of prospective profits or fees
or damage to business arising there from;(3)
    
    Notwithstanding the termination of this Agreement, TRM and CPM shall continue to perform
such services under this Agreement in settlement of accounts
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or winding up of affairs between TRM and CPM if so requested by either party.(4)
    
    Notwithstanding the termination of this Agreement, TRM or CPM shall continue
to provide the claims and legal defense under this Agreement with respect to
all claims reported to either prior to the effective date of any termination
in accordance with the terms of this Agreement. In consideration for
performing its services as set forth herein, CPM and TRM will continue to
compensate each other in the manner set forth in Article 2 of this
Agreement. In the event either company assumes the handling of their own
claims after termination, each party agrees to cooperate with and instruct
its respective employees to cooperate in such transition.
 ARTICLE 4  MAINTENANCE CONTROL AND OWNERSHIP OF RECORDS
 4.01
    
    Maintenance of RecordsTRM and CPM will each maintain all appropriate records, files,
ledgers and reports so as to accurately reflect at all times the
financial transactions with one another.4.02
    
    Ownership of Records
 (a)
    
    All books, records, and files established and maintained by TRM or CPM
by reason of its performance under this Agreement which, absent this
Agreement, would have been held by TRM or CPM respectively shall (i)
be deemed the joint property of each party, (ii) be maintained in
accordance with all other applicable law and regulation and (iii) be
subject to examination at all times by CPM or TRM and persons
authorized by it or any governmental agency having jurisdiction over
CPM or TRM, if any.(b)
    
    Except s set forth in (a) above, each party is the owner of all
records related to its company regardless of in whose possession those
records may be at any time.
 ARTICLE 5  GENERAL REQUIREMENTS
 5.01
    
    TRMs and CPMs General DutiesTRM and CPM are responsible to perform the duties assumed under this
Agreement in accordance with standard procedures for the performance
of such duties, which exist in the insurance industry in the United
States.
 ARTICLE 6  MISCELLANEOUS
 6.01
    
    NoticesAll notice requirements and other communications indicated shall be
deemed given when personally delivered or on the third succeeding
business day after being mailed by registered or certified mail,
return receipt requested, to the appropriate party at its address
below or at such other address as shall be specified by notice given
hereunder.
 CPM:
    
    CastlePoint Management Corp.
120 Broadway, 30th Floor
New York, NY 10271
Attn: General Counsel
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TRM:
    
    Tower Risk Management Corp.
120 Broadway, 31st Floor
New York, NY 10271
Attn: General Counsel
 6.02
    
    Binding Effect and AssignmentThis Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, representatives,
successors and assigns. This Agreement may not be assigned without
mutual consent of the parties.6.03
    
    AmendmentThis Agreement may not be amended, altered or modified except in
writing signed by the party against whom enforcement or any waiver,
change, discharge, alternation or modification is sought.6.04
    
    InvalidityThe invalidity of any provision of this Agreement shall not affect
the validity of the remainder of any such provision or the remaining
provisions of this Agreement.6.05
    
    InterpretationThe article, section and paragraph headings included in this
Agreement have been used solely for convenience and shall not be used
in the interpretation of this Agreement. References to articles,
sections and paragraphs shall refer to such provisions in this
Agreement unless otherwise stated.6.06
    
    WaiverThe failure of either party at any time to require performance by the
other party of any provision of this Agreement shall not be deemed a
continuing waiver of that provision or a waiver of any other
provision of this Agreement and shall in no way affect the full right
to require such performance from the other party at any time
thereafter.6.07
    
    SeverabilityThis Agreement and the transaction contemplated herein constitute one
transaction and shall not be divisible in any manner. A breach of any
portion of this Agreement shall be deemed a breach of the whole
Agreement.6.08
    
    CounterpartsIf photocopies or duplicates of the original of this Agreement are
signed by both parties, then each such originally signed document
shall be deemed to be an original of this Agreement.6.09
    
    IndemnificationEach of CPM and TRM shall hold harmless and defend and indemnify the
other party against any expenses, damages, liability, action, cost or
other claims, including attorney fees arising out of the other
partys material breach of any duty or obligation hereunder or any
claims made against a party relating to, or arising out of, the other
partys willful misconduct or gross negligence in
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performing, or in failing to perform, services hereunder.6.10
    
    ArbitrationAny dispute or difference between CPM and TRM relating to the interpretation or performance of this Agreement, including its
formation or validity, or any transaction under this Agreement, whether arising before or after termination, shall be
submitted to arbitration.Upon written request of any party, each party shall choose an arbitrator and the two chosen shall select a third arbitrator.
If either party refuses or neglects to appoint an arbitrator within 30 days after receipt of the written request for
arbitration, the requesting party may appoint a second arbitrator. If the two arbitrators fail to agree on the selection of a
third arbitrator within 30 days of their appointment, each of them shall nominate three individuals, of whom the other shall
decline two. The third arbitrator shall be chosen by lots from the two remaining nominees.The parties hereby waive all objections to the selection of the arbitrators, provided they are selecting in conformity with
this paragraph 6.10.All arbitrators shall be active or retired officers of insurance or reinsurance companies, or Lloyds of London underwriters,
and disinterested in the outcome of the arbitration. Each party shall submit its case to the arbitrators within 30 days of
the appointment of the third arbitrator.The arbitrators shall have the power to determine all procedural rules for the holding of the arbitration including but not
limited to inspection of documents, examination of witnesses and any other matter relating to the conduct of the arbitration.
The arbitrators shall interpret this Agreement as an honorable engagement and not as merely a legal obligation; they are
relieved of all judicial formalities and may abstain from following the strict rules of law. The arbitrators may award
interest and costs. Each party shall bear the expense of its own arbitrator and shall share equally with the other party the
expense of the third arbitrator and of the arbitration.6.11
    
    Governing LawThis Agreement shall be interpreted according to the laws of the state of Delaware, excluding its conflict of laws provisions.
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IN WITNESS WHEREOF
 Tower Risk Management Corp.By:
    /s/ Francis ColalucciFrancis Colalucci, SVP and CFOCastlePoint Management Corp.By:
    /s/ Joel WeinerJoel Weiner, SVP and CFO 6