<PAGE>

                                                                   Exhibit 10.28


                            AGGREGATE EXCESS OF LOSS
                             RETROCESSION AGREEMENT
                            Effective January 1, 2004

ARTICLE                                                                  PAGE
-------                                                                  ----

1        BUSINESS COVERED                                                  2

2        TERM                                                              3

3        TERRITORY                                                         3

4        EXCLUSIONS                                                        3

5        COVERAGE                                                          4

6        NET RETAINED LINES                                                5

7        REINSURANCE PREMIUM                                               5

8        ACCOUNTS AND LOSS SETTLEMENTS                                     6

9        CURRENCY                                                          6

10       TAXES                                                             7

11       RESERVES                                                          7

12       SPECIAL TERMINATION                                               8

13       OFFSET                                                            9

14       ERRORS AND OMISSIONS                                              9

15       ACCESS TO RECORDS                                                10

16       INSOLVENCY                                                       10

17       CONFIDENTIALITY                                                  10

18       ARBITRATION                                                      11

19       SERVICE OF SUIT                                                  12

20       INTERMEDIARY                                                     12

21       CHOICE OF LAW                                                    13

22       PROPORTION                                                       14

EXHIBIT A                                                                 15

EXCLUSIONS                                                             16-25


                                       1
<PAGE>

                            AGGREGATE EXCESS OF LOSS
                             RETROCESSION AGREEMENT

                  (hereinafter referred to as the "Agreement")

                                     between

                     HANNOVER REINSURANCE (IRELAND) LIMITED

                                       and

                        E&S REINSURANCE (IRELAND) LIMITED

            for their respective Quota Share Interest and Liabilities

             (hereinafter collectively referred to as the "Company")

                                       and

                       TOWER INSURANCE COMPANY OF NEW YORK
                               New York, New York

                  (hereinafter referred to as the "Reinsurer")

                                   ARTICLE 1

BUSINESS COVERED

A.       Pursuant to this Agreement, the Reinsurer shall indemnify the Company,
         subject to the terms, conditions and exclusions set forth in this
         Agreement, for the net liability in respect of Middle Market Business
         and Large Lines Real Estate General Liability Business which may accrue
         to the Company from Ultimate Net Loss and Loss Adjustment Expenses
         arising out of reinsurance assumed by the Company pursuant to its
         participation in that certain 2004 Quota Share Reinsurance Agreement
         between State National Insurance Company, Inc. ("State National") and
         the Company, effective January, 2004 (the "State National Quota Share
         Reinsurance Agreement"), a copy of which is attached hereto as Exhibit
         A and incorporated herein by reference. All capitalized terms used in
         this Agreement are as defined in the State National Quota Share
         Reinsurance Agreement unless such capitalized terms are expressly
         defined herein.

B.       In addition to the reinsurance coverage provided pursuant to Article
         1(A) of this Agreement, the Reinsurer shall indemnify and make whole
         the Company for any and all amounts of Net Written Premium on policies
         reinsured under the State National Quota Share Reinsurance Agreement,
         including but not limited to Net Written Premium for Small Market
         Business, that State National fails to collect and to forward to the
         Company (the "Delinquent Amount"), as required pursuant to the terms of
         the State National Quota Share Reinsurance Agreement, within 10 (ten)
         business days of the Company providing the Reinsurer with a written
         notice requesting payment of such Delinquent Amount.


                                       2
<PAGE>

C.       In addition to the reinsurance coverage provided pursuant to Article
         1(A) and 1(B) of this Agreement, the Reinsurer shall indemnify the
         Company for 100% (one hundred percent) for all Loss Adjustment Expenses
         (as defined in the State National Quota Share Reinsurance Agreement)
         incurred by the Company pursuant to the State National Quota Share
         Reinsurance Agreement, including but not limited to Loss Adjustment
         Expenses arising out of Small Market Business should Tower Risk
         Management Corp. (hereinafter "TRM") be unable to fulfill its
         obligations in servicing the underlying policies underwritten by TRM on
         behalf of State National Insurance Company, Inc.

         Such indemnification shall be made within 10 (ten) business days of
         payments by the Company to State National for any such Loss Adjustment
         Expenses.

                                   ARTICLE 2

TERM

A.       This Agreement shall take effect 12:01 a.m., Eastern Standard Time,
         January 1, 2004 as respects losses occurring and or claims made with
         respect to the Business Covered under the State National Quota Share
         Reinsurance Agreement and shall continue in full force and effect until
         such time as the State National Quota Share Reinsurance Agreement
         terminates (the "Term"). At the time of termination, the Reinsurer
         shall be liable for the in force Subject Business for so long as the
         Company remains liable for such in force Subject Business pursuant to
         the State National Quota Share Reinsurance Agreement.

B.       The Company and the Reinsurer may agree to terminate this Agreement or
         some portion of the Subject Business on a cut-off basis. Upon such
         termination, the Reinsurer shall incur no liability for losses
         occurring or claims made subsequent to the effective date of
         termination and the Reinsurer shall return to the Company its unearned
         premium reserve.

                                   ARTICLE 3

TERRITORY

This Agreement shall follow the territorial limits set forth in the State
National Quota Share Reinsurance Agreement.

                                   ARTICLE 4

EXCLUSIONS

This Agreement shall not apply to and specifically excludes:

A.       Nuclear Incident, in accordance with the following clauses attached
         hereto:

         1.       Nuclear Incident Exclusion Clause - Physical Damage -
                  Reinsurance - U.S.A. - NMA 1119;


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<PAGE>

         2.       Nuclear Incident Exclusion Clause - Liability - Reinsurance -
                  U.S.A. - NMA 1590;

B.       War Risks, in accordance with the War Risks Exclusion Clause appearing
         in the original Policies;

C.       Insolvency, in accordance with the Insolvency Funds Exclusion Clause
         attached hereto;

D.       Liability assumed by the Company as a member of any pool, association
         or syndicate, in accordance with the Pools, Associations and Syndicates
         Exclusion Clause attached hereto;

E.       Earthquake, when written as such;

F.       Liability arising out of ownership, maintenance or use of any aircraft
         or flight operations;

G.       Professional Liability, when written as such, however not to exclude
         when written as part of a package policy or when written in conjunction
         with other policies issued by the Company;

H.       Insolvency Risks and Financial Guarantee;

I.       Any acquisitions of companies or books of business outside of the
         normal course of business ("agent rollovers") without the prior written
         consent of the Reinsurer in the underlying State National Quota Share
         Reinsurance Agreement.

J.       Asbestos liabilities of any nature;

K.       Pollution liabilities of any nature;

L.       Assumed reinsurance with the exception of inter-affiliate reinsurance;

M.       Ex gratia payments in excess of $3,000 (three thousand dollars).

                                   ARTICLE 5

COVERAGE

A.       Coverage A - The Reinsurer shall indemnify the Company for 25% (twenty
         five percent) of the paid portion of all Ultimate Net Loss and Loss
         Adjustment Expenses arising out of Middle Market Business in excess of
         75% (seventy five percent) to 115% (one hundred and fifteen percent) of
         the Net Earned Premium allocable to Middle Market Business up to a
         maximum amount equal to 10% (ten percent) of Net Earned Premium for
         Middle Market Business.

B.       Coverage B - The Reinsurer shall indemnify the Company for 25% (twenty
         five percent) of the paid portion of all Ultimate Net Loss and Loss
         Adjustment Expenses arising out of Large Lines Real Estate General
         Liability Business in excess of 60% (sixty percent) to 125% (one
         hundred and twenty-five percent) of the Net Earned Premium allocable to
         Large Lines Real Estate General Liability Business up to a maximum
         amount equal to 16.25% (sixteen and one-quarter percent) of Net Earned
         Premium for Large Lines Real Estate General Liability Business.


                                       4
<PAGE>

                                   ARTICLE 6

NET RETAINED LINES

This Agreement applies only to that portion of Business Covered which the
Company retains net for its own account pursuant to the terms of the State
National Quota Share Reinsurance Agreement.

                                   ARTICLE 7

REINSURANCE PREMIUM

The Company shall pay the Reinsurer reinsurance premium consisting of the
following Coverage A Reinsurance Premium and Coverage B Reinsurance Premium
(collectively, the "Reinsurance Premium"):

A.       Coverage A Reinsurance Premium - The Company shall pay the Reinsurer a
         Coverage A Reinsurance Premium equal to 1.6% (one point six percent) of
         Net Written Premium allocable to the Middle Market Business Segment, as
         collected under the State National Quota Share Reinsurance Agreement.
         Coverage A Reinsurance Premium is payable by the Company to the
         Reinsurer at the time the Company receives its Reinsurance Premium from
         State National under the State National Quota Share Reinsurance
         Agreement.

B.       Coverage B Reinsurance Premium - The Company shall pay the Reinsurer a
         Coverage B Reinsurance Premium equal to 3.0% (three point zero percent)
         of Net Written Premium allocable to Large Lines Real Estate General
         Liability Business, as collected under the State National Quota Share
         Reinsurance Agreement. Coverage B Reinsurance Premium is payable by the
         Company to the Reinsurer at the time the Company receives its
         Reinsurance Premium from State National under the State National Quota
         Share Reinsurance Agreement.


                                       5
<PAGE>

                                  ARTICLE 8

ACCOUNTS AND LOSS SETTLEMENTS

A.       Accounts - Within 30 (thirty) days following the Company's receipt from
         State National of the quarterly report due the Company pursuant to
         Article 12, Accounts, Remittances and Loss Settlements of the State
         National Quota Share Reinsurance Agreement, the Company shall report to
         the Reinsurer, for each Business Segment reinsured hereunder, the
         amount of:

         1.       Reinsurance Premium, per Article 7, Reinsurance Premium;

         2.       Ceded Ultimate Net Loss and Loss Adjustment Expenses paid;

         3.       Ceded Ultimate Net Loss and Loss Adjustment Expenses
                  outstanding (including IBNR);

         Reports shall continue until final settlement of all ceded Ultimate Net
         Loss and Loss Adjustment Expenses hereunder.

         Notwithstanding the above, the Company shall advise the Reinsurer
         promptly of all Ultimate Net Losses, which, in the opinion of the
         Company, may result in a claim hereunder and of all subsequent
         developments thereto which, in the opinion of the Company, may
         materially affect the position of the Reinsurer. Inadvertent omission
         or oversight in dispatching such advises shall in no way affect the
         liability of the Reinsurer. However, the Company shall notify the
         Reinsurer of such omission or oversight promptly upon its discovery.

B.       Loss Settlements - The Reinsurer shall pay the Company the amount of
         paid Ceded Ultimate Net Loss and Loss Adjustment Expenses set forth in
         each quarterly report no later than 15 (fifteen) days following the
         Reinsurer's receipt of the quarterly report by direct wire transfer to
         the Intermediary.

C.       All Ultimate Net Loss settlements made by the Company on Business
         Covered, whether under policy terms and conditions or by way of
         compromise, shall be in the sole discretion of the Company and shall be
         unconditionally binding on the Reinsurer. Upon satisfactory proof of
         loss, the Reinsurer shall pay or allow, as applicable, its proportional
         share of each such settlement in accordance with this Agreement.

                                   ARTICLE 9

CURRENCY

A.       Whenever the word "dollars" or the "$" appears in this Agreement, they
         shall be construed to mean United States Dollars and all transactions
         under this Agreement shall be in United States Dollars.


                                       6
<PAGE>

B.       Amounts paid or received by the Company in any other currency shall be
         converted to United States Dollars at the rate of exchange at the date
         such transaction is entered on the books of the Company.

                                   ARTICLE 10

TAXES

In consideration of the terms under which this Agreement is issued, the Company
undertakes not to claim any deduction of the Reinsurance Premium hereon when
making Canadian tax returns or when making tax returns other than Income or
Profits Tax returns, to any State or Territory of the United States of America
or to the District of Columbia.

                                   ARTICLE 11

RESERVES

A.       If a jurisdiction of the United States shall not permit the Company, in
         the statements required to be filed with its regulatory authority(ies),
         to receive full credit as admitted reinsurance for any Reinsurer's
         share of obligations, the Company shall forward to such Reinsurer a
         statement of the Reinsurer's share of such obligations. Upon receipt of
         such statement, the Reinsurer shall promptly apply for and provide the
         Company with a "clean", unconditional and irrevocable Letter of Credit
         in the amount specified in the statement submitted, with terms and bank
         acceptable to the regulatory authority(ies) having jurisdiction over
         the Company.

B.       "Obligations" as used in this Article, shall mean the sum of losses
         paid and Loss Adjustment Expenses paid by the Company but not yet
         recovered from the Reinsurer, plus reserves for reported losses, Loss
         Adjustment Expenses, losses incurred but not reported and premiums
         unearned, if any.

C.       The Reinsurer hereby agrees that the Letter of Credit shall provide for
         automatic extension of the Letter of Credit without amendment for one
         year from the date of expiration of said Letter or any future
         expiration date unless 30 (thirty) days prior to any expiration the
         issuing bank shall notify the Company by registered mail that the
         issuing bank elects not to consider the Letter of Credit renewed for
         any additional period. An issuing bank, not a "qualified bank" as
         defined by Regulation 133 promulgated by the Insurance Department of
         the State of New York, shall provide 60 (sixty) days notice to the
         Company prior to any expiration.

D.       Notwithstanding any other provision of this Agreement, the Company or
         any successor by operation of law of the Company including, without
         limitation, any liquidator, rehabilitator, receiver or conservator of
         the Company may draw upon such credit, without diminution because of
         the insolvency of any party hereto, at any time and undertakes to use
         and apply such credit for one or more of the following purposes only:



                                       7
<PAGE>

         1.       to pay the Reinsurer's share or to reimburse the Company for
                  the Reinsurer's share of any obligations, as stipulated in the
                  statement submitted by the Company to the Reinsurer, which is
                  due to the Company and not otherwise paid by the Reinsurer;

         2.       in the event the Company has received effective notice of
                  non-renewal of the Letter of Credit and the Reinsurer's
                  liability remains unliquidated and undischarged 30 (thirty)
                  days prior to the expiry date of the Letter of Credit to
                  withdraw the balance of the Letter of Credit and place such
                  sums in an interest bearing trust account to secure the
                  continuing liabilities of the Reinsurer under this Agreement
                  until a renewal Letter of Credit acceptable to the regulatory
                  authority(ies) having jurisdiction over the Company, or a
                  substitute in lieu thereof acceptable to the regulatory
                  authority(ies) having jurisdiction over the Company, has been
                  received by the Company. The Company shall provide to the
                  Reinsurer payment of any interest thereon accruing from such
                  account.

         3.       to make refund of any sum which is in excess of the actual
                  amount required for Sections 1 and 2 of this paragraph.

E.       At annual intervals or more frequently as determined by the Company,
         but never more frequently than quarterly, the Company shall prepare a
         specific statement, for the sole purpose of amending the Letter of
         Credit, of the Reinsurer's share of any obligations. If the statement
         shows that the Reinsurer's share of obligations exceeds the balance of
         credit as of the statement date, the Reinsurer shall, within 30
         (thirty) days after receipt of notice of such excess, secure delivery
         to the Company of an amendment of the Letter of Credit increasing the
         amount of credit by the amount of such difference. If the statement
         shows, however, that the Reinsurer's share of obligations is less than
         the balance of credit as of the statement date, the Company shall,
         within 30 (thirty) days after receipt of written request from the
         Reinsurer, release such excess credit by agreeing to secure an
         amendment to the Letter of Credit reducing the amount of credit
         available by the amount of such excess credit.

F.       The bank shall have no responsibility whatsoever in connection with the
         propriety of withdrawals made by the Company or the disposition of
         funds withdrawn, except to assure that withdrawals are made only upon
         the order of properly authorized representatives of the Company. The
         Company shall incur no obligation to the bank in acting upon the
         credit, other than as appears in the express terms thereof.

                                   ARTICLE 12

SPECIAL TERMINATION

The Company may terminate this Agreement on a cut-off basis or a run-off basis
(the method of termination to be at the sole option of the Company) at any time,
provided that one or more of the qualifying events set forth below has
transpired, by giving the Reinsurer thirty (30) days prior written notice of its
intent to invoke its rights under this Article 12, Special Termination:

         1.       Reinsurer's A.M. Best rating drops below a "B+"; or


                                       8
<PAGE>

         2.       A reduction of more than 20% (twenty percent) of Reinsurer's
                  statutory surplus from Reinsurer's Statutory Surplus Level at
                  December 31, 2003; or

         3.       There is a change in the office of President or CEO of
                  Reinsurer; or

         4.       Insolvency, Rehabilitation, or Regulatory Supervision of
                  Reinsurer; or

         5.       Reinsurer ceases underwriting new property and casualty
                  business; or

         6.       Reinsurer sells 50% or more of its assets or reinsures 50% or
                  more of its Net Written Premium or net liabilities (all as of
                  January 1, 2004) to an unaffiliated third party; or

         7.       An insurance regulatory authority or governmental entity in
                  any United States jurisdiction revokes, suspends or forces
                  Reinsurer to withdraw its certificate of authority in such
                  jurisdiction; or

         8.       If any of the events or circumstances described in Article
                  6.01 (a) through 6.01(h) of that certain General Agency
                  Agreement, made and entered into as of January 1, 2004, by and
                  among State National, Tower Risk Management Corp. and the
                  Reinsurer, transpire or occur at any time.

         9.       If Reinsurer fails to maintain the Trust Account, as defined
                  within the Tower Insurance Company of New York Quota Share
                  Reinsurance Agreement effective January 1, 2004 with the
                  Company, at the minimum balance required by such Trust
                  Agreement for a period of seventy five (75) days.

If the Company elects to invoke this Article 12, Special Termination on a
cut-off basis, the Reinsurer shall have no liability for losses occurring
subsequent to the effective date of termination and shall return all Reinsurance
Premium that is not earned as of the date of termination to the Company. If the
Company elects to invoke this Article 12, Special Termination on a run-off
basis, the Reinsurer will continue to be liable for the full amount of paid
Ceded Ultimate Net Loss and Loss Adjustment Expenses on the in force Subject
Business for so long as the Company remains liable for such in force Subject
Business pursuant to the State National Quota Share Reinsurance Agreement.

                                   ARTICLE 13

OFFSET

The Company and the Reinsurer shall have the right to offset any balance or
amounts due from one party to the other under the terms of this Agreement or any
other agreement between the Company and the Reinsurer. The party asserting the
right of offset may exercise such right any time whether the balances due are on
account of Reinsurance Premiums, Ultimate Net Losses, Loss Adjustment Expenses
or otherwise. However, in the event of insolvency of any party hereto, offset
shall only be allowed in accordance with applicable law.


                                       9
<PAGE>

                                   ARTICLE 14

ERRORS AND OMISSIONS

Inadvertent delays, errors or omissions made by the Company in connection with
this Agreement shall not relieve the Reinsurer from any liability which would
have attached had such delay, error or omission not occurred, provided always
that such delay, error or omission shall be rectified as soon as possible after
discovery by the Company's home office.

                                   ARTICLE 15

ACCESS TO RECORDS

The Company shall place at the disposal of the Reinsurer at all reasonable
times, and the Reinsurer shall have the right to inspect through their
designated representatives, during the Term of this Agreement and thereafter,
all books, records and papers of the Company in connection with any reinsurance
hereunder, or the subject matter hereof.

ARTICLE 16

INSOLVENCY

A.       In the event of the insolvency of the Company, this reinsurance shall
         be payable directly to the Company, or to its liquidator, receiver,
         conservator, or statutory successor on the basis of the liability of
         the Company without diminution because of the insolvency of the Company
         or because the liquidator, receiver, conservator or statutory successor
         of the Company has failed to pay all or a portion of any claim. It is
         agreed, however, that the liquidator, receiver, conservator, or
         statutory successor of the Company shall give written notice to the
         Reinsurer of the pendency of a claim against the Company indicating the
         policy insured which claim would involve a possible liability on the
         part of the Reinsurer with a reasonable time after such claims is filed
         in the conservation or liquidation proceeding or in the receivership,
         and that during the pendency of such claim, the Reinsurer may
         investigate such claim and interpose, at its own expense, in the
         proceeding where such claim is to be adjudicated, any defense or
         defenses that they may deem available to the Company or its liquidator,
         receiver, conservator or statutory successor. The expense thus incurred
         by the Reinsurer shall be chargeable, subject to the approval of the
         court, against the Company as part of the expense of conservation or
         liquidation to the extent of a pro rata share of the benefit which may
         accrue to the Company solely as a result of the defense undertaken by
         the Reinsurer.

B.       Where two or more reinsurers are involved in the same claim and a
         majority in interest elect to interpose defense to such claim, the
         expense shall be apportioned in accordance with the terms of this
         Agreement as though such expense had been incurred by the insolvent
         Company.


                                       10
<PAGE>

                                   ARTICLE 17

CONFIDENTIALITY

The parties acknowledge there may be portions of this Agreement, the Reinsurance
Agreement submission or the marketing package that may contain confidential,
proprietary information of the Company. The Reinsurer shall maintain the
confidentiality of such information concerning the Company and its business and
shall not disclose it to any third person without prior approval; provided,
however, that the Reinsurer may be required and is permitted under this
Agreement to disclose such information in answers to interrogatories, subpoenas
or other legal/arbitration processes as well as to the Company's Intermediaries,
to the Reinsurer's retrocessionaire, and applicable intermediaries, or in
response to requests by governmental and regulatory agencies. In addition, the
Reinsurer may disclose such information to its accountants and to its outside
legal counsel as may be necessary.

                                   ARTICLE 18

ARBITRATION

A.       Any dispute or other matter in question between the Company and the
         Reinsurer arising out of, or relating to, the formation,
         interpretation, performance or breach of this Agreement, whether such
         dispute arises before or after termination of this Agreement, shall be
         settled by arbitration. Arbitration shall be initiated by the delivery
         of a written notice of demand for arbitration by one party to the other
         within a reasonable time after the dispute has arisen.

B.       If more than one reinsurer is involved in the same dispute, all such
         reinsurers shall constitute and act as one party for the purposes of
         this Article, provided, however, that nothing herein shall impair the
         rights of such reinsurers to assert several, rather than joint,
         defenses or claims, nor be construed as changing the liability of the
         reinsurers under the terms of this Agreement from several to joint.

C.       Each party shall appoint an individual as arbitrator and the two so
         appointed shall then appoint a third arbitrator. If either party
         refuses or neglects to appoint an arbitrator within 60 (sixty) days,
         the other party may appoint the second arbitrator. If the two
         arbitrators do not agree on a third arbitrator within 60 (sixty) days
         of their appointment, either party may petition the American
         Arbitration Association to appoint a third arbitrator. The arbitrators
         shall be active or former officers of insurance or reinsurance
         companies or Lloyd's Underwriters; the arbitrators shall not have a
         personal or financial interest in the result of the arbitration.

D.       The arbitration hearings shall be held in New York, New York or such
         other place as may be mutually agreed. Each party shall submit its case
         to the arbitrators within 60 (sixty) days of the selection of the third
         arbitrator or within such longer period as may be agreed by the
         arbitrators. The arbitrators shall not be obliged to follow judicial
         formalities or the rules of evidence except to the extent required by
         governing law, that is, the state law of the situs of the arbitration
         as herein agreed; they shall make their decisions according to the
         practice of the reinsurance business. The decision rendered by a
         majority of the arbitrators shall be final and binding on both parties.
         Such decision shall be a condition precedent to any right of legal
         action arising out of the arbitrated dispute which either party may
         have against the other. Judgment upon the award rendered may be entered
         in any court having jurisdiction thereof.


                                       11
<PAGE>

E.       Each party shall pay the fee and expenses of its own arbitrator and
         one-half of the fee and expenses of the third arbitrator. All other
         expenses of the arbitration shall be equally divided between the
         parties.

F.       Except as provided above, arbitration shall be based, insofar as
         applicable, upon the procedures of the American Arbitration
         Association.

                                   ARTICLE 19

SERVICE OF SUIT

(This Article only applies to reinsurers domiciled outside the United States
and/or unauthorized in any state, territory or district of the United States
having jurisdiction over the Company.)

A.       It is agreed that in the event of the failure of the Reinsurer hereon
         to pay any amount claimed to be due hereunder, the Reinsurer hereon, at
         the request of the Company, shall submit to the jurisdiction of a court
         of competent jurisdiction within the United States. Nothing in this
         Article constitutes or should be understood to constitute a waiver of
         the Reinsurer's right to commence an action in any court of competent
         jurisdiction in the United States, to remove an action to a United
         States District Court, or to seek a transfer of a case to another court
         as permitted by the laws of the United States or of any state in the
         United States. It is further agreed that service of process in such
         suit may be made upon Mendes and Mount, 750 Seventh Avenue, New York,
         New York 10019-6829, and that in any suit instituted, the Reinsurer
         shall abide by the final decision of such court or of any Appellate
         Court in the event of an appeal.

B.       The above-named are authorized and directed to accept service of
         process on behalf of the Reinsurer in any such suit and/or upon the
         request of the Company to give a written undertaking to the Company
         that they shall enter a general appearance upon the Reinsurer's behalf
         in the event such a suit shall be instituted.

C.       Further, pursuant to any statute of any state, territory or district of
         the United States which makes provision therefor, the Reinsurer hereon
         hereby designates the Superintendent, Commissioner or Director of
         Insurance or other officer specified for that purpose in the statute,
         or his successor or successors in office, as their true and lawful
         attorney upon whom may be served any lawful process in any action, suit
         or proceeding instituted by or on behalf of the Company or any
         beneficiary hereunder arising out of this Agreement of reinsurance, and
         hereby designates the above-named as the person to whom the said
         officer is authorized to mail such process or a true copy thereof.


                                       12
<PAGE>

                                   ARTICLE 20

INTERMEDIARY

Pegasus-Towers Perrin Reinsurance is hereby recognized as the Intermediary
negotiating this Agreement for all business hereunder. All communications
(including but not limited to notices, statements, Premium, return premium,
commissions, Taxes, losses, Loss Adjustment Expense, salvages and loss
settlements) relating thereto shall be transmitted to the Company or the
Reinsurer through Pegasus-Towers Perrin Reinsurance, 175 Powder Forest Drive,
Weatogue, CT 06089. Payments by the Company to the Intermediary shall be deemed
to constitute payment to the Reinsurer. Payments by the Reinsurer to the
Intermediary shall be deemed to constitute payment to the Company only to the
extent that such payments are actually received by the Company.

                                   ARTICLE 21

CHOICE OF LAW

This Agreement shall be governed as to performance, administration and
interpretation by the laws of the State of New York, exclusive of that state's
rules with respect to conflicts of laws, except as to rules with respect to
credit for reinsurance in which case the rules of all applicable states shall
apply.


                                       13
<PAGE>

                                   ARTICLE 22


PROPORTION

In Witness Whereof, the parties hereto have caused this Agreement to be executed
in triplicate by their duly authorized representatives:

Signed this 8th day of March, 2004,
For and on behalf of Hannover Reinsurance (Ireland) Limited in confirmation of
the terms, conditions and Reinsurer hereon

By:    /s/ David Maquire                             /s/ Thomas Doran
       -------------------------------------------------------------------------
                           (Signature)
       David Maquire                                Thomas Doran
       -------------------------------------------------------------------------
                          (Print Name)
Title: UNDERWRITER                                  Associate Director
       -------------------------------------------------------------------------

Signed this 8th day of March, 2004,
For and on behalf of E&S Reinsurance (Ireland) Limited in confirmation of the
terms, conditions and Reinsurer hereon

By:    /s/ David Maquire                            /s/ Thomas Doran
       -------------------------------------------------------------------------
                             (Signature)
       David Maquire                               Thomas Doran
       -------------------------------------------------------------------------
                            (Print Name)
Title: UNDERWRITER                                 Associate Director
       -------------------------------------------------------------------------

Signed this 4th day of March, 2004,
For and on behalf of TOWER INSURANCE COMPANY OF NEW YORK for a 100% (one hundred
percent) participation of the terms and conditions hereon

By:    /s/ Marina Contiero
       -------------------------------------------------------------------------
                                   (Signature)
       Marina Contiero
       -------------------------------------------------------------------------
                                  (Print Name)
Title: Vice President
       -------------------------------------------------------------------------


                                       14
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                                    EXHIBIT A
              2004 STATE NATIONAL QUOTA SHARE REINSURANCE AGREEMENT




































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                        NUCLEAR INCIDENT EXCLUSION CLAUSE
                       PHYSICAL DAMAGE - REINSURANCE - USA

         1. This Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any
Pool of Insurers or Reinsurers formed for the purpose of covering Atomic or
Nuclear Energy risks.

         2. Without in any way restricting the operation of paragraph (1) of
this Clause, this Contract does not cover any loss or liability accruing to the
Reassured, directly or indirectly, and whether as Insurer or Reinsurer, from any
insurance against Physical Damage (including business interruption or
consequential loss arising out of such Physical Damage) to:

         I.       Nuclear reactor power plants including all auxiliary property
                  on the site, or

         II.      Any other nuclear reactor installation, including laboratories
                  handling radioactive materials in connection with reactor
                  installations, and "critical facilities" as such, or

         III.     Installations for fabricating complete fuel elements or for
                  processing substantial quantities of "special nuclear
                  material", and for reprocessing, salvaging, chemically
                  separating, storing or disposing of "spent" nuclear fuel or
                  waste materials, or

         IV.      Installations other than those listed in paragraph (2) III
                  above using substantial quantities of radioactive isotopes or
                  other products of nuclear fission.

         3. Without in any way restricting the operations of paragraphs (1) and
(2) hereof, this Contract does not cover any loss or liability by radioactive
contamination accruing to the Reassured, directly or indirectly, and whether as
Insurer or Reinsurer, from any insurance on property which is on the same site
as a nuclear reactor power plant or other nuclear installation and which
normally would be insured therewith except that this paragraph (3) shall not
operate

         (a)      where the Reassured does not have knowledge of such nuclear
                  reactor power plant or nuclear installation, or

         (b)      where said insurance contains a provision excluding coverage
                  for damage to property caused by or resulting from radioactive
                  contamination, however caused. However on and after 1st
                  January 1960, this subparagraph (b) shall only apply provided
                  the said radioactive contamination exclusion provision has
                  been approved by the Governmental Authority having
                  jurisdiction thereof.

         4. Without in any way restricting the operations of paragraphs (1), (2)
and (3) hereof, this Contract does not cover any loss or liability by
radioactive contamination accruing to the Reassured, directly or indirectly, and
whether as Insurer or Reinsurer, when such radioactive contamination is a named
hazard specifically insured against.


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         5. It is understood and agreed that this Clause shall not extend to
risks using radioactive isotopes in any form where the nuclear exposure is not
considered by the Reassured to be the primary hazard.

         6. The term "special nuclear material" shall have the meaning given it
in the Atomic Energy Act of 1954 or by any law amendatory thereof.

         7.       The Reassured to be sole judge of what constitutes:

                  (c)      substantial quantities, and

                  (d)      the extent of installation, plant or site

NOTE: - Without in any way restricting the operation of paragraph (1) hereof, it
is understood and agreed that

                  (a)      all policies issued by the Reassured on or before
                           31st December 1957 shall be free from the application
                           of the other provisions of this Clause until expiry
                           date or 31st December 1960 whichever first occurs
                           whereupon all the provisions of this Clause shall
                           apply.

                  (b)      with respect to any risk located in Canada policies
                           issued by the Reassured on or before 31st December
                           1958 shall be free from the application of the other
                           provisions of this Clause until expiry date or 31st
                           December 1960 whichever first occurs whereupon all
                           the provisions of this Clause shall apply.




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                        NUCLEAR INCIDENT EXCLUSION CLAUSE
                        LIABILITY - REINSURANCE - U.S.A.

1.       This Agreement does not cover any loss or liability accruing to the
         Cedent as a member of, or subscriber to, any association of insurers or
         reinsurers formed for the purpose of covering nuclear energy risks or
         as a direct or indirect reinsurer of any such member, subscriber or
         association.

2.       Without in any way restricting the operation of paragraph (1) of this
         Clause it is understood and agreed that for all purposes of this
         Agreement all the original policies of the Cedent (new, renewal and
         replacement) of the classes specified in Clause II of this paragraph
         (2) from the time specified in Clause III of this paragraph (2) shall
         be deemed to include the following provision (specified as the Limited
         Exclusion Provision):

Limited Exclusion Provision*

         I.       It is agreed that the policy does not apply under any
                  liability coverage, to (injury, sickness, disease, death or
                  destruction (bodily injury or property damage with respect to
                  which an insured under the policy is also an insured under a
                  nuclear energy liability policy issued by Nuclear Energy
                  Liability Insurance Association, Mutual Atomic Energy
                  Liability Underwriters or Nuclear Insurance Association of
                  Canada, or would be an insured under any such policy but for
                  its termination upon exhaustion of its limits of liability.

         II.      Family Automobile Policies (liability only), Special
                  Automobile Policies (private passenger automobiles, liability
                  only), Farmers Comprehensive Personal Liability Policies
                  (liability only), Comprehensive Personal Liability Policies
                  (liability only) or policies of a similar nature; and the
                  liability portion of combination forms related to the four
                  classes of policies stated above, such as the Comprehensive
                  Dwelling Policy and the applicable types of Homeowners
                  Policies.

         III.     The inception dates and thereafter of all original policies as
                  described in II above, whether new, renewal or replacement,
                  being policies which either

                  (a)      become effective on or after 1st May, 1960, or

(b)      become effective before that date and contain the Limited Exclusion
         Provision set out above; provided this paragraph (2) shall not be
         applicable to Family Automobile Policies, Special Automobile Policies
         or policies or combination policies of a similar nature, issued by the
         Cedent on New York risks, until 90 days following approval of the
         Limited Exclusion Provision by the Governmental Authority having
         jurisdiction thereof.

3.       Except for those classes of policies specified in Clause II of
         paragraph (2) and without in any way restricting the operation of
         paragraph (1) of this Clause, it is understood and agreed that for all
         purposes of this Agreement the original liability policies of the
         Cedent (new, renewal and replacement) affording the following
         coverages:


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                  Owners, Landlords and Tenants Liability, Contractual
                  Liability,

                  Elevator Liability, Owners or Contractors (including
                  railroad), Protective Liability, Manufacturers and Contractors
                  Liability, Product Liability, Professional and Malpractice
                  Liability, Storekeepers Liability, Garage Liability,
                  Automobile Liability (including Massachusetts Motor Vehicle or
                  Garage Liability)

         shall be deemed to include, with respect to such coverages, from the
         time specified in Clause V of this paragraph (3), the following
         provision (specified as the Broad Exclusion Provision):

                  Broad Exclusion Provision*

It is agreed that the policy does not apply:

         I.       Under any Liability Coverage, to (injury, sickness, disease,
                  death or destruction (bodily injury or property damage

                  (a)      with respect to which an insured under the policy is
                           also an insured under a nuclear energy liability
                           policy issued by Nuclear Energy Liability Insurance
                           Association, Mutual Atomic Energy Liability
                           Underwriters or Nuclear Insurance Association of
                           Canada, or would be an insured under any such policy
                           but for its termination upon exhaustion of its limit
                           of liability; or

                  (b)      resulting from the hazardous properties of nuclear
                           material and with respect to which (1) any person or
                           organization is required to maintain financial
                           protection pursuant to the Atomic Energy Act of 1954,
                           or any law amendatory thereof, or (2) the insured is,
                           or had this policy not been issued would be, entitled
                           to indemnity from the United States of America, or
                           any agency thereof, under any agreement entered into
                           by the United States of America, or any agency
                           thereof, with any person or organization.

         II.      Under any Medical Payments Coverage, or under any
                  Supplementary Payments Provision relating to (immediate
                  medical or surgical relief (first aid, to expenses incurred
                  with respect to (bodily injury, sickness, disease or death
                  (bodily injury resulting from the hazardous properties of
                  nuclear material and arising out of the operation of a nuclear
                  facility by any person or organization.

         III.     Under any Liability Coverage, to (injury, sickness, disease,
                  death or destruction (bodily injury or property damage
                  resulting from the hazardous properties of nuclear material if


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                  (a)      the nuclear material (1) is at any nuclear facility
                           owned by, or operated by or on behalf of, an insured
                           or (2) has been discharged or dispersed therefrom;

                  (b)      the nuclear material is contained in spent fuel or
                           waste at any time possessed, handled, used,
                           processed, stored, transported or disposed or by or
                           on behalf of an insured; or

                  (c)      (the injury, sickness, disease, death or destruction
                           (the bodily injury or property damage arises out of
                           the furnishing by an insured of services, materials,
                           parts or equipment in connection with the planning,
                           construction, maintenance, operation or use of any
                           nuclear facility, but if such facility is located
                           within the United States of America, its territories,
                           or possessions or Canada, this exclusion (c) applies
                           only to (injury to or destruction of property at such
                           nuclear facility (property damage to such nuclear
                           facility and any property thereat.

         IV.      As used in this endorsement: "hazardous properties" include
                  radioactive, toxic or explosive properties; "nuclear material"
                  means source material, special nuclear material or by-product
                  material; "source material", "special nuclear material" and
                  "by-product material" have the meanings given to them in the
                  Atomic Energy Act of 1954 or in any law amendatory thereof;
                  "spent fuel" means any fuel element or fuel component, solid
                  or liquid, which has been used or exposed to radiation in a
                  nuclear reactor; "waste" means any waste material (1)
                  containing by-product material and (2) resulting from the
                  operation by any person or organization of any nuclear
                  facility included within the definition of nuclear facility
                  under paragraph (a) or (b) thereof; "nuclear facility" means

                  (a)      any nuclear reactor,

                  (b)      any equipment or device designed or used for (1)
                           separating the isotopes of uranium or plutonium, (2)
                           processing or utilizing spent fuel, or (3) handling,
                           processing or packaging waste,

                  (c)      any equipment or device used for the processing,
                           fabricating or alloying of special nuclear material
                           if at any time the total amount of such material in
                           the custody of the Insured at the premises where such
                           equipment or device is located consists of or
                           contains more than 25 grams of plutonium or uranium
                           233 or any combination thereof, or more than 250
                           grams of uranium 235,

                  (d)      any structure, basin, excavation, premises or place
                           prepared or used for the storage or disposal of
                           waste,

                           and includes the site on which any of the foregoing
                           is located, all operations conducted on such site and
                           all premises used for such operations; "nuclear
                           reactor" means any apparatus designed or used to
                           sustain nuclear fission in a self-supporting chain
                           reaction or to contain a critical mass of fissionable
                           material; (with respect to injury to or destruction
                           of property, the word "injury" or "destruction"
                           ("property damage" includes all forms of radioactive
                           contamination of property. (includes all forms of
                           radioactive contamination of property.


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         V.       The inception dates and thereafter of all original policies
                  affording coverages specified in this paragraph (3), whether
                  new, renewal or replacement, being policies which become
                  effective on or after 1st May, 1960, provided this paragraph
                  (3) shall not be applicable to

                  (i)      Garage and Automobile Policies issued by the Cedent
                           on New York risks, or

                  (ii)     Statutory liability insurance required under Chapter
                           90, General Laws of Massachusetts, until 90 days
                           following approval of the Board Exclusion Provision
                           by the Governmental Authority having jurisdiction
                           thereof.

         4.       Without in any way restricting the operation of paragraph (1)
                  of this Clause, it is understood and agreed that paragraphs
                  (2) and (3) above are not applicable to original liability
                  policies of the Cedent in Canada and that with respect of such
                  policies this Clause shall be deemed to include the Nuclear
                  Energy Liability Exclusion Provisions adopted by the Canadian
                  Underwriters' Association or the Independent Insurance
                  Conference of Canada.

                        ---------------------------------

*Note The words printed in italics in the Limited Exclusion Provision and in the
Broad Exclusion Provision shall apply only in relation to original liability
policies which include a Limited Exclusion Provision or a Broad Exclusion
Provision containing those words.



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                     WAR RISK EXCLUSION CLAUSE (REINSURANCE)

         As regards interests which at time of loss or damage are on shore, no
liability shall attach hereto in respect of any loss or damage which is
occasioned by war, invasion, hostilities, acts of foreign enemies, civil war,
rebellion, insurrection, military or usurped power, or martial law or
confiscation by order of any government or public authority.

         This War Exclusion Clause shall not, however, apply to interest which
at time of loss or damage are within the territorial limits of the United States
of America (comprising the fifty States of the Union and the District of
Columbia, its territories and possessions, including the Panama Canal Zone and
the Commonwealth of Puerto Rico and including Bridges between the United States
of America and Mexico provided they are under United States ownership), Canada,
St. Pierre and Miquelon, provided such interests are insured under original
policies, endorsements or binders containing a standard war or hostilities or
warlike operations exclusion clause.

         Nevertheless, this clause shall not be construed to apply to loss or
damage occasioned by riots, strikes, civil commotion, vandalism, malicious
damage, including acts committed by agents of any government, party or faction
engaged in war, hostilities or other warlike operation, provided such agents are
acting secretly and not in connection with any operations of military or naval
armed forces in the country where the interests insured are situated.


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                        INSOLVENCY FUND EXCLUSION CLAUSE

This Agreement excludes all liability of the Ceding Company arising by contract,
operation of law or otherwise, from its participation or membership, whether
voluntary or involuntary, in any insolvency fund. "Insolvency Fund" includes any
guarantee fund, insolvency fund, plan, pool, association, fund or other
arrangement, howsoever denominated, established or governed, which provides for
any assessment of or payment or assumption by the Ceding Company of part or all
of any claim, debt, charge, fee or other obligation of an insurer or its
successors or assigns which has been declared by any competent authority to be
insolvent or which is otherwise deemed unable to meet any claim, debt, charge,
fee or other obligation in whole or in part.







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               POOLS, ASSOCIATIONS AND SYNDICATES EXCLUSION CLAUSE

Section A:

Excluding:

         (e)      All business derived directly or indirectly from any Pool,
                  Association, or Syndicate which maintains its own reinsurance
                  facilities.

         (f)      Any Pool or Scheme (whether voluntary or mandatory) formed
                  after March 1, 1968 for the purpose of insurance property
                  whether on a country-wide basis or in respect of designated
                  areas. This exclusion shall not apply to so-called Automobile
                  Insurance Plans or other Pools formed to provide coverage for
                  Automobile Physical Damage.

Section B:

It is agreed that business written by the Company for the same perils, which is
known at the time to be insured by, or in excess of underlying amounts placed in
the following Pools, Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

                  Industrial Risk Insurers,
                  Associated Factory Mutuals Improved Risk Mutuals
                  Any Pool, Association or Syndicate formed for the purpose of
                  writing Oil, Gas or Petro-Chemical Plants and/or Oil or Gas
                  Drilling Rigs, United States Aircraft Insurance Group,
                  Canadian Aircraft Insurance Group, Associated Aviation
                  Underwriters, American Aviation Underwriters

Section B does not apply:

         (a)      Where the Total Insured Value over all interests of the risk
                  in question is less than $250,000,000.

         (b)      To interests traditionally underwritten as Inland Marine or
                  stock and/or contents written on a blanket basis.

         (c)      To Contingent Business Interruption, except when the Company
                  is aware that the key location is known at the time to be
                  insured in any Pool, Association, or Syndicate named above
                  other than as provided for under Section B(a).

         (d)      To risks as follows:

                  Offices, Hotels, Apartments, Hospitals, Educational
                  Establishments, Public Utilities, (other than railroad
                  schedules) and builder's risks on the classes of risks
                  specified in this subsection (d) only. Where this clause
                  attaches to Catastrophe Excesses, the following Section C is
                  added:


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Section C:

Nevertheless the Reinsurer specifically agrees that liability accruing to the
Company from its participation in:

         (1)      The following so-called "Coastal Pools":

                  Alabama Insurance Underwriting Association Florida Windstorm
                  Underwriting Association Louisiana Insurance Underwriting
                  Association Mississippi Windstorm Underwriting Association
                  North Carolina Insurance Underwriting Association South
                  Carolina Windstorm and Hail Underwriting Association Texas
                  Catastrophe Property Insurance Association

                                       AND

         (2)      All "Fair Plan" and "Rural Risk Plan" business for all perils
                  otherwise protected hereunder shall not be excluded, except,
                  however, that this reinsurance does not include any increase
                  in such liability resulting from:

                  (i)      The inability of any other participant in such
                           "Coastal Pool" and/or "Fair Plan" and/or "Rural Risk
                           Plan" to meet its liability

                  (ii)     Any claim against such "Coastal Pool" and/or "Fair
                           Plan" and/or "Rural Risk Plan" or any participant
                           therein, including the Company, whether by way of
                           subrogation or otherwise, brought by or on behalf of
                           any insolvency fund (as defined in the Insolvency
                           Fund Exclusion Clause incorporated in this Contract).



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