<PAGE>

                                                                   Exhibit 10.25

                                   QUOTA SHARE
                              REINSURANCE AGREEMENT

                  (HEREINAFTER REFERRED TO AS THE "AGREEMENT")

                                     BETWEEN

                       TOWER INSURANCE COMPANY OF NEW YORK
                               NEW YORK, NEW YORK

                   (HEREINAFTER REFERRED TO AS THE "COMPANY")

                                       AND

                            TOKIO MILLENNIUM RE LTD.

                  (HEREINAFTER REFERRED TO AS THE "REINSURER")



                                   ARTICLE 1

BUSINESS COVERED

This Agreement shall indemnify the Company in respect of the net liability as
herein provided and specified which may accrue to the Company as a result of
Ultimate Net Loss and Loss Adjustment Expenses subject to this Agreement, under
policies written by the Company and classified as Property or Liability,
following the Company's original policies, including: Fire and Allied Lines,
Commercial Multiple Peril, Homeowners Multiple Peril and Liability, Workers'
Compensation, Inland Marine and Automobile Liability and Physical Damage, all
subject to the terms, conditions and exclusions of this Agreement.

                                   ARTICLE 2

FOLLOW THE FORTUNES

The Reinsurer's liability shall attach simultaneously with that of the Company
and shall be subject in all respects to the same risks, terms, conditions,
interpretations, waivers and to the same modifications, alterations, and
cancellations as the respective insurances (or reinsurances) of the Company, the
true intent of this Agreement being that the Reinsurer shall, in every case to
which this Agreement applies, follow the fortunes of the Company, subject always
to the terms, conditions and exclusions of this Agreement.




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                                   ARTICLE 3

TERM

A.       This Agreement shall take effect 12:01 a.m., Standard Time, October 1,
         2003 and shall apply to all losses occurring on or after 12:01 a.m.,
         Standard Time, October 1, 2003 in respect of all inforce Business at
         12:01 a.m., Standard Time, October 1, 2003 and new and renewal Business
         written on and after 12:01 a.m., Standard Time, October 1, 2003 until
         12:01 a.m., Standard Time, January 1, 2004.

         Notwithstanding the above, this Agreement shall not be effective unless
         the cut-off letter, dated December 29, 2003, between the Company and
         PXRE Reinsurance Company for the Quota Share Reinsurance Agreement,
         effective January 1, 2003, is fully executed.

         At the time of termination, the Reinsurer shall be liable for the in
         force Business Covered until the earlier of the expiration or the
         anniversary date of the Company's policies, but not to exceed 12
         (twelve) months plus odd time. In the event that any policy is required
         by statute or regulation or order to be continued in force, the
         Reinsurer will continue to remain liable with respect to each such
         policy until the Company may legally cancel, non-renew or otherwise
         eliminate liability under the Company's policy.

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

                                   ARTICLE 4

TERRITORY

In respect of primary business written by the Company, this Agreement shall
apply to New York, New Jersey, Pennsylvania and Connecticut and incidental
business in other states.

                                   ARTICLE 5

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;

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

B.       War Risks, in accordance with the War Risks Exclusion Clause attached
         hereto;

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;


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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 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 hereon.

                                   ARTICLE 6

COVERAGE, RETENTION, PER RISK - PER LOSS OCCURRENCE LIMITS AND AGGREGATE LIMIT

A.       Coverage - The Reinsurer shall indemnify the Company for the Cession
         Percentage of the net retained liability of all Ultimate Net Loss and
         Loss Adjustment Expenses billed by Towers Claim Service for the Term of
         this Agreement, subject to the Retention, Per Risk - Per Loss
         Occurrence Limits and the Aggregate Limit hereon. The Reinsurer shall
         only be obligated to indemnify the Company for underlying policies
         where the Reinsurer has been paid respective premiums for such
         underlying policies by the Company.

B.       Retention - The Company shall retain net and unreinsured the result of
         subtracting 100% (one hundred percent) from the Cession Percentage of
         all Ultimate Net Loss in respect of the first 92.0% (ninety two point
         zero percent) of Ultimate Net Loss Ratio and 100% (one hundred percent)
         of Ultimate Net Loss in excess of the first 92.0% (ninety two point
         zero percent) of Ultimate Net Loss Ratio.

C.       Per Risk - Per Loss Occurrence Limits - In no event shall the
         Reinsurer's limit of liability exceed its pro rata share of $500,000
         (five hundred thousand dollars) per risk (as defined in the Company's
         inuring Excess of Loss Reinsurance Treaties), per Loss Occurrence in
         respect of property business and $500,000 (five hundred thousand
         dollars) per Loss Occurrence for liability business. In addition, in no
         event shall the Reinsurer's aggregate limit of liability exceed 10%
         (ten percent) of Reinsurance Premium earned per Loss Occurrence in
         respect of ceded property catastrophe Ultimate Net Loss and Loss
         Adjustment Expenses. Furthermore, in no event shall the Reinsurer's
         aggregate limit of liability exceed 10% (ten percent) of Reinsurance
         Premium in respect of the combined amounts of property catastrophe
         Ultimate Net Loss and Ultimate Net Loss liability emanating from
         Terrorist Acts.

D.       Aggregate Limit - The Reinsurer's maximum overall aggregate Ultimate
         Net Loss and Loss Adjustment Expense liability under this Agreement
         shall be 92.0% (ninety two point zero percent) of ultimate Reinsurance
         Premium earned by the Reinsurer.
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                                   ARTICLE 7

DEFINITIONS

A.       "Cession Percentage" as used in this Agreement shall equal 80% (eighty
         percent) if the maximum overall Net Written Premium is $95,250,000
         (ninety two million two hundred fifty thousand dollars) or less for
         this Agreement. If the maximum overall Net Written Premium is greater
         than $92,250,000 (ninety two million two hundred fifty thousand
         dollars) the Cession Percentage shall be equal to the result of
         multiplying 80% (eighty percent) by the result of dividing $92,250,000
         (ninety two million two hundred fifty thousand dollars) by the actual
         Net Written Premium.

B.       "Declaratory Judgment Expenses" as used in this Agreement shall mean
         legal expenses paid by the Company in the investigation, analysis,
         evaluation or litigation of a coverage action between the Company and
         any other party to determine if there is coverage under a policy or
         policies issued by the Company for a specific claim or specific claims
         reinsured under this Agreement or which would be reinsured under this
         Agreement had the Company not been successful in the coverage action.

         Recoveries from any form of insurance or reinsurance that protects the
         Company against claims which are the subject matter of this clause will
         inure to the benefit of the Reinsurer and shall be deducted to arrive
         at the amount of the Company's Ultimate Net Loss.

C.       "Loss Adjustment Expenses" as used in this Agreement shall mean all
         costs and expenses allocable to a specific claim that are incurred by
         the Company in the investigation, appraisal, adjustment, settlement,
         litigation, defense or appeal of a specific claim, including court
         costs and costs of supersedeas and appeal bonds and including a)
         pre-judgment interest, unless included as part of the award or
         judgment; b) post-judgment interest and c) legal expenses and costs
         incurred in connection with coverage questions and legal actions
         connected thereto, including pro rata Declaratory Judgment Expenses.

         Loss Adjustment Expenses shall include in-house adjusters, defense
         attorneys, and other claims personnel of Tower Claims Services (TCS)
         who bill the Company for their services on an hourly basis.

D.       "Loss Occurrence" shall have the following meanings:

         1.       As respects property losses, "Loss Occurrence" shall mean the
                  sum of all individual losses directly occasioned by any one
                  disaster, accident or loss or series of disasters, accidents
                  or losses arising out of one event which occurs within the
                  area of one state of the United States or province of Canada
                  and states or provinces contiguous thereto and to one another.
                  However, the duration and extent of any one "Loss Occurrence"
                  shall be limited to all individual losses sustained by the
                  Company occurring during any period of 168 (one hundred sixty
                  eight) consecutive hours arising out of and directly
                  occasioned by the same event except that the term "Loss
                  Occurrence" shall be further defined as follows:
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                  a.       As regards windstorm, hail, tornado, hurricane,
                           cyclone, including ensuing collapse and water damage,
                           all individual losses sustained by the Company
                           occurring during any period of 72 (seventy two)
                           consecutive hours arising out of and directly
                           occasioned by the same event. However, the event need
                           not be limited to one state or province or states or
                           provinces contiguous thereto.

                  b.       As regards riot, riot attending a strike, civil
                           commotion, vandalism and malicious mischief, all
                           individual losses sustained by the Company occurring
                           during any period of 72 (seventy two) consecutive
                           hours within the area of one municipality or county
                           and the municipalities or counties contiguous thereto
                           arising out of and directly occasioned by the same
                           event. The maximum duration of 72 (seventy two)
                           consecutive hours may be extended in respect of
                           individual losses which occur beyond such 72 (seventy
                           two) consecutive hours during the continued
                           occupation of an assured's premises by strikers,
                           provided such occupation commenced during the
                           aforesaid period.

                  c.       As regards earthquake (the epicenter of which need
                           not necessarily be within the territorial confines
                           referred to in the opening paragraph of this article)
                           and fire following directly occasioned by the
                           earthquake, only those individual fire losses which
                           commence during the period of 168 (one hundred sixty
                           eight) consecutive hours may be included in the
                           Company's "Loss Occurrence".

                  d.       As regards "Freeze", only individual losses directly
                           occasioned by collapse, breakage of glass and water
                           damage (caused by bursting of frozen pipes and tanks)
                           may be included in the Company's "Loss Occurrence".

                  For all "Loss Occurrences" the Company may choose the date and
                  time when any such period of consecutive hours commences
                  provided that it is not earlier than the date and time of the
                  occurrence of the first recorded individual loss sustained by
                  the Company arising out of that disaster, accident or loss and
                  provided that only one such period of 168 (one hundred sixty
                  eight) consecutive hours shall apply with respect to one event
                  except for those "Loss Occurrences" referred to in
                  sub-paragraphs 1 and 2 of this Article where only one such
                  period of 72 (seventy two) consecutive hours shall apply with
                  respect to one event.

                  No individual losses occasioned by an event that would be
                  covered by 72 (seventy two) hours clauses may be included in
                  any "Loss Occurrence" claimed under the 168 (one hundred sixty
                  eight) hours provision.

2.                As respects casualty losses, "Loss Occurrence" shall mean any
                  one accident, disaster, casualty or happening, or series of
                  accidents, disasters, casualties or happenings arising out of
                  or following on one event, regardless of the number of
                  interests insured or the number of policies responding.
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                  Except where specifically provided otherwise in this
                  Agreement, each Loss Occurrence shall be deemed to take place
                  as of the earliest date of loss as determined by any original
                  policy responding to the Loss Occurrence.

3.                As respects liability losses (bodily injury and property
                  damage) other than Automobile and Products, and at the option
                  of the Company, "Loss Occurrence" shall mean the sum of all
                  damages sustained by each insured during a period of twelve
                  consecutive months arising out of a continuous or repeated
                  injurious exposure to substantially the same general
                  conditions. For purposes of this definition, the date of loss
                  shall be deemed to be the inception or renewal date of the
                  original policy of insurance to which payment is charged.

                  As respects occupational disease and cumulative trauma:

                  a.       In case the Company shall, within one original policy
                           year, sustain several losses arising out of such and
                           occupational or other disease or cumulative trauma of
                           a specific kind or class, suffered by several
                           employees of one original insured, all such losses
                           shall be deemed to arise out of one 'occurrence' and
                           the date of the occurrence for reinsurance purposes
                           shall be deemed to be the inception, anniversary or
                           renewal date of the Company's original policy.

                  b.       With respect to an occupational disease or other
                           disease suffered by more than one employee of one or
                           more employers, such occupational disease or other
                           disease shall be covered under this Agreement if
                           resulting from a sudden and accidental event not
                           exceeding 48 (forty eight) hours in duration. For
                           purposes of this Agreement, a 48 (forty eight) hour
                           event will be deemed as one Loss Occurrence. All such
                           losses subsequently arising out of such event and not
                           otherwise classified except as occupational disease
                           or other disease shall be considered as one Loss
                           Occurrence or may be combined with losses classified
                           as other than occupational disease or other disease
                           which arise out of the same event, and the
                           combination of such losses shall be considered as one
                           Loss Occurrence within the meaning hereof.

E.       "Net Earned Premium" shall mean the Net Written Premium of the
         Company's Business Covered plus the unearned premium reserve at the
         inception of this Agreement less the unearned premium reserve at the
         calculation date.

F.       "Net Written Premium" shall mean gross premium of the Company's
         Business Covered less cancellations and returns and less premium paid
         for specific excess of loss reinsurance above $500,000 (five hundred
         thousand dollars) and facultative reinsurances, if any, which
         reinsurances inure to the benefit of the Reinsurer.

G.       "Terrorist Acts" shall mean any act, or preparation in respect of
         action, or threat of action designed to influence the government de
         jure or de facto of any nation or any political division thereof, or in
         pursuit of political, religious, ideological, or similar purposes to
         intimidate the public or a section of the public of any nation by any
         person or group(s) of persons whether acting alone or on behalf of or
         in connection with any organization(s) or government(s) de jure or de
         facto, and which:
<PAGE>

         (i)      involves violence against one or more persons; or
         (ii)     involves damage to property; or
         (iii)    endangers life other than that of the person committing the
                  action; or
         (iv)     creates a risk to health or safety of the public or a section
                  of the public; or
         (v)      is designed to interfere with or to disrupt an electronic
                  system.

         Loss, damage, cost or expense arising out of or in connection with any
         action in controlling, preventing, suppressing, retaliating against, or
         responding to any act of terrorism shall be considered part of
         terrorism Ultimate Net Loss.

H.       "Ultimate Net Loss" shall mean, subject to all limitations in this
         Agreement including the Per Risk - Per Loss Occurrence Limits in
         Article 6, Coverage, Retention, Per Risk - Per Loss Occurrence Limits
         and Aggregate Limit, Section C, actual loss or losses, including Loss
         Adjustment Expenses, arising out of Business Covered hereunder
         sustained by the Company in respect of losses occurring during the
         Term, including 100% (one hundred percent) of Extra Contractual
         Obligations and 100% (one hundred percent) of Excess Policy Limits,
         after making deductions for all recoveries and salvages and inuring
         specific and facultative reinsurance, whether collectible or not. The
         Reinsurer shall not be liable for more than $500,000 (five hundred
         thousand dollars) additional subject Ultimate Net Loss for any one
         risk, one Loss Occurrence in respect of Excess of Policy Limits/Extra
         Contractual Obligations liability.

I.       "Ultimate Net Loss Ratio" shall mean the ratio of Ultimate Net Losses
         incurred divided by Net Earned Premium as of the date of calculation.

J.       "Unearned Premium Reserve at 12:01 a.m., Standard Time, October 1,
         2003" shall mean the Net Written Premium, as defined in E. above,
         written during the period 12:01 a.m., Standard Time, January 1, 2003
         until 12:01 a.m., Standard Time, October 1, 2003 and that is unearned
         as of 12:01 a.m., Standard Time, October 1, 2003.

                                   ARTICLE 8

NET RETAINED LINES

This Agreement applies only to that portion of Business Covered which the
Company retains net for its own account, and in calculating the amount of any
Ultimate Net Loss hereunder and also in computing the amounts in Article 6,
Coverage, Retention, Per Risk - Per Loss Occurrence Limits and Aggregate Limit,
to which this Agreement applies, only Ultimate Net Loss in respect of that
portion of Business Covered which the Company retains net for its own account
shall be included. The Company warrants that it will have a maximum net retained
line of $500,000 (five hundred thousand dollars) for any one risk.

The amount of the Reinsurer's liability hereunder in respect of any Ultimate Net
Loss shall not be increased by reason of the inability of the Company to collect
from any other reinsurer, whether specific or general, any amounts which may
have become due from such reinsurer, whether such inability arises from the
insolvency of such reinsurer or otherwise.
<PAGE>

                                   ARTICLE 9

REINSURANCE PREMIUM AND REINSURER'S MARGIN

A.       Reinsurance Premium - As a condition precedent to Coverage hereunder,
         the Company shall pay to the Reinsurer, via credit to the Notional
         Profit Account, the Cession Percentage of the Unearned Premium Reserve
         of the Company as of 12:01 a.m., Standard Time, October 1, 2003.

         In addition to the above, the Company shall pay to the Reinsurer, via
         credit/debit to the Notional Profit Account, as applicable, Reinsurance
         Premium equal to the Cession Percentage of the Net Written Premium
         collected for new and renewal business for the Term of this Agreement.
         Such Reinsurance Premium shall be determined and reported to the
         Reinsurer monthly, 45 (forty five) days in arrears of each month end.
         Reinsurance Premium calculated for the month shall be deemed
         credited/debited to the Notional Profit Account 60 (sixty) days in
         arrears of each respective month end.

         The Company shall have the option, subject to the Reinsurer's consent,
         to terminate this Agreement on a cut-off basis. If the Company elects,
         and the Reinsurer consents, to terminate this Agreement on a cut-off
         basis, in accordance with Article 3, Term, then the Company shall debit
         the Notional Profit Account for the respective unearned premium less
         previously paid Ceding Commissions on such unearned premium.

         The maximum overall Net Written Premium for this Agreement shall be
         $95,250,000 (ninety five million two hundred fifty thousand dollars) or
         so deemed. The maximum overall ceded Net Written Premium shall be
         $76,200,000 (seventy six million, two hundred thousand dollars) or so
         deemed.

B.       Reinsurer's Margin - The Company shall pay to the Reinsurer Reinsurer's
         Margin equal to 9.065% (nine point zero six five percent) of
         Reinsurance Premium. The Company shall determine and pay Reinsurer's
         Margin monthly to the Reinsurer at the time Reinsurance Premium is
         credited to the Notional Profit Account.

                                   ARTICLE 10

CEDING COMMISSION

The Reinsurer shall allow the Company a provisional Ceding Commission equal to
38.50% (thirty eight point five zero percent) of the Reinsurance Premium hereon.
Ceding Commission shall be debited/credited, as applicable, to/from the Notional
Profit Account as Reinsurance Premiums are credited to the Notional Profit
Account monthly and as the Ultimate Net Loss Ratio is re-determined quarterly.
The Ultimate Net Loss Ratio shall include incurred but not reported and shall be
consistent with the Ultimate Net Loss Ratios reported by the Company in its
annual statement filings with its state of domicile regulator.
<PAGE>

Ceding Commission shall be calculated each quarter and based upon the Ultimate
Net Loss Ratio re-determined each quarter, in accordance with the following
table which Ceding Commission may be reduced by the provisions in Article 12,
Trust Account:
<TABLE>
<CAPTION>

                                               Ceding Commission Rate                 Ultimate Net Loss Ratio
                                               ----------------------                 ------------------------
<S>                                              <C>                                        <C>
         Maximum                                 42.50%                                     50% or Lower
                                                          .8 for 1
                  Provisional                    38.50%                                         55%
                                                          .9 for 1
         Minimum                                 29.00%                                   65.556% or Higher
</TABLE>

         If the Ultimate Net Loss Ratio exceeds 50% (fifty percent), the Ceding
         Commission shall be reduced .8% (point eight percent) and any portion
         thereof for each 1% (one percent) and any portion thereof that the
         Ultimate Net Loss Ratio exceeds 50% (fifty percent), up to a Ceding
         Commission of 38.50% (thirty eight point five zero percent) at a 55%
         (fifty five percent) Ultimate Net Loss Ratio. If the Ultimate Net Loss
         Ratio exceeds 55% (fifty five percent), the Ceding Commission shall be
         reduced .9% (point nine percent) and any portion thereof for each 1%
         (one percent) and any portion thereof that the Ultimate Net Loss Ratio
         exceeds 55% (fifty five percent), subject to a minimum Ceding
         Commission of 29.00% (twenty nine point zero zero percent) at a 65.556%
         (sixty five point five five six percent) or higher Ultimate Net Loss
         Ratio. Adjustments to Ceding Commission shall be debited/credited, as
         applicable, to/from the Notional Profit Account at the respective
         quarterly Ultimate Net Loss settlement.

The Reinsurer shall remain liable for payment of Ceding Commission whether or
not the Notional Profit Account becomes depleted.

                                   ARTICLE 11

NOTIONAL PROFIT ACCOUNT AND INTEREST CREDIT

A.       Notional Profit Account - For purposes of this Agreement, the Company
         shall establish and maintain a cumulative Notional Profit Account
         comprised of the following:

         1.       The Notional Profit Account at September 30, 2003 shall be
                  equal to $0 (zero dollars);

         2.       The Notional Profit Account at each subsequent month end shall
                  be comprised of the following cumulative amounts:

                  a)       The Notional Profit Account at the end of the prior
                           month; plus

                  b)       Reinsurance Premium; less

                  c)       Ceding Commission, excluding the Return Ceding
                           Commission as per Article 12, Trust Account; less
<PAGE>

                  d)       Reinsurer's Margin; less

                  e)       Ceded Ultimate Net Losses paid by the Reinsurer for
                           the respective month; plus

                  f)       Interest Credit.

         The Company shall determine and report the balance and activity of the
         Notional Profit Account monthly within 75 (seventy five) days of the
         month end.

B.       Interest Credit - The Notional Profit Account shall be credited
         monthly, as of the end of the respective month, by the Company with an
         Interest Credit rate equal to .206% (point two zero six percent) of the
         average daily balance of the Notional Profit Account for the respective
         month, to achieve an annual effective yield of 2.5% (two point five
         percent).

         Interest Credit shall continue even in the event of the Company's
insolvency.

                                   ARTICLE 12

TRUST ACCOUNT

The Company shall establish a segregated Trust Account and Trust Agreement
acceptable to the Reinsurer to collateralize the Notional Profit Account in
Article 11, Notional Profit Account and Interest Credit. The Company shall
deposit Reinsurance Premium less provisional Ceding Commission less Reinsurer's
Margin, all as contractually due hereunder. The Company shall also withdraw
Ceding Commission adjustments and ceded paid portion of Ultimate Net Loss
amounts when contractually due. The Company shall invest such amounts to both
(i) achieve a minimum effective annual yield of 2.5% (two point five percent)
per annum and (ii) enable investments to be admitted assets for statutory
reporting on the Company's financial statements.

If the market value of the assets in the Trust Account at any calendar quarter
end is less than the Notional Profit Account balance at such calendar quarter
end, the Company shall deposit assets to achieve the required Notional Profit
Account balance at such quarter end. If the market value of assets in the Trust
Account at any calendar quarter end exceeds the balance of the Notional Profit
Account at such calendar quarter end, the Reinsurer will instruct the Trustee,
if requested by the Company, to remit to the Company the excess funding.

Within 45 (forty five) days of each calendar quarter end, beginning with the
quarter ending December 31, 2003, if the Company fails to maintain the Trust
Account equal to the Notional Profit Account required level, then the cumulative
amount of the shortfall shall be deemed "Return Ceding Commission" due the
Reinsurer. Such actual amount shall be paid in cash by the Company to the
Reinsurer within 60 (sixty) days of the respective calendar quarter end to
reduce the Ceding Commission that otherwise would have been due at the
respective Ultimate Net Loss Ratio as per the Ceding Commission table in Article
10, Ceding Commission. The Company shall calculate the cumulative shortfall, if
any, and re-determine the Return Ceding Commission due, within 45 (forty five)
days of each subsequent calendar quarter end until all liability under this
Agreement is finalized. The Company shall pay to the Reinsurer any additional
Return Ceding Commission due in excess of any previously paid Return Ceding
Commission and the Reinsurer shall pay to the Company any reduction of Return
Ceding Commission due over the previously paid Return Ceding Commission within
60 (sixty) days of the calendar quarter end.
<PAGE>

Upon the occurrence of a Triggering Event, the Reinsurer shall have the sole
option of drawing any and all assets from the segregated Trust Account and
placing such assets into a New York Regulation No. 114 compliant Trust Account.
Notwithstanding the above, the Company is required to deposit additional assets
into the Trust Account to guarantee an investment return equivalent to the .206%
(point two zero six percent) monthly yield, as specified in Article 11, Notional
Profit Account and Interest Credit and Article 12, Trust Account. If the Company
does not deposit sufficient assets, then the provisions in paragraph 3 above of
this article shall continue to be required.

A "Triggering Event" is any of the following:

         1.       A.M. Best Rating of the Company falls below B+; or

         2.       a reduction of more than 20% (twenty percent) of the Company's
                  statutory surplus from the Company's Statutory Surplus Level
                  at September 30, 2003; or

         3.       Insolvency, Rehabilitation, or Regulatory Supervision of the
                  Company.

                                   ARTICLE 13

ACCOUNTS, REMITTANCES AND LOSS SETTLEMENTS

A.       Within 45 (forty five) days following the end of each month, the
         Company shall report to the Reinsurer the amount of:

         1.       Net Written Premium and ceded Net Written Premium by line of
                  business;

         2.       Net Earned Premium and ceded Net Earned Premium by line of
                  business;

         3.       Ceding Commissions paid and unpaid;

         4.       Ceded Ultimate Net Loss and Loss Adjustment Expenses paid by
                  line of business;

         5.       Ceded Ultimate Net Loss and Loss Adjustment Expenses
                  outstanding by line of business;

         6.       Salvage recovered and ceded Salvage recovered by line of
                  business;

         7.       Premium amounts calculated in accordance with Article 9,
                  Reinsurance Premium and Reinsurer's Margin, including
                  applicable Reinsurer's Margin;

         8.       The balance of the Notional Profit Account as of that month
                  end and activity in the Notional Profit Account during the
                  month.

         Reports shall continue until final settlement of all Ultimate Net Loss
         hereunder, or upon Commutation in accordance with Article 14,
         Commutation.
<PAGE>

B.       Ultimate Net Loss settlements by the Reinsurer to the Company shall be
         made within 15 (fifteen) days following the Reinsurer's receipt of the
         Company's monthly report or 60 (sixty) days in arrears of the
         respective month end, whichever is later.

         Ultimate Net Loss recoverable hereunder shall be first settled by debit
         to the Notional Profit Account. However, in the event the Notional
         Profit Account becomes depleted and not a positive amount, the
         Reinsurer shall remit to the Company Ultimate Net Loss recoverable
         hereunder less Return Ceding Commission due and unpaid, per Article 12,
         Trust Account from other funds of the Reinsurer. However, in no event
         shall the Reinsurer be liable for amounts exceeding the Reinsurer's
         maximum limits of liability as set forth in Article 6, Coverage,
         Retention, Per Risk - Per Loss Occurrence Limits and Aggregate Limit.

C.       Notwithstanding the above, the Company shall advise the Reinsurer
         promptly (but no later than 30 (thirty) days from the date the Company
         determines that a loss may result in a claim hereunder or may
         materially affect the position of the Reinsurer) 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.

D.       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, subject always to the terms
         conditions and exclusions of this Agreement. 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 14

COMMUTATION

The Company shall have the option, only with the consent of the Reinsurer,
effective at any calendar quarter end on or after the calendar quarter of
termination of this Agreement, to commute all ceded Ultimate Net Loss
outstanding hereunder. The date that the Company and the Reinsurer mutually
elect to commute shall be deemed the commutation date.

Upon Commutation, the Reinsurer shall pay 100% (one hundred percent) of the
residual Notional Profit Account to the Company and release to the Company any
residual funds in the Trust Account. Upon payment of the Notional Profit Account
and release of any residual funds in the Trust Account, the Reinsurer shall be
released from all past, current and future liability under this Agreement.


<PAGE>

                                   ARTICLE 15

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.

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 16

TAXES AND FEDERAL EXCISE TAX

A.       Taxes - In consideration of the terms under which this Agreement is
         issued, the Company undertakes not to claim any deduction of the
         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.

B.       Federal Excise Tax - (Applicable to those reinsurers, excepting
         Underwriters at Lloyd's London and other reinsurers exempt from Federal
         Excise Tax, who are domiciled outside the United States of America.)

         The Reinsurer has agreed to allow for the purpose of paying the Federal
         Excise Tax the applicable percentage of the Premium payable hereon (as
         imposed under Section 4371 of the Internal Revenue Code) to the extent
         such Premium is subject to the Federal Excise Tax.

         In the event of any return of Premium becoming due hereunder, the
         Reinsurer shall deduct the applicable percentage from the return
         Premium payable hereon and the Company or its agent should take steps
         to recover the tax from the United States Government.

                                   ARTICLE 17

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
         or alternative REG 114 Trust in the amount specified in the statement
         submitted, with terms and bank acceptable to the regulatory
         authority(ies) having jurisdiction over the Company. The form of
         collateral to be provided under this clause in excess of the Notional
         Profit Account shall be solely at the option of the Reinsurer.
<PAGE>

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:

         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.
<PAGE>

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 18

EXCESS OF POLICY LIMITS

This Agreement shall protect the Company, within the limits hereof, for 100%
(one hundred percent) of loss in excess of the limit of its original policies of
insurance or Reinsurance Agreements, such loss in excess of the limit having
been incurred because of failure by the Company or Tower Risk Management to
settle within the policies of insurance or Reinsurance Agreement limit or by
reason of 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 reinsured or in the preparation or prosecution of an
appeal consequent upon such action.

However, this Article shall not apply where the loss has been incurred due to a
fraud by a member of the board of directors or a corporate officer of the
Company or Tower Risk Management acting individually or collectively or in
collusion with any individual or corporation or any other organization or party
involved in the presentation, defense or settlement of any claim covered
hereunder.

For the purpose of this Article, the word "loss" shall mean any amounts for
which the Company would have been contractually liable to pay had it not been
for the limit of the original Reinsurance Agreement.

                                   ARTICLE 19

EXTRA CONTRACTUAL OBLIGATIONS

This Agreement shall protect the Company for 100% (one hundred percent) of any
Extra Contractual Obligations within the limits hereof. The term "Extra
Contractual Obligations" is defined as those liabilities not covered under any
other provision of the Company's original policies of insurance or Reinsurance
Agreements and which arise from the handling of any claim on Business Covered
hereunder, such liabilities arising because of, but not limited to, the
following: failure by the Company or Tower Risk Management to settle within the
policies of insurance or Reinsurance Agreement limit, or by reason of 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
reinsured or in the preparation or prosecution of an appeal consequent upon such
action.


<PAGE>

The date on which any Extra Contractual Obligation is incurred by the Company
shall be deemed, in all circumstances, to be the date of the original loss
event. However, this Article shall not apply where the loss has been incurred
due to fraud by a member of the board of directors or a corporate officer of the
Company or Tower Risk Management acting individually or collectively or in
collusion with any individual or corporation or any other organization or party
involved in the presentation, defense or settlement of any claim covered
hereunder.

                                   ARTICLE 20

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, Ceding Commissions, Return Ceding Commissions,
Ultimate Net Losses or any other balances due or owed between the Company and
the Reinsurer. In the event of insolvency of either party to this agreement,
then offsets shall only be allowed to the extent permitted by the provisions of
New York Insurance Law Section 7427.

                                   ARTICLE 21

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 22

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 its 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. Such right shall continue to exist as long as one
party has a claim against the other party arising out of this Agreement.

                                   ARTICLE 23

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.


<PAGE>

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.

                                   ARTICLE 24

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 are 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 rating agencies, auditors,
advisors and to its outside legal counsel as may be necessary.

                                   ARTICLE 25

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.
<PAGE>

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, each of the arbitrators shall nominate 3 (three)
         individuals . Each arbitrator shall then decline two of the nominations
         presented by the other arbitrator. he third arbitrator shall then be
         chosen form the remaining two nominations by drawing lots. 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.

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 26

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 Morgan, Lewis & Bockius LLP, 101 Park Avenue New
         York, New York 10178, 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.
<PAGE>

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 Reinsures 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 designate 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.

                                   ARTICLE 27

INTERMEDIARY

Tower Risk Management Corporation and Pegasus Advisors - Towers Perrin
Reinsurance are hereby recognized as the Intermediaries negotiating this
Agreement for all business hereunder and through whom all communications
relating hereto (including but not limited to notices, statements and reports)
shall be transmitted to both parties. It is understood, as regards remittances
due either party hereunder, that payment by the Company to the Intermediaries,
shall constitute payment to the Reinsurer but payment by the Reinsurer to the
Intermediaries shall only constitute payment to the Company to the extend such
payments are actually received by the Company.


<PAGE>

                                   ARTICLE 28

PROPORTION

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

Signed this 17th day of December 31, 2003,
For and on behalf of TOWER INSURANCE COMPANY OF NEW YORK in acceptance of the
terms, conditions and Reinsurer hereon:

By:                      /s/ Marina Contiero
                  ----------------------------------
                             (Signature)

                           Marina Contiero
                  ----------------------------------
                            (Print Name)

Title:                     Vice President
                  ----------------------------------


Signed this 17th day of December 31, 2003,
For and on behalf of TOKIO MILLENNIUM RE LTD. for its 100% (one hundred percent)
participation of the terms and conditions hereon:

By:                      /s/ Tatsuhiko Hoshina
                  ----------------------------------
                              (Signature)

                           Tatsuhiko Hoshina
                  ----------------------------------
                             (Print Name)


Title:                     Director & CUO
                  ----------------------------------