<PAGE>

                                                                  EXHIBIT 10.62

                        ALLIANCE CAPITAL MANAGEMENT L.P.

                   Discretionary Investment Advisory Agreement

                                      With

                     Platinum Underwriters Reinsurance, Inc.

                             Dated November 4, 2002
                                (Effective Date)

                  Alliance Capital Management L.P. (the "Adviser") and the
undersigned hereby agree as of the above date that the Adviser shall act as
discretionary investment manager with respect to certain assets of Platinum
Underwriters Reinsurance, Inc. (the "Client") described below (the "Investment
Account") on the following terms and conditions:

         1.       The Investment Account

                  The Investment Account established for the Client refers to
the Trust Account defined in and subject to a certain Trust Agreement, by and
among the Client, Mountain Ridge Insurance Company ("Mountain Ridge") and State
Street Bank and Trust Company, dated as of November 1, 2002, as amended,
modified or supplemented from time to time (the "Trust Agreement") and
established as a condition of the Retrocession Agreements (as defined in the
Trust Agreement). The Investment Account shall initially consist of cash, cash
equivalent, stocks, bonds and other securities placed in the Investment Account
by the Client or which shall become part of the Investment Account as a result
of transactions.

                  All cash, securities and other assets in the Investment
Account shall be held by such other party as the Client shall designate as
trustee or custodian for such account (each, a "Custodian"). The Adviser shall
not be responsible for any custodial arrangements involving the assets of the
Investment Account or for the payment of any custodial charges and fees, nor
shall the Adviser have possession or custody of any such assets. All payments,
distributions and other transactions in cash, securities or other assets in
respect of the Investment Account shall be made directly to or from the
Custodian for such Investment Account, and the Adviser shall have no
responsibility or liability with respect to transmittal or safekeeping of such
cash, securities or other assets of an Investment Account, or the acts or
omissions of any Custodian or others with respect thereto. The Client may make
additions to or withdrawals from the Investment Account established for it,
provided the Adviser receives at least three (3) business days' prior written
notice of withdrawals. Should the Client fail to provide the Adviser with timely
written notice of any additions to or withdrawals from its Investment Account,
the Adviser shall not be liable for any resulting investment or other loss, if
any, which shall be incurred by or charged to the applicable Investment Account,
as the case may be. The Client agrees to provide or instruct the
<PAGE>
Custodian for its Investment Account to provide to the Adviser such information
as the Adviser may reasonably request as being necessary or appropriate to the
performance of the Adviser's responsibilities to the Client under this
Agreement.

         2.       Services of Adviser

                  By execution of this Agreement, the Adviser accepts its
appointment as investment manager for the Investment Account with full
discretion and agrees to supervise and direct the investments of the Investment
Account in accordance with the written investment objectives, policies and
restrictions of the Client previously furnished to the Adviser as the same may
be amended by the Client from time to time. In the performance of its services,
the Adviser will not be liable for any error in judgment or any acts or
omissions to act except those resulting from the Adviser's negligence, willful
misconduct, malfeasance or material breach of this Agreement. Nothing herein
shall in any way constitute a waiver or limitation of any right of any person
under the Federal securities laws or any state securities laws.

                  The Adviser will make available to the Client a daily report
on the positions of each of the investments in the Investment Account and a
monthly written report of the inventory of investments in the Investment Account
established for the Client. It is agreed that the Adviser, in the maintenance of
its records, does not assume responsibility for the accuracy of information
furnished by any Client or any other person.

         3.       Funding Policy

                  The Client shall from time to time inform the Adviser in
writing of the funding policy applicable to it and of its cash disbursement
requirements. The Adviser shall make its investment decisions for an Investment
Account in accordance with such funding policy and requirements.

         4.       Investment Objectives, Policies and Restrictions

                  It will be the responsibility of the Client to notify the
Adviser in writing of any modifications to Schedule A. The Client is also
required to notify the Adviser in writing of specific restrictions governing its
Investment Account under the current or future laws of any jurisdiction or by
virtue of the terms of any other contract or instrument purporting to bind the
Client or the Adviser.

         5.       Delivery of Client Documentation

                  No later than the date of this Agreement, the Client will
provide the Adviser with copies of all documents relevant to the Adviser's
management of the Investment Account established for the Client, (i.e. trust
agreement, pension plan documents, by-laws, etc.), including the Client's
written statement of investment objectives, policies and restrictions referred
to above. The Client further agrees to promptly deliver to the Adviser true and
complete copies of
                                       2

<PAGE>
all amendments or supplements to such documents. The Client will indemnify and
hold harmless the Adviser against any and all losses, costs, claims and
liabilities which it may suffer or incur arising out of any failure by the
Client to provide to the Adviser the documents required to be furnished in
accordance with the above provisions.

         6.       Discretionary Authority

                  The Adviser, whenever it deems appropriate may (i) buy, sell,
exchange, convert, liquidate or otherwise trade in any stock, bonds and other
securities (including money market instruments) and contracts relating to the
same, and (ii) subject to its duty to seek best execution, place orders for the
execution of such transactions with or through such brokers, dealers or issuers
as the Adviser in its absolute discretion may select.

                  It is understood that, to the extent permitted by Schedule A,
the Adviser or Alliance Capital Global Derivatives Corporation, an affiliate of
the Adviser, may also effect transactions for the Investment Account of the
Client in options and futures and other commodity contracts. In such event, the
Client will execute any additional documentation which the Adviser deems
necessary to enable it or its affiliate to engage in such transactions on behalf
of its Investment Account. The Client represents and warrants that it is
familiar with the requirements of the Commodity Exchange Act and the National
Futures Association pertaining to commodity pool operators and has determined
that it is in compliance with such requirements, to the extent applicable.

         7.       Brokerage Transactions

                  Fixed-income securities transactions for the Investment
Account will generally be effected in dealer markets where the Adviser will act
as agent for the Client in the purchase or sale of fixed-income securities at a
net price that includes a mark-up from the dealer. The Adviser will issue
instructions to such issuers, brokers and dealers for the placement of orders
for the Investment Account and instruct such dealers to forward to the Client
copies of all confirmations promptly after the execution of transactions for the
Client's Investment Account.

         8.       Aggregation of Transactions

                  The Client authorizes the Adviser in its discretion to
aggregate purchases and sales of securities for its Investment Account with
purchases and sales of securities of the same issuer for other clients of the
Adviser occurring on the same day. When transactions are so aggregated, the
actual prices applicable to the aggregated transactions will be averaged, and
the Investment Account and the accounts of other participating clients of the
Adviser will be deemed to have purchased or sold their proportionate share of
the securities involved at the average price so obtained.

         9.       Transaction Procedures

                  All transactions will be settled by payment to, or delivery
by, the applicable Custodian of all cash, securities or other assets due to or
from the Investment Account. The

                                       3

<PAGE>
Adviser may issue such instructions to a Custodian as may be appropriate in
connection with the settlement of transactions initiated by the Adviser.
Instructions of the Adviser to a Custodian shall be transmitted in writing or,
at the option of the Adviser, orally and confirmed in writing as soon as
practical thereafter. The Adviser will take reasonable measures to insure that
broker-dealers and issuers selected by the Adviser perform their obligations
with respect to the Investment Account.

         10.      Fees

                  The compensation of the Adviser for its services under this
Agreement shall be calculated and paid by the Client in respect of the
Investment Account established for it, in accordance with the Fee Schedule
attached hereto as Exhibit A, as the same may be amended from time to time by
mutual agreement between the Client and the Adviser. It is understood that, in
the event that such fees are to be billed to and paid by the Custodian for the
Investment Account, the Client will provide written authorization to the
Custodian to pay the fees of the Adviser directly from the Investment Account.
The Client shall be responsible solely for the fee due to the Adviser in respect
of the Investment Account established for such Client.

         11.      Confidential Relationship

                  All information provided by the Client or a Custodian to the
Adviser shall be held as confidential by the Adviser; provided, however, as is
necessary to carry out the purposes of this Agreement or as may be required by
law, the Adviser shall be permitted to disclose or communicate to a proper party
any information received from the Client or a Custodian or developed by the
Adviser under the terms of this Agreement. All recommendations, advice and other
work product of the Adviser developed under the terms of this Agreement and
disclosed to the Client or a Custodian shall be held as confidential, except as
required by law. Notwithstanding the foregoing, Client hereby authorizes the
Adviser to disclose through whatever means it deems appropriate (CHECK THE
APPROPRIATE BOXES BELOW):

         (a) Yes[X] No[ ]          that the Client is an investment management
                                   client of the Adviser;

         (b) Yes[X] No[ ]          the type of assets that the Adviser is
                                   managing for the Client from time to time
                                   (e.g., fixed-income assets); and/or

         (c) Yes[X] No[ ]          solely in the limited context of the
                                   Adviser's responses to Request for Proposals
                                   ("RFPs"), the Adviser is also authorized by
                                   the Client to disclose in such RFPs, the
                                   value of the assets managed for the Client by
                                   the Adviser from time to time.

If the Client does not check either "yes" or "no" to any of the requested
disclosure authorizations indicated in (a) through (c) above, the Client shall
be deemed to have no objection to the Adviser

                                       4

<PAGE>
disclosing the indicated information. The Client may revoke these authorizations
in respect of itself, at any time by written notice to the Adviser.

         12.      Services to Other Clients

                  It is understood that the Adviser performs investment advisory
services for various clients including investment companies. The Client agrees
that the Adviser may give advice and take action with respect to any of its
other clients which may differ from advice given, or the timing or nature of
action taken, with respect to the Investment Account established for it, so long
as it is the Adviser's policy, to the extent practical, to allocate investment
opportunities to the Investment Account over a period of time on a fair and
equitable basis relative to other clients.

                  Nothing in this Agreement shall limit or restrict the Adviser
or any of its directors, officers, affiliates or employees from buying, selling
or trading in any securities or other assets for its or their own account or
accounts, and the Client acknowledges that the Adviser, its directors, officers,
affiliates and employees, and other clients of the Adviser, may at any time
have, acquire, increase, decrease or dispose of positions in investments which
are at the same time being acquired, held or disposed of for the Investment
Account.

                  The Adviser will not have the obligation to initiate the
purchase or sale, or to recommend for purchase or sale, for the Investment
Account any security or other asset which the Adviser, its directors, officers,
affiliates or employees may purchase, hold or sell for its or their own accounts
or for the accounts of any other clients of the Adviser.

         13.      Non-Public Information

                  The Adviser will have no obligation to purchase or sell for
the Investment Account the securities of any issuer on the basis of any material
non-public information as may come into its possession.

         14.      Representations by the Client

                  The Client represents and warrants that the appointment of the
Adviser as discretionary investment adviser entitled to give entitlement orders
or other instructions and communications to the Custodian is authorized by the
governing documents (including, but not limited to the Retrocession Agreements,
the Trust Agreement and all documents related thereto) relating to the
Investment Account and that the terms of this Agreement do not violate any
provisions thereof or any obligation by which it is bound, whether arising by
contract, operation of law or otherwise. The Client represents and warrants that
(i) this Agreement has been duly authorized by appropriate action and when
executed and delivered will be binding upon it in accordance with its terms; and
(ii) it will deliver to the Adviser such evidence of such authority as the
Adviser may reasonably require, whether by way of a certified resolution or
otherwise.

         15.      Representations by Adviser


                                       5

<PAGE>
                  The Adviser represents that (i) it is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended (the
"Advisers Act") and (ii) that it has all other regulatory authority and capacity
to enter into this Agreement and perform its duties hereunder.


         16.      Indemnification

                  The Adviser agrees to indemnify and hold the Client harmless
from any and all expenses, damages, costs and fees, including reasonable
attorney's fees, which may be incurred by reason of the Adviser's negligence,
willful misconduct, malfeasance, material breach of this Agreement or violation
of applicable law.

         17.      Valuation

                  In computing the market value of any security held in the
Investment Account, the Adviser shall value such security through independent,
recognized pricing services utilized by the Adviser for pricing securities held
in its advisory accounts generally. Any other security or asset shall be valued
in a manner determined in good faith by the Adviser to reflect its fair market
value.

         18.      Receipt of Disclosure Statement

                  The Client acknowledges receipt of Part II of the Adviser's
current Form ADV in compliance with Rule 204-3(b) under the Advisers Act more
than forty-eight (48) hours prior to the date of execution of this Agreement.

         19.      Notices

                  Unless otherwise specified herein, all notices, instructions
and advice with respect to security transactions or any other matters
contemplated by this Agreement shall be deemed duly given when received by the
Client and the Adviser, as applicable, at their addresses appearing below. In
respect of the Investment Account, the Adviser may rely upon any notice (written
or oral) from any person whom the Adviser reasonably believes to be an
authorized representative of the Client.

         20.      Specimen Signatures

                  The Adviser will forward from time to time to the Client and
the Custodian for the Investment Account, a list of names and specimen
signatures of persons authorized to act on behalf of the Adviser. The Client
will forward to the Adviser a list of names and specimen signatures of persons
authorized to act on behalf of the Client and shall cause the Custodian of its
Investment Account to forward a like list and specimen signatures to the
Adviser.

         21.      Invalid Provisions

                  If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future law, such provision shall be
fully severable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full

                                       6

<PAGE>

force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or its severance from this Agreement.

         22.      Termination; Assignment; Amendment

                  This Agreement may be terminated at any time by the Client in
respect of its Investment Account by giving to the Adviser at least thirty (30)
days' prior written notice of such termination. This Agreement may be terminated
at any time by the Adviser in respect of the Investment Account by giving to the
Client at least thirty (30) days' prior written notice of such termination. Fees
paid in advance of the effectiveness of the termination will be prorated to the
date of termination specified in the notice of termination, and any unearned
portion thereof will be refunded to the Client. No assignment, as that term is
defined in the Advisers Act, shall be made by the Adviser without the written
consent of the Client. No assignment shall be deemed to result from changes in
the directors, officers or employees of the Adviser except as may be provided in
the Advisers Act. The Adviser agrees that it will notify the Client of any
change in the membership of the general partners of the Adviser within a
reasonable time after such change. This Agreement may be amended or modified at
any time by mutual agreement of the Client and the Adviser in writing.

         23.      Counterparts

                  This Agreement may be executed in two or more counterparts,
each one of which shall be deemed to be an original.

         24.      Governing Law

                  To the extent Federal law does not apply, this Agreement shall
be construed in accordance with and governed by the laws of the State of New
York.

         25.      Entire Agreement

                  This Agreement constitutes the entire agreement of the parties
with respect to management of the Investment Account.

                                       7

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective representatives as of the date first above
written.
                                    PLATINUM UNDER WRITERS REINSURANCE,INC

                                    BY:     /s/ Michael D. Price
                                            -------------------------------
                                            Name:  MICHAEL D. PRICE
                                            Title: PRESIDENT

                                    ADDRESS:      195 Broadway
                                                  28th Floor
                                                  New York, NY 10007
                                                  Attention: General Counsel

                                    ALLIANCE CAPITAL MANAGEMENT L.P.

                                    BY:     Alliance Capita] Management
                                            Corporation, its General Partner

                                    BY:     /s/ Louis T. Mangan
                                            --------------------------------
                                            Louis T. Mangan
                                            Assistant Secretary

                                    ADDRESS:    1345 Avenue of the Americas
                                                New York, New York 10105
                                                Attn: Holly Spencer
                                        cc:     Managing Director, Institutional
                                                Asset Management

                                       8

<PAGE>

                            New Account Documentation
                                       for

                     Platinum Underwriters Reinsurance, Inc.

The Adviser will require the documents identified below to establish its
investment management relationship with Platinum Underwriters Reinsurance, Inc.

1.       Fully executed advisory agreement (with fee schedule attached).

2.       Accurate list of securities to be transferred to new account unless
         initially consisting of cash or cash equivalents.

3.       Written statement of investment objectives, guidelines and
         restrictions, if any.

4.       Form W-9/W-8, as applicable.

5.       List of Authorized Signatories.

6.       Certified resolution of the Board of Directors or appropriate Committee
         authorizing appointment of the Adviser as investment adviser.

                                       9

<PAGE>

                                    EXHIBIT A

                        ALLIANCE CAPITAL MANAGEMENT L.P.

                  FIXED INCOME INSURANCE ASSET MANAGEMENT FEES
                                  PREPARED FOR

                     Platinum Underwriters Reinsurance, Inc.

FOR MINIMUM FIXED INCOME ACCOUNT SIZE OF $1 BILLION

<TABLE>
<CAPTION>
Fee                             Assets
---                             ------
<S>            <C>             <C>
0.19%          on the first    $100 million
0.14%          on the next     $150 million
0.11%          on the next     $250 million
0.10%          on the balance
</TABLE>

FOR FIXED INCOME ASSETS LESS THAN $1 BILLION

<TABLE>
<CAPTION>
Fee                             Assets
---                             ------
<S>         <C>               <C>
0.20%       on the first      $100 million
0.15%       on the next       $150 million
0.12%       on the next       $250 million
0.10%       on the balance
</TABLE>

<PAGE>

                                   SCHEDULE A

                              INVESTMENT GUIDELINES

<PAGE>

                              INVESTMENT GUIDELINES
                     PLATINUM UNDERWRITERS REINSURANCE. INC.

  INVESTMENT OBJECTIVE:

  The Fund's assets are managed to provide a high degree of investment income
  subject to risk, guidelines, appropriate liquidity considerations, and tax
  efficiency. Other objectives include to maintain or enhance the Platinum
  Group's [Financial/Credit] rating and to generate a superior long-term total
  rate of return versus a benchmark.

  The Fund's assets will be managed in accordance with the investment provisions
  of Title 5 Subtitle 6 of the Maryland Insurance Article, a summary of which is
  attached as Exhibit

 1. PORTFOLIO DURATION:

  The targeted duration of the portfolio will be that of the liability stream,
  which Platinum will provide as needed. If no liability stream is available, a
  duration target of 3.5 years will apply. The portfolio could deviate as much
  as +/- one year away from this target. There is no limitation placed on the
  duration of individual securities.

  PORTFOLIO CREDIT QUALITY:

  The average quality of the managed fund should be no less than A/A2.

  ADDITIONAL SECURITY PARAMETERS:

  For Investments permitted under the Maryland Insurance code

<TABLE>
<CAPTION>
                                             SECURITY:                                  RATING:        DIVERSIFICATION LIMITS
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                                                  <C>               <C>
i.   GOVERNMENT                Government securities issued by United States                             100% per issuer
                                                                                                         100% of portfolio
------------------------------------------------------------------------------------------------------------------------------------
ii. MONEY MARKETS              Repurchase and reverse repurchase agreements         A/P1 or better       3% per issuer
                                                                                                        100% of portfolio
                               -----------------------------------------------------------------------------------------------------
                               Negotiable Certificates of Deposit and Time          A-/A3 or better      3% per issuer
                               Deposits, and Demand Notes                                               100% of portfolio
                               -----------------------------------------------------------------------------------------------------
                               Commercial paper, including finance company paper    A1/P1 or better      3% per issuer
                               and asset-backed commercial paper                                        100% of portfolio
------------------------------------------------------------------------------------------------------------------------------------
iii MORTGAGE BACKED            Agency (FNMA, FHLMC or GNMA) mortgage backed         A/A2 or better       10% per issuer
SECURITIES AND ASSET-BACKED    securities (pass-throughs and CMOs)                                       30% of portfolio
SECURITIES
                               -----------------------------------------------------------------------------------------------------
                               Asset-backed securities (an asset-backed security    A/A2 or better       5% per issuer
                               issued by a discreet master trust will be thought                         20% of portfolio
                               as an individual issuer) - Public and 144a
                               asset-backed securities
                               -----------------------------------------------------------------------------------------------------
                               Publicly issued private label pass-throughs and      A/A2 or better       5% per issuer
                               CMOs (excluding I/Os and P/Os)                                           30% of portfolio
------------------------------------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

<TABLE>
<S>                            <C>                                                  <C>               <C>
iv. COMMERCIAL MORTGAGE        Commercial mortgage backed securities (including     A/A2 or better       3% per issuer
    BACKED SECURITIES          REITS)                                                                   10% of portfolio
------------------------------------------------------------------------------------------------------------------------------------
v.  MUNICIPAL BONDS            Municipal securities, including "general             A-/A3 or better      3% per issuer
                               obligation" and "revenue" bonds (see "Other                             100% of portfolio
                               Qualifications" below)
                                                                                    ------------------------------------------------
                                                                                    Greater than         3% per issuer
                                                                                    BBB-/Baa3,less      10% of portfolio
                                                                                    than A-/A3
------------------------------------------------------------------------------------------------------------------------------------
vi. CORPORATE SECURITIES       Notes, debentures, medium term notes or secured      A-/A3 or better      3% per issuer
                               securities                                                              100% of portfolio
                                                                                    ------------------------------------------------
                                                                                    less than A-/A3      3% per issuer
                                                                                    greater than        20% of portfolio
                                                                                    BBB-/Baa3
------------------------------------------------------------------------------------------------------------------------------------
vii. PREFERRED STOCKS          Preferred Stocks including Perpetual, Sinking Fund,  BBB-/Baa3 or         2.5% per issuer
                               Adjustable Rate and Fixed Rate                       better               10% of portfolio
------------------------------------------------------------------------------------------------------------------------------------
viii. SOVEREIGN AND            Sovereign securities                                 AA-/Aa3 or better    3% per issuer
SUPRANATIONAL SECURITIES                                                                                10% of portfolio
                                                                                    ------------------------------------------------
                                                                                    less than AA-/Aa3    3% per issuer
                                                                                    greater than         5% of portfolio
                                                                                    BBB-/Baa3
                               -----------------------------------------------------------------------------------------------------
                               Supranational securities                             AA-/Aa3 or better    3% per issuer
                                                                                                         5% of portfolio
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

  CERTAIN QUANTITATIVE LIMITATIONS

-        The per issuer limitations are a function of the market value of the
         combined accounts (US).

-        Sovereign securities will not exceed 10% of admitted assets.

-        The maximum percentage for all securities rated below A-/A3 is 20% of
         the portfolio.

 OTHER QUALIFICATIONS

-        Futures and options are permitted, provided the instrument is
                  used as a hedge, with specific prior approval from Platinum.

             -    Swaps

             -    Futures

             -    Exchange traded options

             -    Over-the-counter options

-        Structured securities or securities with embedded options are
                  permitted. Leverage is not permitted.

-        In the case of a split rating, the lower of the ratings
                  available shall apply.

<PAGE>

-        Should a security be downgraded below investment grade (Le. below
         BBB-/Baa3) the manager must notify and consult with Platinum as soon as
         reasonably practicable, regarding the optimal timing of the disposal.

-        For securities with variable principal repayment, the estimated
         duration should be used with respect to the duration restrictions.

-        All holdings must be denominated in the base currency of the relevant
         portfolio.

-        General obligation bonds are secured by the issuer's pledge of its full
         faith, credit and taxing power for the payment of principal and
         interest. Revenue or special tax bonds are payable only from the
         revenues derived from a particular facility or class of facilities but
         not from general tax revenues. Excluded will be revenue bonds where the
         revenues are derived solely from special or other excise taxes.
         Municipal bonds will be utilized when there is an after-tax benefit to
         the portfolio.

<PAGE>

                                                                       EXHIBIT 1

                              INVESTMENT GUIDELINES
                     PLATINUM UNDERWRITERS REINSURANCE, INC.

         The memorandum was prepared by Dewey Ballantine, LLP, counsel to
Platinum Underwriters Reinsurance, Inc., and provides a broad overview of the
investment limitations applicable to Maryland domiciled insurers and, as such,
particular investments may need to be reviewed against the requirement of the
code.

         1.       AUTHORIZATION OF INVESTMENTS

         The Board of Directors or a committee authorized by the Board of
Directors to supervise or make investments will approve the Investment
Guidelines and ratify all investments made pursuant to such Investment
Guidelines.

        2.       MINIMUM CAPITAL INVESTMENTS

        Before investing in other types of securities, the company will invest
its funds in an amount equal in value to the minimum capital and surplus
requirements. The permissible investments for such funds are limited to those
set forth in Section 5-607(b) of the Code and include (i) bonds or other debt
of the United States or an agency of the United States (if the obligation is
guaranteed by the United States); (ii) bonds or other debt that is the direct
obligation of Maryland or of a county, district or municipal corporation of
Maryland; (iii) bonds or other debt of another state; (iv) mortgage loans or
deeds of trust as specified in Section 5-608(j) and (k) of the Code on property
located in Maryland and (v) ground rents as specified in Section 5-608(m) of
the Code. At least 60% of the total amount of the required minimum investments
must consist of the types listed in (i) and (ii) above.

         3.       RESERVE INVESTMENTS

         After satisfying the minimum investment requirements, the company will
invest in cash or the classes of reserve investments set forth in Section 5-608
of the Code to bring its investments up to an amount not less than 50% of the
aggregate amount of its unearned premium and loss reserves. These investments
are referred to as reserve investments. Except for real property acquired under
Section 5-608(n) of the Code, a security or investment is not eligible as a
reserve investment unless (i) the security or investment is interest-bearing,
interest-accruing or divided or income-paying; (ii) the insurer is entitled to
the interest or income on the security or investment.

         The reserve investments of an insurer may include the following classes
of assets set forth in Section 5-608(d), (e), (f), (g), (h), (i), (j), (k),
(l), (m), (n), (q), (r) and (s) of the Code:

                  Obligations of Certain Banks. Obligations issued or guaranteed
by the African Development Bank, Asian Development Bank, International Bank for
Reconstruction and Development or International Finance Corporation, however,
an insurer may not invest more than 5% of its total admitted assets in such
obligations.

                  Government Securities. Bonds or other debt that are not in
default, are valid and legally authorized obligations, issued, assumed or
guaranteed by the United States, a state, or other specified municipalities,
which are payable from taxes levied on all taxable property or all taxable
income within the jurisdiction of the governmental unit or other special
revenues pledged or appropriated by law provided for the purpose of the payment
obligations and are not payable solely out of special assessments on properties
benefited by local improvements.

                  Secured Fixed Interest Securities. Obligations that are not in
default, that are issued, assumed or guaranteed by a solvent institution
created or existing under the laws of the United States or a state and that (i)
are secured by adequate collateral security (as defined in Section
5-608(e)(2)(iv)(3)) and bear fixed interest and during each of any 3, including
either of the last 2, of the 5 fiscal years immediately preceding the date of
acquisition by the insurer, the net earnings available for fixed charges of the
issuing, assuming or guaranteeing institution must have been not less than 1.25
times the total of the institution's fixed charges for the year or (ii) at the
date of acquisition by the insurer, are adequately secured and have investment
qualities and characteristics in which speculative elements are not
predominant.

                  Unsecured Fixed Interest Securities. Obligations that are not
in default, that are issued, assumed or guaranteed by a solvent institution
created or existing under the laws of the United States or a state and that are
unsecured obligations that bear fixed interest for which the net earnings
available for fixed charges of the issuing, assuming or guaranteeing
institution (i) for a period of 5 fiscal years immediately preceding the date
of acquisition by the insurer, averaged each year not less than 1.5 times the

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institution's average annual fixed charges applicable to the period and (ii)
during the last year of the 5-year period, must have been not less than 1.5
times the institution's fixed charges for the year.

                  Contingent Interest Obligations. Obligations that are not in
default, that are issued, assumed or guaranteed by a solvent institution created
or existing under the laws of the United States or a state and that are
adjustment, income or other contingent interest obligations for which the net
earnings available for fixed charges of the issuing, assuming or guaranteeing
institution for a period of 5 fiscal years immediately preceding the date of
acquisition by the insurer (i) averaged each year not less than 1.5 times the
sum of the institution's average annual fixed charges plus the institution's
average annual maximum contingent interest applicable to the period and (ii)
during each of the last 2 years of the 5-year period, must have been not less
than 1.5 times the sum of the institution's fixed charges plus maximum
contingent interest for the year.

                  Preferred or Guaranteed Stock. Preferred or guaranteed stock
of a solvent institution, created or existing under the laws of the United
States or a state, if (i) all prior obligations, and prior preferred stock, if
any, of the institution at the date of acquisition by the insurer are eligible
investments under Section 5-608; (ii) for preferred stock (1) the net earnings
of the institution available for fixed charges for a period of 5 fiscal years
immediately preceding the acquisition by the insurer must have averaged each
year not less than 1.5 times the sum of any average annual fixed charges, any
average annual maximum contingent interest, and the average annual preferred
dividend requirement applicable to the period; and (2) during either of the last
2 years of the 5-year period, the net earnings must have been not less than 1.5
times the sum of the institution's fixed charges, contingent interest, and
preferred dividend requirement for the year; and (iii) for guaranteed stock, the
assuming or guaranteeing institution meets the requirements of 5-608 (e)(2)(iii)
(described above in the " Unsecured Fixed Interest Securities" paragraph)
construed to include as a fixed charge the amounts of guaranteed dividends or
the rental covering the guarantee of the dividends.

                  Secured Obligations Issued by Trustees or Receivers.
Certificates, notes or other obligations, adequately secured, issued by
trustees or receivers of an institution created or existing under the laws of
the United States or a state, that, or the assets of which, are being
administered under the direction of a court. (See Section 5-608(g)).

                  Equipment Trust Certificates. Equipment trust obligations or
certificates that are adequately secured or other adequately secured
obligations that evidence (1) an interest in transportation equipment located
wholly or partly in the United States; and (2) a right to receive determined
parts of rental, purchase, or other fixed obligatory payments for the use of
the transportation equipment.

                  Bills of Exchange. Bank and bankers' acceptance and other
bills of exchange of the kind and maturities made eligible by law for purchase
in the open market by federal reserve banks.

                  Bonds Secured by Mortgage or Deed on US Property. Bonds or
other debt secured by first mortgages or deeds of trust on unencumbered
fee-simple or improved leasehold real property located in the United States and
otherwise meeting the requirements of Section 5-608(j). Except as otherwise
provided in Section 5-608, an insurer may not invest in or loan on the security
of any one property more than the greater of $25,000 or 2% of its total
admitted assets. The total investments of an insurer under this paragraph may
not exceed 40% of its total admitted assets.

                  Purchase-Money Mortgages. Purchase-money mortgages or like
securities received by an insurer on the sale or exchange of real property
acquired under subsection 5-608(n).

                  Bonds Secured by Mortgages Guaranteed by the US. Bonds, notes
or other debt secured by mortgages or deeds of trust that are guaranteed or
insured by an instrumentality of the United States under the National Housing
Act, Serviceman's Readjustment Act of 1944, or Bankhead-Jones Farm Tenant Act.

                  Stock or Debentures of Housing Authority. Stock or debentures
or both of a housing authority organized under the housing law of Maryland, to
the extent and on the conditions that the Commissioner authorizes, if all of
the stock of the housing authority has been or will be issued to one or more
insurers.

                 Investments in Savings and Loan Association. Shares or
deposits in a savings and loan association or building and loan association to
the extent that the investment or account is insured by the Federal Deposit
Insurance Corporation.

                 Common Stock. Dividend-paying common stock of a corporation
created or existing under the laws of the United States, Canada, a state, or a
province of Canada. (See Section 5-608(s)).

         4.       QUANTITATIVE LIMITATIONS ON RESERVE INVESTMENTS

         To the extent necessary to satisfy the reserve investment requirements,
the company will not have more than (i) 10% of its total admitted assets in
preferred stock under Section 5-608(f); (ii) 10% of its total admitted assets
in common stock under Section 5-608(s); or (iii) 5% of its total admitted
assets in the stock of one corporation. (See Section 5-608(s)(2)).
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         5.       OTHER INVESTMENTS

          Once the minimum investment requirements of Section 5-607 of the Code
are satisfied, the company may invest the remainder of its funds in any of the
classes of investments eligible under Section 5-608 or which are not
prohibited by the Code. In addition to investments specifically set forth as
reserve investments, Section 5-608 includes the following permissible types of
investments:

                  Canadian Securities. The company may invest in Canadian
securities and investments that are substantially of the same kinds, classes,
and investments grades as those eligible for investment under Sections 5-601
through 5-609 of the Code.

                  Investment of Foreign Authorized Insurers. If the company is
authorized to do business in a foreign country or possession of the United
States or that has outstanding insurance or reinsurance contracts on risks
located in a foreign country or possession of the United States the company
may invest in or otherwise acquire securities and investments in the foreign
country or possession that are substantially of the kinds, classes and
investment grades as those eligible for investment under Sections 5-601
through 5-609 of the Code. The aggregate amount of such investments and of the
currency of the foreign country or possession held by the company may not
exceed 1.5 times the greater of (i) the amount of the reserves of the insurer
and other obligations under any outstanding insurance contracts or reinsurance
contracts in that country or possession; and (ii) the amount that the company
is required by law to invest in that country or possession.

                  Investments Not Otherwise Prohibited. The investments of the
company may include any other investments not otherwise prohibited if (i) the
aggregate amount of the investments does not exceed 4% of the amount of
admitted assets of the insurer at the end of the previous year; (ii) the
investment does not violate any limitations on allowed investments and (iii)
the investments comply with the limitation established in Exhibit I,
"Additional Limitations."

         6.       PROHIBITED INVESTMENTS

         In addition to other excluded investments, the following are
prohibited investments: (1) obligations, stock, or other securities of
insolvent corporations (unless specifically permitted); (2) a mortgage or deed
of trust, or real property or an interest in real property other than as
specified in Sections 5-608(j), (k), (l) and (m); (3) the capital stock of the
company; (4) stocks, bonds or other securities issued by a corporation, other
than an insurer, if a majority of the stock having voting powers of the
issuing corporation is owned directly or indirectly by or for the benefit of
one or more officers or directors of the insurer; or (5) an investment that
the Commissioner finds is against public policy or designed to evade a
prohibition on investment.

         The company may not directly or indirectly invest in stocks, bonds or
other securities issued by a corporation, if a majority of the outstanding
stock of the corporation, or a majority of the stock having voting powers of
the corporation, is or will be after the acquisition directly or indirectly
owned: (i) by the company or by or through one or more of the company's
officer's or director's holding the stock for the benefit of the insurer or
its stockholders; (ii) by a parent corporation or subsidiary of the company,
the parent corporation or subsidiary of the parent corporation; or (iii) by
any combination of the company, its parent corporation, its subsidiaries or
its stockholders.

         7.       OTHER LIMITATIONS

         Securities of One Issuer. Except as otherwise specifically provided,
the company may not have more than 10% of its total admitted assets in the
securities of one person other than (i) governmental obligations eligible for
minimum capital investments or (ii) investments in the stock of other insurers.

         Foreign Investments. The company may invest in stocks, shares, bonds
or obligations of a person or governmental or business unit of or in a foreign
country or subdivision thereof, if the foreign investments conform
substantially with the limitations imposed by domestic investments. However,
the aggregate amount of foreign investments held under 5-605(c)(l) and under
5-608(o) and (p) may not exceed the greater of (i) 10% of the company's total
admitted assets; (ii) 1.5 times the amount of the company's reserves and other
obligations under the insurance or reinsurance contracts in that country and
(iii) the amount necessary to transact business in the foreign country,
directly or through a subsidiary corporation.

         Subsidiaries. Generally, the company may not invest in a subsidiary
an amount which exceeds the lesser of 10% of the company's assets and 50% of
the domestic insurer's surplus as regards policy holders. In addition, after
the investment the company must have remaining surplus as regards
policyholders that bears a reasonable relation to the company's outstanding
liabilities and is adequate to meet the company's financial needs.

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         High Yield and High Risk Obligations. Without the prior approval of the
Commissioner, the company may not acquire a high yield / high risk obligation
if, after such acquisition, the aggregate cost of the acquisition plus the
admitted value of all other high yield / high risk obligations then held by the
company would exceed 20% of the company's admitted assets.