TRANSITION SERVICES AGREEMENT


                                 BY AND BETWEEN


                             SCOTTISH HOLDINGS, INC.


                                       AND


                        EMPLOYERS REINSURANCE CORPORATION



                            Dated as of _______, 2003


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                                TABLE OF CONTENTS


ARTICLE I. DEFINITIONS.........................................................1


ARTICLE II. APPOINTMENT; STANDARDS.............................................3

     Section 2.01.  Appointment and Acceptance of Appointment..................3
     Section 2.02.  Standards..................................................4

ARTICLE III. TERMINATION.......................................................4

     Section 3.01.  Termination................................................4
     Section 3.02.  Consultation...............................................4
     Section 3.03.  Effect of Termination......................................4
     Section 3.04.  Additional Termination Provisions..........................5

ARTICLE IV. TRANSITION SERVICES AND OTHER ARRANGEMENTS.........................5

     Section 4.01.  Independent Contractor.....................................5
     Section 4.02.  Transition Services........................................5
     Section 4.03.  Separation Services........................................6
     Section 4.04.  Special Projects...........................................6
     Section 4.05.  Additional Agreement.......................................6
     Section 4.06.  Non-Exclusivity............................................7

ARTICLE V. LIMITATION OF LIABILITY.............................................7

     Section 5.01.  Limited Liability of a Provider............................7
     Section 5.02.  Additional Limitation on Liability.........................7

ARTICLE VI. PRICING............................................................7

     Section 6.01.  Costs and Disbursements....................................7
     Section 6.02.  Invoices...................................................8

ARTICLE VII. REPRESENTATIONS AND WARRANTIES....................................8

     Section 7.01.  Non-Infringement...........................................8
     Section 7.02.  Compliance with Laws and Privacy and Security Policies.....8
     Section 7.03.  Disclaimer of Implied Warranties and Covenants.............8

ARTICLE VIII. COVENANTS........................................................9

     Section 8.01.  Non-Infringement...........................................9
     Section 8.02.  Capability and Lack of Harmful Components..................9
     Section 8.03.  Compliance with Privacy and Security Policies..............9

ARTICLE IX. INDEMNIFICATION....................................................9

     Section 9.01.  Indemnification............................................9
     Section 9.02.  Procedures Relating to Indemnification....................10


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ARTICLE X. TRANSITION SERVICES WORKS AND TRANSITION SERVICES DATA.............10


ARTICLE XI. TRANSITION PROJECT MANAGEMENT.....................................11


ARTICLE XII. DISPUTE RESOLUTION...............................................11


ARTICLE XIII. CONFIDENTIAL INFORMATION........................................12

     Section 13.01. Provider's Obligations....................................12
     Section 13.02. Recipient's Obligations...................................12
     Section 13.03. Compulsory Disclosure.....................................12
     Section 13.04. Injunction................................................12

ARTICLE XIV. REGULATORY MATTERS...............................................13


ARTICLE XV. COMPLIANCE WITH AND CHANGES TO LAWS, POLICIES AND TECHNOLOGY......13

     Section 15.01. Compliance with General Laws..............................13
     Section 15.02. Amendment of Privacy and Security Policies................13
     Section 15.03. Non-Public Personally Identifiable Information............13
     Section 15.04. Technology Changes........................................14

ARTICLE XVI. TRANSITION SERVICES AND DISASTER RECOVERY........................14


ARTICLE XVII. INABILITY TO PERFORM TRANSITION SERVICES; ERRORS................14


ARTICLE XVIII. SURVIVAL.......................................................14


ARTICLE XIX. MISCELLANEOUS....................................................15

     Section 19.01. Notices...................................................15
     Section 19.02. Waivers and Amendments; Preservation of Remedies..........16
     Section 19.03. Force Majeure.............................................16
     Section 19.04. No Third Party Beneficiaries..............................16
     Section 19.05. No Agency.................................................16
     Section 19.06. Subcontracting............................................16
     Section 19.07. Further Assurances........................................17
     Section 19.08. Incorporation of General Provisions.......................17
     Section 19.09. Entire Agreement..........................................17
     Section 19.10. Consistency with Purchase Agreement.......................17

Schedule A          Transition Services


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                          TRANSITION SERVICES AGREEMENT

     THIS TRANSITION SERVICES AGREEMENT (this "Agreement"), dated as of
___________, 2003, is made by and between Employers Reinsurance Corporation, a
Missouri corporation ("Provider"), and Scottish Holdings, Inc., a Delaware
corporation (together with Scottish Re (U.S.), Inc., a Delaware corporation,
"Recipient"). Capitalized terms used herein but not defined in the text shall
have the meanings ascribed to them in the Purchase Agreement, dated October [ ],
2003, by and among Provider and Recipient (the "Purchase Agreement"). Provider
and Recipient are each individually referred to herein as a "Party" and,
collectively, as the "Parties".

                                   WITNESSETH:

     WHEREAS, pursuant to the Purchase Agreement, Recipient is purchasing 95% of
the outstanding shares of Capital Stock of the Company;

     WHEREAS, the Parties desire to effectuate and cooperatively provide for an
orderly transition in the performance of administrative services from Provider
to the Company; and

     WHEREAS, this Agreement is being entered into pursuant to Sections 2.04(b)
and 5.10 of the Purchase Agreement;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and upon the terms and conditions set forth herein, the
Parties hereto agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

     Whenever the singular term is used in a definition, the same shall include
the plural, and whenever the plural is used in a definition, the same shall
include the singular, where appropriate.

     "Company" means ERC Life Reinsurance Corporation, a Missouri-domiciled
insurance company.

     "Confidential Information" shall mean all tangible business information
that a Party maintains in confidence, and, with respect to Non-Public Personally
Identifiable Information, all tangible and intangible business information of
the Party, including the following:

          (i)   information relating to the Party's planned or existing Systems
                and systems architecture, including computer hardware, computer
                software, source code, object code, documentation, methods of
                processing and operational methods;

          (ii)  sales, profits, organizational restructuring, new business
                initiatives and financial information;


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          (iii) proprietary and confidential information that describes the
                Party's reinsurance, insurance and financial products, including
                actuarial calculations, product designs, and how such products
                are administered and managed;

          (iv)  proprietary and confidential information that describes the
                Party's product strategies, tax interpretations, tax positions
                and treatment of any item;

          (v)   confidential information and software of third parties with
                which the Party conducts business;

          (vi)  Non-Public Personally Identifiable Information; and

          (vii) any other third party information as to which the Party has
                obligations of confidentiality.

Notwithstanding the foregoing, Confidential Information shall not include
information that (i) is or becomes generally known to the public not as a result
of a disclosure by a Party, (ii) is rightfully in the possession of a Party
prior to disclosure by the other Party, (iii) is received by a Party in good
faith and without restriction from a third party, not under a confidentiality
obligation to the other Party and having the right to make such disclosure, or
(iv) is independently developed by or for a Party without reference to the
Confidential Information of the other Party. The foregoing exceptions do not
apply to the disclosure of Non-Public Personally Identifiable Information.

     "Dispute" has the meaning set forth in Article XII.

     "Force Majeure" means an event beyond the control of such Party (or any
Person acting on its behalf), which by its nature could not have been foreseen
by such Party (or such Person), or, if it could have been foreseen, was
unavoidable, and includes acts of God, storms, floods, riots, fires, sabotage,
terrorism, civil commotion or civil unrest, interference by civil or military
authorities, acts of war (declared or undeclared) or armed hostilities or other
national or international calamity or one or more acts of terrorism or failure
of energy sources.

     "Non-Public Personally Identifiable Information" means all tangible and
intangible financial or medical information of or concerning an individual
person which either has been obtained from sources which are not available to
the general public or obtained from the person who is the subject of such
information, and which information is included in data files exchanged by any of
the parties to the Transaction Agreements. The term shall include, without
limitation, names, addresses, telephone numbers, email addresses, account or
policy information, and any list or grouping of customers, and any medical
records or other medical information of such customers and any other type of
information deemed "nonpublic" and protected by applicable privacy Law and data
elements reflecting the same.

     "Other Costs" has the meaning set forth in Section 6.01.

     "Party" has the meaning set forth in the Preamble.


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     "Privacy Policy" means the privacy policies of Provider, copies of which
have been made available to Recipient.

     "Provider" has the meaning set forth in the Preamble, and, for purposes of
Article IV, shall include Affiliates of the Provider.

     "Provider Indemnified Party" has the meaning set forth in Section 5.01.

     "Purchase Agreement" has the meaning set forth in the Preamble.

     "Recipient" has the meaning set forth in the Preamble.

     "Recipient Indemnified Party" has the meaning set forth in Section 9.01(b).

     "Security Policy" means the security policies of Provider.

     "Separation Services" has the meaning set forth in Section 4.03.

     "Service Charges" has the meaning set forth in Section 6.01.

     "Special Projects" means a service that Recipient requests Provider to
provide and that Provider has agreed to provide in writing, in accordance with
Section 4.04, that does not reasonably fall within one of the identified
categories of Transition Services.

     "Systems" means a Party's computer facilities, system(s), applications,
databases, networks (voice or data) or software.

     "Transition Project Manager" means the person, designated by Provider and
Recipient respectively, who is primarily responsible for administering this
Agreement, including, but not limited to, conducting reviews of service levels
and performance, managing data migration and mitigating and resolving technical
and business issues, with the authority and obligations set forth in Article XI.

     "Transition Services" has the meaning set forth in Section 4.02(a)

     "Transition Services Data" means output data from the delivery of
Transition Services by Provider to Recipient under this Agreement.

     "Transition Services Works" means reports developed for Recipient in
connection with the Transition Services provided by Provider to Recipient under
this Agreement.

                                  ARTICLE II.

                             APPOINTMENT; STANDARDS

     Section 2.01. Appointment and Acceptance of Appointment.

     Subject to the terms and conditions set forth herein, for the period
commencing on the Effective Date and continuing until terminated in accordance
with Article III hereof, Recipient


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hereby appoints Provider to provide, or arrange with Provider's Affiliates to
provide, the Transition Services specified in Article IV hereof and Schedule A
hereto to the Company and Provider hereby accepts such appointment.

     Section 2.02. Standards.

     Except as otherwise provided in this Agreement, and provided that Provider
is not restricted by an existing contract with a third party or by Law, Provider
agrees that the nature, quality and standard of care applicable to delivery of
the Transition Services will be substantially the same as that applicable to
those Transition Services that Provider provided to the Company immediately
prior to the Closing Date. With respect to Separation Services not previously
provided to the Company, and provided that Provider is not restricted by an
existing contract with a third party or by Law, Provider agrees that the nature,
quality and standard of care applicable to delivery of such Separation Services
shall be substantially the same as that applicable to similar services provided
to Provider's Affiliates or other business components.

                                  ARTICLE III.

                                   TERMINATION

     Section 3.01. Termination.

     (a) Recipient may from time to time terminate this Agreement with respect
to one or more Transition Services, in whole but not in part, upon giving at
least thirty (30) days prior written notice to Provider; provided, that any such
termination of a Transition Service shall not reduce the price of the Transition
Services as set forth in Section 6.01 hereto. Notwithstanding the preceding
sentence, no specific Transition Service shall be terminable if such termination
would result in a material increase in Provider's costs or time in providing the
Transition Services; provided, that in any such instance, Provider and Recipient
may mutually agree to a termination plan with respect to any such Transition
Service, including provision for payment of Provider's costs or time in
connection with any such termination.

     (b) Provider may terminate this Agreement with respect to one or more
Transition Services, in whole but not in part, at any time upon prior written
notice to Recipient if Recipient has failed to perform any of its material
obligations under this Agreement relating to such Transition Service, and such
failure shall have continued for a period of thirty (30) days after receipt by
Recipient of a notice of such failure from Provider.

     Section 3.02. Consultation.

     Each Party agrees that prior to exercising its rights under Section 3.01,
it will use reasonable efforts to consult for a reasonable period of time with
the other Party in advance of such termination and its implementation.

     Section 3.03. Effect of Termination.

     Upon termination of any Transition Service pursuant to this Agreement, the
relevant Provider will have no further obligation to provide the terminated
Transition Service, and the


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relevant Recipient will have no obligation to pay any future Other Costs
relating to any such Transition Service, except as agreed to pursuant to Section
4.04 of this Agreement, and upon termination of this Agreement in accordance
with its terms, no Provider will have any further obligation to provide any
Transition Service, and no Recipient will have any obligation to pay any
Transition Service Charges or Other Costs relating to any Transition Service or
make any other payments under this Agreement; provided that notwithstanding any
such termination Recipient shall remain obligated to Provider for Service
Charges, Other Costs and any other fees, costs and expenses owed and payable in
respect of Transition Services provided prior to the effective date of
termination. In connection with termination of any Transition Service, the
provisions of this Agreement not relating solely to such terminated Transition
Service shall survive any such termination.

     Section 3.04. Additional Termination Provisions.

     Provider's obligations and the rights of Recipient under this Agreement
shall terminate at such time as the Company is no longer owned and controlled
directly or indirectly by Recipient or in the event of a change in control of
Recipient. In addition, unless otherwise provided with respect to a particular
Transition Service, this Agreement shall terminate on the date which is nine (9)
calendar months after the Effective Date.

                                  ARTICLE IV.

                   TRANSITION SERVICES AND OTHER ARRANGEMENTS

     Section 4.01. Independent Contractor.

     In no event shall the personnel of Provider performing the Transition
Services to Recipient in accordance with this Agreement be considered employees
or agents of Recipient. Provider shall be solely liable for the payment of
salary, bonus, employer's share of all applicable withholding taxes, other
reasonable out of pocket expenses normally incidental to the provision of the
Transition Services (including, without limitation, travel and entertainment
expenses) and benefits received by such personnel, which shall be consistent
with the historical practices of Provider and its Affiliates.

     Section 4.02. Transition Services.

     (a) During the period commencing on the Closing Date and ending on the
relevant termination date as provided in Article III hereof, subject to the
provisions below, Provider shall provide or cause to be provided to Recipient
with respect to the Company the services set forth in Schedule A hereto (the
"Transition Services").

     (b) The Transition Services listed on Schedule A shall be deemed to include
(i) services that are, according to Provider's written manuals, procedures,
customs or otherwise (at the highest level of the various sources, to the extent
the sources conflict) provided as part of a Transition Service; (ii) services
required to reflect changes in technology required by regulators to support the
Transition Services; and (iii) services that were provided to the Company prior
to the Closing and are necessary for (y) the conduct of the business of the
Company as of Closing


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or (z) the provision of services by, or fulfillment of obligations of, Recipient
under the Transaction Agreements.

     (c) On or prior to the Effective Date, Provider shall obtain all waivers
and consents necessary to provide any Transition Services and Provider shall
bear any expenses related to such waivers and consents.

     Section 4.03. Separation Services.

     Provider shall provide (i) such services as are reasonably required to
enable Provider to separate the Company from Provider or any of Provider's
Affiliates, including, without limitation, claim file separation, policy file
separation, physically separating hardware and software, and security, (ii)
services required to enable Recipient to operate the Company under its own
management, including the migration of data, (iii) assistance in understanding
current business practices and historical data for purpose of the Recipient's
integration of various functions, systems and practices into Recipient's
business, and (iv) in connection with data migration, reasonable access to
Provider's data to be migrated (collectively, the "Separation Services"). If any
Separation Services are not Transition Services, they shall be subject to the
procedures set forth in Section 4.04 and shall become Special Projects
thereunder.

     Section 4.04. Special Projects.

     (a) If Recipient requests in writing that Provider provide a Special
Project, which request shall include a description of the service required to be
performed, Provider (a) shall within five (5) Business Days after the date of
the request provide Recipient with written notice of receipt of the request and
(b) shall within ten (10) Business Days after the date of such request provide
Recipient with a written proposal for such Special Project, giving reasonable
priority to other demands on Provider's resources under this Agreement and
otherwise. Such written proposal shall refer to the description provided by
Provider, include the estimated time and price of performing it (including all
consents necessary to perform the Special Projects), and include the potential
impact on any previously existing Transition Services. If the Parties agree on
such proposal, Provider shall perform such Special Project in accordance with
the terms of this Agreement.

     (b) On or prior to commencing any Special Project, Provider shall obtain
all waivers and consents necessary to perform any Special Projects and Provider
shall bear any expenses related to such waivers and consents.

     Section 4.05. Additional Agreement.

     As of the Closing, except as otherwise provided in this Agreement, Schedule
A hereto, or Section 5.02 of the Purchase Agreement, Recipient shall cease to
use and shall have no further access to, and Provider shall have no obligation
to otherwise provide, Provider Intranet and other Provider owned or licensed
computer software, hardware or technology, and Recipient shall have no access
to, and Provider shall have no obligation to otherwise provide, computer-based
resources (including e-mail and access to Provider computer networks and
databases) that require a password or are available on a secured access basis.
Except as provided in this Agreement or in Schedule A, Recipient shall cease
using the business services made available by


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Provider and/or its Affiliates to the Company or its employees prior to the
Closing Date. Recipient agrees to use its best efforts to fully implement the
provisions of this Section promptly.

     Section 4.06. Non-Exclusivity.

     Nothing herein shall prevent Recipient during the term of this Agreement
from obtaining any of the Transition Services from any other person or from
providing any Transition Service to itself using its own facilities and
employees; provided, however, that any use of such third party services shall
not reduce the price of the Transition Services as set forth in Section 6.01.

                                   ARTICLE V.

                             LIMITATION OF LIABILITY

     Section 5.01. Limited Liability of a Provider.

     Notwithstanding the standard for services set forth in Section 2.02
pursuant to which Provider will perform, or cause to be performed, each
Transition Service, neither Provider nor its Affiliates or Representatives
(each, a "Provider Indemnified Party") shall have any liability in contract,
tort or otherwise to Recipient or its Affiliates or Representatives for or in
connection with any Transition Services rendered by any Provider Indemnified
Party pursuant to the terms of this Agreement, the transactions contemplated
hereunder or any Provider Indemnified Party's action or inaction with respect
thereto, except for Losses arising out of or resulting directly from such
Provider Indemnified Party's gross negligence or willful misconduct in
connection with the foregoing.

     Section 5.02. Additional Limitation on Liability.

     Notwithstanding any other provision contained in this Agreement, in no
event shall Provider, Recipient or their respective Affiliates or
Representatives be liable for any special, indirect, punitive, incidental or
consequential losses, damages or expenses, including loss of profits.

                                  ARTICLE VI.

                                     PRICING

     Section 6.01. Costs and Disbursements.

     Recipient shall pay to Provider for the provision of the Transition
Services: (i) $300,000 per month for the first three months of the term of this
Agreement, and (ii) $250,000 per month for the last six months of the term of
this Agreement (the "Service Charges") in accordance with the terms of this
Agreement. Further, in connection with performance of the Transition Services,
Provider may incur certain reasonable transition costs and other incidental
out-of-pocket costs and expenses (excluding overhead and temporary loss of use
of its employees or resources) (the "Other Costs"), which shall, without
duplication, either be paid directly by Recipient or


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reimbursed to Provider by Recipient. Provider shall not be responsible for any
costs or expenses necessary to integrate Recipient's systems for purposes of
receiving the services described in this Agreement.

     Section 6.02. Invoices.

     Provider shall deliver an invoice to Recipient on a monthly basis (or at
such other frequency as is consistent with the basis on which the Service
Charges are determined and, if applicable, charged to Affiliates of Provider) in
arrears for the Service Charges, any Other Costs and any other amounts due to
Provider under this Agreement. Recipient shall pay the amount of such invoice by
wire transfer to Provider within thirty (30) days of the date of such invoice in
accordance with Section 2.06 of the Purchase Agreement. If Recipient fails to
pay such amount by such date, Recipient shall be obligated to pay to Provider,
in addition to the amount due, interest on such amount at the Interest Rate from
the date the payment was due through the date of payment, all in accordance with
Section 2.06 of the Purchase Agreement. As soon as practicable after receipt of
any reasonable written request by Recipient, Provider shall provide Recipient
with data and documentation supporting the calculation of any amount due to
Provider under this Agreement for the purpose of verifying the accuracy of such
calculation.

                                  ARTICLE VII.

                         REPRESENTATIONS AND WARRANTIES.

     Section 7.01. Non-Infringement.

     Provider represents and warrants that as of the Closing Date no service
provided pursuant hereto that Provider performed for itself prior to the Closing
Date and that will become a Transition Service infringes any copyright,
trademark, trade name, patent, trade secret, or other intellectual property
right, or violates any third party property or contractual right, or contains
any scandalous, libelous, or unlawful matter.

     Section 7.02. Compliance with Laws and Privacy and Security Policies.

     Provider represents and warrants that as of the Closing Date, Provider has
been and is in compliance in all material respects with all applicable Laws of
any Governmental Authority and any Privacy Policies and Security Policies
necessary for Provider to provide the Transition Services as contemplated
herein.

     Section 7.03. Disclaimer of Implied Warranties and Covenants.

     THE PARTIES AGREE THAT NEITHER RECIPIENT NOR PROVIDER MAKES ANY IMPLIED
WARRANTIES OR COVENANTS UNDER THIS AGREEMENT WHATSOEVER.


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                                 ARTICLE VIII.

                                   COVENANTS.

     Section 8.01. Non-Infringement.

     Provider covenants that no Transition Services, Transition Services Works,
or Transition Services Data will infringe any Intellectual Property right,
trademark, trade name, trade dress or other intellectual property right of any
third party, or violate any third party property or contractual right, right of
privacy or right of publicity, or contain any libelous or unlawful matter.

     Section 8.02. Capability and Lack of Harmful Components.

     Provider covenants that it will utilize frequently updated commercially
available anti-virus software to ensure that any Transition Services Data
provided by Provider under this Agreement will not, at the time of installation,
contain any virus, disabling code or other such malware.

     Provider covenants that no Transition Services, Transition Services Works
and Transition Services Data provided by Provider as contemplated herein will
violate in any material respect any applicable Law of any Governmental
Authority.

     Section 8.03. Compliance with Privacy and Security Policies.

     Provider covenants that the provision of the Transition Services,
Transition Services Works or Transition Services Data by Provider as provided
for in this Agreement, including without limitation, the provision to Recipient
of any information, including without limitation, customer and policyholder
information, will not result in any material breach of Privacy Policies or
Security Policies.

                                  ARTICLE IX.

                                 INDEMNIFICATION

     Section 9.01. Indemnification.

     (a) Recipient shall indemnify and hold harmless each Provider Indemnified
Party on an After Tax Basis from and against any Losses, and reimburse each
relevant Provider Indemnified Party for all reasonable expenses as they are
incurred, whether or not in connection with pending litigation and whether or
not any Provider Indemnified Party is a party hereto, arising out of or in
connection with Transition Services, Separation Services or Special Projects
rendered by such Provider Indemnified Party pursuant to the terms of this
Agreement, the transactions contemplated hereunder or any such Provider
Indemnified Party's action or inaction with respect thereto; provided, that
Recipient shall not be liable under this Section 9.01(a) for any Losses of any
such Provider Indemnified Party arising out of or resulting from such Provider
Indemnified Party's gross negligence or willful misconduct in connection with
the foregoing.


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     (b) Provider shall indemnify and hold harmless each relevant Recipient and
its Affiliates and Representatives (each, a "Recipient Indemnified Party") on an
After Tax Basis from and against any Losses, and reimburse each Recipient
Indemnified Party for all reasonable expenses as they are incurred, whether or
not in connection with pending litigation and whether or not any Recipient
Indemnified Party is a party hereto, arising out of the gross negligence or
willful misconduct of Provider in connection with (i) any of the Transition
Services, Separation Services or Special Projects rendered by or on behalf of
Provider pursuant to the terms of this Agreement, (ii) the transactions
contemplated hereunder, or (iii) Provider's action or inaction with respect
thereto.

     (c) Notwithstanding any other indemnification provision contained herein,
subject to Article V and without duplication, Recipient shall indemnify and hold
harmless Provider Indemnified Party on an After Tax Basis from and against any
Losses, arising out of or in connection with any breach by Recipient, or its
Representatives or Affiliates of any of their representations, warranties,
covenants or agreements contained in Section 4.05.

     (d) Notwithstanding any other provision contained in this Agreement, the
aggregate indemnification obligation of either of Provider or Recipient under
this Article IX shall in no event exceed the aggregate total of Service Charges
and Other Costs.

     Section 9.02. Procedures Relating to Indemnification.

     Sections 10.03 and 10.04 of the Purchase Agreement shall be deemed
incorporated into and shall become a part of this Agreement and shall apply to
any claims for indemnity asserted pursuant to Section 9.01 of this Agreement.

                                   ARTICLE X.

             TRANSITION SERVICES WORKS AND TRANSITION SERVICES DATA.

     To the extent permitted by applicable law and third party agreements in
effect on the Closing Date to which Provider is a party or may be subject,
Recipient shall acquire all right, title and interest in the Transition Services
Works and Transition Services Data (in whatever medium or format), all of which
shall vest in Recipient upon creation or upon the Closing Date, whichever occurs
later, and shall be owned by Recipient in perpetuity. All of such Transition
Services Works and Transition Services Data shall be provided as "work for hire"
within the meaning of the Copyright Act of 1976, as amended. If and to the
extent that any such Transition Services Works and Transition Services Data, or
any part thereof, is not a "work for hire" for any reason, then subject to
applicable law and any third party agreements to which Provider is a party,
Provider hereby irrevocably transfers, conveys, and assigns all right, title,
and interest in such Transition Services Works and Transition Services Data to
Recipient. With respect to any Transition Services Works and Transition Services
Data as to which such complete rights of ownership cannot be assigned because of
prohibitions against such transfers by reason of third party agreements in
existence as of the Closing Date, Provider shall obtain all necessary licenses
to grant Recipient the perpetual, paid-up, unrestricted rights to use,
reproduce, distribute, display, modify, transfer, create derivative works of,
sublicense and disclose such Transition Services Works and Transition Services
Data. Provider shall secure written agreements from any


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<PAGE>

personnel (employees, consultants and others) or entities providing Transition
Services Works and Transition Services Data and Transition Services to the
extent necessary for Provider to carry out the provisions of this subparagraph.
Upon termination of the provision of any or all Transition Services under this
Agreement, all Transition Services Works and Transition Services Data (to the
extent embodied in a tangible form) shall reasonably promptly be delivered to
Recipient at its address set forth below and Provider shall retain no copies
thereof, except that Provider shall be entitled to retain one copy thereof
solely for archival purposes and such copy shall be treated and protected by
Provider as Confidential Information of Recipient pursuant to Article XIII
herein.

                                  ARTICLE XI.

                         TRANSITION PROJECT MANAGEMENT.

     Provider and Recipient shall each appoint a Transition Project Manager.
Each Transition Project Manager may appoint or designate in writing directed to
the other Transition Project Manager a person or persons to act in his or her
stead on day-to-day matters within various functional areas such as primary
contacts to deal with information technology matters, actuarial matters, or
financial matters. Transition Project Managers may serve as the primary contact
point for his or her respective principal with respect to the obligations of the
Parties under this Agreement and to questions or issues that may arise during
the performance of this Agreement; provided, that neither Transition Project
Manager, or his or her designee, shall have the authority to bind his or her
respective principal. Any Party may, by advance notice given to the other Party
in accordance with Section 19.01, designate another Transition Project Manager
hereunder, provided that notice of such change shall be effective upon receipt.

                                  ARTICLE XII.

                               DISPUTE RESOLUTION.

     In the event of any dispute, controversy or claim arising out of or
relating to the transactions contemplated by this Agreement, or the validity,
interpretation, breach or termination of any provision of this Agreement, or
calculation or allocation of the costs of any Transition Service or Special
Project, including claims seeking redress or asserting rights under any Law
(each, a "Dispute"), Provider and Recipient shall negotiate in good faith in an
attempt to resolve such Dispute amicably between themselves at the operational
level. If such Dispute has not been resolved to the mutual satisfaction of
Provider and Recipient within twenty (20) Business Days (or such longer period
as the Parties may agree), then at the request of either Party the matter shall
be submitted to the Chief Financial Officers of Provider and Recipient for their
consideration. In the event that such Chief Financial Officers are unable to
resolve such Dispute within an additional twenty (20) Business Day period (or
such longer period as the Parties may agree), such Dispute will be resolved in
accordance with the judicial process referred to in Section 11.12 of the
Purchase Agreement.


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<PAGE>

                                 ARTICLE XIII.

                            CONFIDENTIAL INFORMATION.

     Section 13.01. Provider's Obligations.

     Subject to the terms and conditions of the Purchase Agreement: (i) Provider
shall maintain the confidentiality of the Confidential Information of Recipient
and, except as provided in this Agreement, shall not use the Confidential
Information for any purpose other than the performance of this Agreement; and
(ii) upon termination of this Agreement, Provider agrees to turn over the
Confidential Information of Recipient to Recipient or to destroy such
information in accordance with the instructions of Recipient; provided, however,
that Provider may maintain one archive copy of all such information that was
generated by Provider under this Agreement in a secure data storage facility.

     Section 13.02. Recipient's Obligations.

     Recipient shall maintain the confidentiality of the Confidential
Information of Provider, and except as provided in this Agreement, shall not use
the Confidential Information for any purpose other than the performance of this
Agreement. Upon termination of this Agreement and any Transition Services
provided to Recipient hereunder, Recipient agrees to turn over the Confidential
Information of Provider to Provider or to destroy such information in accordance
with the instructions of Provider; provided, however, that Recipient may
maintain one archive copy of all of such information that was generated by
Recipient under this Agreement in a secure data storage facility.

     Section 13.03. Compulsory Disclosure.

     If either Party is requested or required to disclose Confidential
Information of the other pursuant to any judicial or administrative process,
then such receiving Party shall promptly notify the other Party to this
Agreement in writing of such request or requirement. The Party whose
Confidential Information is requested or required to be disclosed shall either
(i) promptly seek protective relief from such disclosure obligation, or (ii)
direct the receiving Party to comply with such request or requirement. The Party
in receipt of Confidential Information of the other Party shall cooperate with
efforts of the other Party to maintain the confidentiality of such information
or to resist compulsory disclosure thereof but any costs incurred by the
receiving Party shall be reimbursed by the other Party, except for costs of the
receiving Party's employees. If, after a reasonable opportunity to seek
protective relief, such relief is not obtained by the Party whose Confidential
Information is subject to discovery or disclosure, or if such Party fails to
obtain such relief, the receiving Party may disclose such portion of such
Confidential Information that such Party reasonably believes, on the basis of
advice of such Party's counsel, such Party is legally obligated to disclose.

     Section 13.04. Injunction.

     Each Party agrees that the breach by the other Party of its obligations
under this Article XIII would cause significant and irreparable harm to the
aggrieved Party, which may be difficult to measure with certainty or to
compensate through money damages. Each Party acknowledges


                                       12
<PAGE>

that the aggrieved Party shall be entitled, without proof of irreparable harm
and without waiving any other right or remedy available to it, to such
injunctive and equitable relief as may be deemed proper by a court of competent
jurisdiction.

                                  ARTICLE XIV.

                               REGULATORY MATTERS.

     Provider shall cooperate with Recipient and any regulatory authorities that
supervise it to satisfy any regulatory requirements applicable to entities that
provide services to it. From and after the Closing Date, Provider shall continue
to maintain systems necessary to provide the Transition Services to meet all
applicable regulatory requirements.

                                  ARTICLE XV.

          COMPLIANCE WITH AND CHANGES TO LAWS, POLICIES AND TECHNOLOGY.

     Section 15.01. Compliance with General Laws.

     Nothing in this Agreement shall oblige either Party hereto to act in breach
of the requirements of any law, rule or regulation applicable to it, including
securities and insurance laws, written policy statements of securities
commissions, insurance and other regulatory authorities, and the by-laws, rules,
regulations and written policy statements of relevant securities and
self-regulatory organizations, or law, rule or regulation of any Governmental
Authority concerning privacy.

     Section 15.02. Amendment of Privacy and Security Policies.

     During the term of this Agreement, Provider shall provide Recipient with
notice of any amendment to any Privacy Policy or Security Policy which amendment
would be likely to adversely affect (i) Provider's ability to perform the
Transition Services, Separation Services or Special Projects or (ii) Recipient's
ability to receive and use the Transition Services, Separation Services or
Special Projects.

     Section 15.03. Non-Public Personally Identifiable Information.

     Except for the purposes of carrying out this Agreement, Provider shall not
disclose or use any Non-Public Personally Identifiable Information related to
the Transition Services or the business of Recipient. Such Non-Public Personally
Identifiable Information shall not be reproduced or shared with any other party
except those entities with which Provider may from time to time contract in
accordance with the fulfillment of the terms of this Agreement and which
disclosure shall comply with all state and federal statutes and regulations
governing the disclosure of medical records and non-public personally
identifiable information, including any state or federal laws pertaining to the
confidentiality of medical records that include diagnosis


                                       13
<PAGE>

and treatment for HIV and psychiatric or substance abuse conditions and
problems. Provider shall promptly adopt and implement security procedures to
protect from improper disclosure or use of Non-Public Personally Identifiable
Information related to the Transition Services or the business of Recipient,
such procedures to be in compliance with all applicable federal and state
regulatory requirements.

     Section 15.04. Technology Changes

     In connection with the migration of data, Provider shall notify recipient
of any changes to software applications, field data or parameters that are
material to the migration of data.

                                  ARTICLE XVI.

                   TRANSITION SERVICES AND DISASTER RECOVERY.

     Provider shall have established and implemented security and disaster
recovery procedures to protect data owned by Recipient as well as Recipient's
networks and systems, all in accordance with commercially reasonable practices.

                                 ARTICLE XVII.

                inability to perform transition services; errors.

     In the event that Provider is unable to perform a Transition Service as
required by this Agreement (other than for reasons of Force Majeure) for a
period that can reasonably be expected to exceed four (4) days Provider shall
cooperate with Recipient to obtain an alternative means of providing such
Transition Service and shall bear all reasonable costs incurred in either
restoring the Transition Service or obtaining an alternative source of such
Transition Service. In addition, Provider shall, at its own expense, promptly
correct any errors in the provision of Transition Services rendered by Provider.

                                 ARTICLE XVIII.

                                    SURVIVAL.

     The provisions of Articles V, VI (to the extent any sums remain due or are
disputed), VIII, IX, X, XII, XIII, XVIII and XIX shall survive the termination
or expiration of this Agreement.


                                       14
<PAGE>

                                  ARTICLE XIX.

                                 MISCELLANEOUS.

     Section 19.01. Notices.

     Any notice or other communication required or permitted hereunder shall be
in writing and shall be delivered personally, sent by facsimile transmission
(and immediately after transmission confirmed by telephone) or sent by
certified, registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally or sent by facsimile transmission (and
immediately after transmission confirmed by telephone) or, if mailed, on the
date shown on the receipt therefor, as follows:

          if to Provider:

          Employers Reinsurance Corporation
          5200 Metcalf Avenue
          P.O. Box 2991
          Overland Park, KS 66201
          Attention:  General Counsel
          Facsimile:  (913) 676-5258

          with a copy to:

          General Electric Company
          3135 Easton Turnpike, W3A24
          Fairfield, CT  06431
          Attention:  Vice President and Senior
                      Counsel for Transactions
          Facsimile:  (203) 373-3008

          and

          Stinson Morrison Hecker LLP
          2600 Grand Boulevard
          Kansas City, Missouri 64108
          Attention:  James S. Swenson
          Facsimile:  (816) 691-2768

          if to Recipient:

          Scottish Holdings, Inc.
          15800 John J. Delaney Drive
          Suite 200
          Charlotte, North Carolina 28277
          Attention:  General Counsel
          Facsimile:  (704) 542-5744


                                       15
<PAGE>

          with a copy to:

          LeBoeuf, Lamb, Greene & MacRae, L.L.P.
          125 West 55th Street
          New York, NY 10019
          Attention:  Hugh T. McCormick, Esq.
                      Stephen G. Rooney, Esq.
          Facsimile:  (212) 424-8500

Any Party may, by notice given in accordance with this Section 19.01 to the
other Parties, designate another address or person for receipt of notices
hereunder.

     Section 19.02. Waivers and Amendments; Preservation of Remedies.

     This Agreement may be amended, superseded, canceled, renewed or extended,
and the terms hereof may be waived, only by a written instrument signed by all
of the Parties or, in the case of a waiver, by the Party waiving compliance. No
delay on the part of any Party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any Party of any right, power, remedy or privilege, nor any single or partial
exercise of any such right.

     Section 19.03. Force Majeure.

     No Party hereto (or any Person acting on its behalf) shall have any
liability or responsibility for failure to fulfill any obligation (other than a
payment obligation) under this Agreement so long as and to the extent to which
the fulfillment of such obligation is prevented, frustrated, hindered or delayed
as a consequence of circumstances of Force Majeure; provided always that such
Party (or such Person) shall have exercised reasonable due diligence to minimize
the effect of Force Majeure on its obligations.

     Section 19.04. No Third Party Beneficiaries.

     Except as otherwise expressly set forth in Article IX and in any other
provision of this Agreement, nothing in this Agreement is intended or shall be
construed to give any Person, other than the Parties hereto, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.

     Section 19.05. No Agency.

     Nothing in this Agreement shall be deemed in any way or for any purpose to
constitute any party an agent of another unaffiliated party in the conduct of
such other party's business.

     Section 19.06. Subcontracting.

     Any Provider may hire or engage one or more subcontractors to perform any
or all of its obligations under this Agreement, provided that, subject to
Article V, such Provider shall in all cases remain primarily responsible for all
obligations undertaken by it in this Agreement with


                                       16
<PAGE>

respect to the scope of the Transition Services, the Standard for Transition
Services and the content of the Transition Services provided to the relevant
Recipient

     Section 19.07. Further Assurances.

     (a) Recipient shall take any and all necessary actions to cause and enable
the Company to comply with all of the provisions of this Agreement, and
Recipient agrees to be jointly and severally liable for any payment or
reimbursement required to be made by the Company pursuant to this Agreement,
including pursuant to Section 6.01.

     (b) If any Party hereto identifies a need for additional or other
transition services to be provided by or on behalf of Provider or the Company,
whether prior to or within six months after the Closing Date, the Parties hereto
agree to negotiate in good faith to provide such requested services. To the
extent practicable such additional or other services shall be provided on terms
substantially similar to those applicable to Transition Services of similar
types and otherwise on terms consistent with those contained in this Agreement.

     Section 19.08. Incorporation of General Provisions.

     The general provisions of Article XI of the Purchase Agreement (other than
Sections 11.01, 11.07, 11.10 and 11.11) shall be deemed incorporated into and
shall become a part of this Agreement..

     Section 19.09. Entire Agreement.

     This Agreement, including any Schedules and Exhibits and including the
Transaction Agreements to the extent referred to herein, embodies the entire
agreement between the Parties and supercedes any prior written agreement or any
oral agreement with respect to the subject matter hereof. Any change or
modification to this Agreement is null and void unless made by means of a
written amendment to this Agreement which has been signed by both Parties.

     Section 19.10. Consistency with Purchase Agreement.

     This Agreement shall be subject to the provisions of the Purchase
Agreement, including but not limited to Sections 5.02, 5.03 and 5.11, which
provisions shall be paramount and controlling and shall supersede the provisions
of this Agreement to the extent of any conflicts or inconsistencies.

     IN WITNESS WHEREOF, Provider and Recipient have each caused this Agreement
to be signed and delivered by its duly authorized officer, all as of the
Effective Date set forth above.

                           [SIGNATURE PAGE TO FOLLOW]


                                       17

<PAGE>

SCOTTISH HOLDINGS, INC.                     EMPLOYERS REINSURANCE
                                            CORPORATION

By:                                         By:
   ---------------------------------           ---------------------------------



Name:                                       Name:
     -------------------------------             -------------------------------



Title:                                      Title:
      ------------------------------              ------------------------------


                                       18

<PAGE>

                                                                      Schedule A

                               Transition Services


                                       19