REINSURANCE AGREEMENT
                                       
                                    Between
                                       
                     WESTERN UNITED LIFE ASSURANCE COMPANY
                                       
                                      and
                                       
                      OLD STANDARD LIFE INSURANCE COMPANY


TABLE OF CONTENTS
                                                                  Page

A.    REINSURANCE COVERAGE                                          1
B.    PLACING REINSURANCE IN EFFECT                                 2
C.    PAYMENTS BY REINSURED                                         2
D.    PAYMENTS BY REINSURER                                         2
E.    TERMS OF REINSURANCE                                          2
F.    UNUSUAL EXPENSES AND ADJUSTMENTS                              3
G.    POLICY ADMINISTRATION                                         4
H.    POLICY CHANGES                                                4
I.    ASSIGNMENT OF REINSURANCE                                     5
J     ERRORS                                                        5
K.    REDUCTIONS                                                    5
L.    AUDIT OF RECORDS AND PROCEDURES                               6
M.    ARBITRATION                                                   6
N.    CHOICE OF LAW AND FORUM                                       6
O.    INSOLVENCY                                                    7
P.    PARTIES TO AGREEMENT                                          7
Q.    EFFECTIVE DATE                                                8
R.    DURATION OF AGREEMENT                                         8
S.    MISCELLANEOUS                                                 8
T.    EXECUTION                                                     9
            SCHEDULES
            SCHEDULE I                                             10
            SCHEDULE II                                            11
            SCHEDULE III                                           12
            SCHEDULE IV                                            13
            SCHEDULE V                                             14
            SCHEDULE VI                                            16




<PAGE>  127

                  C O I N S U R A N C E    A G R E E M E N T
                                    between
                     WESTERN UNITED LIFE ASSURANCE COMPANY
                                      of
                             Spokane, Washington.,
                hereinafter referred to as the "REINSURED," and
                      OLD STANDARD LIFE INSURANCE COMPANY
                                      of
                                 Boise, Idaho,
                  hereinafter referred to as the "REINSURER."

A. REINSURANCE COVERAGE
1. The annuity policies (referred to herein as "Policies") issued by the
   REINSURED on the forms listed in Schedule I shall be reinsured with the
   REINSURER in accordance with the REINSURED'S underwriting rules applicable
   to such policies.
2. The reinsurance shall cover the portion of the Policies specified in
   Schedule I. All benefits provided by the Policies shall be reinsured
   hereunder in the portion specified in Schedule I.
3. The liability of the REINSURER shall begin simultaneously with that of the
   REINSURED but in no event prior to the effective date of this Agreement.
   Reinsurance with respect to any Policy shall not be in force and binding
   unless the insurance issued directly by the REINSURED is in force and
   unless the issuance and delivery of such insurance constituted the doing of
   business in a state of the United States of America, the District of
   Columbia, or a country in which the REINSURED was properly licensed.
4. Reinsurance under this Agreement shall be coinsurance of the portion of the
   policy which is reinsured with the REINSURER and shall follow the forms of
   the REINSURED.
5. The reinsurance under this Agreement with respect to any policy shall be
   maintained in force without reduction so long as the liability of the
   REINSURED under such policy reinsured hereunder remains in force without
   reduction, unless Coinsurance is terminated or reduced as provided herein.

B. PLACING REINSURANCE IN EFFECT
Reinsurance with respect to policies issued after the effective date of this
Agreement shall become effective automatically and simultaneously with the
liability of the REINSURED, provided however, that the REINSURED shall give
notification of such reinsurance to the REINSURER simultaneously with the
monthly reconciliation prescribed in Section E, paragraph 2.

C. PAYMENTS BY REINSURED
The REINSURED shall pay the REINSURER as Coinsurance premiums the Reinsurance
Share, as set forth in Schedule I, of the gross

<PAGE>  128

 contributions or premiums the REINSURED receives on and after the effective
date of this Agreement.

D. PAYMENTS BY REINSURER
1. Benefits
   The REINSURER shall pay the REINSURED:
      (a) the Reinsurance Share of the gross amount of all death or annuity
          benefits paid by the REINSURED (i.e., without deduction for
          reserves) with respect to  the Policies reinsured hereunder; and
      
      (b) the Reinsurance Share of the net cash surrender values paid by the
          REINSURED  with respect to Policies reinsured hereunder.

2. Policy Expense Allowances
   The REINSURER shall pay the REINSURED the full amount of Allowances for
   Policy expenses as defined in Schedule I.

E. TERMS OF REINSURANCE
1. Except as otherwise specifically provided herein, all amounts due to be
   paid to either the REINSURER or the REINSURED shall be determined and paid
   on a net basis as of the last day of the calendar month to which such
   amount is attributable.  All amounts shall be due and accrued as of such
   date.  Such amounts shall be payable in accordance with the schedule set
   forth in Section E, paragraph 2.
2. The REINSURED shall provide periodic reports to the REINSURER as specified
below.
      (a) The REINSURED shall submit monthly, not later than fifteen (15)
          days after the end of each calendar month, a Monthly Report
          substantially in accordance with Schedule II. Any amounts indicated
          in the Monthly Report as due the REINSURER shall accompany such
          report.

      (b) If a Policy is cancelled in accordance with a thirty day
          cancellation provision, the REINSURED shall refund the entire
          Allowance to the REINSURER, and the REINSURER shall refund the
          entire Reinsurance Share to REINSURED each as they relate to the
          cancelled Policy

      (c) Any amounts indicated in the Monthly Report as due the REINSURED
          shall be paid by the REINSURER within fifteen (15) days after
          REINSURER'S receipt of the Monthly Report.
      
      (d) Interest as specified in Schedule IV shall be paid on any amounts
          not paid when due.
      
      
      <PAGE>  129
      
      
      (e) If the REINSURED ever becomes aware that its monthly reports for an
          Accounting Period as required in section 2(a) did not accurately
          reflect the actual experience of the Policies during the Accounting
          Period, it shall promptly submit a revised summary to the
          REINSURER. Any amount shown by the revised summary as owed by
          either the REINSURED or the REINSURER to the other shall be paid
          promptly.
      
      (f) Upon notice to the REINSURED, the REINSURER may unilaterally amend
          Schedule II in order to obtain the data it reasonably needs to
          properly administer this Agreement or to prepare its financial
          statements.
      
      (g) Not later than thirty (30) days after the end of each calendar
          year, the REINSURED shall submit to the REINSURER an Annual Report
          substantially in accordance with Schedule III.
      
      (h) Each year the REINSURED shall provide the REINSURER with a copy of
          its annual financial reports prepared in accordance with GAAP, if
          applicable, and its annual statutory statement, as soon as they are
          available.
      

3. The parties elect to have this Agreement treated in accordance with Section
   1.848-2(g)(8) of the Income Tax Regulations issued under Section 848 of the
   Internal Revenue Code of 1986. Specific details of this election are set
   forth in Schedule VI.

F. UNUSUAL EXPENSES AND ADJUSTMENTS
1. Any unusual expenses, as hereinafter defined, incurred by the REINSURED in
   defending or investigating a claim for policy liability or rescinding a
   policy reinsured hereunder, but net of unusual expenses receivable under
   other reinsurance agreements with respect to the portion of the policies
   reinsured hereunder, shall be participated in by the REINSURER in the same
   proportion as its reinsurance bears to the total insurance under such
   policy.
2. For purposes of this Agreement (but not as a limitation on the REINSURER'S
   liability under paragraph 1), it is agreed that penalties, attorneys fees,
   and interest imposed automatically by statute against the REINSURED and
   arising solely out of a judgment rendered against the REINSURED in a suit
   for policy benefits reinsured hereunder shall be considered unusual
   expenses.
3. In no event, however, shall the following categories of expenses or
   liabilities be considered for purposes of this Agreement as "unusual
   expenses":
      (a) routine investigative or administrative expenses;
      
      <PAGE>  130
      
      
      
      (b) expenses incurred in connection with a dispute or contest arising
          out of conflicting claims of entitlement to policy proceeds or
          benefits which the REINSURED admits are payable;
      
      (c) expenses, fees, settlements, or judgments arising out of or in
          connection with claims against the REINSURED for punitive or
          exemplary damages; and
      
      (d) expenses, fees, settlements, or judgments arising out of or in
          connection with claims made against the REINSURED and based on
          alleged or actual bad faith, failure to exercise good faith, or
          tortious conduct.
      
G. POLICY ADMINISTRATION
1. The Policies reinsured pursuant to the terms of this Agreement shall be
   administered by the REINSURED in accordance with the terms of each Policy
   and in compliance with applicable statutes, regulations and rules.

2. The REINSURED shall bear all expenses incurred in connection with
   administration of the Policies reinsured hereunder, except as provided in
   paragraph F. hereinabove.

H. POLICY CHANGES
1. If the REINSURED intends to make a change in the terms or conditions of a
   policy reinsured hereunder including, but not limited to a change in the
   method used to calculate the statutory reserve on the policy and such
   change is likely to affect the risk reinsured hereunder in respect of such
   policy, the REINSURED shall notify the REINSURER of such proposed change.
2. For purposes of this Agreement, any change made to a policy reinsured
   hereunder which has not been approved by the REINSURER shall be deemed to
   be the issuance of a new policy form by the REINSURED. The REINSURER shall
   inform the REINSURED whether the REINSURER will include such new policy
   form under this Agreement or will terminate or modify the reinsurance
   hereunder in respect of such policy.
3. Unless otherwise agreed by the REINSURER and the REINSURED, the interest
   rates credited on the Policies reinsured hereunder shall be determined
   according to interest rates credited by the REINSURED.
4. Unless otherwise agreed by the REINSURER and the REINSURED, the investments
   underlying the Policies reinsured hereunder shall be made in accordance
   with the investment policy adopted by the REINSURER.  Such investment
   policy may be amended from time to time by REINSURER in its sole discretion
   upon reasonable notice to the REINSURED.

<PAGE>  131



I. ASSIGNMENT OF REINSURANCE
If the REINSURED proposes to sell, assumption reinsure or otherwise assist in
the transfer of the policies or risks that are reinsured under this Agreement
to any third party, it shall require that the third party agree in writing to
an assignment of all rights and obligations of the REINSURED under this
Agreement. The REINSURER may object to any assignment that would result in a
material adverse economic impact to the REINSURER. If the REINSURER objects to
an assignment on this basis, the REINSURED and the REINSURER shall mutually
agree on a termination charge which shall be paid by the REINSURED to the
REINSURER.

J. ERRORS
If either the REINSURED or the REINSURER shall fail to perform an obligation
under this Agreement and such failure shall be the result of an error on the
part of the REINSURED or the REINSURER, such error shall be corrected by
restoring both the REINSURED and the REINSURER to the positions they would
have occupied had no such error occurred; an "error" is a clerical mistake
made inadvertently and excludes errors of judgment and all other forms of
error.

K. REDUCTIONS
1. If a portion of the insurance issued by the REINSURED on a Policy reinsured
   hereunder is terminated, reinsurance on that Policy shall be reduced.
2. The REINSURER shall return to the REINSURED any reinsurance premiums,
   without interest thereon, paid to the REINSURER for any period beyond the
   date of reduction of reinsurance hereunder.

L. AUDIT OF RECORDS AND PROCEDURES
The REINSURER and the REINSURED each shall have the right to audit, at the
office of the other, all records and procedures relating to reinsurance under
this Agreement.

M. ARBITRATION
If the REINSURED and the REINSURER cannot mutually resolve a dispute regarding
the interpretation or operation of this Agreement, the dispute shall be
decided through arbitration as set forth in the Schedule V. The arbitrators
shall base their decision on the terms and conditions of this Agreement.
However, if the terms and conditions of this Agreement do not explicitly
dispose of an issue in dispute between the parties, the arbitrators may base
their decision on the customs and practices of the insurance and reinsurance
industry rather than solely on an interpretation of applicable law. The
arbitrators' decision shall take into account the right to offset mutual debts
and credits as provided in this Agreement. There shall be no appeal from the
arbitrators'

<PAGE>  132

 decision. Any court having jurisdiction over the subject matter and over the
parties may reduce the arbitrators' decision to judgment.

The parties intend this section to be enforceable in accordance with the
Federal Arbitration Act (9 U.S.C., Section 1) including any amendments to that
Act which are subsequently adopted. In the event that either party refuses to
submit to arbitration as required by paragraph 1, the other party may request
a United States Federal District Court to compel arbitration in accordance
with the Federal Arbitration Act. Both parties consent to the jurisdiction of
such court to enforce this section and to confirm and enforce the performance
of any award of the arbitrators.

N. CHOICE OF LAW AND FORUM
Idaho law shall govern the terms and conditions of the Agreement. In the case
of an arbitration, the arbitration hearing shall take place in Boise, Idaho,

O. INSOLVENCY
1. In the event of the insolvency of the REINSURED, all reinsurance shall be
   payable directly to the liquidator, receiver, or statutory successor of
   said REINSURED, without diminution because of the insolvency of the
   REINSURED.
2. In the event of the insolvency of the REINSURED, the liquidator, receivor,
   or statutory successor shall give the REINSURER written notice of the
   pendency of a claim on a policy reinsured within a reasonable time after
   such claim is filed in the insolvency proceeding. During the pendency of
   any such claim, the REINSURER may investigate such claim and interpose, in
   the name of the REINSURED (its liquidator, receiver, or statutory
   successor), but at its own expense, in the proceeding where such claim is
   to be adjudicated, any defense or defenses which the REINSURER may deem
   available to the REINSURED or its liquidator, receiver, or statutory
   successor.
3. The expense thus incurred by the REINSURER shall be chargeable, subject to
   court approval, against the REINSURED as part of the expense of liquidation
   to the extent of a proportionate share of the benefit which may accrue to
   the REINSURED solely as a result of the defense undertaken by the
   REINSURER. Where two or more reinsurers are participating in the same claim
   and a majority in interest elect to interpose a defense or defenses to any
   such claim, the expense shall be apportioned in accordance with the terms
   of the Coinsurance agreement as though such expense had been incurred by
   the REINSURED.
4. Any debts or credits, matured or unmatured, liquidated or unliquidated,
   regardless of when they arose or were incurred, in favor of or against
   either the REINSURED or the REINSURER with respect to this Agreement or
   with respect to any other claim of one party against the other are deemed
   mutual debts or

<PAGE>  133

 credits, as the case may be, and shall be set off, and only the balance shall
   be allowed or paid.

P. PARTIES TO AGREEMENT
This is an agreement for indemnity reinsurance solely between the REINSURED
and the REINSURER. The acceptance of reinsurance hereunder shall not create
any right or legal relation whatever between the REINSURER and the insured or
the beneficiary under any policy reinsured hereunder, and the REINSURED shall
be and remain solely liable to such insured or beneficiary under any such
policy.

Q. EFFECTIVE DATE
The effective date of this Agreement is January 1, 1997.

R. DURATION OF AGREEMENT
1. Except as otherwise provided herein, this Agreement shall be unlimited in
   duration.
2. This Agreement may be terminated at any time by either the REINSURER or the
   REINSURED upon thirty (30) days' written notice with respect to reinsurance
   not yet placed in force. The REINSURER shall continue to accept reinsurance
   during the thirty (30) day notice period, and shall remain liable on all
   reinsurance placed in effect under this Agreement until the termination or
   expiration of the insurance reinsured.
3. Upon ninety (90) days' written notice to the other party, REINSURER and
   REINSURED shall have the right to terminate reinsurance under this
   Agreement with respect to those policies which have attained the tenth or
   any subsequent anniversary of having been reinsured hereunder. Any such
   termination shall apply to all policies which attain the same or any
   subsequent anniversary within the twelve (12) month period following the
   effective date of such notice of termination. Termination with respect to
   each affected policy shall be effective as of the anniversary of such
   policy having been reinsured hereunder. The REINSURER shall pay to the
   REINSURED a surrender benefit equal to the surrender value of each policy
   for which reinsurance is terminated.
4. The termination of this Agreement or of the reinsurance in effect under
   this Agreement shall not extend to or affect any of the rights or
   obligations of the REINSURED and the REINSURER applicable to any period
   prior to the effective date of such termination. In the event that,
   subsequent to the termination of this Agreement, an adjustment is made
   necessary with respect to any accounting hereunder, a supplementary
   accounting shall take place. Any amount owed to either party by reason of
   such supplementary accounting shall be paid promptly upon the completion
   thereof.

S. MISCELLANEOUS

<PAGE>  134


1. This Agreement represents the entire agreement between the REINSURED and
   REINSURER and supersedes, with respect to its subject matter, any prior
   oral or written agreements between the parties.
2. No modification of any provision of this Agreement shall be effective
   unless set forth in a written amendment to this Agreement which is executed
   by both parties.
3. A waiver shall constitute a waiver only with respect to the particular
   circumstance for which it is given and not a waiver of any future
   circumstance.

                                 T. EXECUTION
                          IN WITNESS WHEREOF the said
                     WESTERN UNITED LIFE ASSURANCE COMPANY
                                      of
                             Spokane, Washington.,
                                 and the said
                      OLD STANDARD LIFE INSURANCE COMPANY
                                      of
                                 Boise, Idaho,
 have by their respective officers executed this Agreement in duplicate on the
                              dates shown below.

WESTERN UNITED LIFE ASSURANCE COMPANY
Signed at Spokane, WA

By:    John Van Engelen
Title: President
Date:  2/26/97

OLD STANDARD LIFE INSURANCE COMPANY
Signed at Spokane, WA

By:    Clayton Rudd
Title: President
Date:  2/26/97



<PAGE>  135

SCHEDULE I
POLICIES SUBJECT TO REINSURANCE, AMOUNT OF REINSURANCE & ALLOWANCES

The percentage of  single premium deferred annuity contracts as defined below
issued by the REINSURED on and after the effective date of the Agreement are
subject to reinsurance as set forth in the Agreement.  The amount of
reinsurance under this Agreement shall be percentage of the liability of the
REINSURED on all policies in the forms list defined below. All benefits
provided by such policies shall be reinsured.

<TABLE>
<CAPTION>
              Reinsuran                 Allowances
             ce Quota
             Share
                         Policy                                      
                         Reserves,                                   Monthly
                         Claims &                      Admin.        Admin.
Trade Name    Premiums   Benefits        Commissions   Policy Issue  Servicing
<S>           <C>        <C>             <C>           <C>           <C>
TDCD          75%        75%             3.00%         1.00%         0.0333%
CDMaxI        75%        75%             3.00%         1.00%         0.0333%
CDMax III     75%        75%             4.00%         1.00%         0.0333%
CDMax V       75%        75%             5.00%         1.00%         0.0333%
Navigator II  75%        75%             5.00%         1.00%         0.0333%
UNIMAXIII     75%        75%             5.00%         1.00%         0.0333%
                                                                     
                         Policy                                      Reinsurance
                         Reserves,       Reinsurance   Reinsurance   Quota
                         Policy          Quota Share   Quota Share   Share
Basis for     Gross      Claims &        of Gross      of Gross      of Account
Charge        Premiums   Benefits        Premiums      Premiums      Value
                                                                     
</TABLE>

NOTES:
      The Monthly Administrative Servicing Allowance percentage shall be
      applied to the account at the end of each month on all reinsured
      deferred annuity business in force.
      


<PAGE>  136

SCHEDULE II
Annuity Coinsurance
Monthly Report to

OLD STANDARD LIFE INSURANCE COMPANY

Amounts Due OLD STANDARD LIFE INSURANCE COMPANY
First year premiums (gross first year premium received during the month,
multiplied by the Reinsurance Quota Share percentage)
                                                      $_________

Sum of amounts due to OLD STANDARD LIFE INSURANCE COMPANY
                                                      $_________

Amounts Due WESTERN UNITED LIFE ASSURANCE COMPANY

Commission Allowances (Attach detailed worksheet of
calculations)
                                                      $_________

Policy Issue Allowances (Attach detailed worksheet of
calculations)
                                                      $_________

Monthly Administrative Servicing  Allowances (Attach
detailed worksheet of calculations)
                                                      $_________

Surrender values paid during the month multiplied by
the Reinsurance Share percentage
                                                      $_________

Death benefits paid during the month multiplied by
the Reinsurance Share percentage
                                                      $_________

Policy Cancellations (Attach detailed worksheet of
calculations) (1)
                                                      $_________

Sum of amounts due to WESTERN UNITED LIFE ASSURANCE
COMPANY
                                                      $_________

Net amount due (sum of amounts due OLD STANDARD LIFE
INSURANCE Company minus sum of amounts due to
WESTERN UNITED LIFE ASSURANCE)
                                                      $_________


<PAGE>  137


Note: If the net amount due is negative, then that amount is due from OLD
STANDARD LIFE INSURANCE COMPANY to WESTERN UNITED LIFE ASSURANCE COMPANY.

Additional Items Needed By
OLD STANDARD LIFE INSURANCE COMPANY For Financial Reporting

A monthly listing of statutory and GAAP reserves, account values, and interest
credited.

(1) Policies cancelled pursuant to the thirty day cancellation provision.



<PAGE>  138

SCHEDULE III
ANNUAL REPORT

The annual report shall provide the following information:

      (a) Exhibit 8 from the NAIC-prescribed annual statement
      
      (b) a breakdown of the reserves by withdrawal characteristic of the
      annuity contract
      
      (c) "Analysis of Increase in Reserves" from the NAIC-prescribed annual
      statement
      
      (d) "Exhibit of Annuities" from the NAIC-prescribed annual statement
      
      (e) an actuarial certification of the reported statutory reserves
      
      (f) tax reserves and required interest.



<PAGE>  139

SCHEDULE IV
INTEREST RATE


 .75% per month times the amount overdue; if any interest is due.



<PAGE>  140

SCHEDULE V
ARBITRATION SCHEDULE

To initiate arbitration, either the REINSURED or the REINSURER shall notify
the other party in writing of its desire to arbitrate, relating the nature of
its dispute and the remedy sought. The party to which the notice is sent shall
respond to the notification in writing within ten (10) days of its receipt.

The arbitration hearing shall be before a panel of three arbitrators, each of
whom must be a present or former officer of a life insurance company. An
arbitrator may not be a present or former officer, attorney, or consultant of
the REINSURED or the REINSURER or either's affiliates.

The REINSURED and the REINSURER shall each name five (5) candidates to serve
as an arbitrator. The REINSURED and the REINSURER shall each choose one
candidate from the other party's list, and these two candidates shall serve as
the first two arbitrators. If one or more candidates so chosen shall decline
to serve as an arbitrator, the party which named such candidate shall add an
additional candidate to its list, and the other party shall again choose one
candidate from the list. This process shall continue until two arbitrators
have been chosen and have accepted. The REINSURED and the REINSURER shall each
present their initial lists of five (5) candidates by written notification to
the other party within twenty-five (25) days of the date of the mailing of the
notification initiating the arbitration. Any subsequent additions to the list
which are required shall be presented within ten (10) days of the date the
naming party receives notice that a candidate that has been chosen declines to
serve.

The two arbitrators shall then select the third arbitrator from the eight (8)
candidates remaining on the lists of the REINSURED and the REINSURER within
fourteen (14) days of the acceptance of their positions as arbitrators. If the
two arbitrators cannot agree on the choice of a third, then this choice shall
be referred back to the REINSURED and the REINSURER. The REINSURED and the
REINSURER shall take turns striking the name of one of the remaining
candidates from the initial eight (8) candidates until only one candidate
remains. If the candidate so chosen shall decline to serve as the third
arbitrator, the candidate whose name was stricken last shall be nominated as
the third arbitrator. This process shall continue until a candidate has been
chosen and has accepted. This candidate shall serve as the third arbitrator.
The first turn at striking the name of a candidate shall belong to the party
that is responding to the other party's initiation of the arbitration. Once
chosen, the arbitrators are empowered to decide all substantive and procedural
issues by a majority of votes.


<PAGE>  141


It is agreed that each of the three arbitrators should be impartial regarding
the dispute and should resolve the dispute on the basis described in the
Agreement and this ARBITRATION Schedule. Therefore, at no time will either the
REINSURED or the REINSURER contact or otherwise communicate with any person
who is to be or has been designated as a candidate to serve as an arbitrator
concerning the dispute, except upon the basis of jointly drafted
communications provided by both the REINSURED and the REINSURER to inform
those candidates actually chosen as arbitrators of the nature and facts of the
dispute. Likewise, any written or oral arguments provided to the arbitrators
concerning the dispute shall be coordinated with the other party and shall be
provided simultaneously to the other party or shall take place in the presence
of the other party. Further, at no time shall any arbitrator be informed that
the arbitrator has been named or chosen by one party or the other.

The arbitration hearing shall be held on the date fixed by the arbitrators. In
no event shall this date be later than six (6) months after the appointment of
the third arbitrator. As soon as possible, the arbitrators shall establish
prearbitration procedures as warranted by the facts and issues of the
particular case. At least ten (10) days prior to the arbitration hearing, each
party shall provide the other party and the arbitrators with a detailed
statement of the facts and arguments it will present at the arbitration
hearing. The arbitrators may consider any relevant evidence; they shall give
the evidence such weight as they deem it entitled to after consideration of
any objections raised concerning it. The party initiating the arbitration
shall have the burden of proving its case by a preponderance of the evidence.
Each party may examine any witnesses who testify at the arbitration hearing.
Within twenty (20) days after the end of the arbitration hearing, the
arbitrators shall issue a written decision that sets forth their findings and
any award to be paid as a result of the arbitration, except that the
arbitrators may not award punitive or exemplary damages. In their decision,
the arbitrators shall also apportion the costs of arbitration, which shall
include, but not be limited to, their own fees and expenses.



<PAGE>  142

SCHEDULE VI
SECTION 1.848-2(g)(8) ELECTION

The REINSURED and the REINSURER agree to the following pursuant to Section
1.848-2(g)(8) of the Income Tax Regulations issued under Section 848 of the
Internal Revenue Code of 1986 (hereinafter "Section 1.848-2(g)(8).")
      1.    As used below, the term "party" will refer to the REINSURED or the
            REINSURER as appropriate.
      2.    As used below, the phrases "net positive consideration",
            "capitalize specified policy acquisition expenses", "general
            deductions limitation", and "net consideration" shall have the
            meaning used in Section 1.848-2(g)(8).
      3.    The party with net positive consideration for this Agreement for
            any taxable year beginning with the taxable year prescribed in
            paragraph 5 below will capitalize specified policy acquisition
            expenses with respect to this Agreement without regard to the
            general deductions limitation.
      4.    The parties agree to exchange information pertaining to the amount
            of net consideration under this Agreement to ensure consistency.
            This will be accomplished as follows:
                  (a)   The REINSURED shall submit to the REINSURER by the
                        fifteenth day of March in each year its calculation of
                        the net consideration for the preceding calendar year.
                        Such calculation will be accompanied by a statement
                        signed by an officer of the REINSURED stating that the
                        REINSURED will report such net consideration in its
                        tax return for the preceding calendar year.
                  
                  (b)   The REINSURER may contest such calculation by
                        providing an alternative calculation to the REINSURED
                        in writing within thirty (30) days of the REINSURER'S
                        receipt of the REINSURED'S calculation. If the
                        REINSURER does not so notify the REINSURED, the
                        REINSURER will report the net consideration as
                        determined by the REINSURED in the REINSURER'S tax
                        return for the previous calendar year.
                  
                  (c)   If the REINSURER contests the REINSURED'S calculation
                        of the net consideration, the parties will act in good
                        faith to reach an agreement as to the current amount
                        within thirty (30) days of the date the REINSURER
                        submits its alternative calculation. If the
                  
                  <PAGE>  143
                  
                   REINSURED and the REINSURER reach agreement on an amount of
                        net consideration, each party shall report such amount
                        in their respective tax returns for the preceding
                        calendar year.

      5.    This election shall be effective for 1997 and all subsequent
            taxable years for which the Reinsurance Agreement remains in
            effect.