<PAGE>

                                                                   Exhibit 10.50

                              FORBEARANCE AGREEMENT
                              ---------------------

                        AND AMENDMENT TO PROMISSORY NOTE
                        --------------------------------

               AND CONDITIONAL CONSENT TO SUBSIDIARY TRANSACTIONS
               --------------------------------------------------

     This Forbearance Agreement and Amendment to Promissory Note and Conditional
Consent to Subsidiary Transactions ("Forbearance Agreement") is entered into as
of January 02, 2002 ("Closing Date") by and between Comerica Bank - California,
successor by merger to Imperial Bank ("Bank") and Anchor Pacific Underwriters,
Inc., a Delaware corporation ("Borrower"). This Forbearance Agreement is made
with reference to the following facts:

     A. Borrower is currently indebted to Bank pursuant to the Loan Documents
(as defined below). Borrower acknowledges that it is in default under the Loan
Documents as set forth in Section I.C. below, and Borrower desires, inter alia,
that Bank (i) temporarily forbear from exercising its rights and remedies as to
existing defaults under the Loan Documents as of the date of execution of this
Forbearance Agreement, and (ii) consent to the commission arrangement and sale
of certain assets of Borrower's subsidiary Ward Benefits Administrators &
Insurance Services, Inc., as described herein.

     B. Bank desires full repayment of the amounts that may become due by
Borrower under the Loan Documents. Bank is willing to temporarily forbear from
exercising its rights and remedies as to existing defaults under the Loan
Documents and to consent to the proposed sale of assets only in accordance with
the terms and conditions set forth in this Forbearance Agreement.

     C. THIS FORBEARANCE AGREEMENT ADDRESSES THE DEBTS AND/OR OBLIGATIONS OF
BORROWER TO BANK WHICH ARE FULLY DESCRIBED HEREIN. THIS FORBEARANCE AGREEMENT
DOES NOT PERTAIN TO ANY OTHER INDEBTEDNESS AND/OR OBLIGATIONS OF BORROWER (OR
ANY OTHER PARTIES) TO BANK NOT SPECIFICALLY ADDRESSED IN THIS FORBEARANCE
AGREEMENT. ALL TERMS AND PROVISIONS OF ANY AGREEMENTS BETWEEN BORROWER AND BANK
INCLUDING, BUT NOT LIMITED TO, THE LOAN DOCUMENTS, NOT SPECIFICALLY MODIFIED
HEREIN, SHALL REMAIN IN FULL FORCE AND EFFECT IN ACCORDANCE WITH THEIR ORIGINAL
TERMS.

     NOW, THEREFORE, in consideration of (i) the above recitals and the mutual
promises contained in this Forbearance Agreement; (ii) the execution of this
Forbearance Agreement and all documents, instruments and agreements required to
be executed in accordance with this Forbearance Agreement; (iii) the
satisfaction of all Conditions Precedent set forth in Section IX below; and for
other and further valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, it is hereby agreed as follows:

     I. Acknowledgment of the Existing Indebtedness and the Loan Documents.
        ------------------------------------------------------------------

     A. The Loan Agreement and Related Documents.
        ----------------------------------------

        1. Borrower and Bank are parties to that certain Credit Terms and
     Conditions dated September 30, 1997 and the Addendum thereto dated October
     17, 1997 (as

                                       -1-

<PAGE>

     amended, restated, modified, supplemented or revised from time to time, the
     "Credit Terms and Conditions").

          2. In furtherance of the Credit Terms and Conditions, Borrower
     executed and delivered to Bank (i) a Promissory Note in the principal
     amount of $250,000 dated April 29, 1999; (ii) a Promissory Note in the
     original principal amount of $931,485.75 dated September 30, 1999, and
     (iii) a Promissory Note in the principal amount of $200,000 dated December
     16, 1999.

          3. The Promissory Notes dated April 29, 1999 and December 16, 1999
     have been repaid. The term "Note" shall hereinafter refer to the September
     30, 1999 Promissory Note as amended, restated, modified, supplemented or
     revised from time to time.

          4. In furtherance of the Credit Terms and Conditions, Borrower
     executed and delivered to Bank that certain Commercial Security Agreement
     dated December 7, 1999 (as amended, restated, modified, supplemented or
     revised from time to time, the "Security Agreement"). The Credit Terms and
     Conditions and the Security Agreement included a grant of a security
     interest in Borrower's Collateral.

          5. Borrower has delivered to Bank (i) a warrant to purchase stock
     dated April 30, 1999, granting to Bank stock warrants in Borrower for a
     total of 100,000 shares of Borrower's Common Stock, and (ii) a warrant to
     purchase stock dated December 15, 1999, granting to Bank stock warrants in
     Borrower for a total of 80,000 shares of Borrower's Common Stock, on terms
     and conditions more fully set forth therein.

          6. The documents referenced above and all documents and written
     amendments, notes and so forth related thereto are hereinafter collectively
     referred to as "Loan Documents." All capitalized terms not defined herein
     shall have the meaning described in the Loan Documents.

          7. The Borrower acknowledges that the Loan Documents constitute duly
     authorized, valid, binding, fully perfected and continuing agreements and
     obligations of Borrower to Bank, enforceable in accordance with their
     respective terms; and that Borrower has no claims, cross-claims,
     counterclaims, setoffs or defenses of any kind or nature which would in any
     way reduce or offset its obligations to Bank under the Loan Documents as of
     the date of this Forbearance Agreement.

     B.   Existing Indebtedness. Borrower acknowledges and agrees that the
          ---------------------
current outstanding principal balance owed to Bank under the Loan Documents is
$500,000, plus accrued and unpaid interest through the date of this Forbearance
Agreement, together with the Bank's costs, expenses and reasonable attorneys'
fees, which but for this Forbearance Agreement would be fully due and payable
("Existing Indebtedness").

     C.   Defaults Under Loan Agreements and Remedies. Borrower acknowledges and
          -------------------------------------------
agrees that Borrower is in default under the terms and conditions of the Loan
Documents in that, inter alia, (i) Borrower failed to satisfy the Tangible Net
Worth covenant for the period ending December 31, 2000 and has continued to fail
to satisfy said covenant for every period thereafter; and (ii) Borrower failed
to provide an audit within 90 days after close of the fiscal year ending

                                       -2-

<PAGE>

December 31, 2000. Borrower acknowledges and agrees that but for this
Forbearance Agreement, the Bank is fully entitled to exercise all of its rights
and remedies under the Loan Documents, including but not limited to foreclosing
on its Collateral. Borrower has no defense at law or equity, including the right
of setoff, to the Bank's claims for repayment of the Existing Indebtedness.

     D.   Proposed Cessation of Subsidiary Business and Related Agreements with
          ---------------------------------------------------------------------
          Loomis Benefits West, Inc.
          -------------------------

          1. Pursuant to the Credit Terms and Conditions, among other things,
Borrower agreed that it would not sell any assets except in the ordinary and
normal course of its business, or transfer any substantial part of its business
or any assets unless Borrower received the written consent of Bank Borrower
desires that its wholly-owned subsidiary, Ward Benefits Administrators &
Insurance Services, Inc. ("WBA") cease its business operations, enter into a
commission arrangement (the "Commission Arrangement") with Loomis Benefits West,
Inc. ("Loomis"), and sell certain assets ("WBA Assets") to Loomis. The terms and
conditions of the Commission Arrangement and proposed sale are outlined in a
letter from Loomis to WBA dated January 1, 2002. Borrower has requested that
Bank consent to the cessation of WBA's business, the Commission Arrangement and
the sale of WBA Assets.

          2. Bank has agreed that if the Conditions to Bank's Consent set forth
in Section V of this Forbearance Agreement are satisfied, Bank is willing to
consent to the matters described in the foregoing Section I(D).

     II.  Limited Scope of Agreement.
          --------------------------

     Nothing contained in this Forbearance Agreement shall be interpreted as or
be deemed a release or a waiver by Bank of any of the terms and conditions of
the Loan Documents, or any other documents, instruments and agreements between
the parties hereto except as specifically provided in this Forbearance
Agreement. Unless specifically modified herein, all other terms and provisions
of the Loan Documents shall remain in full force and effect in accordance with
their original terms, and are hereby ratified and confirmed in all respects.
This Forbearance Agreement does not constitute a waiver or release by Bank of
any obligations between Borrower and Bank, or a waiver by Bank of any defaults
by Borrower under the Loan Documents, unless expressly so provided herein, nor
between Bank and any other person or entity. The Bank has no duty to advance any
funds under the Loan Documents.

     III. Bank's Agreement To Forbear During Forbearance Period.
          -----------------------------------------------------

     A.   Forbearance Period. So long as no Event of Default occurs under this
          ------------------
Forbearance Agreement, Bank hereby agrees to forbear from exercising its rights
and remedies under the Loan Documents through 1:00 p.m. Pacific Time on January
31, 2002 ("Forbearance Period").

     B.   Bank Remedies at Expiration of Forbearance Period. Borrower
          -------------------------------------------------
acknowledges and agrees that immediately after the Forbearance Period expires,
if Borrower is in default and the Existing Indebtedness to Bank is not paid in
full, Bank may exercise all of the rights and remedies contained in the Loan
Documents, in this Forbearance Agreement, and under applicable law.

                                       -3-

<PAGE>

     C.  Borrower further acknowledges and agrees that Bank's agreement to
forbear during the Forbearance Period concerns only Borrower's defaults which
have been identified herein and exist as of the date of execution of this
Forbearance Agreement ("Existing Defaults"), but not as to any defaults which
may arise in the future or which are unknown to Bank.

     IV. Amendment to Payment Provisions of Promissory Note.
         ---------------------------------------------------

     The Note is hereby amended as follows:

     A.  The section of the Note entitled "Payment" is amended by replacing the
         term "$16,500.00" with the term "$20,000.00."

     B.  The following is added as an additional provision of the section of the
         Note entitled "Payment:"

               "In addition to the monthly payments of principal and interest
               prescribed herein, Borrower shall make the following payments
               toward the principal balance of this Note:

               $37,500 due on or before January 31, 2002.

               $37,500 due on or before February 28, 2002."

     V.  Conditions to Bank's Consent.
         ----------------------------

     The Bank's consent to the matters described in Section I(D) of this
Forbearance Agreement shall not be binding upon Bank unless and until each of
the following conditions to Bank's consent ("Consent Conditions") are met, or
are waived in writing by Bank:

     A.  Borrower shall deliver to Bank an executed copy of the Commission
         Arrangement and an executed copy of the bill of sale for the WBA
         Assets.

     B.  Borrower's parent company, Ward North America Holding, Inc., a
         California corporation, shall execute and deliver to Bank the Guaranty
         of all obligations owed by Borrower to Bank in the form attached hereto
         as Exhibit "A" ("Guaranty").

     C.  WBA and Harden & Company Insurance Services, Inc. (each, a "Subsidiary
         Guarantor") shall execute and deliver to Bank a Reaffirmation of
         Guaranty in the form attached hereto as Exhibit "B."

     D.  Borrower shall pay Bank the sum of $37,500 on or before the Closing
         Date as a payment toward the principal amount owed on account of the
         Existing Indebtedness. This payment shall be the payment required to be
         made on or before January 31, 2002 under the Note as amended by Section
         IV of this Forbearance Agreement.

                                       -4-

<PAGE>

     VI.   Other Consideration.
           -------------------

     A.    By execution of this Forbearance Agreement, Borrower agrees from and
after the Closing Date, 100% of all proceeds of any future sale or other
disposition of the remaining WBA assets (i.e., the fixed assets and certain
miscellaneous assets remaining after the sale of the WBA Assets to Loomis) shall
immediately be paid over to Bank as a payment toward the principal amount owed
on account of the Existing Indebtedness. Borrower agrees to execute and deliver
such further instruments and take such further action as may reasonably be
requested by Bank in this regard, including, without limitation, the following:

     B.    As soon as practicable, but no later than fifteen (15) days after the
Closing Date, Borrower shall deliver to Bank a fixed asset report with respect
to WBA, listing the fixed assets of WBA by location and including a list of
serial numbers or other means of identification as to the WBA fixed assets.

     VII.  Reimbursement of Bank's Fees and Costs.
           --------------------------------------

           Contemporaneously with the execution of this Forbearance Agreement,
Borrower shall:

     A.    Pay Bank a facility fee in the amount of $1,000.00; and

     B.    Reimburse Bank for all of Bank's costs and expenses, including
           attorneys' fees of Bank's outside counsel ("Costs"): (a) incurred in
           connection with enforcing Borrower's obligations under the Loan
           Documents; (b) incurred in connection with the negotiation,
           preparation and documentation of this Forbearance Agreement and all
           accompanying documents; and (c) all Costs of recording any instrument
           or document required hereunder to maintain and/or perfect Bank's
           security interests in the Collateral. The amount to be paid to Bank
           in connection with the preparation and documentation of this
           Forbearance Agreement is $8,700.00.

     C.    By execution of this Forbearance Agreement, Borrower authorizes Bank
           to collect the amounts set forth in this Section VII by charging
           Borrower's demand deposit account number 1891-52925-5.

     VIII. Affirmative Covenants.
           ---------------------

     A.    In addition to any covenants, which exist in the Loan Documents,
           Borrower shall immediately give written notice to Bank in reasonable
           detail of:

           1. Any change in the name of Borrower, or any company or partnership
              in which Borrower is a principal or retains a majority interest,
              including but not limited to any Subsidiary Guarantor. Borrower
              shall give Bank thirty days prior written notification of any such
              change;

           2. Any change in the state of Borrower's incorporation, or relocation
              of Borrower's chief executive office. Borrower shall give Bank
              thirty days prior written notification of any such change or
              relocation;

                                       -5-

<PAGE>

          3. Any change in the state of incorporation of any Subsidiary
             Guarantor, or relocation of any Subsidiary Guarantor's chief
             executive office. Borrower shall give Bank thirty days prior
             written notification of any such change or relocation

          4. Any change in the present location of the Collateral referred to
             herein;

          5. The occurrence of any Event of Default (as defined in Section XIII
             below), or any condition, event or act which, with the giving of
             notice or the passage of time or both, would constitute an Event of
             Default under this Forbearance Agreement;

          6. Any termination or cancellation of any insurance policy which
             Borrower is required to maintain, or any uninsured or partially
             uninsured loss through liability or property damage, or through
             fire, theft or other cause affecting the Collateral in excess of an
             aggregate sum of $100,000; and

          7. Any litigation initiated by or against Borrower for an amount in
             excess of $50,000.

     B.   At any time and from time to time Borrower shall execute and deliver
          such further instruments and take such further action as may
          reasonably be requested by Bank to effect the purposes of this
          Forbearance Agreement.

     IX.  Conditions Precedent.
          --------------------

     This Forbearance Agreement shall not be binding upon Bank unless and until
each of the following conditions precedent ("Conditions Precedent") are met, or
are waived in writing by Bank:

     A.   Borrower shall have timely complied with and performed all of the acts
          and/or conditions specifically identified as conditions precedent in
          this Forbearance Agreement;

     B.   Borrower shall have paid Bank the sum of $37,500 in accordance with
          Section V(D) of this Forbearance Agreement;

     C.   Borrower shall have reimbursed Bank for all of its Costs in accordance
          with Section VII above;

     D.   Bank shall have received the Guaranty duly executed by Ward North
          America Holding, Inc.;

     E.   Bank shall have received a fully executed Reaffirmation of Guaranty
          from WBA and Harden & Company Insurance Services, Inc.;

     F.   Borrower shall have executed and delivered to Bank corporate
          resolutions authorizing the execution of this Forbearance Agreement,
          certificates of

                                       -6-

<PAGE>

               incumbency, good standing, and such other matters as Bank in its
               sole and absolute discretion may require, including those
               attached as Exhibit "C;" and

         G.    Bank shall have received such other documents, instruments and
               agreements, and obtained all necessary internal approvals as Bank
               may require.

         X.    Release of Claims.
               -----------------

         As additional consideration for Bank to enter into this Forbearance
Agreement, Borrower, for itself, its executors, administrators, general
partners, limited partners, employees, representatives, shareholders,
predecessors, subsidiaries and/or affiliates, parents, heirs, trustees,
trustors, beneficiaries, successors-in-interest, transferees, assigns, officers,
directors, managers, servants, employees, insurers, trustors, trustees,
underwriters, successors, attorneys, and agents, now and in the future, and all
persons acting by, through, under or in concert with Borrower, hereby releases
and discharges Bank, and Bank's past, present and future administrators,
affiliates, agents, assigns, attorneys, directors, employees, executors, heirs,
officers, parents, partners, predecessors, representatives, parents
shareholders, subsidiaries and successors, and each of them; and each of their
respective administrators, affiliates, agents, assigns, attorneys, directors,
employees, executors, heirs, officers, parents, partners, predecessors,
representatives, shareholders, subsidiaries and successors, and each of them;
and all persons acting by, through, under or in concert with one or more of
them, from any liabilities or claims arising out of, related to or in any way
connected any acts or omissions of Bank relating in any way to the Loan
Documents, this Forbearance Agreement (except for matters relating to the
performance of this Forbearance Agreement following the date of its execution)
and Borrower's financial relationship with Bank and its predecessors-in-interest
from the beginning of time through and including the date of execution of this
Forbearance Agreement (collectively, "Released Matters").

         XI.   Representations and Waivers Concerning Release Provisions.
               ---------------------------------------------------------

         Borrower understands and has been advised by its legal counsel of the
provisions of Section 1542 of the California Civil Code, which provides as
follows:

         A general release does not extend to claims which the creditor does
         not know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor.

Borrower understands and hereby waives the provisions of California Civil Code
Section 1542 and declares that it realizes it may have damages Borrower
presently knows nothing about and that, as to them, Bank has been released
pursuant to these release provisions. Borrower also declares that it understands
that Bank would not agree to enter into this Forbearance Agreement if the
release provisions set forth above did not cover damages and their results which
may not yet have manifested themselves or may be unknown to or not anticipated
at the present time by Borrower.

         Borrower represents and warrants that Borrower is the owner of the
claims hereby compromised and that Borrower has not heretofore assigned or
transferred, nor purported to assign or transfer, to any person or entity
("Person") any of the Released Matters. Borrower further agrees to indemnify and
hold harmless Bank from all liabilities, claims, demands,

                                       -7-

<PAGE>


damages, costs, expenses, and attorneys' fees incurred by Bank as the result of
any Person asserting any such assignment or transfer of any rights or claims.

         XII.  Events of Default.
               -----------------

         In addition to any other Events of Default set forth in this
Forbearance Agreement or the Loan Documents, an "Event of Default" shall exist
herein if any one or more of the following events occur:

         A.    Borrower shall fail to pay any payment as provided herein; or

         B.    Any representation or warranty made under this Forbearance
               Agreement, or any certificate or statement furnished or made to
               Bank pursuant thereto, shall prove to be untrue or misleading in
               any material respect as of the date on which such representation
               or warranty is made; or

         C.    Borrower shall take any action to the effect that, or make any
               claim that, the Loan Documents including this Forbearance
               Agreement are not legal, valid, binding agreements enforceable
               against any party executing same; or attempt in any way to
               terminate or declare ineffective or inoperative the same; or
               shall in any way whatsoever cease to give or provide the
               respective liens, security interests, rights, titles, interests,
               remedies, powers or privileges intended to be created thereby; or

         D.    A default, other than the Existing Defaults, shall occur in the
               performance of any material term, condition, covenant or
               agreement contained in the Loan Documents, in this Forbearance
               Agreement, or in connection with any other obligation owing by
               Borrower to Bank; or

         E.    Borrower shall do any of the following acts, or violate any other
               term or provision of this Forbearance Agreement: (i) apply for or
               consent to the appointment of a receiver, trustee, custodian,
               intervenor or liquidator of all or a substantial part of its
               assets; (ii) file a voluntary petition in bankruptcy court or
               admit in writing that it is unable to pay its debts as they
               become due; (iii) make a general assignment for the benefit of
               creditors; (iv) file a petition or answer seeking reorganization
               or take advantage of any bankruptcy or insolvency laws; (v) file
               an answer admitting any of the material allegations of, or
               consent to, or default in answering a petition filed against it,
               in any bankruptcy, reorganization or insolvency proceeding; or
               (vi) take any action for the purpose of effecting any of the
               foregoing; or

         F.    A judgment(s) or order for entry of judgment shall be entered
               against Borrower in an aggregate amount exceeding the sum of
               $50,000 which is not stayed pending appeal, bonded or otherwise
               covered by insurance; or

         G.    Any of the following acts or events occur: (i) an order for
               relief, judgment or decree shall be entered by any court of
               competent jurisdiction or other competent authority approving a
               petition seeking reorganization of Borrower; (ii) an order shall
               be entered by any court of competent jurisdiction or other
               competent authority appointing a receiver, custodian, trustee,
               intervenor or liquidator for

                                       -8-

<PAGE>

               Borrower as to all or substantially all of its assets, and such
               order, judgment or decree shall continue un-stayed and in effect
               for a period of sixty (60) days; or (iii) an involuntary petition
               seeking bankruptcy, reorganization or receivership shall be filed
               against Borrower which is not dismissed within sixty (60) days of
               the filing thereof; or (iv) an event of default under any of
               Borrower's obligations to the Bank; or

         H.    Any change should occur which, in the opinion of Bank, has
               resulted or could result in a Material Adverse Change.

         XIII. Remedies.
               --------

         If an Event of Default shall occur under this Forbearance Agreement, or
any other agreement referenced herein or executed in connection herewith, Bank
may exercise, at its election, and without notice, demand, protest or
presentment (which notice, demand, protest and presentment are expressly waived)
in addition to all rights and remedies granted to it in the Loan Documents, any
or all of the following (failure to specify any remedy herein shall not limit
Bank's remedies, nor be deemed to create a conflict or contradiction with the
Loan Documents):

         A.    Bank's limited agreement to forbear under this Forbearance
               Agreement shall immediately and automatically cease, and Bank may
               exercise all of its rights and remedies and may declare all
               amounts owed under the Loan Documents immediately due and
               payable;

         B.    Bank may proceed to enforce the Loan Documents and this
               Forbearance Agreement and exercise any or all of the rights and
               remedies afforded to Bank by the California Commercial Code, the
               California Civil Code, the California Code of Civil Procedure or
               otherwise possessed by Bank;

         C.    Bank may, to the fullest extent permitted by law: (1) sell its
               Collateral or any interest therein at public or private sale for
               cash or upon credit and for immediate or future delivery and for
               such price and on such terms as Bank shall deem appropriate, and
               negotiate, endorse, assign, transfer and deliver to the purchaser
               or purchasers thereof (which may be Bank) the Collateral so sold,
               and each purchaser at any sale shall hold the property sold
               absolutely free from any claim or right on the part of Borrower
               (and Borrower hereby waives, to the extent permitted by law, all
               rights of redemption, stay and/or appraisal which Borrower now
               has or may at any time in the future have); and/or (2) obtain
               specific performance by Borrower of any covenant or undertaking
               of Borrower in the Loan Documents herein; and/or (3) without
               notice to Borrower, proceed by suit or suits at law or in equity
               to foreclose its security interest and sell its Collateral or any
               portion thereof pursuant to judgment or decree of a court, courts
               or referee having competent jurisdiction; and/or (4) without
               notice to Borrower, exercise any of its rights under, or
               foreclose its Collateral thereunder;

         D.    Without regard to the adequacy of Bank's Collateral, or to the
               solvency of Borrower, Bank may institute legal proceedings for
               the appointment of a receiver or receivers with respect to any or
               all of its Collateral pending foreclosure

                                       -9-

<PAGE>

               hereunder or for the sale of any or all of its Collateral under
               the order of a court of competent jurisdiction or under other
               legal process;

         E.    Either personally, or by means of a court-appointed receiver,
               Bank may enter onto the premises where its Collateral is located
               and take possession of all or any of its Collateral and exclude
               therefrom Borrower and all others claiming under Borrower, and
               perform any acts necessary or appropriate to care for, maintain,
               preserve and protect its Collateral. In the event Bank demands or
               attempts to take possession of its Collateral in the exercise of
               any rights hereunder, Borrower promises and agrees to turn over
               promptly and to deliver complete possession thereof to Bank;

         F.    Without notice to or demand upon Borrower, Bank may make such
               payments and do such acts as Bank may deem necessary to protect
               its security interest in its Collateral including, without
               limitation, paying, purchasing, contesting or compromising any
               encumbrance, charge or lien which is prior to or superior to the
               security interests granted in the Loan Documents and, in
               exercising any such powers or authority, to pay all expenses
               incurred in connection therewith; and/or

         G.    Enforce any of the rights and remedies available to it under the
               Loan Documents or this Forbearance Agreement, or according to
               applicable law.

         All rights and remedies granted to Bank hereunder are cumulative, and
Bank shall have the right to exercise any one or more of such rights and
remedies alternatively, successively or concurrently as Bank may, in its sole
and absolute discretion, deem advisable.

         XIV.  Revival Clause; Solvency.
               ------------------------

         If the incurring of any debt or the payment of money or transfer of
property made to Bank by or on behalf of Borrower should for any reason
subsequently be declared to be "fraudulent" or "preferential" within the meaning
of any state or federal law relating to creditor's rights, including, without
limitation, fraudulent conveyances, preferences or otherwise voidable or
recoverable payments of money or transfers of property, in whole or in part, for
any reason (collectively, "Voidable Transfers") under the Bankruptcy Code or any
other federal or state law, and Bank is required to repay or restore any such
Voidable Transfer or the amount or any portion thereof, or upon the advice of
its in-house counsel or outside counsel is advised to do so, then, as to such
Voidable Transfer or the amount repaid or restored (including all reasonable
costs, expenses and attorneys' fees of Bank related thereto), the liability of
Borrower under the Loan Agreement, and all of Bank's rights and remedies under
the Loan Agreement and this Forbearance Agreement shall automatically be
revived, reinstated and restored and shall exist as though such Voidable
Transfer had never been made to the extent of any harm to Bank.

         Borrower represents and warrants that the execution, delivery and
performance of this Forbearance Agreement will not (i) render Borrower insolvent
as that term is defined below; (ii) leave Borrower with remaining assets which
constitute unreasonably small capital given the nature of Borrower's business;
or (iii) result in the incurrence of Debts (as defined below) beyond Borrower's
ability to pay them when and as they mature and become due and payable. For the
purposes of this paragraph, "Insolvent" means that the present fair salable
value of assets is less

                                      -10-

<PAGE>

than the amount that will be required to pay the probable liability on existing
Debts as they become absolute and matured. For the purposes of this paragraph,
"Debts" includes any legal liability for indebtedness, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed or contingent. Borrower
hereby acknowledges and warrants that it, in its corporate capacity that
Borrower have derived or expect to derive a financial or other benefit or
advantage from this Forbearance Agreement.

         XV.   Notices.
               -------

         All notices required to or permitted to be given to Bank under this
Forbearance Agreement shall be addressed as follows:

               To:     Peter M. Drees
                       Vice President
                       Comerica Bank - California
                       11512 El Camino Real, Suite 350
                       San Diego, California 92130
                       Fax No. (858) 509-2365

               Copy:   Pillsbury Winthrop LLP
                       101 West Broadway, Suite 1800
                       San Diego, California 92101
                       Fax No.: (619) 236-1995
                       Attn: Lori Partrick, Esq.
                       Fax No. (619) 236-1995

         All notices required to or permitted to be given to Borrower under this
Forbearance Agreement shall be addressed as follows:

               To:     Ted Filley
                       Senior Vice President
                       Anchor Pacific Underwriters, Inc.
                       610 West Ash Street, Suite 1500
                       San Diego, California 92101
                       Fax No. (619) 557-0408

         The above addresses may be changed effective upon receipt of a new
address. Any notice required herein or permitted to be given shall be in writing
and be personally served or sent by facsimile (upon confirmation of receipt) and
overnight United States mail and shall be deemed given when sent or, if mailed,
when deposited in the United States mail so long as it is properly addressed.

         XVI.  Representations and Warranties.
               ------------------------------

         Borrower hereby represents and warrants that:

         A.    Representations and Warranties. All Representations and
               ------------------------------
Warranties contained in the Credit Terms and Conditions are true and correct as
of the date of this Forbearance

                                      -11-

<PAGE>

Agreement. Except for Events of Default identified in this Forbearance
Agreement, no Event of Default has occurred and/or is continuing.

     B.     Further Representations. No representation or warranty of Borrower
            -----------------------
contained in this Forbearance Agreement or in any documents provided to Bank in
connection herewith (including any financial statements and/or financial
information) misstates any material fact or omits to state a material fact, the
absence of which makes such representation, warranty or statement misleading.

     XVII.  Authority.
            ---------

     Each party hereto represents and warrants to each other party that (i) it
has authority to execute this Forbearance Agreement; (ii) the execution,
delivery and performance of this Forbearance Agreement does not require the
consent or approval of any person, entity, governmental body, trust, trustor or
other authority; (iii) this Forbearance Agreement is a valid, binding and legal
obligation of the undersigned enforceable in accordance with its terms, and does
not contravene or conflict with any other agreement, indenture or undertaking to
which any party hereto is a party; and (iv) each party hereto is the sole and
lawful owner of all right, title, and interest in and to every claim and other
matter which the party purports to settle or compromise herein.

     XVIII. Payment of Expenses.
            -------------------

     In the event any action (whether or not in a court proceeding) shall be
required to interpret, implement, modify, or enforce the terms and provisions of
this Forbearance Agreement, or to declare rights under same, the prevailing
party in such action shall recover from the losing party all of its fees and
costs, including, but not limited to, the reasonable attorneys' fees and costs
(if applicable) of Bank's outside counsel.

     XIX.   Governing Law.
            -------------

     This Forbearance Agreement shall be construed and interpreted in accordance
with and shall be governed by the laws of the state of California. The parties
also hereby agree to submit to the jurisdiction of the California courts with
respect to all matters relating to this Forbearance Agreement.

     XX.    Successors, Assigns.
            -------------------

     This Forbearance Agreement shall be binding on and inure to the benefit of
all of the parties hereto, and upon the heirs, executors, administrators, legal
representatives, successors and assigns of the parties hereto, and each of them.
The terms and provisions of this Forbearance Agreement are for the exclusive
benefit of Borrower and Bank, and may not be transferred, assigned, pledged, set
over or negotiated to any person or entity without the prior express written
consent of Bank. Notwithstanding any other provisions contained herein, Bank may
sell, transfer, negotiate, assign or grant participations in all or a portion of
its rights in any of the Loan Documents, in this Forbearance Agreement, to any
person or entity without prior notice to Borrower, provided, however, that any
such assignee shall be bound by the terms and provisions of the Loan Documents
and this Forbearance Agreement.

                                      -12-

<PAGE>

     XXI.   Jury Trial Waiver
            -----------------

     BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

     XXII.  Complete Agreement of Parties.
            -----------------------------

     This Forbearance Agreement constitutes the entire agreement between Bank
and Borrower arising out of, related to or connected with the subject matter of
this Forbearance Agreement. Any supplements, modifications, waivers or
terminations of this Forbearance Agreement shall not be binding unless executed
in writing by the parties to be bound thereby. No waiver of any provision of
this Forbearance Agreement shall constitute a waiver of any other provisions of
this Forbearance Agreement (whether similar or not), nor shall such waiver
constitute a continuing waiver unless otherwise expressly so provided. However,
this Forbearance Agreement does not alter or amend any provision of any of the
Loan Documents except to the extent of the provisions expressly set forth
herein.

     XXIII. Execution In Counterparts.
            -------------------------

     This Forbearance Agreement may be executed in any number of counterparts
each of which, when so executed and delivered, shall be deemed an original, and
all of which together shall constitute but one and the same agreement.

     XXIV.  Contradictory Terms/Severability.
            --------------------------------

     In the event that any term or provision of this Forbearance Agreement
contradicts any term or provision of any other document, instrument or agreement
between the parties including, but not limited to, any of the Loan Documents,
the terms of this Forbearance Agreement shall control. If any provision of this
Forbearance Agreement shall be invalid, illegal or otherwise unenforceable, such
provision shall be severable from all other provisions of this Forbearance
Agreement, and the validity, legality and enforceability of the remaining
provisions of this Forbearance Agreement shall not be adversely affected or
impaired, and shall thereby remain in full force and effect.

     XXV.   Headings.
            --------

     All headings contained herein are for convenience purposes only, and shall
not be considered when interpreting this Forbearance Agreement.

                                      -13-

<PAGE>

     XXVI.  Continuing Cooperation.
            ----------------------

     The parties hereto shall cooperate with each other in carrying out the
terms and intent of this Forbearance Agreement, and shall execute such other
documents, instruments and agreements as are reasonably required to effectuate
the terms and intent of this Forbearance Agreement.

     XXVII. Consultation With Counsel.
            -------------------------

     Each party hereto acknowledges that (i) it has been represented by counsel
of its own choice at each stage in the negotiation of this Forbearance
Agreement; (ii) it has relied on such counsel's advice throughout all of the
negotiations which preceded the execution of this Forbearance Agreement, and in
connection with the preparation and execution of this Forbearance Agreement;
(iii) such counsel has read this Forbearance Agreement; (iv) such counsel has
advised such party concerning the validity and effectiveness of this Forbearance
Agreement, and the transactions to be consummated in accordance therewith and/or
each party has had the opportunity to consult with counsel and has voluntarily
waived doing so; and (v) each party hereto is freely and voluntarily entering
into this Forbearance Agreement.

    AGREED AND ACCEPTED:
    -------------------

COMERICA BANK - CALIFORNIA,
a California banking corporation

By: ___________________________________           Dated: ____________, 2001

Title _________________________________


ANCHOR PACIFIC UNDERWRITERS, INC.,
a Delaware corporation

By: ___________________________________           Dated: ____________, 2001

Title: ________________________________

                                      -14-

<PAGE>

                                    EXHIBIT A
                                    ---------

                  [Guaranty - Ward North America Holding, Inc.]

                                      -15-

<PAGE>

                                    EXHIBIT B
                                    ---------

                           [Reaffirmation of Guaranty]

                                      -16-

<PAGE>

                                    EXHIBIT C
                                    ---------

                             [Corporate Resolutions]

                                      -17-