<PAGE>

                                                                    EXHIBIT 10.8

                            AGREEMENT OF REINSURANCE
                                    NO. 0012

                                     between
                      NATIONAL INTERSTATE INSURANCE COMPANY
                               an Ohio corporation
                         having its principal offices at
                            5400 Transportation Blvd.
                           Cleveland, Ohio 44125-5306
                     (herein referred to as the "Reinsurer")

                                       and

                        GREAT AMERICAN INSURANCE COMPANY
                       and such of its subsidiaries as it
                         may designate from time to time
                                  P.O. Box 2575
                             Cincinnati, Ohio 45202
               (herein referred to collectively as the "Company")

In consideration of the promises set forth in this Agreement, the parties agree
as follows:

Article  I - SCOPE OF AGREEMENT

         As a condition precedent to the Reinsurer's obligations under this
Agreement, the Company shall cede to the Reinsurer the business described in
this Agreement underwritten by Company pursuant to the Underwriting Management
Agreement entered into of even date herewith by and between Company and National
Interstate Insurance Agency, Inc., an Ohio corporation and affiliate of
Reinsurer and the Reinsurer shall accept such business as reinsurance from the
Company.

         This Agreement is comprised of General Articles I through X and
Exhibit(s) listed below and each Exhibit which is incorporated herein as a part
of this Agreement. The terms of the General Articles and of the Exhibit(s) shall
determine the rights and obligations of the parties. The terms of the General
Articles shall apply to each Exhibit unless specifically amended

                                       1
<PAGE>

therein. In the event of termination of all the Exhibits made part of this
Agreement, the General Articles shall automatically terminate when the liability
of the Reinsurer under said Exhibits ceases.

            EXHIBIT A -      QUOTA-SHARE
                                  of
                             Public Transportation Liability Business

            EXHIBIT B -      QUOTA-SHARE
                                  of
                             Public Transportation
                             Automobile Physical Damage Business

            EXHIBIT C -      UNDERWRITING MANAGEMENT AGREEMENT
                             between Company and National Interstate Insurance
                             Agency, Inc.

Article  II - PARTIES TO THE AGREEMENT

         This Agreement is solely between the Company and the Reinsurer. Great
American Insurance Company shall be the Agent of Company as to all matters
pertaining to this Agreement. Performance of the obligations of each party under
this Agreement shall be rendered solely to the other party. However, if the
Company becomes insolvent, the liability of the Reinsurer shall be modified to
the extent set forth in the article entitled INSOLVENCY OF THE COMPANY.

Article  III - ADMINISTRATION

         Reinsurer shall be entitled to receive and retain for its own account
all incoming sums of money received in connection with the subject business due
or becoming due to Company on or after the effective date hereof, minus
Company's retention and commission, in accordance with the terms of Exhibit C.

                                       2
<PAGE>

         The parties agree that Reinsurer shall have the right and obligation,
at its expense, to exercise and perform all of Company's rights and obligations
in connection with the subject business and Company hereby assigns, transfers
and grants to Reinsurer the rights, powers and privileges of Company to exercise
and perform the same. Without limiting the foregoing, it is agreed that
Reinsurer shall have the right and/or obligation to:

         1)       give, receive, execute, issue and deliver all notices,
                  endorsements, waivers, demands, proofs and agreements of every
                  kind and nature which may be necessary or desirable in
                  connection with the policies or any reinsurance relating to
                  the subject business;

         2)       ask, demand, attach, sue for, recover, receive and receipt for
                  all premiums, debts and sums of money due or becoming due on,
                  under or in connection with the policies or any reinsurance
                  relating to the subject business;

         3)       to adjust, settle, pay, defend, arbitrate and/or compromise
                  any and all claims under or in connection with the policies or
                  reinsurance relating to the subject business; and

         4)       prosecute or defend any action which Reinsurer deems necessary
                  or desirable in order to exercise the rights, powers and
                  privileges granted to Reinsurer hereunder.

         Recoveries from any form of insurance or reinsurance which protects the
Company against claims which are related to the subject business or management
thereof shall inure to the benefit of Reinsurer.

Article  IV - ERRORS AND OMISSIONS

         The Reinsurer shall not be relieved of liability because of an error or
accidental omission of the Company in reporting any claim or loss or any
business reinsured under this Agreement,

                                       3
<PAGE>

provided that the error or omission is rectified promptly after discovery. The
Reinsurer shall be obligated only for the return of the premium paid for
business reported but not reinsured under this Agreement.

Article  V - SPECIAL ACCEPTANCES

         Business not within the terms of this Agreement may be submitted to the
Reinsurer for special acceptance and, if accepted by the Reinsurer, shall be
subject to all of the terms of this Agreement except as modified by the special
acceptance.

Article  VI - RESERVES AND TAXES

         The Reinsurer shall maintain the required reserves as to the Reinsurers
portion of unearned premium, claims, losses, and adjustment expense.

Article  VII - OFFSET

         The Company or the Reinsurer may offset any balance, whether on account
of premium, commission, claims or losses, adjustment expense, salvage, or
otherwise, due from one party to the other under this Agreement or under any
other agreement heretofore or hereafter entered into between the Company and the
Reinsurer.

Article  VIII - INSPECTION OF RECORDS

         Each Party shall allow the other Party to this Agreement to inspect, at
reasonable times, the records of the Company relevant to the business reinsured
under this Agreement, including files concerning claims, losses, or legal
proceedings which involve or are likely to involve either or any of the Parties
to this Agreement.

                                       4
<PAGE>

Article  IX - ARBITRATION

         Any unresolved difference of opinion between the Reinsurer and the
Company shall be submitted to arbitration by three arbitrators. One arbitrator
shall be chosen by the Reinsurer, and one shall be chosen by the Company. The
third arbitrator shall be chosen by the other two arbitrators within ten (10)
days after they have been appointed. If the two arbitrators cannot agree upon a
third arbitrator, each arbitrator shall nominate three persons of whom the other
shall reject two. The third arbitrator shall then be chosen by drawing lots. If
either party fails to choose an arbitrator within thirty (30) days after
receiving the written request of the other party to do so, the latter shall
choose both arbitrators, who shall choose the third arbitrator. The arbitrator
shall be impartial and shall be present or former officials of property or
casualty insurance or reinsurance companies.

         The party requesting arbitration (the "Petitioner") shall submit its
brief to the arbitrators within thirty (30) days after notice of the selection
of the third arbitrator. Upon receipt of the Petitioner's brief, the other party
("the Respondent") shall have thirty (30) days to file a reply brief. On receipt
of the Respondent's brief, the Petitioner shall have twenty (20) days to file a
rebuttal brief. Respondent shall have twenty (20) days from the receipt of
Petitioners rebuttal brief to file its rebuttal brief. The arbitrators may
extend the time for filing of briefs at the request of either party. The
arbitrators shall use best efforts to render a decision within 60 days of
receipt of the final pleading.

         The arbitrators are relieved from judicial formalities and, in addition
to considering the rules of law and the customs and practices of the insurance
and reinsurance business, shall make their award with a view to effecting the
intent of this Agreement. The decision of the majority shall be final and
binding upon the parties. The costs of arbitration, including the fees of the

                                       5
<PAGE>

arbitrators, shall be shared equally unless the arbitrators decide otherwise.
The arbitration shall be held at the time and places agreed upon by the
arbitrators.

Article  X - INSOLVENCY OF THE COMPANY

         In the event of the insolvency of the Company and the appointment of a
liquidator, receiver, conservator or statutory successor, the reinsurance
provided hereunder shall be payable immediately upon demand, with reasonable
provision for verification, on the basis of the liability of the Company on the
basis of claims allowed against the Company by any court of competent
jurisdiction or any liquidator, receiver, conservator or statutory successor
having authority to allow such claims, without diminution because of such
insolvency or because such liquidator, receiver, conservator or statutory
successor has failed to pay all or a portion of any claims.

         Payment by the Reinsurer shall be made directly to the Company or to
its liquidator, receiver, conservator or statutory successor, except where this
Agreement specifies another payee in the event of the insolvency of the Company,
and the Reinsurer with the consent of the direct insureds has assumed such
policy obligations of the Company as its direct obligations to the payees under
such policies, in substitution for the obligations of the Company to such
payees.

         In the event of the insolvency of the Company, the liquidators,
receivers, conservator or statutory successor of the Company shall give written
notice to the Reinsurer of the pendency of a claim against the insolvent Company
on the policy or policies reinsured within a reasonable time after such claim is
filed in the insolvency proceeding. During the pendency of such claim the
Reinsurer may investigate such claim and interpose, at its own expense, in the
proceeding where such claim is to be adjudicated any defense or defenses which
it may deem available to the Company or its liquidator, receiver, conservator or
statutory successor. Such expense incurred by the Reinsurer shall be chargeable
subject to court approval against the insolvent

                                       6
<PAGE>

Company as part of the expense of liquidation to the extent of a proportionate
share of the benefit which may accrue to the Company solely as a result of the
defense undertaken by the Reinsurer.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed In duplicate as of the 1st day of November, 1989.

                                          NATIONAL INTERSTATE INSURANCE COMPANY

                                                   /s/ Art Kraus
                                                   -------------
                                                   Vice President

Attest: /s/ Alan Spachman
        -----------------
                                          GREAT AMERICAN INSURANCE COMPANY

                                                   /s/ Karen Holley Horrell
                                                   ------------------------
                                                   Senior Vice President

Attest: /s/ Eve Cutler Rosen
        --------------------
                                       7
<PAGE>

                                    EXHIBIT A

                         Attached to and made a part of
                        Agreement of Reinsurance No. 0012

                             QUOTA-SHARE REINSURANCE

                                       of

                    Public Transportation Liability Business

Section  1 - LIABILITY OF THE REINSURER

         The Reinsurer shall pay to the Company, with respect to public
transportation liability business of the Company, the amount of net loss in
excess of the Company Retention but not exceeding the Limits of Liability of the
Reinsurer as set forth in the Schedule of Reinsurance.

                             SCHEDULE OF REINSURANCE

<TABLE>
<CAPTION>
  Class of Business                     Company Retention                    Limits of Liability of the Reinsurer
  -----------------                     -----------------                    ------------------------------------
<S>                                   <C>                                    <C>
Public Transportation                 10% p/o first $100,000                 Primary and First Excess Policies:
                                                                             90% first $100,000
Liability Business                    each occurrence                        each occurrence
</TABLE>

Section  2 - ALLOCATION OF ADJUSTMENT EXPENSE

         In addition to payments for its share of net loss, the Reinsurer shall
pay to the Company all adjustment expenses.

Section  3 - OTHER REINSURANCE

         The obligations of the Company to reinsure business falling within the
scope of this Exhibit and of the Reinsurer to accept such and no other
reinsurance (either facultative or treaty) is permitted, except as provided for
below.

                                       1
<PAGE>

         The Company may purchase facultative excess of loss reinsurance or
facultative share reinsurance within the liability of the Reinsurer, if, in the
underwriting judgment of the Company, the Reinsurer will be benefited thereby.
In no event, however, shall the amount required with respect to the Company
Retention be reduced.

Section  4 - COMPANY POLICY AMOUNTS

         For the purpose of determining the Company Retention and the Units of
Liability of the Reinsurer, the limits of liability of the Company with respect
to any one policy shall be deemed not to exceed:

         (a)      Public Transportation Liability Business

<TABLE>
<S>                                       <C>
(1) Commercial Automobile Liability       $10,000,000 each occurrence

(2) Garage Liability                      $10,000,000 each occurrence

(3) Commercial General Liability          $10,000,000 each occurrence

(4) Garagekeepers Legal Liability         $2,000,000 each occurrence
</TABLE>

         Limits in excess of Five Million Dollars ($5,000,000.00) liability
coverage and One Million Dollars ($1,000,000.00) physical damage shall be
facultatively placed with assuming reinsurers that shall have been approved by
the company, with notice immediately to the Company.

Section  5 - DEFINITIONS

         (a)      Public Transportation Liability Business

                  This term shall mean insurance which is classified as
                  commercial automobile liability, commercial general liability
                  written in conjunction therewith, garage liability, and
                  garagekeepers legal liability for public transportation
                  companies including but not limited to municipal bus lines,
                  charter bus companies, limousine companies, and school bus
                  lines on vehicles principally garaged in the United States of
                  America.

                                       2
<PAGE>

         (b)      Company Retention

                  This term shall mean the amount the Company shall retain for
                  its own account; however, this requirement shall be satisfied
                  if this amount is retained by the Company or its affiliated
                  companies under common management or common ownership.

         (c)      Net Loss

                  This term shall mean all payments by the Company in settlement
                  of claims or losses, payment of benefits, or satisfaction of
                  judgments or awards after deduction of subrogation and other
                  recoveries and after deduction of amounts due from all other
                  reinsurance, whether collectible or not. This term shall not
                  include adjustment expense. If the Company becomes insolvent,
                  this definition shall be modified to the extent set forth in
                  the article entitled INSOLVENCY OF THE COMPANY.

         (d)      Adjustment Expense

                  This term shall mean expenditures by the Company, other than
                  for office expenses and for the salaries and expenses of
                  employees of the Company or of any subsidiary or related or
                  wholly owned company of the Company, made in connection with
                  the disposition of a claim, loss, or legal proceeding
                  including investigation, negotiation, and legal expenses,
                  court costs; statutory penalties; prejudgment interest or
                  delayed damages; and interest on any judgment or award.

         (e)      Prejudgment Interest or Delayed Damages

                  This term shall mean interest or damages added to a
                  settlement, verdict, award, or judgment based on the amount of
                  time prior to the settlement, verdict, award, or judgment
                  whether or not made part of the settlement, verdict, award, or
                  judgment.

         (f)      Occurrence

                  This term shall mean each accident or occurrence or series of
                  accidents or occurrences arising out of one event, whether
                  involving one or several of the Company's policies.

                  All bodily injury or property damage arising out of continuous
                  or repeated exposure to substantially the same general
                  conditions shall be considered as arising out of one
                  occurrence, whether involving one or several of the Company's
                  policies.

                                       3
<PAGE>

Section  6 - EXCLUSIONS

         This Exhibit shall not apply to:

         (a)      Business accepted by the Company as reinsurance from other
                  insurers except for business accepted from insurers approved
                  by the Company and the Reinsurer;

         (b)      Nuclear incident per the Nuclear Incident Exclusion Clause -
                  Liability - Reinsurance attached hereto;

         (c)      Policies covering liability of any insurer or reinsurer for
                  its acts or omissions in the negotiation, settlement, or
                  defense of claims or any act or omission in dealings with its
                  policyholders;

         (d)      Any loss or liability accruing to the Company directly or
                  indirectly from any insurance written by or through any pool
                  or association including pools or associations in which
                  membership by the Company is required under any statutes or
                  regulations and including automobile assigned risk pools and
                  voluntary or involuntary market assistance programs; however,
                  this exclusion shall not apply to individual automobile
                  assigned risks assigned to the Company;

         (e)      Any liability of the Company arising from its participation or
                  membership in any insolvency fund;

         (f)      Any loss or damage which is occasioned by war, invasion,
                  hostilities, acts of foreign enemies, civil war, rebellion,
                  insurrection, military or usurped power, or martial law or
                  confiscation by order of any government or public authority;

         (g)      Business written on a co-indemnity basis not controlled by the
                  Company;

         (h)      Business written to apply in excess of a deductible or self
                  insured amount of more than $100,000 or business written to
                  apply specifically in excess over underlying insurance;

         (i)      Automobile liability insurance relating to the primary
                  ownership, maintenance, or use of:

                  (1)      Taxis;

                  (2)      Ambulances;

                  (3)      Racing automobiles;

                  (4)      Automobiles leased or rented to others without
                           drivers except for trip leasing;

                  (5)      Trucks, tractors, semi-trailers, or trailers used for
                           hire;

                                       4
<PAGE>

                  (6)      Motorcycles, motorized scooters, motorized bicycles,
                           power cycles, and any similar motorized vehicles;

         (j)      Liability insurance relating to products or completed
                  operations except when incidental to the total operations of
                  an insured;

         (k)      Environmental restoration liability, except to the extent
                  defined by the MCS 90 Endorsement;

         (l)      Pollution under any auto liability policy that does not
                  include a standard ISO pollution exclusion approved by the
                  Reinsurer, except to the extent defined by the MCS 90
                  Endorsement;

Pollution under any, other than auto, liability policy which does not contain a
standard ISO Pollution exclusion approved by the Reinsurer. However, if an
applicable State or Federal Regulatory Body or Agency does not permit the
standard ISO pollution exclusion, then this exclusion does not apply. If the
Company files an independent pollution exclusion, then such exclusion is an
acceptable substitute for the standard ISO pollution exclusion wording as long
as the Reinsurer has approved it before its use.

         If the Company provides insurance for an insured with respect to the
ownership, maintenance, or use of items listed in exclusions (i)(l) through
(i)(5) and if such ownership, maintenance, or use constitutes only a minor an
incidental part of the total ownership, maintenance, or use of such items of the
insured, such exclusion(s) shall not apply.

         If the Company is bound, without the knowledge of and contrary to the
instructions of the Company's supervisory underwriting personnel, on any
business falling within the scope of one or more of the exclusions set forth in
this Section, these exclusions, except (a) through (g), shall be suspended with
respect to such business until 30 days after an underwriting supervisor of the
Company acquires knowledge of such business.

Section  7 - REINSURANCE PREMIUM

         As a condition precedent to the Reinsurers obligations hereunder, the
Company shall pay to the Reinsurer:

         (a)      With respect to the public transportation liability business
                  reinsured hereunder

                  (1)      For the Primary and First Excess Policies:

                                       5
<PAGE>

                           (i)      As respects commercial automobile liability,
                                    garage liability and garagekeepers legal
                                    liability, a reinsurance premium equal to a
                                    percentage of the Company's subject earned
                                    premium determined in accordance with the
                                    National Interstate Insurance Agency
                                    Transportation Account Pricing Model;

                           (ii)     As respects commercial general liability,
                                    the reinsurance premium shall be based on
                                    the premium charged by the Company,
                                    allocated in accordance with the National
                                    Interstate Insurance Agency Transportation
                                    Account Pricing Model.

Section  8 - REPORTS AND REMITTANCES

         (a)      Reinsurance Premium

                  Within 30 days after the close of each month that this Exhibit
                  is in effect, the Reinsurer shall render to the Company a
                  report of insurance and reinsurance premiums for such period
                  with respect to the subject business of the Company collected
                  during such period, summarizing all premiums and associate
                  charges for ceding commissions and premium taxes by line of
                  insurance, and the amounts due to the Company and to the
                  Reinsurer, respectively, shall be remitted promptly.

         (b)      Claims and Losses

                  The Reinsurer shall report promptly to the Company each claim
                  or loss for which the Company's estimated amount of net loss
                  is 50% or more of the amount of the Company Retention and
                  shall also report all cases of serious injury which,
                  regardless of considerations of liability or coverage, might
                  involve this reinsurance, including but not limited to the
                  following:

                  (1)      Cord injury - paraplegia, quadriplegia;

                  (2)      Amputations - requiring a prosthesis;

                  (3)      Brain damage affecting mentality or central nervous
                           system - such as permanent disorientation, behavior
                           disorder, personality change, seizures, motor
                           deficit, inability to speak (aphasia), hemiplegia or
                           unconsciousness (comatose);

                  (4)      Blindness;

                  (5)      Burns - involving over 10% of body with third degree
                           or 30% of body with second degree;

                  (6)      Multiple fractures - involving more than one member
                           or non-union;

                  (7)      Fracture of both heel bones (fractured bilateral os
                           calcis);

                                       6
<PAGE>

                  (8)      Nerve damage causing paralysis and loss of sensation
                           in arm and hand (brachial plexus nerve damage);

                  (9)      Massive internal injuries affecting body organs;

                  (10)     Injury to nerves at base of spinal canal (Cauda
                           Equina) or any other back injury resulting in
                           incontinence of bowel and/or bladder;

                  (11)     Fatalities;

                  (12)     Any other serious injury which, in the judgment of
                           the Reinsurer, might involve the Company.

         The Reinsurer shall advise the Company of the estimated amount of net
         loss and adjustment expense in connection with each such claim or loss
         and of any subsequent changes in such estimates.

         Upon receipt of a definitive statement of net loss and adjustment
         expense from the Reinsurer, the Company shall promptly pay to the
         Reinsurer the Company's portion of net loss and Company's portion of
         adjustment expense, if any. The Reinsurer shall report to the Company
         any subsequent changes in the amount of net loss and/or adjustment
         expense, and the amount due either party shall be remitted promptly.

         (c)      General

                  In addition to the reports required in (a) and (b) above, the
                  Reinsurer shall furnish such other information as may be
                  required by the Company for the completion of the Company's
                  quarterly and annual statements and internal records.

                  All reports shall be rendered in forms acceptable to the
                  Company and the Reinsurer.

Section  9 - COMMENCEMENT AND TERMINATION

         This Exhibit shall apply to claims and losses resulting from
occurrences insured under new and renewal policies of the Company becoming
effective at and after 12:01 AM., October 1, 1989.

                                       7
<PAGE>

                                    EXHIBIT B

                         Attached to and made a part of
                        Agreement of Reinsurance No. 0012

                             QUOTA SHARE REINSURANCE

                                       of

            Public Transportation Automobile Physical Damage Business

Section  1 - LIABILITY OF THE REINSURER

         The Reinsurer shall pay to the Company, with respect to public
transportation automobile physical damage business of the Company, the amount of
net loss sustained by the Company in excess of the Company Retention but not
exceeding the Limit of Liability of the Reinsurer as set forth in the Schedule
of Reinsurance.

         The Limit of Liability of the Reinsurer under this Exhibit shall not
exceed a total payment of $45,000 on all insureds involved in one occurrence.

                             SCHEDULE OF REINSURANCE

<TABLE>
<CAPTION>
   Class of Business                   Company Retention                      Limit of Liability of the Reinsurer
   -----------------                   -----------------                      -----------------------------------
<S>                                   <C>                                     <C>
Public Transportation                 10% p/o first $50,000                    Primary and First Excess Policies
                                                                               90% first $50,000
Physical Damage                       each occurrence                          each occurrence
Automobile Business                   each insured                             each insured
</TABLE>

Section  2 - ALLOCATION OF ADJUSTMENT EXPENSE

         In addition to payments for its share of net loss, the Reinsurer shall
pay to the Company all adjustment expenses.

                                        1
<PAGE>

Section  3 - OTHER REINSURANCE

         The obligations of the Company to reinsure business falling with the
scope of this Exhibit and of the Reinsurer to accept such reinsurance are
mandatory and no other reinsurance (either facultative or treaty) is permitted,
except as provided for below.

         When the amount of insurance written by the Company on an individual
insured exceeds $1,000,000, permission is granted the Company to purchase
facultative excess of loss or share reinsurance for the excess amount on such
insured. If the Company purchases facultative excess of loss reinsurance, it
shall advise the Reinsurer immediately, and a reinsurance rate which compensates
for the enhanced partial loss shall be agreed upon. If the Company does not
purchase either facultative excess of loss or share reinsurance for the excess
amount on such insured, the net loss for the purpose of computing the Company
Retention and the Limit of Liability of the Reinsurer shall be reduced as if
facultative share reinsurance had been in force at the time of the loss for the
excess amount on such insured.

         The Company may also purchase facultative excess of loss reinsurance or
facultative share reinsurance within the liability of the Reinsurer, if, in the
underwriting judgment of the Company, the Reinsurer will be benefited thereby.
In no event, however, shall the amount required with respect to the Company
Retention be reduced.

         Recoveries from catastrophe reinsurance shall be deemed not to reduce
the amount required with respect to the Company Retention.

Section  4 -DEFINITIONS

         (a)      Public Transportation Automobile Physical Damage Business

                  This term shall mean insurance which is classified as
                  automobile physical damage for public transportation companies
                  including but not limited to municipal bus lines, charter bus
                  companies, limousine companies, and school bus lines, on
                  vehicles principally garaged in the United States of America.

                                       2
<PAGE>

         (b)      Company Retention

                  This term shall mean the amount the Company shall retain for
                  its own account; however, this requirement shall be satisfied
                  if this amount is retained by the Company or its affiliated
                  companies under common management or common ownership.

         (c)      Net Loss

                  This term shall mean all payments by the Company in settlement
                  of claims or losses after deduction of salvage and other
                  recoveries and after deduction of amounts due from all other
                  reinsurance, except catastrophe reinsurance, whether
                  collectible or not. This term shall not include adjustment
                  expense. If the Company becomes insolvent, this definition
                  shall be modified to the extent set forth in the article
                  entitled INSOLVENCY OF THE COMPANY.

         (d)      Adjustment Expense

                  This term shall mean expenditures by the Company, other than
                  for office expenses and for the salaries and expenses of
                  employees of the Company or of any subsidiary or related or
                  wholly owned company of the Company, made in connection with
                  the disposition of a claim, loss, or legal proceeding
                  including investigation, negotiation, and legal expenses;
                  court costs; statutory penalties; prejudgment interest or
                  delayed damages; and interest on any judgment or award.

         (e)      Prejudgment Interest or Delayed Damages

                  This term shall mean interest or damages added to a
                  settlement, verdict, award, or judgment based on the amount of
                  time prior to the settlement, verdict, award, or judgement
                  whether or not made a part of the settlement, verdict, award,
                  or judgment.

         (f)      Occurrence

                  This term shall mean each occurrence or series of occurrences
                  arising out of one event.

Section  5 - EXCLUSIONS

         This Exhibit shall not apply to:

         (a)      Reinsurance accepted by the Company other than:

                  (1)      Facultative reinsurance on a share basis of risks
                           accepted individually and not forming part of any
                           general agreement, or

                  (2)      Local agency reinsurance on a share basis accepted in
                           the normal course of business;

                                       3
<PAGE>

         (b)      Nuclear incident per the Nuclear Incident Exclusion - Physical
                  Damage -Reinsurance attached hereto;

         (c)      Any loss or liability accruing to the Company directly or
                  indirectly from any insurance written by or through any pool
                  or association including: pools or associations in which
                  membership by the Company is required under any statutes or
                  regulations;

         (d)      Any liability of the Company arising from its participation or
                  membership in any insolvency fund;

         (e)      Any loss or damage which is occasioned by war, invasion,
                  hostilities, acts of foreign enemies, civil war, rebellion,
                  insurrection, military or usurped power, or martial law or
                  confiscation by order of any government or public authority;

         (f)      Liability under coverage specifically afforded for loss or
                  damage resulting from misappropriation, secretion, conversion,
                  infidelity or any dishonest act on the part of the insured or
                  other party of interest, his or their employees or agents, or
                  any person or persons to whom merchandise may be entrusted
                  (carriers for hire excepted).

Section  6 - REINSURANCE PREMIUM

         As a condition precedent to the Reinsurer's obligations hereunder, the
         Company shall pay to the Reinsurer a reinsurance premium according to
         National Interstate Insurance Agency Transportation Account Pricing
         Model.

Section  7 - REPORTS AND REMITTANCES

         (a)      Reinsurance Premium

                  Within 30 days after the close of each month that this Exhibit
                  is in effect, the Reinsurer shall render to the Company a
                  report of insurance and reinsurance premiums for such period
                  with respect to the subject business of the Company collected
                  during such period, summarizing all premiums and associated
                  charges for ceding commissions and premium taxes by line of
                  insurance, and the amounts due to the Company and to the
                  Reinsurer, respectively, shall be remitted promptly.

         (b)      Claims and Losses

                  The Reinsurer shall report promptly to the Company each claim
                  or loss which, in the Reinsurer's opinion, may involve the
                  reinsurance afforded by this Exhibit. The Reinsurer shall
                  advise the Company of the estimated amount of net loss and
                  adjustment expense in connection with each such claim or loss
                  and of any subsequent changes in such estimates.

                                       4
<PAGE>

                  Upon receipt of a definitive statement of net loss and
                  adjustment expense from the Reinsurer, the Company shall
                  promptly pay to the Reinsurer the Company's portion of net
                  loss and the Company's portion of adjustment expense, if any.
                  The Reinsurer shall report to the Company any subsequent
                  changes in the amount of net loss and/or adjustment expense,
                  and the amount due either party shall be remitted promptly.

         (c)      P.C.S. Catastrophe Bulletins

                  The Reinsurer shall furnish to the Company, upon request, the
                  following information with respect to each catastrophe set
                  forth in the Catastrophe Bulletins published by the Property
                  Claim Services:

                  (1)      The preliminary estimates of the amount recoverable
                           from the Company;

                  (2)      The Company's portion of claims, losses, and loss
                           adjustment expenses paid less salvage recovered
                           during each calendar quarter;

                  (3)      The Company's portion of reserves for claims, losses,
                           and loss adjustment expenses at the end of each
                           calendar quarter.

         (d)      General

                  In addition to the reports required by (a), (b), and (c)
                  above, the Reinsurer shall furnish such other information as
                  may be required by the Company for the completion of the
                  Company's quarterly and annual statements and internal
                  records.

                  All reports shall be rendered on forms acceptable to the
                  Company and the Reinsurer.

Section  8 - COMMENCEMENT AND TERMINATION

         This Exhibit shall apply to claims and losses resulting from
occurrences insured under new and renewal policies of the Company becoming
effective at and after 12:01 A.M., October 1, 1989.

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<PAGE>

         NUCLEAR INCIDENT EXCLUSION - PHYSICAL DAMAGE - REINSURANCE

1.       This Reinsurance does not cover any loss or liability accruing to the
         Reinsured directly or indirectly and whether as Insurer or Reinsures,
         from any Pool of Insurers or Reinsurer formed for the purpose of
         covering Atomic or Nuclear Energy risks.

2.       Without in any way restricting the operation of paragraph (I) of this
         Clause, this Reinsurance does not cover any loss or liability accruing
         to the Reinsured, directly or indirectly and whether as Insurer or
         Reinsurer, from any insurance against Physical Damage (inducing
         business interruption or consequential loss arising out of such
         Physical Damage) to:

         I.       Nuclear reactor power plants including all auxiliary property
                  on the site, or

         II.      Any other nuclear reactor installation, including laboratories
                  handling radioactive materials in connection with reactor
                  installations, and "critical facilities" as such, or

         III.     Installations for fabricating complete fuel elements or for
                  processing substantial quantities of "special nuclear
                  material", and for reprocessing, salvaging, chemically
                  separating, storing or disposing of "spent" nuclear fuel or
                  waste materials, or

         IV.      Installations other than those listed in paragraph (2) III
                  above using substantial quantities of radioactive isotopes or
                  other products of nuclear fission.

3.       Without in any way restricting the operations of paragraphs (1) and (2)
         hereof, this Reinsurance does not cover any loss or liability by
         radioactive contamination accruing to the Reinsured, directly or
         indirectly, and whether as Insurer or Reinsurer, from any insurance on
         property which is on the same site as a nuclear reactor power plant or
         other nuclear installation and which normally would be insured
         therewith except that this paragraph (3) shall not operate

         (a)      where Reinsured does not have knowledge of such nuclear
                  reactor power plant or nuclear installation, or

         (b)      where said insurance contains a provision excluding coverage
                  for damage to property caused by or resulting from radioactive
                  contamination, however caused. However on and after 1st
                  January 1960 this subparagraph (b) shall only apply provided
                  the said radioactive contamination exclusion provision has
                  been approved by the Governmental Authority having
                  jurisdiction thereof.

4.       Without in any way restricting the operations of paragraphs (1), (2)
         and (3) hereof, this Reinsurance does not cover any loss or liability
         by radioactive contamination accruing to the Reinsured, directly or
         indirectly, and whether as Insurer or Reinsurer, when such radioactive
         contamination is a named hazard specifically insured against.

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<PAGE>

5.       It is understood and agreed that this Clause shall not extend to risks
         using radioactive isotopes in any form where nuclear exposure is not
         considered by the Reinsured to be the primary hazard.

6.       The term "special nuclear material" shall have the meaning given it in
         the Atomic Energy Act of 1954 or by any law amendatory thereof.

7.       Reinsured to be sole judge of what constitutes:

         (a)      substantial quantities, and

         (b)      the extent of installation, plant or site.

Note. - Without in any way restricting the operation of paragraph (I) hereof, it
is understood and agreed that

         (a)      all policies issued by the Reinsured on or before 31st
                  December 1957 shall be free from the application of the other
                  provisions of this Clause until expiration date or 31st
                  December 1960 whichever first occurs whereupon all the
                  provisions of this Clause shall apply,

         (b)      with respect to any risk located in Canada policies issued by
                  the Reinsured on or before 31st December 1958 shall be free
                  from the application of the other provisions of this Clause
                  until expiration date or 31st December 1960 whichever first
                  occurs whereupon all the provisions of this Clause shall
                  apply.

                                       2
<PAGE>

         NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE

(1)      This reinsurance does not cover any loss or liability accruing to the
         Reassured as a member of, or subscriber to, any association of insurers
         or reinsurer formed for the purpose of covering nuclear energy risks or
         as a direct or indirect reinsures of any such member, subscriber or
         association.

(2)      Without in any way restricting the operation of paragraph (1) of this
         Clause it is understood and agreed that for all purposes of this
         reinsurance all the original policies of the Reassured (new, renewal
         and replacement) of the classes specified in Clause II of this
         paragraph (2) from the time specified in Clause III In this paragraph
         (2) shall be deemed to include the following provision (specified as
         the Limited Exclusion Provision):

Limited Exclusion Provision*

         I.       It is agreed that the policy does not apply under any
                  liability coverage, to bodily injury (injury, sickness,
                  disease, death or destruction) or property damage with respect
                  to which an insured under the policy is also an insure under a
                  nuclear energy liability policy issued by Nuclear Energy
                  Liability Insurance Association, Mutual Atomic Energy
                  Liability Underwriters or Nuclear Insurance Association of
                  Canada, or would be art insured under any such policy but for
                  its termination upon exhaustion of its limit of liability.

         II.      Family Automobile Policies (liability only), Special
                  Automobile Policies (private passenger automobiles, liability
                  only), Farmers Comprehensive Personal Liability Policies
                  (liability only), Comprehensive Personal Liability Policies
                  (Liability only) or policies of a similar nature; and the
                  liability portion of combination forms related to the four
                  classes of policies stated above, such as the Comprehensive
                  Dwelling Policy and the applicable types of Homeowners
                  Policies.

         III.     The inception dates and thereafter of all original policies as
                  described in II above, whether new, renewal or replacement,
                  being policies which either

                  (a)      become effective on or after 1st May, 1960, or

                  (b)      become effective before that date and contain the
                           Limited Exclusion Provision set out above; provided
                           this paragraph (2) shall not be applicable to Family
                           Automobile Policies, Special Automobile Policies, or
                           policies or combination policies of a similar nature,
                           issued by the Reassured on New York risks, until 90
                           days following approval of the Limited Exclusion
                           Provision by the Governmental Authority having
                           jurisdiction thereof.

(3)      Except for those Basses of policies specified in Clause II of paragraph
         (2) and without in any way restricting the operation of paragraph (1)
         of this Clause, it is understood and agreed that for all purposes of
         this reinsurance the original liability policies of the Reassured (new,
         renewal and replacement) affording the following coverage's:

         Owners, Landlords and Tenants Liability, Contractual Liability,
         Elevator Liability, Owners or Contractors (including railroad)
         Protective Liability, Manufacturers and Contractors Liability, Product
         Liability. Professional and Malpractice Liability. Storekeepers
         Liability, Garage Liability, Automobile Liability (inducing
         Massachusetts Motor Vehicle or Garage Liability)

         shall be deemed to include, with respect to such coverage's, from the
         time specified in

                                       1
<PAGE>

         Clause V of this paragraph (3), the following provision (specified as
         the Broad Exclusion Provision):

Broad Exclusion Provision*

It is agreed that the policy does not apply:

         I.       Under any Liability Coverage, to bodily injury,(injury,
                  sickness, disease, death or destruction) or property damage.

         (a)      with respect to which an insured under the policy is also an
                  insured under a nuclear energy liability policy issued by
                  Nuclear Energy Liability Insurance Association, Mutual Atomic
                  Energy Liability Underwriters or Nuclear Insurance Association
                  of Canada, or would be and insured under any such policy but
                  for its termination upon exhaustion of its limit of liability;
                  or

         (b)      resulting from the hazardous properties of nuclear material
                  and with respect to which (1) any person or organization is
                  required to maintain financial protection pursuant to the
                  Atomic Energy Act of 1954, or any law amendatory thereof; or
                  (2) the insured is, or had this- policy not been issued would
                  be; entitled to indemnity from the United States of America,
                  or any agency thereof, under -any agreement entered into by
                  the United State of America, or any agency thereof, with any
                  person or organization.

         II.      Under any Medical Payments Coverage, or under any
                  Supplementary Payments Provision relating to first aid,
                  (immediate medical or surgical relief), to expenses incurred
                  with respect to bodily injury, (bodily injury, sickness,
                  disease or death), resulting from the hazardous properties of
                  nuclear material and arising out of the operation of a nuclear
                  facility by any person or organization.

         III.     Under any Liability Coverage, to bodily injury, (injury,
                  sickness, disease, death or destruction), or property damage
                  resulting from the hazardous properties of nuclear material,
                  if

         (a)      the nuclear material (1) is at any nuclear facility owned by,
                  or operated by or on behalf of, an insured or (2) has been
                  discharged or dispersed there from;

         (b)      the nuclear material is contained in spent fuel or waste at
                  any time possessed, handed, used, processed, stored,
                  transported or deposed of by or on behalf of an insured; or

         (c)      the bodily, (injury, sickness, disease, death or destruction),
                  or property damage arises out of the furnishing by an insured
                  of services, materials, parts or equipment in connection with
                  the planning, construction, maintenance, operation or use of
                  any nuclear facility, but if such facility is located within
                  the United States of America, its territories, or possessions
                  or Canada, this exclusion (c) applies only to Property damage,
                  (injury to or destruction of property at such nuclear
                  facility), to such nuclear facility and any property thereat

                                       2
<PAGE>

         IV.      As used in this endorsement

                  "hazardous properties" include radioactive, toxic or explosive
                  properties; "nuclear material" means source material, special
                  nuclear material or byproduct material; "source material",
                  "special nuclear material", and "byproduct material" have the
                  meanings given them in the Atomic Energy Act of 1954 or in any
                  law amendatory thereof; "spent fuel" means any fuel element or
                  fuel component, solid or liquid, which has been used or
                  exposed to radiation in a nuclear reactor: "waste" means any
                  waste material (1) containing byproduct material and (2)
                  resulting from the operation by any person or organization of
                  arty nuclear facility included within the definition of
                  nuclear facility under paragraph (a) or (b) thereof; "nuclear
                  facility" means

         (a)      any nuclear reactor,

         (b)      any equipment or device designed or used for (1) separating
                  the isotopes of uranium or plutonium, (2) processing or
                  utilizing spent fuel, or (3) handing, processing or packaging
                  waste,

         (c)      any equipment or device used for the processing, fabricating
                  or alloying of special nuclear material if at any time the
                  total amount of such material in the custody of the insured at
                  the premises where such equipment or device is located
                  consists of or contains more than 25 grams of plutonium or
                  uranium 233 or any combination thereof, or more than 250 grams
                  of uranium 235,

         (d)      any structure, basin, excavation, premises or place prepared
                  or used for the storage or disposal of waste and includes the
                  site on which any of the foregoing is located, all operations
                  conducted on such site and all premises used for operations;
                  'nuclear reactor means any apparatus designed or used to
                  sustain nuclear fission in a self-supporting chain reaction or
                  to contain a critical mass of fissionable material; "property
                  damage" (With respect to injury to or destruction of property,
                  the word "injury" or "destruction" includes all forms of
                  radioactive contamination of property).

         V.       The inception dates and thereafter of all original policies
                  affording coverage's specified in this paragraph (3), whether
                  new, renewal or replacement, being policies which become
                  effective on or after 1st May, 1960, provided this paragraph
                  (3) shall not be applicable to

                     (ii)     Garage and Automobile Policies issued by the
                              Reassured on New York risks, or

                     (iii)    statutory liability insurance required under
                              Chapter 90, General Laws of Massachusetts, until
                              90 days following approval of the Broad Exclusion
                              Provision by the Governmental Authority having
                              jurisdiction thereof.

(4)      Without in any way restricting the operation of paragraph (1) of this
         Clause, it is understood and agreed that paragraphs (2) and (3) above
         are not applicable to original liability policies of the Reassured in
         Canada and that with respect to such policies this Clause shall be
         deemed to include the Nuclear Energy Liability Exclusion Provisions
         adopted by the Canadian Underwriters' Association or the Independent
         Insurance Conference of Canada.

                                       3
<PAGE>

*NOTE. The words printed in italics in the Limited Exclusion Provisions and in
the Broad Exclusion Provision shall apply only in relation to original liability
policies which include a Limited Exclusion Provision or a Broad Exclusion
Provision containing those words.

                                       4