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                                                                   Exhibit 10.32


                                 ADDENDUM NO. 1

                                     TO THE

                                   QUOTA SHARE
                              REINSURANCE AGREEMENT
                            EFFECTIVE JANUARY 1, 2004

              (HEREINAFTER REFERRED TO AS THE "ORIGINAL AGREEMENT")

                                     BETWEEN

                       TOWER INSURANCE COMPANY OF NEW YORK

                   (HEREINAFTER REFERRED TO AS THE "COMPANY")

                                       AND

            THE REINSURERS SUBSCRIBING THEIR RESPECTIVE INTERESTS AND
                      LIABILITES AGREEMENTS ATTACHED HERETO

                  (HEREINAFTER REFERRED TO AS THE "REINSURERS")


WHEREAS, the Reinsurers and the Company are parties to the Original Agreement.

NOW THEREFORE, effective July 1, 2004, the parties hereto hereby agree to amend
the Original Agreement as follows:


         ARTICLE 7, DEFINITIONS - Definition A shall be deleted in its entirety
         and replaced with the following revised Definition A:

         "A.      "Cession Percentage" as used in this Agreement shall be 60%
                  (sixty percent) for the new and renewal Business Covered
                  written during the period January 1, 2004 through December 31,
                  2004, both days inclusive. However, if the Company has
                  increased its December 31, 2003 Statutory Surplus by more than
                  20% (twenty percent) on or before December 31, 2004, the
                  Company may elect to change the Cession Percentage, effective
                  as of October 1, 2004, to any amount that is not less than the
                  minimum cession percentage of 25% (twenty-five percent) and
                  not greater than 60% (sixty percent) by providing the
                  Reinsurers with written notice of the Company's election of
                  such new Cession Percentage amount by no later than December
                  31, 2004."

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All other terms and conditions of the Original Agreement remain unchanged.


In Witness Whereof, the parties hereto have caused this Addendum No.1 to be
executed by their duly authorized representatives.


Signed for and on behalf of Tower Insurance Company of New York:

By:               /s/ Marina Contiero
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Title:            Vice President
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Date:             September 14, 2004
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Signed for and on behalf of Tokio Millennium Re Ltd. for its 33.333% (thirty
three point three three three percent) participation of the terms and conditions
of the Original Agreement

By:               /s/  Unknown
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Title:            Senior Underwriting Officer
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Date:             September 14, 2004
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Signed for and on behalf of Hannover Reinsurance (Ireland) Limited for an 80%
(eighty percent) share of a 33.334% (thirty three point three three four
percent) their participation of the terms and conditions herein.

By:               /s/ David Olagrier
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Title:            Underwriter
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Date:             September 15, 2004
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Signed for and on behalf of E+S Reinsurance (Ireland) Limited for a 20% (twenty
percent) share of a 33.334% (thirty three point three three four percent)
participation of the terms and conditions herein.

By:               /s/ David Olagrier
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Title:            Underwriter
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Date:             September 15, 2004
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