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                                                                   EXHIBIT 10.28

                  CASUALTY EXCESS OF LOSS REINSURANCE AGREEMENT
                  (hereinafter referred to as the "Agreement")

                                     between

                      SAFETY NATIONAL CASUALTY CORPORATION
                               St. Louis, Missouri
                  (hereinafter referred to as the "Reinsured")


                                       and


                         ORACLE REINSURANCE COMPANY LTD.
                                Hamilton, Bermuda
                  (hereinafter referred to as the "Reinsurer")



                                    PREAMBLE

         In consideration of the mutual covenants hereinafter contained and upon
the terms and conditions hereinafter set forth, the parties hereto agree as
follows:


                                    ARTICLE I
                                BUSINESS COVERED

         This Agreement shall cover business classified by the Reinsured as
Specific and/or Aggregate Excess Workers' Compensation and Casualty Business,
and shall apply to the Reinsured's Net Losses occurring prior to January 1, 1997
for Policies effective on or before December 31, 1996.


                                   ARTICLE II
                               TERM & CANCELLATION

1. This Agreement shall become effective at 12:01 A.M. Local Standard Time,
January 27, 1998, and shall apply to all Losses Occurring prior to January 1,
1997.



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2.       This Agreement shall terminate upon the first to occur of any of the
         following events:

         a.)      At such time as all of the Reinsured's liabilities and
                  obligations with respect to the reinsured claims have been
                  satisfied in their entirety, and the Reinsurer has paid to the
                  Reinsured in full all amounts owing to the Reinsured under the
                  provisions of this Agreement.

         b.)      At any time, by mutual written consent of the parties.

         c.)      The Reinsured shall have the right to terminate this Agreement
                  immediately by giving the Reinsurer notice:

                  (1)      If the performance of the whole or any part of this
                           Agreement is prohibited or rendered impossible de
                           jure or de facto in particular and without prejudice
                           to the generality of the preceding words in
                           consequence of any law or regulations which is or
                           shall be in force in any country or territory or if
                           any law or regulations shall prevent directly or
                           indirectly the remittance of any or all or any part
                           of the balance or payments due to or from either
                           party.

                  (2)      If the Reinsurer at any time shall:

                           (a)      Become insolvent, or
                           (b)      Suffer any impairment of capital, or
                           (c)      File a petition in bankruptcy, or
                           (d)      Go into liquidation or rehabilitation, or
                           (e)      Have a receiver appointed, or

                  (3)      In the event of the severance or obstruction of free
                           and unfettered communication and/or normal commercial
                           and/or financial intercourse between the United
                           States of America and the country in which the
                           Reinsurer is incorporated or has its principal office
                           as a result of war, currency regulations, or any
                           circumstances arising out of political, financial or
                           economic emergency.

         d.)      Upon the election in writing by the Reinsured, in the event
                  that any event constituting a Change of Control occurs with
                  respect to the Reinsurer.

         e.)      Upon the election in writing by the Reinsured, thirty (30) or
                  less days prior to the scheduled expiration of one or more of
                  the letters of credit required to be maintained by the
                  Reinsured pursuant to Article XXII hereof if, at such time the

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                  Reinsurer has not provided assurance acceptable to the
                  Reinsured, in its sole discretion, that such letter or letters
                  of credit will be renewed for an additional term of not less
                  than one (1) year or replaced with one or more letters of
                  credit meeting the requirements of Article XXII hereof and
                  having a term or terms of not less than one (1) year.

         For purposes of Section 2(d) of this Article, a "Change of Control"
         shall be deemed to have occurred (1) if individuals who, as of the
         effective date of this Plan, constitute the Board of Directors of
         Reinsurer (the "Board of Directors" generally and as of the date of
         this Agreement the "Incumbent Board") cease for any reason to continue
         at least a majority of the directors constituting the Board of
         Directors, provided that any person becoming a director subsequent to
         the date of this Agreement whose election, or nomination for election
         by Reinsurer's shareholders, was approved by a vote of at least
         three-quarters (3/4) of the then directors who are members of the
         Incumbent Board (other than an election or nomination of an individual
         whose initial assumption of office is (A) in connection with the
         acquisition by a third person, including a "group" as such term is used
         in Section 13(d) (3) of the Securities and Exchange Act of 1934, as
         amended (the "1934 Act"), of beneficial ownership, directly or
         indirectly, of 20% or more of the combined voting securities ordinarily
         having the right to vote for the election of directors of Reinsurer
         (unless such acquisition of beneficial ownership was approved by a
         majority of the Board of Directors who are members of the Incumbent
         Board), or (B) in connection with an actual or threatened election
         contest relating to the election of the directors of Reinsurer, as such
         terms are used in Rule 14a-11 of Regulation 14A promulgated under the
         1934 Act) shall be, for purposes of this Plan, considered as though
         such person were a member of the Incumbent Board; or (2) if the
         stockholders of Reinsurer approve a merger, consolidation,
         recapitalization or reorganization of Reinsurer, reverse split of any
         class voting securities of Reinsurer, or an acquisition of securities
         or assets by Reinsurer, or the sale or disposition by Reinsurer of all
         or substantially all of Reinsurer's assets, or if any such transaction
         is consummated without stockholder approval, other than any such
         transaction in which the holders of outstanding Reinsurer voting
         securities immediately prior to the transaction receive, with respect
         to such Reinsurer voting securities, voting securities of the surviving
         or transferee entity representing more than 60 percent of the total
         voting power outstanding immediately after such transaction, with the
         voting power of each such continuing holder relative to other such
         continuing holders not substantially altered in the transaction; or (3)
         if the stockholders of Reinsurer approve a plan of complete liquidation
         of Reinsurer.

3. In the event of any termination of this Agreement pursuant to subsections b,
c, d or e of Section 2 of this Article, the Reinsurer shall pay to the
Reinsured, no later than the effective date of such termination, the full amount
of the reserves required to be maintained by Reinsured, along with all other
amounts owing to Reinsured under the provisions of this Agreement, as of such
effective date.


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4. This Agreement shall have no force or effect until it shall have been
approved or deemed approved by the Director of Insurance of the State of
Missouri as and in the manner required by the Missouri Insurance Code and the
regulations thereunder (collectively, the "Missouri Laws"). In addition,
pursuant to the Missouri Laws, the termination or cancellation of this Agreement
is subject to the prior regulatory approval of the Director of Insurance of the
State of Missouri.


                                   ARTICLE III
                               RETENTION AND LIMIT

1. The Reinsurer shall not be liable for any loss under Specific and/or
Aggregate Excess Workers' Compensation Policies until the Net Loss of the
Reinsured exceeds $590,900,000 in excess of various self-insured retentions, and
then the Reinsurer shall be liable for the amount of Net Loss sustained by the
Reinsured in excess of $590,900,000, but the Reinsurer's liability shall not
exceed $185,100,000.

2. The Reinsurer shall not be liable for any loss under Casualty Business
Policies until the Net Loss of the Reinsured exceeds $80,000,000, and then the
Reinsurer shall be liable for the amount of Net Loss sustained by the Reinsured
in excess of $80,000,000, but the Reinsurer's liability shall not exceed
$5,000,000.


                                   ARTICLE IV
                                     PREMIUM

         The net funds due shall be $64,190,000, consisting of a gross
reinsurance premium of $81,000,000 netted against $16,000,000 Advance
Underwriting Cash Flow Profit Commission and $810,000 of Federal Excise Tax. The
net funds due shall be remitted within thirty (30) days
of the execution of this Agreement.


                                    ARTICLE V
                              REPORTS & REMITTANCES

1. The Reinsured shall report to the Reinsurer in a form mutually acceptable,
within thirty (30) days after the end of each calendar quarter the amount of
Losses Paid by the Reinsured during the quarter. The Reinsured shall also
furnish such other information as may be required by the Reinsurer for the
completion of the Reinsurer's quarterly and annual statements and internal
records. The Reinsurer shall furnish quarterly unaudited financial statements
and annual audited financial statements to the Reinsured.



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2. The Reinsurer shall remit to the Reinsured within forty-five (45) days after
the end of each calendar year the amount of Losses Paid by the Reinsured which
are in excess of the Reinsured's retention as identified in Article III of this
Agreement.

3. The Reinsured's Losses Paid through December 31, 1996 are $214,092,382 on
Specific and/or Aggregate Excess Workers' Compensation Policies and $63,934,116
on Casualty Business Policies.


                                   ARTICLE VI
                               PROFIT COMMISSIONS

         An Investment Profit Commission and an Underwriting Profit Commission
shall be calculated annually by the Reinsured during the term of the Agreement.

1.  Investment Profit Commission:

          a.)      The Reinsured shall be entitled to share, on an annual basis,
                   in a portion of the Investment Return of the Reinsurer on the
                   assets maintained by Reinsurer with respect to this
                   Agreement. The amount of such portion shall be equal to the
                   product of (i) seventy percent (70%) of the first three
                   percent (3%) of the amount by which the Investment Return for
                   the applicable calendar year, expressed as a percentage,
                   exceeds five percent (5%), multiplied by (ii) the Cash
                   Balance at the beginning of the period. Such product shall be
                   increased by any Shortfall existing as of the beginning of
                   such calendar year.

         For the purposes of the preceding paragraph and the formula contained
therein:

         "Investment Return" shall mean the Reinsurer's net investment income
earned after investment expenses plus realized gains and losses divided by the
product of (i) one-half (1/2) and (ii) the sum of the Reinsurer's total invested
assets as of the first day of the applicable calendar year and the Reinsurer's
total invested assets as of the last day of such calendar year. For purposes of
the Investment Profit Commission calculation in 1998, the year of the inception
of this Agreement, and the year of termination of this Agreement, the Investment
Return shall be calculated based upon the dates the Agreement was in force on an
annualized basis.

         "Cash Balance" shall mean gross premiums received less Advance
Underwriting Profit Commission paid, less actual cumulative losses paid by the
Reinsurer and cumulative investment profit commission paid plus cumulative
investment income earned.

         "Shortfall" shall mean, as to each calendar year, the cumulative sum of
any amounts in the preceding calendar years by which the amount obtained
pursuant to section a) above is not sufficient to generate profits up to the
maximum percentage specified.

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         b.)      The Reinsurer will furnish to the Reinsured within fifteen
                  (15) days after the close of each calendar year during which
                  this Agreement is in effect, on forms mutually acceptable to
                  the Reinsured and to the Reinsurer, reports setting forth the
                  amounts of the Investment Return and the Cash Balance for such
                  calendar year, along with the amounts of any cumulative
                  Shortfall carried over to such calendar year.

         c.)      The Investment Profit Commission shall be made annually within
                  sixty (60) days after year end beginning as of December 31,
                  1998. The final Investment Profit Commission calculation shall
                  be made as of December 31, 2034. Payments of any positive
                  Investment Profit Commission shall be made within thirty (30)
                  days after the calculation of such Investment Profit
                  Commission.

2.  Underwriting Cash Flow Profit Commission:

         The Underwriting Cash Flow Profit as of the close of the applicable
calendar year shall be calculated by the Reinsured as follows in the first year:

         a.)      The gross premium received,

         b.)      Less losses paid in the applicable year by the Reinsurer,

         c.)      The result of a.) less b.) above shall be multiplied by a 5%
                  growth rate.

         For all subsequent years, the Underwriting Cash Flow Profit shall by
calculated by the Reinsured as follows:

         d.)      The prior year's calculated Underwriting Cash Flow Profit,

         e.)      Less losses paid by the Reinsurer for the year ended December
                  31,

         f.)      The result of d.) less e.) shall be multiplied by a 5% growth
                  rate.

         g.)      For purposes of the calculation of the Underwriting Cash Flow
                  Profit, actual losses paid shall include remittances made
                  within forty-five (45) days after the end of the calendar
                  year.

         The Reinsurer shall pay to the Reinsured an Underwriting Cash Flow
Profit Commission equal to 1.35% of any positive Underwriting Cash Flow Profit,
calculated as described above, and shall be calculated annually within sixty
(60) days of the close of the applicable calendar year. Payments shall be made
within thirty (30) days after the calculation of such Underwriting Cash Flow
Profit. The initial calculation shall be made as of December 31, 1998 and the
final calculation shall be made as of December 31, 2034.


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3.  Advance Underwriting Cash Flow Profit Commission:

         At inception of this Agreement, the Reinsurer shall advance the
Reinsured $16 million of Underwriting Cash Flow Profit Commission to be held as
collateral against non-performance under the Agreement. This advance commission
shall be used to pay Underwriting Cash Flow Profit Commissions earned under the
Agreement. In the event the Underwriting Cash Flow Profit Commissions earned do
not reduce the Advance Underwriting Cash Flow Profit to zero, the Reinsured
shall retain such advance until all losses are paid under this Agreement.


                                   ARTICLE VII
                               NET RETAINED LINES

         This Agreement applies to that portion of any insurance or reinsurance
which the Reinsured retains net for its own account, and shall include
reinsurance which the Reinsured has commuted with former Reinsurers, and
reinsurance deemed uncollectible by the Reinsured due to the insolvency of such
other Reinsurers or otherwise. In calculating the amount of any loss hereunder
and also in computing the amount or amounts in excess of which this Agreement
attaches, only loss or losses in respect of that portion of any insurance or
reinsurance which the Reinsured retains net for its own account, commuted with
former Reinsurers, or deemed uncollectible by the Reinsured due to the
insolvency of such other Reinsurers or otherwise shall be included.


                                  ARTICLE VIII
                                    NET LOSS

1. The term "Net Loss(es)" shall mean the actual loss incurred by the Reinsured
under Policies covered hereunder. Such loss shall include sums paid in
settlement of claims and suits and in satisfaction of judgments, including
prejudgment interest when added to a judgment. Such loss also shall include any
allocated loss adjustment expenses incurred by the Reinsured with respect to
Casualty Business. Allocated loss adjustment expenses shall include without
limitation:

         a)       expenses sustained in connection with settlement and
                  litigation of claims and suits, satisfaction of judgments,
                  defense of or negotiations concerning a loss (which shall
                  include the pro rata share of the Reinsured's outside
                  employees according to the time occupied in adjusting such
                  loss and the salaries and expenses of the Reinsured's
                  employees while diverted from their normal duties to the
                  service of field adjustment but shall not include any salaries
                  of officers nor normal overhead salaries and expenses of the
                  Reinsured),



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         b)       legal expenses and costs incurred in connection with coverage
                  questions and legal actions, including declaratory judgment
                  actions, connected thereto, and

         c)       any interest on judgments other than prejudgment interest when
                  added to a judgment.

2. All salvages, recoveries, payments and reversals or reductions of verdicts or
judgments (net of the cost of obtaining such salvage, recovery, payment or
reversal or reduction of a verdict or judgment) whether recovered, received or
obtained prior to or subsequent to loss settlement under this Agreement,
including amounts recoverable under other reinsurance whether collected or not,
shall be applied as if recovered, received or obtained prior to the aforesaid
settlement and shall be deducted from the actual losses sustained to arrive at
the amount of the net loss. Nothing in this Article shall be construed to mean
losses are not recoverable until the net loss to the Reinsured finally has been
ascertained.

3. The Reinsurer shall be subrogated, as respects any loss for which the
Reinsurer shall actually pay or become liable, but only to the extent of the
amount of payment by or the amount of liability to the Reinsurer, to all the
rights of the Reinsured against any person or other entity who may be legally
responsible for damages as a result of said loss. Should the Reinsured elect not
to enforce such rights, the Reinsurer are hereby authorized and empowered to
bring any appropriate action in the name of the Reinsured or its policyholders,
or otherwise to enforce such rights. The Reinsurer shall promptly remit to the
Reinsured the amount of any judgment awarded in such an action in excess of the
amount of payment by, or the amount of liability to, the Reinsurer hereunder.


                                   ARTICLE IX
                                   DEFINITIONS

1.       Casualty Business

         The term "Casualty Business" shall include but is not limited to:
         Primary and Excess Automobile and General Liability, Umbrella 
         Liability, Medical Payments, Uninsured Motorists, No Fault Automobile
         Programs, and the foregoing coverages under Multiple Peril and similar
         types of Policies.

2.       Loss(es) Paid

         The term "Loss(es) Paid" shall mean actual payments to claimants under
         Policies covered hereunder.



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3.       Loss Occurrence

         The term "Loss Occurrence" as used herein shall be construed to mean
         any one accident, disaster, casualty or occurrence, or series of
         accidents, disasters, casualties or occurrences arising out of or
         caused by any event.

         However, the Reinsurer agrees to follow the fortunes of the Reinsured
         and recognize any definition of occurrence or accident imposed upon the
         Reinsured by any workers' compensation board or other board, court or
         tribunal, having competent jurisdiction.

         If any of this Article is held to be invalid under the laws of any
         state, that provision shall be deemed to comply with the minimum
         requirements of such law, giving due consideration to the original
         intentions of the parties. But this shall not affect the validity or
         enforceability of the original provisions in any other jurisdiction.

4.       Loss(es) Occurring

         The term "Loss(es) Occurring" shall be defined as in the original
         Specific and/or Aggregate Excess Workers' Compensation and/or Casualty
         Business Policy.

5.       Net Loss

         The term "Net Loss" shall have the meaning set forth in Article VIII
         above.

6.       Policy

         The term "Policy" or "Policies" shall mean any and all Specific and/or
         Aggregate Excess Workers' Compensation, and/or Employers Liability,
         and/or Casualty Business binders, certificates, Policies and contracts
         of insurance, issued or held bound, provisionally or otherwise, by the
         Reinsured and effective on or before December 31, 1996.

7.       Specific and/or Aggregate Excess Workers' Compensation

         The term "Specific and/or Aggregate Excess Workers' Compensation" shall
         mean the insurance afforded under the Policies which the Reinsured
         identifies as Excess Workers' Compensation and/or Employers Liability.




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                                    ARTICLE X
                          EXTRA CONTRACTUAL OBLIGATIONS

1. This Agreement shall indemnify the Reinsured within the limits hereof, where
the net loss includes any extra contractual obligations. "Extra Contractual
Obligations" (ECO) are defined as those liabilities not covered under any other
provision of this Agreement and which arise from the handling of any claim on
business covered hereunder, such liabilities arising because of, but not limited
to, the following: failure by the Reinsured to settle within the Policy limit,
or by reason of alleged or actual negligence, fraud or bad faith in rejecting an
offer of settlement or in the preparation of the defense or in the trial of any
action against its insured or reinsured or in the preparation or prosecution of
an appeal consequent upon such action.

2. The date on which an Extra Contractual Obligation is incurred by the
Reinsured shall be deemed, in all circumstances, to be the date of the original
accident, casualty, disaster or loss occurrence.

3. However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Reinsured acting individually or collectively or in collusion with any
individual or corporation or any other organization or party involved in the
presentation, defense or settlement of any claim covered hereunder.

4. If any of this Article is held to be invalid under the laws of any state,
that provision shall be deemed to comply with the minimum requirements of such
law, giving due consideration to the original intentions of the parties. But
this shall not affect the validity or enforceability of the original provisions
in any other jurisdiction.


                                   ARTICLE XI
                         LOSS IN EXCESS OF POLICY LIMITS

1. This Agreement shall indemnify the Reinsured within the limits hereof in
connection with Net Loss in excess of the limit of its original Policy, such
loss in excess of the limit having been incurred because of failure by it to
settle within the Policy limit or by reason of alleged or actual negligence,
fraud or bad faith in rejecting an offer of settlement or in the preparation of
the defense or in the trial of any action against its insured or reinsured or in
the preparation or prosecution of any appeal consequent upon such action.

2. However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
Reinsured acting individually or collectively or in collusion with any
individual or corporation or any other organization or party involved in the
presentation, defense or settlement of any claim covered hereunder.



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3. For the purpose of this Article, the word "loss" shall mean any amounts for
which the Reinsured would have been contractually liable to pay had it not been
for the limit of the original Policy.


                                   ARTICLE XII
                                    TERRITORY

         This Agreement shall apply to losses occurring within the territorial
limits of the Reinsured's original insurances.


                                  ARTICLE XIII
                                    CURRENCY

         Whenever the word "Dollars" or the "$" sign appears in this Agreement,
they shall be construed to mean United States Dollars and all transactions under
this Agreement shall be in United States Dollars.

         Amounts paid or received by the Reinsured in any other currency shall
be converted to United States Dollars at the rate of exchange at the date such
transaction is entered on the books of the Reinsured.


                                   ARTICLE XIV
                                      TAXES

         The Reinsurer shall reimburse the Reinsured one percent (1%) of the
premium hereon, or in the alternative, to deduct one percent (1%) or such other
rate that may be in effect from time to time for the purpose of paying the
Federal Excise Tax to the extent such premium is subject to Federal Excise Tax.


                                   ARTICLE XV
                                   REMITTANCE

1. Unpaid loss payments, premium payments and profit commissions due hereunder
shall be subject to interest, calculated by multiplying the unpaid amount by the
U.S. Prime Rate as published in the Wall Street Journal Eastern Edition on the
date upon which the unpaid loss payments, premium payment or profit commissions
begins to accrue interest as set forth below, the product of which shall be
multiplied by 1/365 for each day that interest accrues.



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2. Unpaid loss payments due hereunder shall accrue interest from sixty (60) days
subsequent to the sending (whether by mail, telecopy, or otherwise) by the
Reinsured the Reinsured's quarterly report to the Reinsurer, until such time as
the Reinsured receives the loss payment.

Notwithstanding the foregoing, no unpaid loss payment, premium payment or profit
commission due hereunder shall accrue interest:

         a.)      during any period(s) between the receipt by the Reinsured of a
                  Reinsurer's specific written request for additional,
                  substantive information regarding the loss for which claim is
                  being made and the sending (whether by mail, telecopy or
                  otherwise) by the Reinsured of a written response thereto,
                  except that, if the Reinsured receives such a request for
                  additional information more than thirty (30) days subsequent
                  to its sending of the original proof of loss or a response to
                  a Reinsurer's specific request for additional information,
                  this Subparagraph a. shall not apply as respects such
                  period(s).

         b.)      during any period(s) between the receipt by the Reinsured of a
                  specific written request by the Reinsurer for additional,
                  substantive information regarding the premium payment or
                  profit commissions and the sending (whether by mail, telecopy,
                  or otherwise) by the Reinsured of a written response thereto.
                  If, however, either party receives such a request for
                  additional information from the payor more than thirty (30)
                  days subsequent to its sending of the billing of premium or
                  profit commissions or a response to the other party's specific
                  request for additional information, this Subparagraph b. shall
                  not apply as respects such period(s). Furthermore, if either
                  party receives such a request for additional information from
                  the payee more than thirty (30) days subsequent to its sending
                  of the premium payment or profit commissions calculation or a
                  response to the other party's specific request for additional
                  information, this Subparagraph b. shall not apply as respects
                  such period(s).

         c.)      during any period(s) in which the unpaid loss payments,
                  premium payment or profit commissions due hereunder is in
                  dispute. For the purpose of this Subparagraph c., a loss,
                  premium payment or profit commissions shall be deemed in
                  dispute if litigation or arbitration proceedings concerning
                  the loss, premium payment or profit commissions have been
                  initiated, or as respects loss, the Reinsurer has issued a
                  formal written notification denying the validity of coverage.
                  Nothing in this Subparagraph c. shall in any way preclude or
                  restrict the awarding of interest in any litigation or
                  arbitration proceeding.



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3. Premium payments shall accrue interest from sixty (60) days from the due date
specified in this Agreement until such time as the Reinsurer receives the
premium payment. Profit commissions shall accrue interest from one hundred and
twenty (120) days from the end of the last Agreement year to which they apply
until such time as the Reinsured receives the profit commission payment.

4. If the interest due from one party to the other as respects any one payment
is less than one thousand dollars ($1,000), such interest shall be waived.

5. Nothing in this Article shall in any way alter, amend or modify any provision
of any other Article pertaining to the obligation to pay losses or premiums, it
being the intent of this Article only to establish the period during which
interest shall automatically accrue on unpaid loss, premium payments or profit
commissions due hereunder.


                                   ARTICLE XVI
                              ERRORS AND OMISSIONS

         Inadvertent delays, errors or omissions made in connection with this
Agreement shall not relieve either party from any liability which would have
attached had such delays, errors or omissions not occurred, provided always that
such delays, errors or omissions shall be rectified as soon as possible after
discovery.


                                  ARTICLE XVII
                                   COMMUTATION

                  The Reinsured may at any time request that this Agreement be
commuted. In such event, the Reinsurer and the Reinsured shall review such
losses and shall attempt to reach a settlement by mutual agreement. If the
Reinsurer and the Reinsured cannot reach a settlement by mutual agreement, then
the Reinsurer and the Reinsured shall mutually appoint an independent actuary
(F.S.A./F.C.A.S.; or A.S.A./A.C.A.S.) who shall investigate, determine and
capitalize the present value of such losses, and the payment by the Reinsurer of
its proportion of the amount so ascertained to be the capitalized value of such
loss or losses shall constitute a complete and final release of the Reinsurer in
respect of such loss or losses.




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                                  ARTICLE XVIII
                                   INSPECTION

         Upon reasonable notice being given to the Reinsured, the Reinsured
shall place at the disposal of the Reinsurer at the Reinsured's office where
such records are maintained, and the Reinsurer shall have the right to inspect,
through its authorized representatives, at all reasonable times during the
currency of this Agreement and thereafter, the books, records and papers of the
Reinsured pertaining to the reinsurance provided hereunder and all claims made
in connection therewith.


                                   ARTICLE XIX
                                     OFFSET

         Each party hereto shall have, and may exercise at any time and from
time to time, the right to offset any balance or balances, whether on account of
premiums or on account of losses or otherwise, due from each party to the other
party hereto under this Agreement.


                                   ARTICLE XX
                                   ARBITRATION

         Any dispute or other matter in question between the Reinsured and the
Reinsurer arising out of or relating to the formation, interpretation,
performance, or breach of this Agreement, whether such dispute arises before or
after termination of this Agreement, shall be settled by arbitration.
Arbitration shall be initiated by the delivery of a written notice of demand for
arbitration by one party to the other within a reasonable time after the dispute
has arisen. Those Reinsurers involved in the dispute or other matter in
controversy shall be considered as one party for the purpose of allocating the
cost of arbitration. However, in the event of the insolvency of any party
hereto, offset shall only be allowed in accordance with the statutes and/or
regulations of the state or other jurisdiction having control over the
insolvency.

         Each party shall appoint an individual as arbitrator and the two so
appointed shall then appoint a third arbitrator. If either party refuses or
neglects to appoint an arbitrator within thirty (30) days, the other party may
appoint the second arbitrator. If the two arbitrators do not agree on a third
arbitrator within ten (10) days of their appointment, each of the arbitrators
shall nominate three individuals. Each arbitrator shall then decline two of the
nominations presented by the other arbitrator. The third arbitrator shall then
be chosen from the remaining two nominations by drawing lots. The arbitrators
shall be active or retired officers of insurance or reinsurance companies; the
arbitrators shall not have a personal or financial interest in the result of the
arbitration.



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         The arbitration hearings shall be held in the city in which the
Reinsured's Head Office is located or such other place as may be mutually
agreed. Each party shall submit its case to the arbitrators within thirty (30)
days of the selection of the third arbitrator or within such longer period as
may be agreed by the arbitrators. The arbitrators shall not be obliged to follow
judicial formalities or the rules of evidence except to the extent required by
governing law, that is, the state law of the situs of the arbitration as herein
agreed; they shall make their decisions according to the practice of the
reinsurance business. The decision by a majority of the arbitrators shall be
rendered within sixty (60) days from the conclusion of the arbitration hearings
and such decision shall be final and binding on both parties. Such decision
shall be a condition precedent to any right of legal action arising out of the
arbitrated dispute which either party may have against the other. Judgment upon
the award rendered may be entered in any court having jurisdiction thereof.

         Each party shall pay the fee and expenses of its own arbitrator and
one-half of the fee and expenses of the third arbitrator. All other expenses of
the arbitration shall be equally divided between the parties.


                                   ARTICLE XXI
                                 SERVICE OF SUIT

         It is agreed that in the event of the failure of the Reinsurer hereon
to pay any amount claimed to be due hereunder, the Reinsurer hereon, at the
request of the Reinsured, will submit to the jurisdiction of a Court of
competent jurisdiction within the United States. Nothing in this Article
constitutes or should be understood to constitute a waiver of the Reinsurer's
rights to commence an action in any Court of competent jurisdiction in the
United States, to remove an action to a United States District Court, or to seek
a transfer of a case to another Court as permitted by the laws of the United
States or of any State in the United States. It is further agreed that service
of process in such suit may be made upon Baker & McKenzie, 805 Third Avenue, New
York, New York, 10022, and that in any suit instituted against any one of them
upon this Agreement, the Reinsurer will abide by the final decision of such
Court or of any Appellate Court in the event of an appeal.

         The above named are authorized and directed to accept service of
process on behalf of the Reinsurer in any such suit and/or upon the request of
the Reinsured to give a written undertaking to the Reinsured that they will
enter a general appearance upon the Reinsurer's behalf in the event such a suit
shall be instituted.

         Further, pursuant to any statute of any state, territory or district of
the United States which makes provision therefor, the Reinsurer hereon hereby
designates the Superintendent, Commissioner or Director of Insurance or other
officer specified for that purpose in the statute,

                                       15

<PAGE>   16



or his successor or successors in office as his true and lawful attorney upon
whom may be served any lawful process in any action, suit or proceeding
instituted by or on behalf of the Reinsured or any beneficiary hereunder arising
out of this Agreement, and hereby designates the above named as the person to
whom the said officer is authorized to mail such process or a true copy thereof.


                                  ARTICLE XXII
                                  LOSS RESERVES

1. If a jurisdiction of the United States will not permit the Reinsured in the
statements required to be filed with its regulatory authority(ies), to receive
full credit as admitted reinsurance for any Reinsurer's share of obligations,
the Reinsured shall forward to such Reinsurer a statement of the Reinsurer's
share of such obligations. Upon receipt of such statement the Reinsurer shall
promptly apply for, and provide the Reinsured with, a "clean," unconditional and
irrevocable Letter of Credit, in the amount specified in the statement
submitted, with terms and bank acceptable to the regulatory authority(ies)
having jurisdiction over the Reinsured.

2. "Obligations," as used in this Article, shall mean any amounts due under this
Agreement, including but not limited to, the sum of losses paid and allocated
loss adjustment expenses paid by the Reinsured but not yet recovered from the
Reinsurer plus reserves for reported losses, losses incurred but not reported,
allocated loss adjustment expenses, and premiums unearned, if any, plus
Investment Profit Commission and Underwriting Cash Flow Profit Commission.

3. The Reinsurer hereby agrees that the Letter of Credit will provide for
automatic extension of the Letter of Credit without amendment for one year from
the date of expiration of said Letter or any future expiration date unless
thirty (30) days prior to any expiration the issuing bank shall notify the
Reinsured by registered mail that the issuing bank elects not to consider the
Letter of Credit renewed for any additional period. An issuing bank, not a
"qualified bank" as defined by Regulation No. 133 promulgated by the Insurance
Department of the State of New York, shall provide sixty (60) days notice to the
Reinsured prior to any expiration.

4. Notwithstanding any other provision of the Agreement, the Reinsured or any
successor by operation of law of the Reinsured including, without limitation,
any liquidator, rehabilitator, receiver or conservator of the Reinsured may draw
upon such credit, without diminution because of the insolvency of any party
hereto, at any time and undertakes to use and apply such credit for one or more
of the following purposes only:

         a.)      To pay the Reinsurer's share or to reimburse the Reinsured for
                  the Reinsurer's share of any obligations, as stipulated in the
                  statement submitted by the Reinsured to the Reinsurer which is
                  due to the Reinsured and not otherwise paid by the Reinsurer.


                                       16

<PAGE>   17



         b.)      In the event the Reinsured has received effective notice of
                  non-renewal of the Letter of Credit and the Reinsurer's
                  liability remains unliquidated and undischarged thirty (30)
                  days prior to the expiry date of the Letter of Credit, to
                  withdraw the balance of the Letter of Credit and place such
                  sums in an interest bearing trust account to secure the
                  continuing liabilities of the Reinsurer under this Agreement
                  until a renewal Letter of Credit acceptable to the regulatory
                  authority(ies) having jurisdiction over the Reinsured, or a
                  substitute in lieu thereof acceptable to the regulatory
                  authority(ies) having jurisdiction over the Reinsured, has
                  been received by the Reinsured. The Reinsured shall provide to
                  the Reinsurer payment of any interest thereon accruing from
                  such account.

         c.)      To make refund of any sum which is in excess of the actual
                  amount required for Sections a. and b. of this Paragraph.

5. At annual intervals or more frequently as determined by the Reinsured, but
never more frequently than quarterly, the Reinsured shall prepare a specific
statement, for the sole purpose of amending the Letter of Credit, of Reinsurer's
share of any obligations. If the statement shows that the Reinsurer's share of
obligations exceeds the balance of credit as of the statement date, the
Reinsurer shall, within thirty (30) days after receipt of notice of such excess,
secure delivery to the Reinsured of an amendment of the Letter of Credit
increasing the amount of credit by the amount of such difference. If the
statement shows, however, that Reinsurer's share of obligations is less than the
balance of credit as of the statement date, the Reinsured shall, within thirty
(30) days after receipt of written request from the Reinsured, release such
excess credit by agreeing to secure an amendment to the Letter of Credit
reducing the amount of credit available by the amount of such excess credit.

6. The bank shall have no responsibility whatsoever in connection with the
propriety of withdrawals made by the Reinsured or the disposition of funds
withdrawn, except to assure that withdrawals are made only upon the order of
properly authorized representatives of the Reinsured. The Reinsured shall incur
no obligation to the bank in acting upon the credit, other than as appears in
the express terms thereof.

7. All expenses incurred in the establishment or maintenance of such Letter of
Credit shall be for the account of the Reinsurer.


                                  ARTICLE XXIII
                                   INSOLVENCY

         In the event of the insolvency of the Reinsured, this reinsurance shall
be payable directly to the Reinsured, or to its liquidator, receiver,
conservator or statutory successor on the basis of the liability of the
Reinsured without diminution because of the insolvency of the Reinsured or
because the liquidator, receiver, conservator or statutory successor of the
Reinsured has failed to

                                       17

<PAGE>   18



pay all or a portion of any claim. It is agreed, however, that the liquidator,
receiver, conservator or statutory successor of the Reinsured shall give written
notice to the Reinsurer of the pendency of a claim against the Reinsured
indicating the Policy insured which claim would involve a possible liability on
the part of the Reinsurer within a reasonable time after such claim is filed in
the conservation or liquidation proceeding or in the receivership, and that
during the pendency of such claim, the Reinsurer may investigate such claim and
interpose, at their own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses that they may deem available to the
Reinsured or its liquidator, receiver, conservator or statutory successor. The
expense thus incurred by the Reinsurer shall be chargeable, subject to the
approval of the court, against the Reinsured as part of the expense of
conservation or liquidation to the extent of a pro rata share of the benefit
which may accrue to the Reinsured solely as a result of the defense undertaken
by the Reinsurer.


                                  ARTICLE XXIV
                                     NOTICES

         Any notice, report, statement, or other communication provided for or
appropriate under this Agreement shall be in writing and be given by personal
delivery, by a nationally recognized overnight delivery service, or by first
class United States mail, postage prepaid, as follows:

To Reinsurer:

                           Oracle Reinsurance Company Ltd.
                           Clarendon House
                           11 Church Street
                           Hamilton, Bermuda
                           Attention:
                                     ---------------------

To Reinsured:

                           Safety National Casualty Corporation
                           2043 Woodlands Parkway
                           Suite 200
                           St. Louis, MO  63146
                           Attention:
                                     ---------------------

         Either party may change its address for purposes of receipt of any such
communication by giving ten (10) days notice of such change to the other party
in the manner above prescribed.





                                       18

<PAGE>   19


                                   ARTICLE XXV
                                  GOVERNING LAW

         This Agreement shall be deemed to have been made under and shall be
governed by the laws, regulations and decisions of the State of Missouri in all
respects, including matters of construction, validity, and performance, without
giving effect to principles of conflicts of laws.


                                  ARTICLE XXVI
                                   AMENDMENTS

         This Agreement constitutes the entire agreement of the parties hereto
with respect to the business covered and there are no understandings between the
parties other than as expressed in this Agreement. Any amendment, change or
modification to this Agreement shall be null and void unless the same is made by
a written amendment to this Agreement signed by both parties hereto.


                                  ARTICLE XXVII
                             SUCCESSORS AND ASSIGNS

         This Agreement shall be binding upon the successors and permitted
assigns of the respective parties hereto.

         THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first written above.


Attest:                             SAFETY NATIONAL CASUALTY CORPORATION

------------------------------
                                     By:
                                        ----------------------------------------
                                      Name:
                                      Title:


Attest:                             ORACLE REINSURANCE COMPANY LTD.

-------------------------------
                                     By:
                                        ----------------------------------------
                                      Name:
                                      Title:


                                       19