E. W. BLANCH CO.
R:\98R\14122.DOC                             Reinsurance Services
                                                          Page 20

            "Working" Per Event Reinsurance Contract
                   Effective:  January 1, 1998

                            issued to

           Associated International Insurance Company
                   Woodland Hills, California
                    Calvert Insurance Company
                       Hoboken, New Jersey
                               and
         any additional company established or acquired
by Associated International Insurance Company, Calvert Insurance
                           Company, or
           Gryphon Holdings, Inc., New York, New York,
                    to be included hereunder





















                        E. W. Blanch Co.

                      Reinsurance Services

                      3500 West 80th Street

                  Minneapolis, Minnesota  55431




                        Table of Contents


Article                                                      Page

     I    Business Reinsured                                   3
    II    Term                                                 4
   III    Territory (BRMA 51A)                                 4
    IV    Exclusions                                           5
     V    Retentions and Limits                                5
    VI    Definitions                                          6
   VII    Other Reinsurance                                   10
  VIII    Loss Settlements                                    10
    IX    Salvage and Subrogation                             11
     X    Reinsurance Premium                                 11
    XI    Late Payments                                       12
   XII    Profit Sharing                                      14
  XIII    Offset (BRMA 36C)                                   14
   XIV    Access to Records (BRMA 1D)                         15
    XV    Liability of the Reinsurer                          15
   XVI    Net Retained Lines                                  15
  XVII    Errors and Omissions (BRMA 14F)                     15
 XVIII    Currency (BRMA 12A)                                 16
   XIX    Taxes (BRMA 50B)                                    16
    XX    Federal Excise Tax                                  16
   XXI    Unauthorized Reinsurers                             16
  XXII    Insolvency                                          17
 XXIII    Arbitration                                         18
  XXIV    Service of Suit (BRMA 49C)                          19
   XXV    Agency Agreement                                    20
  XXVI    Intermediary (BRMA 23A)                             20
          Schedule A






            "Working" Per Event Reinsurance Contract
                   Effective:  January 1, 1998

                            issued to

           Associated International Insurance Company
                   Woodland Hills, California
                    Calvert Insurance Company
                       Hoboken, New Jersey
                               and
         any additional company established or acquired
by Associated International Insurance Company, Calvert Insurance
                           Company, or
           Gryphon Holdings, Inc., New York, New York,
                    to be included hereunder
     (hereinafter referred to collectively as the "Company")

                               by

           The Subscribing Reinsurer(s) Executing the
              Interests and Liabilities Agreements
                         Attached Hereto
          (hereinafter referred to as the "Reinsurer")



Article I - Business Reinsured

A. By this Contract the Reinsurer agrees to reinsure and/or
   indemnify the Company for the net excess liability which may
   accrue to the Company under its policies, contracts and
   binders of insurance or reinsurance (hereinafter called
   "policies") in force on the effective date hereof, or issued
   or renewed on or after that date, and classified by the
   Company as all lines of business (direct and assumed) as
   respects programs managed by the Company, subject to the
   terms, conditions and limitations hereinafter set forth.
   Programs set forth in Schedule A attached to and forming part
   of this Contract shall be excluded from coverage hereunder.
   The Company shall have the option of excluding additional
   programs from coverage hereunder in accordance with paragraph
   B below.

B. The Company shall have the option to exclude any program from
   this Contract by submitting each such program in writing to
   the Reinsurer not more than 90 days after the inception of the
   program as respects those programs eligible for coverage
   hereunder.  Casualty programs that generate $5,000,000 or less
   of estimated annualized subject earned premium during the
   first 12 months of the program will be deemed to have
   automatic coverage under the terms and conditions hereinafter
   set forth if not excluded from this Contract.  All property
   programs and those casualty programs that generate greater
   than $5,000,000 of estimated annualized subject earned premium
   during the first 12 months of the program must be submitted to
   the lead reinsurer(s) hereunder for acceptance on behalf of
   the Reinsurer of coverage under the terms and conditions
   hereinafter set forth if declared to this Contract.

C. The Company shall be the sole judge of what constitutes a
   "program."


Article II - Term

A. This Contract shall become effective on January 1, 1998, with
   respect to losses arising out of loss events commencing on or
   after that date, and shall remain in force until December 31,
   1998, both days inclusive.  Notwithstanding the foregoing, in
   the event negotiations for a renewal of this Contract are not
   completed by December 31, 1998, at the Company's option, this
   Contract shall be extended by addendum through March 31, 1999.

B. Except as provided in paragraph C below, reinsurance hereunder
   on business in force on the effective date of expiration shall
   remain in full force and effect until expiration, cancellation
   or next premium anniversary of such business, whichever first
   occurs, but in no event beyond 36 months, plus odd time (not
   exceeding 42 months in all) as respects multiple year
   policies, nor 12 months plus odd time (not exceeding 18 months
   in all) as respects policies of one year policy terms or less,
   following the effective date of expiration.  However, these
   limitations shall not apply to any Extended Reporting Period
   or Extended Discovery Endorsement provisions or policies
   classified by the Company as Project Specific coverage.

C. Notwithstanding the provisions of paragraph B above, the
   Company shall have the option of reassuming the unexpired
   liability of the Reinsurer hereunder on business in force on
   the effective date of expiration, in which event the Reinsurer
   shall not be liable for claims made or losses arising out of
   loss events commencing after that date.  As respects policies
   providing an aggregate limit of liability which are in force
   on the effective date of expiration, the Reinsurer shall be
   liable for the entire aggregate loss under such policies if
   the inception date of the policy period falls on or before the
   effective date of expiration, as respects policies written on
   an occurrence basis, or if the first claim is made on or
   before the effective date of expiration as respects policies
   written on a claims made basis.

D. If this Contract expires while a loss event covered hereunder
   is in progress, the Reinsurer's liability hereunder shall,
   subject to the other terms and conditions of this Contract, be
   determined as if the entire loss event had occurred prior to
   the expiration of this Contract, provided that no part of such
   loss event is claimed against any renewal or replacement of
   this Contract.


Article III - Territory (BRMA 51A)

The territorial limits of this Contract shall be identical with
those of the Company's policies.


Article IV - Exclusions

This Contract does not apply to and specifically excludes the
following:

      1.   Reinsurance assumed by the Company (unless an assumed
      program has been specifically declared to this Contract
      and accepted by the Reinsurer), except inter-company
      reinsurance between any member companies of Gryphon
      Insurance Group, Inc.

      2.   Financial guarantee and insolvency.

      3.   Business written by the Company on a co-indemnity
      basis where the Company is not an equal or controlling
      carrier.

      4.   Nuclear risks as defined in the "Nuclear Incident
      Exclusion Clause - Liability - Reinsurance" and the
      "Nuclear Incident Exclusion Clause - Physical Damage"
      attached to and forming part of this Contract.

      5.   Liability as a member, subscriber or reinsurer of any
      Pool, Syndicate or Association which is not underwritten
      or controlled by the Company.  However, this exclusion
      shall not apply to Assigned Risk Plans or similar plans.

      6.   All liability of the Company arising by contract,
      operation of law, or otherwise, from its participation or
      membership, whether voluntary or involuntary, in any
      insolvency fund.  "Insolvency fund" includes any guaranty
      fund, insolvency fund, plan, pool, association, fund or
      other arrangement, however denominated, established or
      governed, which provides for any assessment of or payment
      or assumption by the Company of part or all of any claim,
      debt, charge, fee or other obligation of an insurer, or
      its successors or assigns, which has been declared by any
      competent authority to be insolvent, or which is otherwise
      deemed unable to meet any claim, debt, charge, fee or
      other obligation in whole or in part.


Article V - Retentions and Limits

A. As respects business subject to this Contract, for each layer
   of reinsurance coverage provided by this Contract the Company
   shall retain and be liable for the first amount of ultimate
   net loss arising out of each loss event identified as
   "Company's Retention" for the excess layer in the schedule set
   forth below.  The Reinsurer shall then be liable for the
   amount by which such ultimate net loss exceeds the Company's
   retention, but the liability of the Reinsurer shall not exceed
   the amount identified as "Reinsurer's Limit" for the excess
   layer in the schedule set forth below as respects any one loss
   event.

                                  Reinsurer's Limit  Company's
   Retention

   First Excess Layer:           $  500,000     xs   $  500,000
   Second Excess Layer:          $9,000,000     xs   $1,000,000

B. With respect to business subject hereunder, the maximum policy
   limit (except statutory) with respect to any one coverage, any
   one policy shall be deemed not to exceed $5,000,000 any one
   loss event, with limits in excess of this amount deemed
   reinsured elsewhere.


Article VI - Definitions

A. "Net excess liability" as used herein shall mean those amounts
   payable by the Company as defined in the ultimate net loss
   definition set forth in paragraph B below.

B. "Ultimate net loss" as used herein is defined as the sum or
   sums (including loss in excess of policy limits, extra
   contractual obligations, prejudgment interest if included as
   part of an award or judgment and any loss adjustment expense,
   as hereinafter defined) paid or payable by the Company in
   settlement of claims and in satisfaction of judgments rendered
   on account of such claims, after deduction of all salvage, all
   recoveries and all claims on inuring insurance or reinsurance,
   whether collectible or not.  Nothing herein shall be construed
   to mean that losses under this Contract are not recoverable
   until the Company's ultimate net loss has been ascertained.

C. "Loss in excess of policy limits" and "extra contractual
   obligations" as used herein shall mean:

      1.   "Loss in excess of policy limits" shall mean 90% of
      any amount paid or payable by the Company under a policy
      ceded to this Contract in excess of its policy limits, but
      otherwise within the terms of its policy, as a result of
      an action against it by its insured or its insured's
      assignee to recover damages the insured is legally
      obligated to pay to a third party claimant because of the
      Company's alleged or actual negligence or bad faith in
      rejecting a settlement within policy limits, or in
      discharging its duty to defend or prepare the defense in
      the trial of an action against its insured, or in
      discharging its duty to prepare or prosecute an appeal
      consequent upon such an action.

      2.   "Extra contractual obligations" shall mean 90% of any
      punitive, exemplary, compensatory or consequential
      damages, other than loss in excess of policy limits, paid
      or payable by the Company under a policy ceded to this
      Contract as a result of an action against it by its
      insured, its insured's assignee or a third party claimant,
      which action alleges negligence or bad faith on the part
      of the Company in handling a claim under a policy subject
      to this Contract.

   Any loss in excess of policy limits or extra contractual
   obligation shall be deemed to have occurred on the same date
   as the loss covered or alleged to be covered under the policy.

   Notwithstanding anything stated herein, this Contract shall
   not apply to any loss incurred by the Company as a result of
   any fraudulent and/or criminal act by any officer or director
   of the Company acting individually or collectively or in
   collusion with an individual or corporation or any other
   organization or party involved in the presentation, defense or
   settlement of any claim covered hereunder.

D. "Loss adjustment expense" as used herein shall mean expenses
   allocable to the investigation, defense and/or settlement of
   specific claims, including 1) prejudgment interest, unless
   included as part of the award or judgment; 2) post-judgment
   interest; and 3) legal expenses and costs incurred in
   connection with coverage questions and legal actions connected
   thereto; but not including office expenses or salaries of the
   Company's regular employees, except that allocated outside
   costs of the Company's or RA&MCO's salaried adjusters shall be
   included.  Claim costs shall also be included which are
   incurred by RA&MCO and billed to the Company in accordance
   with its management agreement.

   With respect to legal expenses and costs incurred in direct
   connection with declaratory judgment actions brought to
   resolve policy language coverage disputes between the Company
   and its insured, such expenses shall, for purposes of this
   Contract, not exceed an amount equal to the applicable limit
   of the policy or policies involved unless agreed to by the
   Reinsurer.

E. The term "loss event" as used herein shall mean an accident,
   occurrence, claim made, loss discovered or any other
   circumstance that triggers coverage as provided, defined, or
   interpreted in the Company's original policies, however:

      1.   Where the Company's policy provides for an aggregate
      limit of liability, the term "loss event" shall mean all
      losses subject to that aggregate limit, each aggregate
      period.  For purposes of this Contract, the date of loss
      for purposes of this reinsurance will be the inception
      date of each aggregate period, as respects policies
      written on an occurrence basis and the date the first
      claim is made as respects policies written on a claims
      made basis.  Nevertheless, the Company may extract from
      any aggregate "loss event" a single loss so it may be
      combined with losses from other policies and submitted as
      a single "loss event."

           In the event the Company's losses arising out of a
      single "loss event" involve policies providing different
      types of coverage such as an occurrence and a claims made
      policy, all losses can be combined and submitted as a
      single "loss event" utilizing the occurrence date of loss
      for the purpose of reinsurance coverage.  In the event the
      Company's losses arising out of a single "loss event"
      involve multiple claims made policies, all losses can be
      combined and submitted as a single "loss event" utilizing
      the date the first claim is made for the purpose of
      reinsurance coverage.

      2.   As respects policies written on a claims made basis,
      the date of loss shall be the date the claim is made under
      the original policy.  As respects any extended reporting
      or discovery period provisions under a claims made policy
      subject hereto, it is understood and agreed that the
      following shall apply:

        a.   Claims made against and/or reported to the Company
        during the extended reporting or discovery period shall
        be deemed to have occurred on the last full day of the
        applicable policy period;

        b.   If the Company issues a separate policy and/or
        reinstates the aggregate limit provided under a policy,
        premium and losses during the period to which said
        separate policy and/or reinstated limit applies may, at
        the time of issuance and at the Company's option, be
        allocated to (i) the contract which is in effect at the
        effective date of said separate policy and/or at the
        beginning of the period to which the reinstated limit
        applies, or (ii) the contract which was in effect at the
        effective date of the original policy.  If the Company
        elects (i), said losses shall be subject to a separate
        retention and limit (as specified in the Article V) from
        that of the original policy period.

      3.   As respects multiple year policies, whether issued
      with one limit or reinstatement of the limit, each 12-
      month period within a multiple year policy shall be
      considered a separate period as regards the Company's
      retention and the aggregate policy limit.  However, as
      respects business classified by the Company as Project
      Specific coverage, the entire multiple year term shall be
      considered one period as regards the Company's retention
      and the aggregate policy limit.

      4.   As respects property losses subject hereto, all
      individual losses directly occasioned by any one disaster,
      occurrence or loss or series of disasters, occurrences or
      losses arising out of one occurrence which occurs anywhere
      in the world, but limited in the United States of America
      and Canada to the United States or province of Canada and
      states or provinces contiguous thereto and to one another.
      However, the duration and extent of any one "loss event"
      shall be limited to all individual losses sustained by the
      Company occurring during any period of 168 consecutive
      hours arising out of and directly occasioned by the same
      loss event, except that the term "loss event" shall be
      further defined as follows:

        a.   As regards windstorm, hail, tornado, hurricane,
        cyclone, including ensuing collapse and water damage,
        all individual losses sustained by the Company occurring
        during any period of 72 consecutive hours arising out of
        and directly occasioned by the same loss event.
        However, the loss event need not be limited to one state
        or province or states or provinces contiguous thereto.

        b.   As regards riot, riot attending a strike, civil
        commotion, vandalism and malicious mischief, all
        individual losses sustained by the Company occurring
        during any period of 72 consecutive hours within the
        area of one municipality or county and the
        municipalities or counties contiguous thereto arising
        out of and directly occasioned by the same loss event.
        The maximum duration of 72 consecutive hours may be
        extended in respect of individual losses which occur
        beyond such 72 consecutive hours during the continued
        occupation of an assured's premises by strikers,
        provided such occupation commenced during the aforesaid
        period.

        c.   As regards earthquake (the epicenter of which need
        not necessarily be within the territorial confines
        referred to above) and fire following directly
        occasioned by the earthquake, only those individual fire
        losses which commence during the period of 168
        consecutive hours may be included in the Company's "loss
        event."

        d.   As regards "freeze," only individual losses
        directly occasioned by collapse, breakage of glass and
        water damage (caused by bursting frozen pipes and tanks
        and melting snow) may be included in the Company's "loss
        event."

           Except for those "loss events" referred to in
      subparagraphs (a) and (b) above, the Company may choose
      the date and time when any such period of consecutive
      hours commences, provided that it is not earlier than the
      date and time of the occurrence of the first recorded
      individual loss sustained by the Company arising out of
      that disaster, occurrence or loss, and provided that only
      one such period of 168 consecutive hours shall apply with
      respect to one loss event.

           However, as respects those "loss events" referred to
      in subparagraphs (a) and (b) above, if the disaster,
      occurrence or loss occasioned by the occurrence is of
      greater duration than 72 consecutive hours, then the
      Company may divide that disaster, occurrence or loss into
      two or more "loss events," provided that no two periods
      overlap and no individual loss is included in more than
      one such period, and provided that no period commences
      earlier than the date and time of the occurrence of the
      first recorded individual loss sustained by the Company
      arising out of that disaster, occurrence or loss.

           It is understood that losses arising from a
      combination of two or more perils as a result of the same
      occurrence shall be considered as having arisen from one
      "loss event."  Notwithstanding the foregoing, the hourly
      limitations as stated above shall not be exceeded as
      respects the applicable perils and no single "loss event"
      shall encompass a time period greater than 168 consecutive
      hours.

   Notwithstanding the foregoing, it is understood that the
   Company shall be the sole judge of what constitutes a single
   "loss event."

F. "Net earned premium" as used herein is defined as gross earned
   premium of the Company for the classes of business reinsured
   hereunder, less cancellations and return premiums, and less
   the earned portion of premiums ceded by the Company for
   reinsurance which inures to the benefit of this Contract or
   increases the Company's available capacity.

G. "Losses incurred" as used herein for each excess layer shall
   mean ceded losses and loss adjustment expense paid as of the
   effective date of calculation for the excess layer, plus the
   ceded reserves for losses and loss adjustment expense
   outstanding as of the same date, all as respects losses
   arising out of loss events commencing during the term of this
   Contract, plus:

      1.   As respects the first calculation of the profit
      sharing, an amount representing Incurred But Not Reported
      Losses (hereinafter called "IBNR") equal to 50.0% of the
      reinsurance premium paid or payable hereunder as respects
      the First Excess Layer, and 60.0% of the reinsurance
      premium paid or payable hereunder as respects the Second
      Excess Layer;

      2.   As respects the first recalculation of the profit
      sharing, an amount representing IBNR equal to 35.0% of the
      reinsurance premium paid or payable hereunder as respects
      the First Excess Layer, and 45.0% of the reinsurance
      premium paid or payable hereunder as respects the Second
      Excess Layer;

      3.   As respects the second recalculation of the profit
      sharing, an amount representing IBNR equal to 20.0% of the
      reinsurance premium paid or payable hereunder as respects
      the First Excess Layer, and 30.0% of the reinsurance
      premium paid or payable hereunder as respects the Second
      Excess Layer;

      4.   As respects the third recalculation of the profit
      sharing, an amount representing IBNR equal to 0% of the
      reinsurance premium paid or payable hereunder as respects
      the First Excess Layer, and 15.0% of the reinsurance
      premium paid or payable hereunder as respects the Second
      Excess Layer.

   IBNR shall not be included in any subsequent recalculations of
   the profit sharing.


Article VII - Other Reinsurance

Notwithstanding the provisions of paragraph B of Article V, the
Company is permitted, but not required, to purchase other
facultative and/or other treaty reinsurance on business subject
to this Contract.  Premiums ceded by the Company for reinsurance
which inures to the benefit of this Contract or increases the
Company's available capacity shall be deducted in determining
subject premium hereunder as provided in paragraph F of
Article VI.


Article VIII - Loss Settlements

A. Wherever a claim is reserved by the Company for an amount of
   ultimate net loss greater than 50% of the Company's retention
   hereunder as respects policy limits or statutory benefits
   applicable to the claim which are greater than the Company's
   retention, and/or whenever, in the opinion of the Company, a
   loss appears likely to result in claim hereunder, the Company
   shall notify the Reinsurer.  Within 90 days after any claim is
   reported to the Reinsurer in accordance with the foregoing,
   the Company shall advise the Reinsurer whether or not, in the
   sole judgment of the Company, the claim is anticipated to
   exceed its retention hereunder.  Further, as respects claims
   arising under Casualty business subject hereto, the Company
   shall notify the Reinsurer whenever a claim involves a
   fatality, amputation, spinal cord damage, brain damage,
   blindness, extensive burns or multiple fractures, regardless
   of liability, if the policy limits or statutory benefits
   applicable to the claim are greater than the Company's
   retention.  The Company shall also notify the Reinsurer of any
   declaratory judgment expense relating directly to a specific
   claim brought against a policy reinsured under this Contract.
   The Reinsurer shall have the right to participate in the
   adjustment of the loss at its own expense.

B. All loss settlements made by the Company, provided they are
   within the terms of the original policies (other than extra
   contractual obligations and loss in excess of policy limits)
   and the terms of this Contract, shall be binding upon the
   Reinsurer, and the Reinsurer agrees to pay all ultimate net
   loss amounts for which it may be liable upon receipt of
   reasonable evidence of the amount paid (or scheduled to be
   paid) by the Company.  The Company may, however, give the
   Reinsurer written notice of its intention to pay any loss on a
   certain date and may require the Reinsurer to have its share
   of such loss in the possession of the Company by such date;
   provided that the Reinsurer shall have a period of five
   business days after receipt of such written notice from the
   Company to mail or otherwise dispatch its payment.


Article IX - Salvage and Subrogation

The Reinsurer shall be credited with salvage (i.e., reimbursement
obtained or recovery made by the Company, less the actual cost,
excluding salaries of officials and employees of the Company, and
sums paid to attorneys as retainer, of obtaining such
reimbursement or making such recovery) on account of claims and
settlements involving reinsurance hereunder.  Salvage thereon
shall always be used to reimburse the excess carriers in the
reverse order of their priority according to their participation
before being used in any way to reimburse the Company for its
primary loss.  The Company hereby agrees to enforce its rights to
salvage or subrogation relating to any loss, a part of which loss
was sustained by the Reinsurer, and to prosecute all claims
arising out of such rights.


Article X - Reinsurance Premium

A. As premium for each layer of reinsurance coverage provided by
   this Contract, the Company shall pay the Reinsurer the
   following:

      1.   As respects the First Excess Layer of reinsurance
      provided by this Contract, the Company shall pay the
      Reinsurer 6.70% of the Company's net earned premium for
      the term of this Contract.

      2.   As respects the Second Excess Layer  of reinsurance
      provided by this Contract, the Company shall pay the
      Reinsurer 2.65% of the Company's net earned premium for
      the term of this Contract.

   In the event this Contract expires on a "runoff" basis in
   accordance with the provisions of paragraph B of Article II,
   premium for the reinsurance provided under each excess layer
   of reinsurance coverage shall be the respective rate set forth
   in subparagraphs 1 and 2 above applied to the Company's net
   earned premium for each 12-month period within the runoff
   period, as respects business in force on the effective date of
   expiration.

B. For each excess layer of reinsurance coverage provided by this
   Contract, the Company shall pay the Reinsurer a deposit
   premium as follows:

      1.   As respects the First Excess Layer of reinsurance
      coverage, the Company shall pay the Reinsurer $6,520,440
      in four equal quarterly installments of $1,630,110 on
      January 1, April 1, July 1 and October 1 of 1998.

      2.   As respects the Second Excess Layer of reinsurance
      coverage, the Company shall pay the Reinsurer $2,578,980
      in four equal quarterly installments of $644,745 on
      January 1, April 1, July 1 and October 1 of 1998.

   No deposit premium shall be payable during the runoff period,
   if any.

C. Within 60 days after the expiration of this Contract, the
   Company shall provide a report to the Reinsurer setting forth
   the premium due hereunder for each excess layer, computed in
   accordance with paragraph A, and any additional premium due
   the Reinsurer or return premium due the Company shall be
   remitted promptly.  Premium for the runoff period, if any,
   shall be payable by the Company within 60 days after the end
   of each 12-month period within the runoff period.


Article XI - Late Payments

A. It is understood and agreed that the provisions of this
   Article shall not be implemented unless specifically invoked,
   in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either
   party is not received by the intermediary named in
   Article XXVI (hereinafter referred to as the "Intermediary")
   by the payment due date, the party to whom payment is due may,
   by notifying the Intermediary in writing, require the debtor
   party to pay, and the debtor party agrees to pay, an interest
   penalty on the amount past due calculated for each such
   payment on the last business day of each month as follows:

      1.   The number of full days which have expired since the
      due date or the last monthly calculation, whichever the
      lesser; times

      2.   1/365th of the six month (or nearest thereto) U.S.
      Treasury Bill rate, as quoted in the Wall Street Journal
      on the first business day of the month for which the
      calculation is being made; times

      3.   The amount past due, including accrued interest.

   It is agreed that interest shall accumulate until payment of
   the original amount due plus interest penalties have been
   received by the Intermediary.

C. The establishment of the due date shall, for purposes of this
   Article, be determined as follows:

      1.   As respects the payment of routine deposits and
      premiums due the Reinsurer, the due date shall be as
      provided for in the applicable section of this Contract.
      In the event a due date is not specifically stated for a
      given payment, it shall be deemed due 45 days after the
      date of transmittal by the Intermediary of the initial
      billing for each such payment.

      2.   Any claim or loss payment due the Company hereunder
      shall be deemed due five business days following receipt
      by the applicable Subscribing Reinsurer of written
      notification that payment has been received from
      Subscribing Reinsurers constituting at least 662/3% of the
      interests and liabilities of all Subscribing Reinsurers
      participating under the applicable layer of this Contract,
      who are active as of the due date; it being understood
      that said date shall not be later than 75 days from the
      date of transmittal by the Intermediary of the initial
      billing for each such payment.

      3.   As respects any payment, adjustment or return due
      either party not otherwise provided for in subparagraphs 1
      and 2 of paragraph C above, the due date shall be deemed
      as five business days following receipt of written
      notification that the provisions of this Article have been
      invoked.

   For purposes of interest calculations only, amounts due
   hereunder shall be deemed paid upon receipt by the
   Intermediary.

D. Nothing herein shall be construed as limiting or prohibiting
   1) a Subscribing Reinsurer from contesting the validity of any
   claim, or from participating in the defense or control of any
   claim or suit; or 2) either party from contesting the validity
   of any payment, or from initiating any arbitration or other
   proceeding in accordance with the provisions of this Contract.
   If the debtor party prevails in an arbitration or other
   proceeding, then any interest penalties due hereunder on the
   amount in dispute shall be null and void.  If the debtor party
   loses in such proceeding, then the interest penalty on the
   amount determined to be due hereunder shall be calculated in
   accordance with the provisions set forth above unless
   otherwise determined by such proceedings.  If a debtor party
   advances payment of any amount it is contesting, and proves to
   be correct in its contestation, either in whole or in part,
   the other party shall reimburse the debtor party for any such
   excess payment made plus interest on the excess amount
   calculated in accordance with this Article.

E. As provided under Article VIII, it is understood and agreed
   that the Company shall furnish the Reinsurer with usual and
   customary claim information and nothing herein shall be
   construed as limiting or prohibiting a Subscribing Reinsurer
   from requesting additional information that it may deem
   necessary.

F. As respects subparagraph 2 of paragraph C above, a Subscribing
   Reinsurer shall be deemed not to be active when it 1) ceases
   assuming new or renewal reinsurance business through the
   Intermediary; 2) is declared insolvent, or put in liquidation,
   conservatorship or rehabilitation by a competent regulatory
   authority or court; 3) is declared insolvent, or is the
   subject of an administrative order or enters provisional
   liquidation and/or liquidation; or 4) has a reduction in its
   statutory surplus or shareholders' funds of 50% or more from
   its statutory surplus or shareholders' funds as of the
   effective date of this Contract.

G. Interest penalties arising out of the application of this
   Article that are $100 or less from any party shall be waived
   unless there is a pattern of late payments consisting of three
   or more items over the course of any 12-month period.


Article XII - Profit Sharing

A. Separately, as respects each excess layer of reinsurance
   coverage provided by this Contract, the Reinsurer shall pay
   the Company a Profit Sharing equal to 25.0% of the net profit,
   if any, accruing to the Reinsurer individually under each
   excess layer of reinsurance hereunder.  The Reinsurer's net
   profit for each excess layer hereunder shall be calculated in
   accordance with the following formula, it being understood
   that a positive balance equals net profit and a negative
   balance equals net loss:

      1.   Reinsurance premium paid or payable hereunder for the
      excess layer; less

      2.   Expenses incurred by the Reinsurer at 15.0% of the
      reinsurance premium paid or payable hereunder for the
      excess layer; less

      3.   Losses incurred hereunder for the excess layer.

B. The Company shall calculate and report the Reinsurer's net
   profit for each excess layer within 60 days after 12 months
   following the date of expiration of this Contract, and within
   60 days after the end of each 12-month period thereafter until
   all losses subject hereto have been finally settled.  Each
   such calculation shall be based on cumulative transactions
   hereunder from the effective date of this Contract through the
   date of calculation.  As respects the initial calculation
   referred to above, any profit sharing shown to be due the
   Company for one or both of the  excess layers shall be paid by
   the Reinsurer as promptly as possible after receipt and
   verification of the Company's report.  As respects each
   recalculation, any additional profit sharing shown to be due
   the Company for one or both of the excess layers shall be paid
   by the Reinsurer as promptly as possible after receipt and
   verification of the Company's report.  Any return Profit
   Sharing shown to be due the Reinsurer shall be paid by the
   Company with its report.


Article XIII - Offset (BRMA 36C)

The Company and the Reinsurer shall have the right to offset
any balance or amounts due from one party to the other under
the terms of this Contract.  The party asserting the right of
offset may exercise such right any time whether the balances
due are on account of premiums or losses or otherwise.


Article XIV - Access to Records (BRMA 1D)

The Reinsurer or its designated representatives shall have
access at any reasonable time to all records of the Company
which pertain in any way to this reinsurance.


Article XV - Liability of the Reinsurer

A. The liability of the Reinsurer shall follow that of the
   Company in every case and be subject in all respects to all
   the general and specific stipulations, clauses, waivers and
   modifications of the Company's policies and any endorsements
   thereon.  However, in no event shall this be construed in any
   way to provide coverage outside the terms and conditions set
   forth in this Contract.

B. Nothing herein shall in any manner create any obligations or
   establish any rights against the Reinsurer in favor of any
   third party or any persons not parties to this Contract.


Article XVI - Net Retained Lines

A. This Contract applies only to that portion of any insurance or
   reinsurance (whether inter-company reinsurance and/or
   reinsurance assumed which has been declared to this Contract
   and accepted by the Reinsurer) the Company retains net for its
   own account (prior to deduction of any underlying reinsurance
   specifically permitted in the Contract), and in calculating
   the amount of any loss hereunder and also computing the amount
   or amounts in excess of which this Contract attaches, only
   loss or losses in respect of that portion of any insurance or
   reinsurance the Company retains net for its own account shall
   be included.

B. The amount of the Reinsurer's liability hereunder in respect
   of any loss or losses shall not be increased by reason of the
   inability of the Company to collect from any other
   reinsurer(s), whether specific or general, any amounts which
   may be due from such reinsurer(s), whether such inability
   arises from the insolvency of such other reinsurer(s) or
   otherwise.


Article XVII - Errors and Omissions (BRMA 14F)

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


Article XVIII - Currency (BRMA 12A)

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

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


Article XIX - Taxes (BRMA 50B)

In consideration of the terms under which this Contract is
issued, the Company will not claim a deduction in respect of the
premium hereon when making tax returns, other than income or
profits tax returns, to any state or territory of the United
States of America or the District of Columbia.


Article XX - Federal Excise Tax

If the Reinsurer is subject to the Federal Excise Tax, the
Reinsurer agrees to allow the Company to withhold the required
amount for the purpose of paying the Tax.  In the event of any
return premium becoming due hereunder, the Reinsurer will deduct
from the amount of the return premium the same percentage as it
allowed, and the Company or its agent should take steps to
recover the Tax from the U. S. Government.


Article XXI - Unauthorized Reinsurers

A. If the Reinsurer is unauthorized in any state of the United
   States of America or the District of Columbia, the Reinsurer
   agrees to fund its share of the Company's ceded outstanding
   loss and loss adjustment expense reserves (including incurred
   but not reported loss reserves) by:

      1.   Clean, irrevocable and unconditional letters of
      credit issued and confirmed, if confirmation is required
      by the insurance regulatory authorities involved, by a
      bank or banks meeting the NAIC Securities Valuation Office
      credit standards for issuers of letters of credit and
      acceptable to said insurance regulatory authorities;
      and/or

      2.   Escrow accounts for the benefit of the Company;
      and/or

      3.   Cash advances;

   if, without such funding, a penalty would accrue to the
   Company on any financial statement it is required to file with
   the insurance regulatory authorities involved.  The Reinsurer,
   at its sole option, may fund in other than cash if its method
   and form of funding are acceptable to the insurance regulatory
   authorities involved.

B. With regard to funding in whole or in part by letters of
   credit, it is agreed that each letter of credit will be in a
   form acceptable to insurance regulatory authorities involved,
   will be issued for a term of at least one year and will
   include an "evergreen clause," which automatically extends the
   term for at least one additional year at each expiration date
   unless written notice of non-renewal is given to the Company
   not less than 30 days prior to said expiration date.  The
   Company and the Reinsurer further agree, notwithstanding
   anything to the contrary in this Contract, that said letters
   of credit may be drawn upon by the Company or its successors
   in interest at any time, without diminution because of the
   insolvency of the Company or the Reinsurer, but only for one
   or more of the following purposes:

      1.   To reimburse itself for the Reinsurer's share of
      losses and/or loss adjustment expense paid under the terms
      of policies reinsured hereunder, unless paid in cash by
      the Reinsurer;

      2.   To reimburse itself for the Reinsurer's share of any
      other amounts claimed to be due hereunder, unless paid in
      cash by the Reinsurer;

      3.   To fund a cash account in an amount equal to the
      Reinsurer's share of any ceded outstanding loss and loss
      adjustment expense reserves (including incurred but not
      reported loss reserves) funded by means of a letter of
      credit which is under non-renewal notice, if said letter
      of credit has not been renewed or replaced by the
      Reinsurer 10 days prior to its expiration date;

      4.   To refund to the Reinsurer any sum in excess of the
      actual amount required to fund the Reinsurer's share of
      the Company's ceded outstanding loss and loss adjustment
      expense reserves (including incurred but not reported loss
      reserves), if so requested by the Reinsurer.

   In the event the amount drawn by the Company on any letter of
   credit is in excess of the actual amount required for B(1) or
   B(3), or in the case of B(2), the actual amount determined to
   be due, the Company shall promptly return to the Reinsurer the
   excess amount so drawn.


Article XXII - Insolvency

A. In the event of the insolvency of one or more of the reinsured
   companies, this reinsurance shall be payable directly to the
   company or to its liquidator, receiver, conservator or
   statutory successor immediately upon demand, with reasonable
   provision for verification, on the basis of the liability of
   the company without diminution because of the insolvency of
   the company or because the liquidator, receiver, conservator
   or statutory successor of the company has failed to pay all or
   a portion of any claim.  It is agreed, however, that the
   liquidator, receiver, conservator or statutory successor of
   the company shall give written notice to the Reinsurer of the
   pendency of a claim against the company indicating the policy
   or bond reinsured 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 its own expense, in the proceeding
   where such claim is to be adjudicated, any defense or defenses
   that it may deem available to the company 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 company 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 company
   solely as a result of the defense undertaken by the Reinsurer.

B. Where two or more reinsurers are involved in the same claim
   and a majority in interest elect to interpose defense to such
   claim, the expense shall be apportioned in accordance with the
   terms of this Contract as though such expense had been
   incurred by the company.

C. It is further understood and agreed that, in the event of the
   insolvency of one or more of the reinsured companies, the
   reinsurance under this Contract shall be payable directly by
   the Reinsurer to the company or to its liquidator, receiver or
   statutory successor, except as provided by Section 4118(a) of
   the New York Insurance Law or except (1) where this Contract
   specifically provides another payee of such reinsurance in the
   event of the insolvency of the company or (2) where the
   Reinsurer with the consent of the direct insured or insureds
   has assumed such policy obligations of the company as direct
   obligations of the Reinsurer to the payees under such policies
   and in substitution for the obligations of the company to such
   payees.


Article XXIII - Arbitration

A. As a condition precedent to any right of action hereunder, any
   dispute arising out of the interpretation, performance or
   breach of this Contract, including the formation or validity
   thereof, shall be submitted for decision to a panel of three
   arbitrators.  Notice requesting arbitration will be in writing
   and sent certified or registered mail, return receipt
   requested.

B. One arbitrator shall be chosen by each party and the two
   arbitrators shall, before instituting the hearing, choose an
   impartial third arbitrator who shall preside at the hearing.
   If either party fails to appoint its arbitrator within 30 days
   after being requested to do so by the other party, the latter,
   after ten days notice by certified or registered mail of its
   intention to do so, may appoint the second arbitrator.

C. If the two arbitrators are unable to agree upon the third
   arbitrator within thirty (30) days of their appointment, the
   two arbitrators will jointly petition the American Arbitration
   Association to appoint the third arbitrator from the AAA's
   Panel of Reinsurance Arbitrators.

D. All arbitrators shall be disinterested active or former
   executive officers of insurance or reinsurance companies,
   underwriters at Lloyd's of London, reinsurance intermediaries
   and attorneys actively or formerly engaged in practicing law
   in the areas of insurance or reinsurance.

E. Within 30 days after notice of appointment of all arbitrators,
   the panel shall meet and determine timely periods for briefs,
   discovery procedures and schedules for hearings.

F. The panel shall be relieved of all judicial formality and
   shall not be bound by the strict rules of procedure and
   evidence.  The arbitration shall take place in Woodland Hills,
   California or, if unanimously agreed by the panel, any other
   mutually acceptable location.

G. If more than one reinsurer is involved in the same dispute,
   all such reinsurers shall constitute and act as one party for
   purposes of this article.  However, nothing shall impair the
   rights of such reinsurers to assert several rather than joint
   defenses or claims, nor shall this provision be construed as
   changing the liability of the reinsurers under the terms of
   this Contract from several to joint.

H. The panel shall make its decision considering custom and
   practice as promptly as possible following the termination of
   hearings.  The decision of any two arbitrators, when rendered
   in writing shall be final and binding, and judgment upon the
   award may be entered in any court having jurisdiction.  The
   panel is empowered to grant such interim relief as it may deem
   appropriate.

I. Each party shall bear the expense of its own arbitrator and
   shall jointly and equally with the other party bear the cost
   of the third arbitrator.  The remaining costs of the
   arbitration shall be allocated by the panel.  The panel may,
   at its discretion, award such further costs and expenses as it
   considers appropriate, including but not limited to attorney's
   fees and interest to the extent permitted by law.  Insofar as
   the arbitration panel chooses to look to substantive law, it
   shall consider the law of the State of California.


Article XXIV - Service of Suit (BRMA 49C)

(Applicable if the Reinsurer is not domiciled in the United
States of America, and/or is not authorized in any State,
Territory or District of the United States where authorization is
required by insurance regulatory authorities)

A. It is agreed that in the event the Reinsurer fails to pay any
   amount claimed to be due hereunder, the Reinsurer, at the
   request of the Company, 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.

B. Further, pursuant to any statute of any state, territory or
   district of the United States which makes provision therefor,
   the Reinsurer hereby designates the party named in its
   Interests and Liabilities Agreement, or if no party is named
   therein, the Superintendent, Commissioner or Director of
   Insurance or other officer specified for that purpose in the
   statute, or his successor or successors in office, as its 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 Company or any beneficiary hereunder arising out of
   this Contract.


Article XXV - Agency Agreement

Gryphon Insurance Group, Inc. shall be deemed the agent of the
reinsured companies for purposes of sending or receiving
notices required by the terms and conditions of this Contract,
and for purposes of remitting or receiving any monies due any
party.


Article XXVI - Intermediary (BRMA 23A)

E. W. Blanch Co. is hereby recognized as the Intermediary
negotiating this Contract for all business hereunder.  All
communications (including but not limited to notices, statements,
premium, return premium, commissions, taxes, losses, loss
adjustment expense, salvages and loss settlements) relating
thereto shall be transmitted to the Company or the Reinsurer
through E. W. Blanch Co., Reinsurance Services, 3500 West 80th
Street, Minneapolis, Minnesota 55431.  Payments by the Company to
the Intermediary shall be deemed to constitute payment to the
Reinsurer.  Payments by the Reinsurer to the Intermediary shall
be deemed to constitute payment to the Company only to the extent
that such payments are actually received by the Company.


In Witness Whereof, the Company by its duly authorized
representative has executed this Contract as of the date
undermentioned at:

New York, New York,this _________ day of __________________ 199___.

                __________________________________________________
                Associated International Insurance Company
                Calvert Insurance Company

                           Schedule A

                         attached to the

            "Working" Per Event Reinsurance Contract
                   Effective:  January 1, 1998

                            issued to

           Associated International Insurance Company
                   Woodland Hills, California
                    Calvert Insurance Company
                       Hoboken, New Jersey
                               and
         any additional company established or acquired
by Associated International Insurance Company, Calvert Insurance
                           Company, or
           Gryphon Holdings, Inc., New York, New York,
                    to be included hereunder



A. Umbrella business produced by Jean Deal & Associates, Dallas,
   Texas for the Specialty Lines Division of Gryphon Insurance
   Group, Inc., Woodland Hills, California.

B. DIC business produced by the Pacific Coast DIC Division of
   Gryphon Insurance Group, Inc., Woodland Hills, California.

C. General Property E&S business produced by the General E&S
   Division of Gryphon Insurance Group, Inc., Woodland Hills,
   California.

D. Animal Mortality business produced by American Equine
   Insurance Group, Rolling Meadows, Illinois, for Gryphon
   Insurance Group, Inc., Hoboken, New Jersey.

E. Canadian business produced by KMS Insurance Services, Toronto,
   Canada, for Gryphon Insurance Group, Inc., Hoboken, New
   Jersey.

F. Midwest Garage program produced by Business Risk Services,
   Geneva, Illinois, for Gryphon Insurance Group, Inc., Hoboken,
   New Jersey.

G. Architects and Engineers business produced by RA&MCO Insurance
   Services, Concord, California for Gryphon Insurance Group,
   Inc., Woodland Hills, California, which is reinsured by Zurich
   Re (UK).

H. Entertainment Industry Insurance produced by the
   Entertainment, Sports & Special Risks Division, Woodland
   Hills, California, which is covered under separate reinsurance
   agreements.