R:\98\A0000014.DOC

                           Quota Share
                      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

          Preamble                                             3
     I    Classes of Business Reinsured                        3
    II    Commencement and Termination                         4
   III    Territory (BRMA 51A)                                 4
    IV    Exclusions                                           4
     V    Retention and Limit                                  7
    VI    Loss in Excess of Policy Limits/ECO                  7
   VII    Losses and Loss Adjustment Expense                   8
  VIII    Salvage and Subrogation                              8
    IX    Original Conditions                                  8
     X    Sliding Scale Commission                             8
    XI    Reports and Remittances                             10
   XII    Offset (BRMA 36C)                                   10
  XIII    Access to Records (BRMA 1D)                         11
   XIV    Errors and Omissions (BRMA 14F)                     11
    XV    Currency (BRMA 12A)                                 11
   XVI    Taxes (BRMA 50B)                                    11
  XVII    Federal Excise Tax (BRMA 17A)                       11
 XVIII    Unauthorized Reinsurers                             12
   XIX    Insolvency                                          13
    XX    Arbitration (BRMA 6J)                               13
   XXI    Service of Suit (BRMA 49C)                          14
  XXII    Agency Agreement                                    15









                           Quota Share
                      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 Agreement(s)
                         Attached Hereto
          (hereinafter referred to as the "Reinsurer")



Preamble

If any provisions of this Contract shall be rendered illegal or
unenforceable by the laws, regulations or public policy of any
state, such provision shall be considered void in such state, but
this shall not affect the validity or enforceability of any
provision of this Contract or the enforceability of such
provision in any other jurisdiction.


Article I - Classes of Business Reinsured

A. By this Contract the Company obligates itself to cede to the
   Reinsurer and the Reinsurer obligates itself to accept quota
   share reinsurance of the Company's net liability under
   policies, contracts and binders of insurance or reinsurance
   (hereinafter called "policies") issued or renewed on or after
   the effective date hereof, and classified by the Company as
   Pacific Coast Difference in Conditions, California Earthquake
   (IBAW Program) and General E&S West Coast Earthquake business.
   As respects General E&S West Coast Earthquake, business
   classified by the Company as Course of Construction,
   Transmission and Distribution Lines, Mechanical Breakdown and
   Boiler and Machinery shall not be covered hereunder.

B. "Net liability" as used herein is defined as the Company's
   gross liability remaining after cessions, if any, to other pro
   rata reinsurers.

C. The liability of the Reinsurer with respect to each cession
   hereunder shall commence obligatorily and simultaneously with
   that of the Company, subject to the terms, conditions and
   limitations hereinafter set forth.


Article II - Commencement and Termination

A. This Contract shall become effective on January 1, 1998, with
   respect to losses occurring on or after that date, and shall
   continue in force thereafter until terminated.

B. Either party may terminate this Contract on any December 31 by
   giving the other party not less than 90 days prior notice by
   certified mail.

C. Unless the Company elects to reassume the ceded unearned
   premium in force on the effective date of termination, and so
   notifies the Reinsurer prior to or as promptly as possible
   after the effective date of termination, reinsurance hereunder
   on business in force on the effective date of termination
   shall remain in full force and effect until expiration,
   cancellation or next premium anniversary of such business,
   whichever first occurs, but not to exceed the following:

      1.   As respects Builders Risk policies, 18 months
      following the effective date of termination;

      2.   As respects all other policies, 12 months plus odd
      time following the effective date of termination.

D. Notwithstanding paragraph B above, the Reinsurer may terminate
   this Contract within 30 days of learning of a change in the
   management responsibility or authority of Matthew T. Peller by
   giving the Company not less than 60 days prior notice by
   certified mail.

E. If the Reinsurer is unable to procure retrocessional
   protection, no cessions will be made under this Contract after
   the expiration or termination of any in force retrocessional
   protections or 90 days after receipt of notification from the
   Reinsurer by the Company, whichever last occurs.


Article III - Territory (BRMA 51A)

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


Article IV - Exclusions

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

      1.   Loss or liability excluded under the terms of the
      "Pools, Associations and Syndicates Exclusion Clause"
      attached to and forming part of this Contract.

      2.   All reinsurance assumed, with the exception of intra-
      company reinsurance and specific insureds whose
      reinsurance is written through their own captive company
      and quoted by a non-related entity.

      3.   Risks of war, whether or not declared, invasion,
      civil war, insurrection, rebellion, revolution or
      confiscation by duly constituted governmental or civil
      authority as excluded under a standard policy containing a
      standard War Exclusion Clause.

      4.   Hail insurance or reinsurance covering growing,
      drying or standing crops when written as such.

      5.   Flood, when written as such; however, this exclusion
      shall not apply to flood when included in Difference in
      Conditions, Inland Marine and All Risk policies.

      6.   All armored car business except when written in
      excess of $500,000.

      7.   Credit, financial or insolvency guarantees.

      8.   Livestock insurance or reinsurance, when written as
      such.

      9.   Third Party Bodily Injury and Property Damage
      Liability, Medical Payments, Workers' Compensation,
      Fidelity and Surety, whether written separately or as part
      of a Multiple Peril policy.  However, nothing herein
      contained shall be construed as excluding liability for
      damage to property in an insured's care, custody or
      control or for which the insured may be liable.

      10.  Ocean Marine, when written as such.

      11.  Aircraft, meaning direct damage to hulls insured
      under Aircraft Hull policies, but not excluding aircraft
      hulls insured under regular Fire, Inland Marine and All
      Risk policies (other than Aircraft Hull policies).  In no
      event shall any liability attach to the Reinsurer
      hereunder in respect of aircraft while in flight or
      taxiing.

      12.  Offshore drilling rigs.

      13.  Automobile risks insured under Automobile policies
      with the exception of floor plans.

      14.  Space and space related risks for the intention of
      ignition of the launch vehicle which includes taxiing
      within the launch site area and in flight.

      15.  Grain elevators.

      16.  Petrochemical risks and refineries.

      17.  Underground mining.

      18.  Inland Marine policies covering jewelers block and
      motor truck cargo.

      19.  Mortgage Impairment insurance.

      20.  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.

      21.  Kidnap and Ransom.

      22.  Residual Value and Credit insurance.

      23.  Crop insurance.

      24.  Burglary and Theft, when written as such.

      25.  Strike insurance.

      26.  Product impairment, recall and tampering.

      27.  Data processing companies whose sole purpose is to
      provide data processing services to other companies which
      include media exposures defined as material on which data
      is to be or is already stored (i.e., disks, magnetic and
      paper tapes, drums, cores and programs).

      28.  Risks as detailed in the "Target Risks Exclusion
      Clause" attached to and forming part of this Contract.

      29.  Nuclear risks as defined in the "Nuclear Incident
      Exclusion Clause - Physical Damage - Reinsurance
      (U.S.A.)," the "Nuclear Incident Exclusion Clause -
      Physical Damage - Reinsurance (Canada)," and the "Nuclear
      Energy Risks Exclusion Clause - Reinsurance (Worldwide
      Excluding U.S.A. & Canada)," attached to and forming part
      of this Contract.

      30.  Boiler and Machinery, when written as such.

      31.  Mechanical breakdowns, when written as such.

      32.  Transmission and distribution lines.

B. Notwithstanding the foregoing provisions of paragraph A, these
   exclusions do not apply where the excluded class or
   operations, in the opinion of the Company, constitutes a minor
   part of or incidental exposure to the main operations of the
   insured, except for the exclusions set forth in subparagraphs
   2, 3, 7, 10, 11, 12, 14, 20, 28, 29 and 32 of paragraph A.

C. As respects business written by the General E&S department,
   this Contract does not apply to and specifically excludes the
   following:

      1.   Onshore drilling rigs.

      2.   Equipment maintenance, warranty or similar coverages.

D. Notwithstanding the foregoing, the exclusions set forth in
   paragraph C do not apply where the excluded class or
   operation, in the opinion of the Company, constitute a minor
   part of or incidental exposure to the main operations of the
   insured.


Article V - Retention and Limit

A. As respects business subject to this Contract, the Company
   shall retain and be liable for 66.67% of its net liability.
   The Company shall cede to the Reinsurer and the Reinsurer
   agrees to accept 33.33% of the Company's net liability.

B. The Company shall purchase or be deemed to have purchased
   inuring facultative reinsurance to limit its loss subject
   hereto from any one coverage, any one policy (exclusive of
   loss in excess of policy limits or extra contractual
   obligations) to $15,000,000 each occurrence, recoveries under
   which shall inure to the benefit of this Contract.


Article VI - Loss in Excess of Policy Limits/ECO

A. In the event the Company pays or is held liable to pay an
   amount of loss in excess of its policy limit, but otherwise
   within the terms of its policy (hereinafter called "loss in
   excess of policy limits") or any punitive, exemplary,
   compensatory or consequential damages, other than loss in
   excess of policy limits (hereinafter called "extra contractual
   obligations") because of alleged or actual bad faith or
   negligence on its part 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 policyholder, or
   in discharging its duty to prepare or prosecute an appeal
   consequent upon such an action, or in otherwise handling a
   claim under a policy subject to this Contract, 100% of the
   loss in excess of policy limits and/or 100% of the extra
   contractual obligations shall be added to the Company's loss,
   if any, under the policy involved, and the sum thereof shall
   be subject to the provisions of Article V.

B. An 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.

C. Notwithstanding anything stated herein, this Contract shall
   not apply to any loss in excess of policy limits or any extra
   contractual obligation 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 any individual or corporation or any other
   organization or party involved in the presentation, defense or
   settlement of any claim covered hereunder.

D. Recoveries from any form of insurance or reinsurance which
   protects the Company against claims the subject matter of this
   Article shall inure to the benefit of this Contract.


Article VII - Losses and Loss Adjustment Expense

A. Losses shall be reported by the Company in summary form as
   hereinafter provided.  The Reinsurer shall have the right to
   participate in the adjustment of losses subject to this
   Contract at its own expense.

B. All loss settlements made by the Company, whether under strict
   policy conditions or by way of compromise, shall be binding
   upon the Reinsurer, and the Reinsurer agrees to pay or allow,
   as the case may be, its proportion of each such settlement in
   accordance with Article XI.

C. In the event of a claim under a policy subject hereto, the
   Reinsurer shall be liable for its proportionate share of loss
   adjustment expense incurred by the Company in connection
   therewith (including litigation expenses and interest on
   judgments, but not including office expenses or salaries of
   the Company's regular employees), and shall be credited with
   its proportionate share of any recoveries of such expense.


Article VIII - Salvage and Subrogation

The Reinsurer shall be credited with its proportionate share of
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.  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 IX - Original Conditions

A. All reinsurance under this Contract shall be subject to the
   same rates, terms, conditions and waivers and to the same
   modifications and alterations as the respective policies of
   the Company.  However, in no event shall this be construed in
   any way to provide coverage outside the terms and conditions
   set forth in this Contract.  The Reinsurer shall be credited
   with its exact proportion of the original premiums received by
   the Company, prior to disbursement of any dividends, but after
   deduction of premiums, if any, ceded by the Company for
   inuring reinsurance.

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 X - Sliding Scale Commission

A. The Reinsurer shall allow the Company a 32.5% provisional
   commission on all premiums ceded to the Reinsurer hereunder.
   The Company shall allow the Reinsurer return commission on
   return premiums at the same rate.

B. The provisional commission allowed the Company shall be
   adjusted periodically in accordance with the provisions set
   forth herein.  The first adjustment period shall be from the
   effective date of this Contract through December 31, 1998, and
   each subsequent 12-month period shall be a separate adjustment
   period.  However, if this Contract is terminated, the final
   adjustment period shall be from the beginning of the then
   current adjustment period through the date of termination if
   this Contract is terminated on a "cutoff" basis, or the end of
   the runoff period if this Contract is terminated on a "runoff"
   basis.

C. The adjusted commission rate shall be calculated as follows
   and be applied to premiums earned for the period under
   consideration:

      1.   If the ratio of losses incurred to premiums earned is
      10% or greater, the adjusted commission rate for the
      period under consideration shall be 30%;

      2.   If the ratio of losses incurred to premiums earned is
      less than 10%, the adjusted commission rate for the period
      under consideration shall be 30%, plus 50% of the
      difference in percentage points between 10% and the actual
      ratio of losses incurred to premiums earned;

      3.   If the ratio of losses incurred to premiums earned is
      0%, the adjusted commission rate for the period under
      consideration shall be 35%.

D. If the ratio of losses incurred to premiums earned for any
   period is greater than 10%, the difference in percentage
   points between the actual ratio of losses incurred to premiums
   earned and 10% shall be multiplied by premiums earned for the
   period and the product shall be carried forward to the next
   adjustment period as a debit to losses incurred.

E. Except as provided in the next paragraph, the Company shall
   calculate and report the adjusted commission on premiums
   earned within 60 days after the end of each adjustment period,
   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 beginning of the adjustment
   period through the date of adjustment, including, as respects
   losses incurred, any debit or credit from the preceding
   adjustment period.  If the adjusted commission on premiums
   earned for the adjustment period as of the date of adjustment
   is less than commissions previously allowed by the Reinsurer
   on premiums earned for the same period, the Company shall
   remit the difference to the Reinsurer with its report.  If the
   adjusted commission on premiums earned for the adjustment
   period as of the date of adjustment is greater than
   commissions previously allowed by the Reinsurer on premiums
   earned for the same period, the Reinsurer shall remit the
   difference to the Company as promptly as possible after
   receipt and verification of the Company's report.

F. As respects the final adjustment period, the Company shall
   calculate and report the adjusted commission on premiums
   earned within 60 days after the date of termination, 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 beginning of the final
   adjustment period through the date of adjustment, including,
   as respects losses incurred, any debit from the preceding
   adjustment period.  If the adjusted commission on premiums
   earned for the final adjustment period as of the date of
   adjustment is less than commissions previously allowed by the
   Reinsurer on premiums earned for the same period, the Company
   shall remit the difference to the Reinsurer with its report.
   If the adjusted commission on premiums earned for the final
   adjustment period as of the date of adjustment is greater than
   commissions previously allowed by the Reinsurer on premiums
   earned for the same period, the Reinsurer shall remit the
   difference to the Company as promptly as possible after
   receipt and verification of the Company's report.

G. "Losses incurred" as used herein shall mean ceded losses and
   loss adjustment expense paid as of the effective date of
   calculation, plus the ceded reserves for losses and loss
   adjustment expense outstanding as of the same date, all as
   respects losses occurring during the adjustment period under
   consideration, plus the debit from the preceding adjustment
   period.

H. "Premiums earned" as used herein shall mean ceded unearned
   premiums at the beginning of the adjustment period under
   consideration, plus ceded net written premiums during the
   period, less ceded unearned premiums at the end of the period.

I. It is expressly agreed that the ceding commission allowed the
   Company includes provision for all dividends, commissions,
   taxes, assessments, and all other expenses of whatever nature,
   except loss adjustment expense.


Article XI - Reports and Remittances

A. Within 60 days after the end of each month, the Company shall
   report to the Reinsurer:

      1.   Ceded net written premium for the month;

      2.   Provisional commission thereon;

      3.   Ceded losses and loss adjustment expense paid during
      the month.

   The positive balance of (1) less (2) less (3) shall be
   remitted by the Company with its report.  Any balance shown to
   be due the Company shall be remitted by the Reinsurer as
   promptly as possible after receipt and verification of the
   Company's report.

B. Within 60 days after the end of each calendar quarter, the
   Company shall report to the Reinsurer the ceded unearned
   premiums and ceded outstanding loss reserves as of the end of
   the calendar quarter.

C. Annually, the Company shall furnish the Reinsurer with such
   information as the Reinsurer may require to complete its
   Annual Convention Statement.


Article XII - 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 XIII - 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 XIV - 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 XV - 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 on the books
   of the Company.


Article XVI - 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 XVII - Federal Excise Tax (BRMA 17A)

(Applicable to those reinsurers, excepting Underwriters at
Lloyd's London and other reinsurers exempt from Federal Excise
Tax, who are domiciled outside the United States of America.)

A. The Reinsurer has agreed to allow for the purpose of paying
   the Federal Excise Tax the applicable percentage of the
   premium payable hereon as imposed under Section 4371 of the
   Internal Revenue Code to the extent such premium is subject
   to the Federal Excise Tax.

B. In the event of any return premium becoming due hereunder the
   Reinsurer will deduct the applicable percentage from the
   return premium payable hereon and the Company or its agent
   should take steps to recover the tax from the United States
   Government.


Article XVIII - 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 unearned
   premium and 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
      unearned premiums returned to insureds on account of
      policy cancellations, unless paid in cash by the
      Reinsurer;

      2.   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;

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

      4.   To fund a cash account in an amount equal to the
      Reinsurer's share of any ceded unearned premium and/or
      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;

      5.   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 unearned premium and/or 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),
   B(2) or B(4), or in the case of B(3), the actual amount
   determined to be due, the Company shall promptly return to the
   Reinsurer the excess amount so drawn.


Article XIX - 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 under the contracts reinsured 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 XX - Arbitration (BRMA 6J)

A. As a condition precedent to any right of action hereunder, in
   the event of any dispute or difference of opinion hereafter
   arising with respect to this Contract, it is hereby mutually
   agreed that such dispute or difference of opinion shall be
   submitted to arbitration.  One Arbiter shall be chosen by the
   Company, the other by the Reinsurer, and an Umpire shall be
   chosen by the two Arbiters before they enter upon arbitration,
   all of whom shall be active or retired disinterested executive
   officers of insurance or reinsurance companies or Lloyd's
   London Underwriters.  In the event that either party should
   fail to choose an Arbiter within 30 days following a written
   request by the other party to do so, the requesting party may
   choose two Arbiters who shall in turn choose an Umpire before
   entering upon arbitration.  If the two Arbiters fail to agree
   upon the selection of an Umpire within 30 days following their
   appointment, each Arbiter shall nominate three candidates
   within 10 days thereafter, two of whom the other shall
   decline, and the decision shall be made by drawing lots.

B. Each party shall present its case to the Arbiters within
   30 days following the date of appointment of the Umpire.  The
   Arbiters shall consider this Contract as an honorable
   engagement rather than merely as a legal obligation and they
   are relieved of all judicial formalities and may abstain from
   following the strict rules of law.  The decision of the
   Arbiters shall be final and binding on both parties; but
   failing to agree, they shall call in the Umpire and the
   decision of the majority shall be final and binding upon both
   parties.  Judgment upon the final decision of the Arbiters may
   be entered in any court of competent jurisdiction.

C. 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 and communications shall be made by
   the Company to each of the reinsurers constituting one party,
   provided, however, that nothing herein shall impair the rights
   of such reinsurers to assert several, rather than joint,
   defenses or claims, nor be construed as changing the liability
   of the reinsurers participating under the terms of this
   Contract from several to joint.

D. Each party shall bear the expense of its own Arbiter, and
   shall jointly and equally bear with the other the expense of
   the Umpire and of the arbitration.  In the event that the two
   Arbiters are chosen by one party, as above provided, the
   expense of the Arbiters, the Umpire and the arbitration shall
   be equally divided between the two parties.

E. Any arbitration proceedings shall take place at a location
   mutually agreed upon by the parties to this Contract, but
   notwithstanding the location of the arbitration, all
   proceedings pursuant hereto shall be governed by the law of
   the state in which the Company has its principal office.


Article XXI - 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 XXII - Agency Agreement

Associated International Insurance Company shall be deemed the
agent of the other 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.


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

Woodland Hills, California,this _______ day of ________________199___.

                __________________________________________________
                Associated International Insurance Company
                Calvert Insurance Company