THIRD AMENDMENT TO EMPLOYMENT AGREEMENT


This  Third  Amendment  to  the  Employment   Agreement   between  Chartwell  Re
Corporation and Michael H. Hayes is entered into as of December 31, 1997.

                                    RECITALS

     A.  Chartwell Re  Corporation  (the  "Company")  entered into an Employment
Agreement  (the  "Agreement")  with  Michael H. Hayes  (the  "Executive")  dated
January 1, 1994; and

     B. The  Agreement  set forth the terms and  conditions  of the  Executive's
employment with the Company.

NOW THEREFORE,  the Company and Executive  hereby consent to amend the Agreement
as follows:

     1. The term of the  Agreement is hereby  extended from December 31, 1997 to
        December 31, 1998.

     2. Section 5(c) shall be deleted and the following shall be inserted in its
        place:

                  "(c)  Insurance  Benefits.   The  Company  shall  provide  the
         Executive with (i) disability and health insurance benefits  (including
         dependent  coverage)  pursuant to the terms of the Company's health and
         disability  plans,  (ii)  supplemental  long term disability  insurance
         coverage equal to 60% of the  Executive's  annual base salary in effect
         hereunder  and (iii)  term life  insurance  coverage  equal to equal to
         $1,000,000 (one million dollars)."

     3. The first  paragraph of Section 8(e) shall be deleted and the  following
        shall be inserted in its place:

                  "Notwithstanding  any other  provisions in this Agreement,  if
         during  the two year  period  following  a "Change of  Control"  of the
         Company, the Executive's employment with the Company shall terminate as
         a result of:

                  (i) the termination of the Executive's  employment by the
                      Company  (including a failure by the Company to extend the
                      Term) other than for Disability or Cause, or

                 (ii) the Executive's termination for Good Reason,

         the Company shall pay to the Executive,  within five (5) days following
         the Date of Termination,  the compensation set forth in Section 8(d)(i)
         plus (in lieu of the  compensation  set forth in Sections  8(d)(ii) and
         (iii)) a lump sum  payment  equal to the sum of (A) three (3) times the
         Executive's Base Salary (at the greater of the rate in effect as of the
         Change of Control or the Date of  Termination),  (B) an amount equal to
         the annual bonus paid to the Executive for the fiscal year  immediately
         preceding the Change of Control or the Date of  Termination,  whichever
         is  greater,  but only to the extent  payment of such  amount  does not
         subject  the  Executive  to  any  Excise  Tax  (as  defined  below)  in
         connection  therewith  and (C) the amount  needed by the  Executive  to
         purchase  benefits  equivalent  to  those  provided  to  the  Executive
         pursuant to Section 5(c) as of the Date of Termination  for a period of
         two (2) years from the Date of Termination."

4.       The address for notices,  demands and all other  communications  to the
         Executive set forth in Section 11 of the Agreement shall be deleted and
         the following address shall be inserted in its place:

                  "16 Ellery Lane
                  Westport, CT  06880"

5.       The address for notices,  demands and all other  communications  to the
         Company set forth in Section 11 of the  Agreement  shall be deleted and
         the following address shall be inserted in its place:

                  "Four Stamford Plaza
                  107 Elm Street
                  Stamford, CT  06902
                  Attention: General Counsel"


                                              Chartwell Re Corporation


/s/ Michael H. Hayes                           By:/s/ Kathleen M. Carroll
--------------------                           --------------------------
Michael H. Hayes                               Kathleen M. Carroll
                                               Senior Vice President,
                                               General Counsel and Secretary