E. W. BLANCH CO.
R:\98R\15176.DOC                             Reinsurance Services
                                                          Page 20

                    Property Excess Per Risk
                      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    Classes of Business Reinsured                        3
    II    Term                                                 3
   III    Territory                                            4
    IV    Exclusions                                           4
     V    Retention and Limit                                  6
    VI    Reinstatement:  Second Property Excess Per Risk      7
   VII    Other Reinsurance                                    8
  VIII    Definitions                                          8
    IX    Losses and Loss Adjustment Expense                  11
     X    Special Provisions                                  12
    XI    Salvage and Subrogation                             12
   XII    Premium                                             12
  XIII    Offset (BRMA 36C)                                   14
   XIV    Access to Records (BRMA 1D)                         14
    XV    Liability of the Reinsurer                          14
   XVI    Net Retained Lines (BRMA 32E)                       14
  XVII    Errors and Omissions (BRMA 14F)                     14
 XVIII    Currency (BRMA 12A)                                 15
   XIX    Taxes (BRMA 50C)                                    15
    XX    Federal Excise Tax (BRMA 17A)                       15
   XXI    Unauthorized Reinsurers                             15
  XXII    Insolvency                                          17
 XXIII    Arbitration                                         18
  XXIV    Service of Suit (BRMA 49C)                          19
   XXV    Agency Agreement                                    19
  XXVI    Intermediary (BRMA 23A)                             19




                    Property Excess Per Risk
                      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")



Article I - Classes of Business Reinsured

By this Contract the Reinsurer agrees to reinsure the excess
liability which may accrue to the Company under its policies,
contracts and binders of insurance or reinsurance (hereinafter
called "policies") in force at the effective date hereof or
issued or renewed on or after that date, and classified by the
Company as Property business underwritten by Associated
International Insurance Company, Woodland Hills, California,
subject to the terms, conditions and limitations hereinafter set
forth.


Article II - Term

A. This Contract shall become effective on January 1, 1998, with
   respect to losses occurring on or after that date, and shall
   remain in force until December 31, 1998, both days inclusive.

B. Unless the Company elects that the Reinsurer have no liability
   for losses occurring after the effective date of expiration,
   and so notifies the Reinsurer prior to or as promptly as
   possible after the effective date of expiration, 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
   12 months plus odd time (not exceeding 18 months in all as
   respects Builders' Risk policies) following the effective date
   of expiration.


Article III - Territory

This Contract shall apply to the territorial limits set forth in
the Company's policies reinsured hereunder.


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 & 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 to exclude 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.

   Notwithstanding the foregoing provisions of this 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 exclusions 2, 3, 7, 10, 11, 12, 14, 20,
   28, 29 and 32 of this paragraph A.

B. 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.

   Notwithstanding the foregoing provisions of this paragraph B,
   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.


Article V - Retention and Limit

A. First Property Excess Per Risk Reinsurance

   The Company shall retain and be liable for the first $100,000
   of ultimate net loss as respects any one risk, each loss.  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 $4,900,000 as
   respects any one risk, each loss, nor shall it exceed
   $12,500,000 as respects all risks involved in any one loss
   occurrence.

B. Second Property Excess Per Risk Reinsurance

   The Company shall retain and be liable for the first
   $5,000,000 of ultimate net loss as respects any one risk, each
   loss.  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 $5,000,000
   as respects any one risk, each loss, nor shall it exceed
   $10,000,000 as respects all risks involved in any one loss
   occurrence.

C. The Company shall be the sole judge of what constitutes "one
   risk," except that in no event shall a building and its
   contents be considered more than one risk.


Article VI - Reinstatement:  Second Property Excess Per Risk

A. As respects the Second Property Excess Per Risk layer
   hereunder, in the event all or any portion of the reinsurance
   hereunder is exhausted by loss arising out of any one loss
   occurrence, the amount so exhausted shall be reinstated
   immediately from the time the loss occurrence commences
   hereon.

      1.   For the first $10,000,000 of ultimate net loss so
      reinstated the Company shall pay no additional premium.

      2.   For the second $10,000,000 of ultimate net loss so
      reinstated the Company agrees to pay additional premium
      equal to the product of the following:

          a.   The percentage of the occurrence limit reinstated
          (based on the ultimate net loss paid by the Reinsurer);
          times

          b.   One-half of the earned reinsurance premium for
          that excess layer for the term of this Contract
          (exclusive of reinstatement premium).

      3.   For the third $10,000,000 of ultimate net loss so
      reinstated the Company agrees to pay additional premium
      equal to the product of the following:

          a.   The percentage of the occurrence limit reinstated
          (based on the ultimate net loss paid by the Reinsurer);
          times

          b.   The earned reinsurance premium for that excess
          layer for the term of this Contract (exclusive of
          reinstatement premium).

B. Whenever the Company requests payment by the Reinsurer of any
   ultimate net loss hereunder, the Company shall submit a
   statement to the Reinsurer of reinstatement premium due the
   Reinsurer.  If the earned reinsurance premium for the term of
   this Contract has not been finally determined as of the date
   of any such statement, the calculation of reinstatement
   premium due shall be based on the annual deposit premium and
   shall be readjusted when the earned reinsurance premium for
   the term of this Contract has been finally determined.  Any
   reinstatement premium shown to be due the Reinsurer as
   reflected by any such statement (less prior payments, if any)
   shall be payable by the Company concurrently with payment by
   the Reinsurer of the requested loss.  Any return reinstatement
   premium shown to be due the Company shall be remitted by the
   Reinsurer as promptly as possible after receipt and
   verification of the Company's statement.

C. Notwithstanding anything stated herein, the liability of the
   Reinsurer under the Second Property Excess Per Risk
   reinsurance shall not exceed $10,000,000 as respects all risks
   involved in any one loss occurrence, nor shall it exceed
   $40,000,000 in all during the term of this Contract.


Article VII - Other Reinsurance

A. The Company shall be permitted to carry excess catastrophe
   reinsurance, recoveries under which shall inure solely to the
   benefit of the Company and be entirely disregarded in applying
   all of the provisions of this Contract.

B. With regard to business written in the General E&S division of
   the Company, the Company shall be permitted to carry excess
   and/or pro rata reinsurance, recoveries under which shall
   inure solely to the benefit of the Company and be entirely
   disregarded in applying all of the provisions of this
   Contract.

C. The Company shall be permitted to purchase facultative
   reinsurance, recoveries under which may inure to the benefit
   of this Contract.  If such reinsurance does not inure to the
   benefit of this Contract, it will be entirely disregarded as
   respects this Contract.


Article VIII - Definitions

A. The term "ultimate net loss" shall mean the actual loss
   incurred by the Company under policies covered hereunder.
   Such loss shall include sums paid in settlement of claims and
   suits and in satisfaction of judgments, including prejudgment
   interest when added to a judgment.  Such loss also shall
   include any losses in excess of policy limits and any extra
   contractual obligations incurred by the Company.

   All salvages, recoveries, payments and reversals or reductions
   of verdicts or judgments whether recovered, received or
   obtained prior or subsequent to loss settlement under this
   Contract, including amounts recoverable under other
   reinsurance whether collected or not, shall be applied as if
   recovered, received or obtained prior to the aforesaid
   settlement and shall be deducted from the actual losses
   sustained to arrive at the amount of the net loss.  Nothing
   herein shall be construed to mean losses are not recoverable
   until the net loss to the Company finally has been
   ascertained.

B. "Loss adjustment expense" as used herein shall include:

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

      2.   Legal expenses and costs incurred in connection with
      coverage questions and legal actions, including
      declaratory judgment actions, connected thereto;

      3.   All interest on judgments other than prejudgment
      interest when added to a judgment, and;

      4.   Expenses sustained to obtain recoveries, salvages and
      other reimbursements, or to secure the reversal or
      reduction of a verdict or judgment.

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

      1.   "Loss in excess of policy limits" shall mean 90% of
      any amount paid or payable by the Company 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 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.

   There will be no recovery hereunder for an extra contractual
   obligation or loss in excess of policy limits that has been
   incurred due to fraud committed by a member of the board of
   directors or a corporate officer of the Company, acting
   individually, collectively, or in collusion with a member of
   the board of directors, a corporate officer, or a partner of
   any other corporation, partnership, or organization involved
   in the defense or settlement of a claim on behalf of the
   Company.

   The date on which any extra contractual obligation and/or loss
   in excess of policy limits is incurred by the Company will be
   deemed, in all circumstances, to be the date of the original
   loss occurrence.  Nothing in this Article will be construed to
   create a separate or distinct loss occurrence apart from the
   original covered loss occurrence that gave rise to the extra
   contractual obligations and/or loss in excess of policy limits
   discussed in the preceding paragraphs.  In no event will the
   total liability of the Reinsurer exceeds its applicable limit
   of liability as set forth in Article V.

   Recoveries from any form of insurance or inuring reinsurance,
   if any, which protects the Company against claims the subject
   matter of this paragraph shall inure to the benefit of this
   Contract.

D. The term "loss occurrence" shall mean the sum of all
   individual losses directly occasioned by any one disaster,
   accident or loss or series of disasters, accidents or losses
   arising out of one event which occurs anywhere in the world
   but limited in the United States of America and Canada to the
   area of one state of 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 occurrence"
   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 event,
   except that the term "loss occurrence" shall be further
   defined as follows:

      1.   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 event.  However, the
      event need not be limited to one state or province or
      states or provinces contiguous thereto.

      2.   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 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.

      3.   As regards earthquake (the epicenter of which need
      not necessarily be within the territorial confines
      referred to in the introductory portion of this
      paragraph D) 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 occurrence."

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

   Except for those "loss occurrences" referred to in
   subparagraphs 1 and 2 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, accident or loss,
   and provided that only one such period of
   168 consecutive hours shall apply with respect to one event.

   However, as respects those "loss occurrences" referred to in
   subparagraphs 1 and 2 above, if the disaster, accident or loss
   occasioned by the event is of greater duration than
   72 consecutive hours, then the Company may divide that
   disaster, accident or loss into two or more "loss
   occurrences," 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,
   accident or loss.

   No individual losses occasioned by an event that would be
   covered by 72 hours clauses may be included in any "loss
   occurrence" claimed under the 168 hours provision.

E. "Net earned premium" as used herein is defined as the
   Company's gross earned premium for the classes of business
   subject to this Contract, less only the earned portion of
   premiums, if any, ceded by the Company for reinsurance which
   inures to the benefit of this Contract.

F. "Losses incurred" as used herein shall mean losses and loss
   adjustment expense paid by the Reinsurer 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 term of this Contract.
   For all loss occurrences during the term of this Contract
   which have two or fewer policies with loss subject to this
   Contract, up to two policies having the largest subject loss
   recoverables during the term of this Contract shall be deemed
   to have a maximum loss and loss adjustment expense recovery of
   $900,000 included in losses incurred hereunder.


Article IX - Losses and Loss Adjustment Expense

A. Whenever a loss sustained by the Company appears likely to
   result in a claim hereunder, the Company shall notify the
   Reinsurer, and 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 this Contract, shall be binding upon the
   Reinsurer, and the Reinsurer agrees to pay all amounts for
   which it may be liable upon receipt of reasonable evidence of
   the amount paid (or scheduled to be paid) by the Company.

C. In the event of loss hereunder, loss adjustment expenses (as
   defined in Article VIII) incurred by the Company in connection
   therewith shall be shared by the Company and the Reinsurer in
   the proportion the ultimate net loss paid or payable by the
   Reinsurer bears to the total ultimate net loss paid or payable
   by the Company, prior to any reinsurance recoveries, but after
   deduction of all salvage and other recoveries.  The
   Reinsurer's liability for loss adjustment expenses shall be in
   addition to its limit of liability for ultimate net loss.

D. In the event the ultimate net loss subject to recovery
   hereunder includes an amount of loss in excess of policy
   limits and/or extra contractual obligations, then the actual
   ultimate net loss recovered hereunder shall be allocated among
   indemnity loss, loss in excess of policy limits and/or extra
   contractual obligations as follows:

      1.   When the limits defined in paragraphs A, B and/or C
      of Article V with regard to all risks subject to recovery
      hereunder involved in any one loss occurrence have not
      been exceeded, the actual ultimate net loss recovered
      hereunder as respects any one risk, each loss shall be
      allocated to indemnity loss, loss in excess of policy
      limits and/or extra contractual obligations in the same
      proportion that each bears to the total ultimate net loss
      subject to recovery on that risk.

      2.   When the limits defined in paragraphs A, B and/or C
      of Article V with regard to all risks subject to recovery
      hereunder involved in any one loss occurrence have been
      exceeded, the actual ultimate net loss recovered hereunder
      as respects any one loss occurrence shall be allocated to
      indemnity loss, loss in excess of policy limits and/or
      extra contractual obligations in the same proportion that
      each bears, before application of the applicable per
      occurrence limit, to the total ultimate net loss subject
      to recovery on that loss occurrence.


Article X - Special Provisions

As respects loss or damage or costs or expenses arising from
asbestos or seepage and/or pollution and/or contamination, other
than contamination from smoke damage, the maximum sublimit shall
be $25,000 per risk, each loss, or so deemed.  Nevertheless, this
does not preclude payment of the cost of removal of debris of
property damaged by a loss otherwise covered hereunder.


Article XI - 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 XII - Premium

A. First Property Excess Per Risk Reinsurance

      1.   As provisional premium for the First Property Excess
      Per Risk Reinsurance provided hereunder, the Company shall
      pay the Reinsurer a deposit premium of $3,125,000 in four
      equal installments of $781,250 on January 1, April 1,
      July 1 and October 1 of 1998.  The provisional premium
      paid by the Company shall be adjusted periodically in
      accordance with the provisions set forth herein.  For
      purposes hereof, the "term of this Contract" shall be from
      the effective date of this Contract through the date of
      expiration if this Contract expires on a "cutoff" basis or
      the end of the runoff period if this Contract expires on a
      "runoff" basis.

      2.   The adjusted premium for the term of this Contract
      shall be equal to the Reinsurer's losses incurred for the
      term of this Contract, plus 3.6% of the Company's net
      earned premium for the term of this Contract, but the
      adjusted premium shall not be less than an amount equal to
      6.72% of the Company's net earned premium for the term of
      this Contract, nor shall it exceed an amount equal to
      10.1% of the Company's net earned premium for the term of
      this Contract.

      3.   In the event this Contract expires on a "runoff"
      basis, on December 31, 1998, the Company shall pay the
      Reinsurer, as promptly as possible after that date, an
      additional deposit premium of 8.4% of the Company's
      subject net unearned premium as of December 31, 1998. The
      Company shall calculate and report the adjusted premium
      for the term of this Contract in accordance with
      subparagraph 2 within 60 days following 12 months after
      the expiration of this Contract and within 60 days after
      the end of each 12-month period thereafter until all
      losses occurring during the term of this Contract have
      been finally settled.  If the adjusted premium exceeds the
      reinsurance premiums previously paid for the term of this
      Contract, the Company shall remit the difference to the
      Reinsurer with its report.  If the adjusted premium is
      less than reinsurance premiums previously paid for the
      term of this Contract, the Reinsurer shall remit the
      difference to the Company as promptly as possible after
      receipt and verification of the Company's report.

B. Second Property Excess Per Risk Reinsurance

      1.   As premium for the Second Property Excess Per Risk
      Reinsurance provided hereunder during the period
      January 1, 1998 through December 31, 1998, the Company
      shall pay the Reinsurer the greater of $750,000 or 2.0% of
      its net earned premium for such period.

      2.   The Company shall pay the Reinsurer a deposit premium
      of $750,000 in four equal installments of $187,500 on
      January 1, April 1, July 1 and October 1 of 1998.

      3.   As promptly as possible after December 31, 1998, the
      Company shall provide a report to the Reinsurer setting
      forth the premium due hereunder, computed in accordance
      with subparagraph 1, and any additional premium due the
      Reinsurer shall be remitted by the Company with its
      report.

      4.   In the event this Contract expires on a "runoff"
      basis, on December 31, 1998, the Company shall pay the
      Reinsurer, as promptly as possible after that date,
      premium for the runoff period equal to 2.0% of the
      Company's subject net unearned premium as of December 31,
      1998.


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 (BRMA 32E)

A. This Contract applies only to that portion of any policy which
   the Company retains net for its own account (prior to
   deduction of any underlying reinsurance specifically permitted
   in this Contract), and in calculating the amount of any loss
   hereunder and also in computing the amount or amounts in
   excess of which this Contract attaches, only loss or losses in
   respect of that portion of any policy which 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 have become 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 on the books
   of the Company.


Article XIX - Taxes (BRMA 50C)

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, the District of Columbia or Canada.


Article XX - 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 of 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 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 United States
   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. If the Reinsurer is unauthorized in any province or
   jurisdiction of Canada, the Reinsurer agrees to fund 115% of
   its share of the Company's ceded Canadian outstanding loss and
   loss adjustment expense reserves (including incurred but not
   reported loss reserves) by:

      1.   A clean, irrevocable and unconditional letter of
      credit issued and confirmed, if confirmation is required
      by the insurance regulatory authorities involved, by a
      Canadian bank or banks meeting the NAIC Securities
      Valuation Office credit standards for issuers of letters
      of credit and acceptable to said insurance regulatory
      authorities, for no more than 15/115ths of the total
      funding required; and/or

      2.   Cash advances for the remaining balance of the
      funding required;

   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.

C. 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 C(1) or
   C(3), or in the case of C(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, 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 Woodland
   Hills, California, unless otherwise mutually agreed.

F. It is agreed that the jurisdiction of the Arbiters to make or
   render any decision or award shall be limited by the limit of
   liability expressly hereinbefore set forth, and that the
   Arbiters shall have no jurisdiction to make any decision or
   render any award exceeding such expressly stated limit of
   liability of the Reinsurer, nor do they have the jurisdiction
   to authorize any punitive, exemplary or consequential damage
   awards between the parties hereto.


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

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.


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:

Woodland Hills, California,this _______ day of ______________199___.

                __________________________________________________
                Associated International Insurance Company
                Calvert Insurance Company


        POOLS, ASSOCIATIONS & SYNDICATES EXCLUSION CLAUSE


Section A:

Excluding:

      (a)  All business derived directly or indirectly from any
      Pool, Association or Syndicate which maintains its own
      reinsurance facilities.

      (b)  Any Pool or Scheme (whether voluntary or mandatory)
      formed after March 1, 1968 for the purpose of insuring
      property whether on a country-wide basis or in respect of
      designated areas.  This exclusion shall not apply to so-
      called Automobile Insurance Plans or other Pools formed to
      provide coverage for Automobile Physical Damage.

Section B:

     It is agreed that business written by the Company for the
same perils, which is known at the time to be insured by, or in
excess of underlying amounts placed in the following Pools,
Associations or Syndicates, whether by way of insurance or
reinsurance, is excluded hereunder:

     Industrial Risk Insurers,
     Associated Factory Mutuals,
     Improved Risk Mutuals,
     Any Pool, Association or Syndicate formed for the purpose of
     writing Oil, Gas or Petro-Chemical Plants and/or Oil or Gas
     Drilling Rigs,
     United States Aircraft Insurance Group,
     Canadian Aircraft Insurance Group,
     Associated Aviation Underwriters,
     American Aviation Underwriters.

Section B does not apply:

      (a)  Where The Total Insured Value over all interests of
      the risk in question is less than $300,000,000.

      (b)  To interests traditionally underwritten as Inland
      Marine or stock and/or contents written on a blanket
      basis.

      (c)  To Contingent Business Interruption, except when the
      Company is aware that the key location is known at the
      time to be insured in any Pool, Association or Syndicate
      named above, other than as provided for under Section
      B(a).

      (d)  To risks as follows:

           Offices, Hotels, Apartments, Hospitals, Educational
      Establishments, Public Utilities (other than railroad
      schedules) and builder's risks on the classes of risks
      specified in this subsection (d) only.

     Where this clause attaches to Catastrophe Excesses, the
following Section C is added:

     Nevertheless the Reinsurer specifically agrees that
liability accruing to the Company from its participation in:

          (1)  The following so-called "Coastal Pools":
               Alabama Insurance Underwriting Association
               Florida Windstorm Underwriting Association
               Louisiana Insurance Underwriting Association
               Mississippi Insurance Underwriting Association
               North Carolina Insurance Underwriting Association
               South Carolina Windstorm and Hail Underwriting
               Association
               Texas Catastrophe Property Insurance Association

                  AND

          (2)  All "Fair Plan" business
for all perils otherwise protected hereunder shall not be
excluded, except, however, that this reinsurance does not include
any increase in such liability resulting from:

           (i)  The inability of any other participant in such
            "Coastal Pool" or "Fair Plan" to meet its liability.

           (ii) Any claim against such "Coastal Pool" or "Fair
            Plan" or any participant therein, including the
            Company, whether by way of subrogation or otherwise,
            brought by or on behalf of any insolvency fund (as
            defined in the Insolvency Fund Exclusion Clause
            incorporated in this Contract).