E. W. BLANCH CO.
R:\98R\15177.DOC                             Reinsurance Services
                                                           Page 6

                Property Excess and Surplus Lines
              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                                                 4
   III    Territory                                            4
    IV    Exclusions                                           4
     V    Retention and Limit                                  6
    VI    Other Reinsurance                                    7
   VII    Definitions                                          7
  VIII    Losses and Loss Adjustment Expense                  11
    IX    Special Provisions                                  11
     X    Salvage and Subrogation                             12
    XI    Commission (BRMA 10A)                               12
   XII    Premium                                             12
  XIII    Profit Sharing                                      14
   XIV    Offset (BRMA 36C)                                   14
    XV    Access to Records (BRMA 1D)                         15
   XVI    Liability of the Reinsurer                          15
  XVII    Net Retained Lines (BRMA 32E)                       15
 XVIII    Errors and Omissions (BRMA 14F)                     15
   XIX    Currency (BRMA 12A)                                 16
    XX    Taxes (BRMA 50C)                                    16
   XXI    Federal Excise Tax (BRMA 17A)                       16
  XXII    Unauthorized Reinsurers                             16
 XXIII    Insolvency                                          18
  XXIV    Arbitration                                         19
   XXV    Service of Suit (BRMA 49C)                          20
  XXVI    Agency Agreement                                    20
 XXVII    Intermediary (BRMA 23A)                             20
          Appendix A





                Property Excess and Surplus Lines
              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

A. By this Contract the Company obligates itself to cede to the
   Reinsurer and the Reinsurer obligates itself to accept
   reinsurance of the Company's liability under 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, underwritten in the
   General E&S Division and classified by the Company as Fire and
   Allied Lines, Commercial Multiple Peril (property perils
   only), Homeowners (property perils only) and Inland Marine,
   subject to the terms, conditions and limitations set forth
   herein and in Appendix A attached to and forming part of this
   Contract.

B. It is understood that west coast earthquake business
   underwritten in the General E&S Division, other than
   earthquake on Course of Construction, Transmission and
   Distribution Lines, Boiler and Machinery and Mechanical
   Breakdown policies, is not subject to this Contract.


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. 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 the
   effective date of expiration as follows:

      1.   As regards Course of Construction policies, 36
      months;

      2.   As regards all other policies, 12 months plus odd
      time not to exceed 18 months.

C. Notwithstanding the provisions of paragraph B above, the
   Company shall have the option of reassuming the unexpired
   liability of the Reinsurer hereunder on business in force on
   the effective date of expiration, in which event the Reinsurer
   shall return to the Company the ceded unearned premium
   hereunder as of the effective date of termination (less ceding
   commission allowed thereon) and the Reinsurer shall have no
   liability hereunder with respect to losses occurring after the
   date of expiration.

D. In the event renewal negotiations are not completed by
   December 31, 1998, at the Company's option, this Contract
   shall be extended through March 31, 1999.


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.   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.

      3.   All reinsurance assumed, except intra-company
      reinsurance.  However, this exclusion shall not apply to
      reinsurance of captive companies when pricing for business
      reinsured is quoted by a non-related entity, or to
      reinsurance of foreign COC business for U.S. insureds
      where a foreign admitted carrier is required to issue the
      policy.

      4.   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.

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

      6.   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.

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

      8.   Credit, financial or insolvency guarantees.

      9.   Livestock insurance or reinsurance when written as
      such.

      10.  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.

      11.  Ocean Marine when written as such.

      12.  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.

      13.  Offshore drilling rigs.

      14.  Onshore drilling rigs.

      15.  Grain elevators.

      16.  Petrochemical risks and refineries.

      17.  Underground mining.

      18.  Automobile risks insured under Automobile policies,
      with the exception of "floor plans."

      19.  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.

      20.  Inland Marine policies covering jeweler's block and
      motor truck cargo.

      21.  Mortgage Impairment insurance.

      22.  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.

      23.  Kidnap and Ransom.

      24.  Residual Value and Credit insurance.

      25.  Crop Insurance.

      26.  Burglary and Theft when written as such.

      27.  Strike Insurance.

      28.  Product impairment, recall and tampering.

      29.  Data processing companies and media exposures.

      30.  Equipment maintenance, warranty or similar coverages.
      However, this exclusion shall not be construed to apply to
      business classified as Course of Construction or Utilities
      where testing of equipment is involved.

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

B. Notwithstanding the foregoing, any exclusion set forth in
   paragraph A (except subparagraphs 2, 3, 4, 6, 8, 11, 12, 13,
   19, 22 and 31) shall be waived automatically when, in the
   opinion of the Company, the exposure excluded therein is
   incidental to the principal exposure on the risk in question.


Article V - Retention and Limit

A. The Company shall retain and be liable for the first $500,000
   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 $12,000,000 as
   respects any one risk, each loss, nor shall it exceed
   $20,000,000 as respects all risks involved in any one loss
   occurrence.

B. 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 - 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. The Company shall purchase or be deemed to have purchased
   inuring excess reinsurance to limit its ultimate net loss
   under any one policy so as to comply with the maximum policy
   limits set forth in Article IX.


Article VII - 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.  It is
   understood that the term "incurred" as used in this paragraph
   shall mean those sums paid or imminent to be paid 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 90.0% 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 90.0% 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.  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.

   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 exceed 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. "Premiums earned" as used herein shall mean ceded net written
   premium for policies which are in force on the effective date
   of this Contract or have effective or renewal dates during the
   term of this Contract, less the unearned portion thereof as of
   the effective date of calculation, it being understood and
   agreed that all premiums for policies which are in force on
   the effective date of this Contract or have effective or
   renewal dates during the term of this Contract shall be
   credited to this Contract, unless this Contract expires on a
   "cut-off" basis, in which event the unearned reinsurance
   premium (less previously allowed commission) as of the date of
   expiration shall be returned by the Reinsurer to the Company.

F. "Losses incurred" as used herein shall mean ceded losses and
   loss adjustment expense paid as of the effective date of
   calculation, plus:

      1.   The ceded reserves for losses and loss adjustment
      expense outstanding as of the same date;

      2.   An amount representing Incurred But Not Reported
      Losses (hereinafter called "IBNR") equal to 20.0% of the
      premiums earned for Course of Construction business
      hereunder for the term of this Contract (said IBNR factor
      to be applied) until all premiums for Course of
      Construction business are earned, at which time no further
      amounts of IBNR will be added);

   it being understood and agreed that all losses and related
   loss adjustment expense under policies which are in force on
   the effective date of this Contract or have effective or
   renewal dates during the term of this Contract shall be
   charged to this Contract, regardless of the date said losses
   actually occur, unless this Contract expires on a "cutoff"
   basis, in which event the Reinsurer shall have no liability
   for losses occurring after the effective date of expiration.

   As respects any subscribing reinsurer participating under this
   Contract who also participated under the Company's Property
   Excess and Surplus Lines Excess Per Risk Reinsurance Contract,
   effective January 1, 1997 and expired December 31, 1997
   (hereinafter referred to as the "expired contract"), such
   subscribing reinsurer's share of any net loss to the
   "Reinsurer" under the expired contract shall be added to that
   subscribing reinsurer's share of losses incurred under this
   Contract.


Article VIII - 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 VII) 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.
   Notwithstanding the foregoing, if the ultimate net loss to the
   Company (exclusive of loss adjustment expenses) is less than
   the Company's retention stated in Article V, then loss
   adjustment expenses shall be included in the ultimate net loss
   for purposes of recovery hereunder, but subject to the limit
   of liability stated in Article V.

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 limit defined in paragraph A of Article V
      with regard to all risks subject to recovery hereunder
      involved in any one loss occurrence has 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 limit defined in paragraph A of Article V
      with regard to all risks subject to recovery hereunder
      involved in any one loss occurrence has 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 per occurrence limit, to
      the total ultimate net loss subject to recovery on that
      loss occurrence.


Article IX - Special Provisions

A. The Company's maximum policy limits subject to this Contract
   shall be as follows:

      1.   $12,500,000 for all policies except as outlined in
      subparagraphs 2 and 3 below, or so deemed;

      2.   As respects coverage for Transmission and
      Distribution lines, $1,000,000 each risk, or so deemed;

      3.   As respects coverage for Foreign COC business,
      $5,000,000 each risk, or so deemed.

B. 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 except business
   classified as Railroad in which case the sublimit shall be
   $250,000 each risk, each loss.  Nevertheless, this does not
   preclude payment of the cost of removal of debris of property
   damaged by a loss otherwise covered hereunder.


Article X - 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 XI - Commission (BRMA 10A)

A. The Reinsurer shall allow the Company a 30.0% 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. 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 XII - Premium

A. With respect to business issued or renewed on or after the
   effective date of this Contract, as premium for the
   reinsurance provided hereunder, the Company shall pay to the
   Reinsurer a reinsurance premium based on Appendix A and
   calculated by applying the applicable Coded Excess Factor to
   the gross written premium of each policy ceded hereunder.

   With respect to business in force on the effective date of
   this Contract, as premium for the reinsurance provided
   hereunder, the Company shall pay to the Reinsurer a
   reinsurance premium based on Appendix A and calculated by
   applying the applicable Coded Excess Factor to the gross
   unearned premium, as of January 1, 1998, of each policy ceded
   hereunder.

      1.   The Coded Excess Factor will be determined based
      upon:

          a.   The size of the gross policy limit (before all
          other reinsurance);

          b.   The attachment point;

          c.   The Company's participation in the primary
          insurance limit;

           and will be in compliance with the Coded Excess
      Factor Table included in Appendix A attached to and
      forming part of this Contract.  It is understood and
      agreed that the Coded Excess Factor Table included in
      Appendix A cannot contemplate each specific combination of
      gross policy limit and attachment point for business
      subject to this Contract.  In the event the combination of
      gross policy limit and attachment point on a specific risk
      does not coincide with the Coded Excess Factor Tables, the
      Company shall be permitted to utilize the original formula
      methodology used to construct the Coded Excess Factor
      Tables in determining the appropriate reinsurance premium
      for such risk.

      2.   The gross written premium and gross unearned premium
      will be the gross premium of the policy for the coverage
      provided before deduction of premium for all other
      reinsurance.

B. At inception, the Company shall report its gross unearned
   premium applicable to subject business in force at inception.
   The premium due the Reinsurer, based upon the cessions
   outlined in paragraph A, shall be paid by the Company with its
   report.

C. Within 60 days after the end of each calendar quarter, the
   Company shall report its gross written premium for the
   quarter.  The premium due the Reinsurer, based upon the
   cessions outlined in paragraph A above, shall be paid by the
   Company with its report.

D. As respects business classified as "National Accounts," the
   Company shall provide a quarterly report to the Reinsurer
   detailing the following for each insured:

      1.   Total insured values and California, Texas, Florida
      and Puerto Rico total insured values;

      2.   Overall gross rate for coverage provided;

      3.   Gross written premium for coverages provided; and

      4.   Premium split between earthquake and all other
      perils/all other lines covered.

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


Article XIII - Profit Sharing

A. The Reinsurer shall pay the Company profit sharing equal to
   50.0% of the net profit, if any, accruing to the Reinsurer
   during the term of this Contract.

B. The Reinsurer's net profit for the term of this Contract shall
   be calculated in accordance with the following formula, it
   being understood that a positive balance equals net profit and
   a negative balance equals net loss:

      1.   Premiums earned for the term of this Contract; less

      2.   Ceding commission allowed the Company on premiums
      earned for the term of this Contract; less

      3.   Expenses incurred by the Reinsurer at 30.0% of
      premiums earned for the term of this Contract; less

      4.   Losses incurred for the term of this Contract.

C. The Company shall calculate and report the Reinsurer's net
   profit no sooner than 12 months following the expiration of
   this Contract, and no sooner than 12 months following the end
   of each 12-month period thereafter until all premiums subject
   hereto have earned and all losses subject hereto have been
   finally settled.  Each such calculation shall be based on
   cumulative transactions hereunder from the beginning of the
   term of this Contract through the date of calculation.  As
   respects the initial calculation referred to above, any profit
   sharing shown to be due the Company shall be paid by the
   Reinsurer as promptly as possible after receipt and
   verification of the Company's report.  As respects each
   recalculation, any additional profit sharing shown to be due
   the Company shall be paid by the Reinsurer as promptly as
   possible after receipt and verification of the Company's
   report.  Any return profit sharing shown to be due the
   Reinsurer shall be paid by the Company with its report.

B. With respect to any subscribing reinsurer participating under
   this Contract and also under the contract, if any, which
   replaces this Contract at January 1, 1999 (hereinafter
   referred to as the "replacement contract"), the subscribing
   reinsurer's share of any net loss to the "Reinsurer" under
   this Contract shall be carried forward and added to the
   subscribing reinsurer's share of losses incurred under the
   replacement contract.


Article XIV - 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 XV - 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 XVI - 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 XVII - 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 XVIII - 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 XIX - 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 XX - 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 XXI - 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 XXII - 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
   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. 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 unearned premium and
   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
      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 C(1),
   C(2) or C(4), or in the case of C(3), the actual amount
   determined to be due, the Company shall promptly return to the
   Reinsurer the excess amount so drawn.


Article XXIII - 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 XXIV - 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 XXV - 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 XXVI - 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 XXVII - 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


<TABLE>
                        Property Excess and Surplus Lines
                      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
<CAPTION>
                                   Appendix A
                              Property Rating Grid

                  XOL Limit  12,000,000  Retention 500,000               Q.S. %   0%           Placement   100.00

Limit        50.00%    80.00%    90.00%    93.33%     95.00%     96.00%     80.00%     60.00%     48.00%     24.00%      12.00%
 Exposed
                                                         Gross Limit
<S>          <C>       <C>       <C>       <C>       <C>        <C>        <C>        <C>        <C>        <C>        <C>
             1,000,000 2,500,000 5,000,000 7,500,000 10,000,000 12,500,000 15,000,000 20,000,000 25,000,000 50,000,000 100,000,000
Attachment
 Point
      0      14.25%    28.19%    36.21%    40.17%    42.71%     44.54%     36.36%     26.41%     20.62%     9.59%      4.48%
100,000      26.88%    47.45%    57.10%    61.36%    63.93%     65.71%     53.33%     38.36%     29.71%     13.46%     6.13%
250,000      32.63%    55.52%    65.36%    69.48%    71.89%     73.54%     59.81%     43.12%     33.42%     15.11%     6.84%
500,000      37.42%    62.09%    71.93%    75.85%    78.08%     79.58%     64.97%     47.06%     36.59%     16.62%     7.51%
1,000,000    41.78%    68.05%    77.82%    81.51%    83.55%     84.88%     69.63%     50.81%     39.70%     18.25%     8.29%
2,500,000    45.92%    73.86%    83.59%    87.03%    88.86%     90.01%     74.30%     54.77%     43.14%     20.30%     9.38%
5,000,000    47.78%    76.57%    86.34%    89.69%    91.42%     92.49%     76.61%     56.82%     45.00%     21.57%    10.15%
7,500,000    48.47%    77.62%    87.42%    90.75%    92.44%     93.48%     77.56%     57.68%     45.79%     22.15%    10.54%
10,000,000   48.83%    78.17%    88.01%    91.33%    93.01%     94.03%     78.08%     58.17%     46.24%     22.50%    10.78%
25,000,000   49.52%    79.24%    89.16%    92.47%    94.13%     95.13%     79.15%     59.17%     47.19%     23.27%    11.36%
50,000,000   49.76%    79.61%    89.57%    92.89%    94.55%     95.55%     79.55%     59.56%     47.57%     23.59%    11.63%
100,000,000  49.88%    79.81%    89.78%    93.11%    94.77%     95.77%     79.77%     59.77%     47.77%     23.78%    11.80%
</TABLE>


        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).