E. W. BLANCH CO.
R:\98R\14154.DOC                             Reinsurance Services
                                                          Page 14
                    Franchise Excess of Loss
                      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                                  4
    VI    Definitions                                          4
   VII    Loss Notices and Settlements                         7
  VIII    Special Provisions                                   7
    IX    Salvage and Subrogation                              7
     X    Premium                                              8
    XI    Offset (BRMA 36C)                                    8
   XII    Access to Records (BRMA 1D)                          8
  XIII    Net Retained Lines (BRMA 32B)                        8
   XIV    Errors and Omissions (BRMA 14F)                      9
    XV    Currency (BRMA 12A)                                  9
   XVI    Taxes (BRMA 50B)                                     9
  XVII    Federal Excise Tax (BRMA 17A)                        9
 XVIII    Unauthorized Reinsurers                             10
   XIX    Insolvency                                          11
    XX    Arbitration                                         11
   XXI    Service of Suit (BRMA 49C)                          13
  XXII    Agency Agreement                                    13
 XXIII    Intermediary (BRMA 23A)                             13
          Schedule A




                    Franchise Excess of Loss
                      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.  However, this Contract shall only apply to losses
sustained by the Company, either directly or indirectly, as a
result of seismic activity and/or volcanic eruption.


Article II - Term

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

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


Article III - Territory

This Contract shall apply to losses occurring anywhere within the
State of California.


Article IV - Exclusions

This Contract shall follow in all respects the exclusions under
the Company's External Third through Sixth Excess Catastrophe
Reinsurance Contract, effective January 1, 1998 (except for the
exclusion of loss in excess of policy limits and extra
contractual obligations), including any interpretations given
those exclusions by the "Reinsurer" under that contract.


Article V - Retention and Limit

A. As respects each excess layer of reinsurance coverage provided
   by this Contract, the Company shall retain and be liable for
   the first amount of ultimate net loss, shown as "Company's
   Retention" for that excess layer in Schedule A attached
   hereto, arising out each loss occurrence.  The Reinsurer shall
   then be liable (subject to the provisions of paragraph B
   below), as respects each excess layer, for the amount by which
   such ultimate net loss exceeds the Company's applicable
   retention, but the liability of the Reinsurer under each
   excess layer shall not exceed the amount, shown as
   "Reinsurer's Per Occurrence Limit" for that excess layer in
   Schedule A attached hereto, as respects any one loss
   occurrence, nor shall it exceed the amount shown as
   "Reinsurer's Annual Limit" for that excess layer in all during
   the term of this Contract.

B. As respects each excess layer of reinsurance coverage provided
   by this Contract, there shall be no recovery under this
   Contract until the Company's gross loss as respects business
   subject to its 1998 property catastrophe reinsurance program
   from any one loss occurrence exceeds the amount shown as
   "Company's Gross Loss" for that excess layer in Schedule A
   attached hereto.


Article VI - Definitions

A. "Ultimate net loss" as used herein is defined as the sum or
   sums (including loss in excess of policy limits, extra
   contractual obligations, any loss adjustment expense as
   hereinafter defined, premium adjustments remitted by the
   Company under the Company's Property Excess Per Risk
   Reinsurance Contract, effective January 1, 1998, arising as a
   result of a loss occurrence, any reinstatement premiums paid
   by the Company under the Company's Excess Catastrophe
   Reinsurance Contract, effective January 1, 1998 and External
   Third Through Sixth Excess Catastrophe Reinsurance Contract,
   effective January 1, 1998, regardless of whether the Company
   has an actual cash payment associated with the same loss
   occurrence, and losses retained by the Company under its 5.0%
   co-participation under the Excess Catastrophe Reinsurance
   Contract, effective January 1, 1998 and External Third Through
   Sixth Excess Catastrophe Reinsurance Contract, effective
   January 1, 1998) paid or payable by the Company in settlement
   of claims and in satisfaction of judgments rendered on account
   of such claims, after deduction of all salvage, all recoveries
   and all claims on inuring insurance or reinsurance, whether
   collectible or not.  Nothing herein shall be construed to mean
   that losses under this Contract are not recoverable until the
   Company's ultimate net loss has been ascertained.

B. "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 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 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.

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

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

C. "Loss adjustment expense" shall mean expenses assignable to
   the investigation, defense and/or settlement of specific
   claims, regardless of how such expenses are classified for
   statutory reporting purposes.  Loss adjustment expense shall
   include 1) prejudgment interest, unless included as part of
   the award or judgment; 2) post-judgment interest; and
   3) declaratory judgment expenses or other legal expenses and
   costs incurred in connection with coverage questions and legal
   actions connected thereto.  Loss adjustment expense shall not
   include office expenses or salaries of the Company's regular
   employees, except that assigned outside costs of the Company's
   salaried adjusters shall be included.

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 epicentre of which need
      not necessarily be within the territorial confines
      referred to in the introductory portion of this paragraph)
      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."

   For all "loss occurrences," 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 except for those
   "loss occurrences" referred to in subparagraphs 1 and 2 above
   where only one such period of 72 consecutive hours shall apply
   with respect to one event.

   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.


Article VII - Loss Notices and Settlements

A. Whenever losses sustained by the Company appear 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 such losses 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.


Article VIII - Special Provisions

A. 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 each 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.

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 IX - Salvage and Subrogation

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


Article X - Premium

A. As premium for each excess layer of reinsurance coverage
   provided by this Contract, the Company shall pay the Reinsurer
   the amount, shown as "Premium" for that excess layer in
   Schedule A attached hereto, in four equal installments of the
   amount, shown as "Quarterly Premium Installment" for that
   excess layer in Schedule A attached hereto, on January 1,
   April 1, July 1, and October 1 of 1998.

B. In the event that a loss becomes subject to any excess layer
   of reinsurance coverage hereunder, the Company shall pay the
   Reinsurer the amount, shown as "Additional Premium" for that
   excess layer in Schedule A attached hereto.  Such additional
   premium shall be payable concurrently with payment by the
   Reinsurer of any loss under that excess layer.


Article XI - 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 XII - 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 XIII - Net Retained Lines (BRMA 32B)

A. This Contract applies only to that portion of any policy which
   the Company retains net for its own account, 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 XIV - Errors and Omissions (BRMA 14F)

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


Article XV - Currency (BRMA 12A)

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

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


Article XVI - Taxes (BRMA 50B)

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


Article XVII - Federal Excise Tax (BRMA 17A)

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

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

B. In the event of any return 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 XVIII - Unauthorized Reinsurers

A. If the Reinsurer is unauthorized in any state of the United
   States of America or the District of Columbia, the Reinsurer
   agrees to fund its share of the Company's ceded outstanding
   loss and loss adjustment expense reserves by:

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

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

      3.   Cash advances;

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

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

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

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

      3.   To fund a cash account in an amount equal to the
      Reinsurer's share of any ceded outstanding loss and loss
      adjustment expense reserves 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, if so requested by the Reinsurer.

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


Article XIX - Insolvency

A. In the event of the insolvency of one or more of the reinsured
   companies, this reinsurance shall be payable directly to the
   company or to its liquidator, receiver, conservator or
   statutory successor immediately upon demand, with reasonable
   provision for verification, on the basis of the liability of
   the company without diminution because of the insolvency of
   the company or because the liquidator, receiver, conservator
   or statutory successor of the company has failed to pay all or
   a portion of any claim.  It is agreed, however, that the
   liquidator, receiver, conservator or statutory successor of
   the company shall give written notice to the Reinsurer of the
   pendency of a claim against the company indicating the policy
   or bond reinsured which claim would involve a possible
   liability on the part of the Reinsurer within a reasonable
   time after such claim is filed in the conservation or
   liquidation proceeding or in the receivership, and that during
   the pendency of such claim, the Reinsurer may investigate such
   claim and interpose, at its own expense, in the proceeding
   where such claim is to be adjudicated, any defense or defenses
   that it may deem available to the company or its liquidator,
   receiver, conservator or statutory successor.  The expense
   thus incurred by the Reinsurer shall be chargeable, subject to
   the approval of the Court, against the company as part of the
   expense of conservation or liquidation to the extent of a pro
   rata share of the benefit which may accrue to the company
   solely as a result of the defense undertaken by the Reinsurer.

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

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


Article XX - Arbitration

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 XXI - Service of Suit (BRMA 49C)

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

A. It is agreed that in the event the Reinsurer fails to pay any
   amount claimed to be due hereunder, the Reinsurer, at the
   request of the Company, will submit to the jurisdiction of a
   court of competent jurisdiction within the United States.
   Nothing in this Article constitutes or should be understood to
   constitute a waiver of the Reinsurer's rights to commence an
   action in any court of competent jurisdiction in the United
   States, to remove an action to a United States District Court,
   or to seek a transfer of a case to another court as permitted
   by the laws of the United States or of any state in the United
   States.

B. Further, pursuant to any statute of any state, territory or
   district of the United States which makes provision therefor,
   the Reinsurer hereby designates the party named in its
   Interests and Liabilities Agreement, or if no party is named
   therein, the Superintendent, Commissioner or Director of
   Insurance or other officer specified for that purpose in the
   statute, or his successor or successors in office, as its true
   and lawful attorney upon whom may be served any lawful process
   in any action, suit or proceeding instituted by or on behalf
   of the Company or any beneficiary hereunder arising out of
   this Contract.


Article XXII - Agency Agreement

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


Article XXIII - 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 hereto 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


                           Schedule A

<TABLE>

                    Franchise Excess of Loss
                      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>

                         First          Second         Third
                         Excess         Excess         Excess
<S>                      <C>            <C>            <C>
Company's Retention      $2,500,000     $7,500,000     $12,500,000

Reinsurer's Per          $5,000,000     $5,000,000     $5,000,000
Occurrence Limit

Reinsurer's Annual Limit $5,000,000     $5,000,000     $5,000,000

Company's Gross Loss     $50,000,000    $100,000,000   $140,000,000

Premium                  $650,000       $475,000       $300,000

Quarterly Premium        $162,500       $118,750       $75,000
Installment

Additional Premium       $250,000       $250,000       $200,000
</TABLE>


The figures listed above for each excess layer shall apply to
each Subscribing Reinsurer in the percentage share for that
excess layer as expressed in its Interests and Liabilities
Agreement attached hereto.