R:\97R\15030.DOC


                Commercial Automobile Quota Share
                      Reinsurance Contract
                  Effective:  December 31, 1997

                            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    Business Reinsured                                   3
    II    Commencement and Termination                         3
   III    Territory (BRMA 51A)                                 4
    IV    Exclusions                                           4
     V    Retention and Limit                                  5
    VI    Assignments and Assessments                          5
   VII    Loss in Excess of Policy Limits/ECO                  6
  VIII    Other Reinsurance                                    6
    IX    Claims and Loss Adjustment Expense                   6
     X    Salvage and Subrogation                              7
    XI    Original Conditions (BRMA 37B)                       7
   XII    Commission                                           8
  XIII    Contingent Commission                                8
   XIV    Reports and Remittances                              9
    XV    Late Payments                                       10
   XVI    Offset (BRMA 36C)                                   11
  XVII    Access to Records (BRMA 1D)                         11
 XVIII    Errors and Omissions (BRMA 14F)                     11
   XIX    Taxes (BRMA 50B)                                    12
    XX    Unauthorized Reinsurers                             12
   XXI    Insolvency                                          13
  XXII    Arbitration                                         14
 XXIII    Service of Suit (BRMA 49C)                          15
  XXIV    Agency Agreement                                    15
     XXV  Intermediary (BRMA 23A)  15




                Commercial Automobile Quota Share
                      Reinsurance Contract
                  Effective:  December 31, 1997

                            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 Agreements
                         Attached Hereto
          (hereinafter referred to as the "Reinsurer")



Article I - Business Reinsured

A. By this Contract the Company obligates itself to cede to the
   Reinsurer and the Reinsurer obligates itself to accept quota
   share reinsurance of the Company's net liability under
   policies, contracts and binders of insurance or reinsurance
   (hereinafter called "policies") in force at the effective date
   hereof or issued or renewed on or after that date, and
   classified by the Company as Commercial Automobile Bodily
   Injury and Property Damage Liability, Commercial Automobile
   Physical Damage, Cargo Property and General Liability
   business.

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

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

D. It is understood that the classes of business reinsured under
   this Contract are deemed to include coverages required under
   Section 30 of the Motor Carrier Act of 1980 and/or any
   amendments thereto.


Article II - Commencement and Termination

A. This Contract shall become effective on December 31, 1997,
   with respect to losses occurring on or after that date, and
   shall continue in force thereafter until terminated.
   Notwithstanding the foregoing, in the event negotiations for a
   renewal of this Contract are not completed by any December 31,
   at the Company's option, this Contract shall be extended
   through March 31 of the subsequent calendar year and any
   notices of cancellation issued by either the Company or
   Reinsurer shall also be extended through that March 31.

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

C. Unless the Company elects to reassume the ceded unearned
   premium in force on the effective date of termination, and so
   notifies the Reinsurer prior to or as promptly as possible
   after the effective date of termination, reinsurance hereunder
   on business in force on the effective date of termination
   shall remain in full force and effect until expiration,
   cancellation or next premium anniversary of such business,
   whichever first occurs, but in no event beyond 12 months
   following the effective date of termination.


Article III - Territory (BRMA 51A)

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


Article IV - Exclusions

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

      1.   All business not specifically classified and covered
      in accordance with the provisions of Article I.

      2.   Treaty and facultative reinsurance.

      3.   Business written by the Company on a co-indemnity
      basis where the Company is not the controlling carrier.

      4.   Nuclear risks as defined in the "Nuclear Incident
      Exclusion Clause - Physical Damage - Reinsurance" and the
      "Nuclear Incident Exclusion Clause - Liability -
      Reinsurance" attached to and forming part of this
      Contract.

      5.   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.

      6.   Liability as a member, subscriber or reinsurer of any
      Pool, Syndicate or Association, and any FAIR Plan or other
      combination of insurers or reinsurers formed for the
      purpose of covering specific perils, specific classes of
      business or for the purpose of insuring risks located in
      specific geographical areas.

      7.   Except as provided in Article VI, 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 the 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 is otherwise deemed unable to meet any
      claim, debt, charge, fee or other obligation in whole or
      in part.

      8.   Seepage and Pollution is excluded per ISO policy or
      endorsement forms, or so deemed.  Notwithstanding the
      foregoing, the Reinsurer agrees that this reinsurance
      exclusion shall not apply to coverage provided by ISO Form
      CA 99-48, "Pollution Liability - Broadened Coverage for
      Covered Autos - Business Auto and Truckers Coverage
      Forms," MCS-90 or the original policies or endorsements
      issued in any state where the primary seepage and
      pollution exclusions have not been approved or are not
      permitted to be included or attached to original policies.
      Further, the Reinsurer agrees that this reinsurance
      exclusion shall not apply in any case where the Company
      has included the primary seepage and pollution exclusion
      within an original policy or endorsement but has sustained
      a loss as a result of that primary seepage and pollution
      exclusion being deemed invalid or inapplicable by a court
      of law.

B. Notwithstanding the foregoing, any reinsurance falling within
   the scope of the exclusion set forth in subparagraph 8 of
   paragraph A that is specially accepted by the Reinsurer from
   the Company shall be covered under this Contract and be
   subject to the terms hereof, except as such terms shall be
   modified by the special acceptance.  Furthermore, the
   exclusion set forth in subparagraph 8 of paragraph A 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.

C. If the Company is bound, without the knowledge and contrary to
   the instructions of the Company's supervisory underwriting
   personnel, on any business falling within the scope of the
   exclusion set forth in subparagraph 8 of paragraph A, the
   exclusion shall be suspended with respect to such business
   until 30 days after an underwriting supervisor of the Company
   acquires knowledge thereof or until the Company is able to
   cancel in compliance with statutory terms, whichever is
   longer.

D. If the Company is required to accept an assigned risk which
   conflicts with the exclusion set forth in subparagraph 8 of
   paragraph A, reinsurance shall apply, but in no event shall
   the Reinsurer's liability exceed the limit set forth in
   Article V.


Article V - Retention and Limit

As respects business subject to this Contract, the Company shall
retain and be liable for 50.0% of its net liability.  The Company
shall cede to the Reinsurer and the Reinsurer agrees to accept
50.0% of the Company's net liability.


Article VI - Assignments and Assessments

A. Reinsurance under this Contract shall apply to risks assigned
   to the Company under any Assigned Risk Plan if, in the opinion
   of the Company, such risks were assigned to the Company
   because of the business written and reinsured hereunder.

B. Reinsurance under this Contract shall also apply to a
   proportion of any assessments made against the Company
   pursuant to those laws and regulations creating obligatory
   funds (including insurance guaranty and insolvency funds to
   the extent that such costs are transferable to the
   policyholder), pools, joint underwriting associations, FAIR
   plans and similar plans, said proportion to be the proportion
   of the Company's total premiums causing the assessment which
   were or are subject to this Contract.

C. In the event this Contract is terminated, unless the Company
   elects cutoff, the provisions of this Article shall continue
   to apply for as long as the Company is required to accept
   assignments and/or assessments because of the business
   reinsured hereunder.


Article VII - Loss in Excess of Policy Limits/ECO

A. In the event the Company pays or is held liable to pay an
   amount of loss in excess of its policy limit, but otherwise
   within the terms of its policy (hereinafter called "loss in
   excess of policy limits") or any punitive, exemplary,
   compensatory or consequential damages, other than loss in
   excess of policy limits (hereinafter called "extra contractual
   obligations") because of alleged or actual bad faith or
   negligence on its part in rejecting a settlement within policy
   limits, or in discharging its duty to defend or prepare the
   defense in the trial of an action against its policyholder, or
   in discharging its duty to prepare or prosecute an appeal
   consequent upon such an action, or in otherwise handling a
   claim under a policy subject to this Contract, 90.0% of the
   loss in excess of policy limits and/or 90.0% of the extra
   contractual obligations shall be added to the Company's loss,
   if any, under the policy involved, and the sum thereof shall
   be subject to the provisions of the Article V.

B. An extra contractual obligation shall be deemed to have
   occurred on the same date as the loss covered or alleged to be
   covered under the policy.

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

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


Article VIII - Other Reinsurance

The Company shall maintain in force excess of loss reinsurance
with limits of $24,500,000 excess of $500,000 each loss event,
recoveries under which shall inure to the benefit of this
Contract.  Premiums ceded by the Company for reinsurance which
inures to the benefit of this Contract shall be deducted in
determining subject premium hereunder as provided in Article XI.


Article IX - Claims and Loss Adjustment Expense

A. Losses shall be reported by the Company in summary form as
   hereinafter provided, but the Company shall notify the
   Reinsurer immediately when a specific case involves unusual
   circumstances or large loss possibilities.  Further, the
   Company shall notify the Reinsurer whenever a claim involves a
   fatality, amputation, spinal cord damage, brain damage,
   blindness, extensive burns or multiple fractures, regardless
   of liability.  The Reinsurer shall have the right to
   participate, at its own expense, in the defense or control of
   any claim or suit or proceeding involving this reinsurance.

B. All loss settlements made by the Company, provided they are
   within the terms of the original policies (other than extra
   contractual obligations and loss in excess of policy limits),
   shall be binding upon the Reinsurer, and the Reinsurer agrees
   to pay or allow, as the case may be, its proportion of each
   such settlement in accordance with Article XIV.  It is agreed,
   however, that if the Reinsurer's share of any loss is equal to
   or greater than $250,000, the Reinsurer will pay its share of
   said loss as promptly as possible after receipt of reasonable
   evidence of the amount paid by the Company.

C. In the event of a claim under a policy subject hereto, the
   Reinsurer shall be liable for its proportionate share of loss
   adjustment expenses incurred by the Company in connection
   therewith, and shall be credited with its proportionate share
   of any recoveries of such expense.

D. "Loss adjustment expenses" as used herein shall mean expenses
   allocable to the investigation, defense and/or settlement of
   specific claims, including 1) prejudgment interest, unless
   included as part of the award or judgment; 2) post-judgment
   interest; 3) legal expenses and costs incurred in connection
   with coverage questions and legal actions connected thereto;
   but not including office expenses or salaries of the Company's
   regular employees, except that allocated outside costs of the
   Company's salaried adjusters shall be included.

   With respect to legal expenses and costs incurred in direct
   connection with declaratory judgment actions brought to
   resolve policy language coverage disputes between the Company
   and its insured, such expenses shall, for purposes of this
   Contract, not exceed an amount equal to the applicable limit
   of the policy or policies involved unless agreed by the
   Reinsurer.


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 - Original Conditions (BRMA 37B)

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

B. Nothing herein shall in any manner create any obligations or
   establish any rights against the Reinsurer in favor of any
   third party or any persons not parties to this Contract.


Article XII - Commission

A. The Reinsurer shall allow the Company a 32.5% 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 (except as provided in Article VI), and all
   other expenses of whatever nature, except loss adjustment
   expense.


Article XIII - Contingent Commission

A. The Reinsurer shall pay the Company a contingent commission
   equal to 20.0% of the net profit, if any, accruing to the
   Reinsurer during each accounting period defined herein.  The
   first accounting period shall be from the effective date of
   this Contract through December 31, 1998, and each subsequent
   12-month period (or 15-month period if this Contract is
   extended through March 31 of any calendar year as provided in
   paragraph A of Article II) shall be a separate accounting
   period.  However, if this Contract is terminated, the final
   accounting period shall be from the beginning of the then
   current accounting period through the date of termination if
   this Contract is terminated on a "cutoff" basis, or the end of
   the runoff period if this Contract is terminated on a "runoff"
   basis.

B. The Reinsurer's net profit for each accounting period 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 accounting period; less

      2.   Ceding commission allowed the Company on premiums
      earned for the accounting period; less

      3.   Expenses incurred by the Reinsurer at 15.0% of
      premiums earned for the accounting period; less

      4.   Losses incurred for the accounting period; less

      5.   The Reinsurer's net loss, if any, from the
      immediately preceding accounting period.

C. As respects each accounting period except the final accounting
   period, the Company shall calculate and report the Reinsurer's
   net profit within 60 days following 24 months after the end of
   each accounting period, and within 60 days after the end of
   each 12-month period thereafter until all losses subject
   hereto have been finally settled.  As respects the final
   accounting period, the Company shall calculate and report the
   Reinsurer's net profit within 60 days after the date of
   termination, and within 60 days after the end of each 12-month
   period thereafter until all losses subject hereto have been
   finally settled.  Each such calculation for each accounting
   period shall be based on cumulative transactions hereunder
   from the beginning of the accounting period through the date
   of calculation, including the Reinsurer's net loss, if any,
   from the immediately preceding accounting period.  As respects
   the initial calculation referred to above, any contingent
   commission 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 contingent commission 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 contingent commission shown to be due the
   Reinsurer shall be paid by the Company with its report.

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

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


Article XIV - Reports and Remittances

A. As promptly as possible after the effective date of this
   Contract, the Company shall remit the Reinsurer's share of the
   unearned premium (less commission thereon) applicable to
   subject business in force at the effective date of this
   Contract.

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

      1.   Ceded net written premium for the month;

      2.   Commission thereon;

      3.   Ceded losses and loss adjustment expense paid during
      the month (net of any recoveries during the month under
      the "cash call" provisions of Article IX).

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

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

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


Article XV - Late Payments

A. It is understood and agreed that the provisions of this
   Article shall not be implemented unless specifically invoked,
   in writing, by one of the parties to this Contract.

B. In the event any premium, loss or other payment due either
   party is not received by the intermediary named in Article XXV
   (hereinafter referred to as the "Intermediary") by the payment
   due date, the party to whom payment is due may, by notifying
   the Intermediary in writing, require the debtor party to pay,
   and the debtor party agrees to pay, an interest penalty on the
   amount past due calculated for each such payment on the last
   business day of each month as follows:

      1.   The number of full days which have expired since the
      due date or the last monthly calculation, whichever the
      lesser; times

      2.   1/365th of the six month (or nearest thereto) U.S.
      Treasury Bill rate, as quoted in the Wall Street Journal
      on the first business day of the month for which the
      calculation is being made; times

      3.   The amount past due, including accrued interest.

   It is agreed that interest shall accumulate until payment of
   the original amount due plus interest penalties have been
   received by the Intermediary.

C. The establishment of the due date shall, for purposes of this
   Article, be determined as follows:

      1.   As respects any routine payment, adjustment or return
      due either party, the due date shall be as provided for in
      the applicable section of this Contract.  In the event a
      due date is not specifically stated for a given payment,
      it shall be deemed due 45 days after the date of
      transmittal by the Intermediary of the initial billing for
      each such payment.

      2.   Any "cash call" payment due the Company in accordance
      with paragraph B of Article IX shall be deemed due
      10 business days after the proof of loss or demand for
      payment is transmitted to the Reinsurer.  If such payment
      is not received within the 10 days, interest will accrue
      on the payment or amount overdue in accordance with
      paragraph B above, from the date the proof of loss or
      demand for payment was transmitted to the Reinsurer.

      3.   As respects any payment, adjustment or return due
      either party not otherwise provided for in subparagraphs 1
      and 2 of paragraph C above, the due date shall be deemed
      as 10 business days following transmittal of written
      notification that the provisions of this Article have been
      invoked.

   For purposes of interest calculations only, amounts due
   hereunder shall be deemed paid upon receipt by the
   Intermediary.

D. Nothing herein shall be construed as limiting or prohibiting
   1) a Subscribing Reinsurer from contesting the validity of any
   claim, or from participating in the defense or control of any
   claim or suit; or 2) either party from contesting the validity
   of any payment, or from initiating any arbitration or other
   proceeding in accordance with the provisions of this Contract.
   If the debtor party prevails in an arbitration or other
   proceeding, then any interest penalties due hereunder on the
   amount in dispute shall be null and void.  If the debtor party
   loses in such proceeding, then the interest penalty on the
   amount determined to be due hereunder shall be calculated in
   accordance with the provisions set forth above unless
   otherwise determined by such proceedings.  If a debtor party
   advances payment of any amount it is contesting, and proves to
   be correct in its contestation, either in whole or in part,
   the other party shall reimburse the debtor party for any such
   excess payment made plus interest on the excess amount
   calculated in accordance with this Article.

E. As provided under Article IX, it is understood and agreed that
   the Company shall furnish the Reinsurer with usual and
   customary claim information and nothing herein shall be
   construed as limiting or prohibiting a Subscribing Reinsurer
   from requesting additional information that it may deem
   necessary.

F. Interest penalties arising out of the application of this
   Article that are $100 or less from any party shall be waived
   unless there is a pattern of late payments consisting of three
   or more items over the course of any 12-month period.


Article XVI - 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 XVII - 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 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 - 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 XX - Unauthorized Reinsurers

A. If the Reinsurer is unauthorized in any state of the United
   States of America or the District of Columbia, the Reinsurer
   agrees to fund its share of the Company's ceded unearned
   premium and outstanding loss and loss adjustment expense
   reserves (including incurred but not reported loss reserves)
   by:

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

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

      3.   Cash advances;

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

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

      1.   To reimburse itself for the Reinsurer's share of
      unearned premiums returned to insureds on account of
      policy cancellations, unless paid in cash by the
      Reinsurer;

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

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

      4.   To fund a cash account in an amount equal to the
      Reinsurer's share of any ceded unearned premium and/or
      outstanding loss and loss adjustment expense reserves
      (including incurred but not reported loss reserves) funded
      by means of a letter of credit which is under non-renewal
      notice, if said letter of credit has not been renewed or
      replaced by the Reinsurer 10 days prior to its expiration
      date;

      5.   To refund to the Reinsurer any sum in excess of the
      actual amount required to fund the Reinsurer's share of
      the Company's ceded unearned premium and/or outstanding
      loss and loss adjustment expense reserves (including
      incurred but not reported loss reserves), if so requested
      by the Reinsurer.

   In the event the amount drawn by the Company on any letter of
   credit is in excess of the actual amount required for B(1),
   B(2) or B(4), or in the case of B(3), the actual amount
   determined to be due, the Company shall promptly return to the
   Reinsurer the excess amount so drawn.


Article XXI - 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 XXII - Arbitration

A. As a condition precedent to any right of action hereunder, any
   dispute arising out of the interpretation, performance or
   breach of this Contract, including the formation or validity
   thereof, shall be submitted for decision to a panel of three
   arbitrators.  Notice requesting arbitration will be in writing
   and sent certified or registered mail, return receipt
   requested.

B. One arbitrator shall be chosen by each party and the two
   arbitrators shall, before instituting the hearing, choose an
   impartial third arbitrator who shall preside at the hearing.
   If either party fails to appoint its arbitrator within 30 days
   after being requested to do so by the other party, the latter,
   after ten days notice by certified or registered mail of its
   intention to do so, may appoint the second arbitrator.

C. If the two arbitrators are unable to agree upon the third
   arbitrator within 30 days of their appointment, the two
   arbitrators will jointly petition the American Arbitration
   Association to appoint the third arbitrator from the AAA's
   Panel of Reinsurance Arbitrators.

D. All arbitrators shall be disinterested active or former
   executive officers of insurance or reinsurance companies,
   underwriters at Lloyd's of London, reinsurance intermediaries
   and attorneys actively or formerly engaged in practicing law
   in the areas of insurance or reinsurance.

E. Within 30 days after notice of appointment of all arbitrators,
   the panel shall meet and determine timely periods for briefs,
   discovery procedures and schedules for hearings.

F. The panel shall be relieved of all judicial formality and
   shall not be bound by the strict rules of procedure and
   evidence.  The arbitration shall take place in Woodland Hills,
   California or, if unanimously agreed by the panel, any other
   mutually acceptable location.

G. 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.  However, nothing shall impair the
   rights of such reinsurers to assert several rather than joint
   defenses or claims, nor shall this provision be construed as
   changing the liability of the reinsurers under the terms of
   this Contract from several to joint.

H. The panel shall make its decision considering custom and
   practice as promptly as possible following the termination of
   hearings.  The decision of any two arbitrators, when rendered
   in writing shall be final and binding, and judgment upon the
   award may be entered in any court having jurisdiction.  The
   panel is empowered to grant such interim relief as it may deem
   appropriate.

I. Each party shall bear the expense of its own arbitrator and
   shall jointly and equally with the other party bear the cost
   of the third arbitrator.  The remaining costs of the
   arbitration shall be allocated by the panel.  The panel may,
   at its discretion, award such further costs and expenses as it
   considers appropriate, including but not limited to attorney's
   fees and interest to the extent permitted by law.  Insofar as
   the arbitration panel chooses to look to substantive law, it
   shall consider the law of the State of California.


Article XXIII - 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 XXIV - Agency Agreement

Gryphon Insurance Group, Inc. shall be deemed the agent of the
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 XXV - 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:

New York, New York,this _________ day of _________________ 199___.

                __________________________________________________
                Associated International Insurance Company
                Calvert Insurance Company