Document:

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                                                                   EXHIBIT 10(g)

                                                  No. 2521-0031-E001

                                   ENDORSEMENT

Attached to and forming part of the PROPERTY PER RISK EXCESS OF LOSS REINSURANCE
AGREEMENT No. 2521-0031 between MERCHANTS MUTUAL INSURANCE COMPANY, Buffalo, New
York and MERCHANTS INSURANCE COMPANY OF NEW HAMPSHIRE, INC., Concord, New
Hampshire (hereinafter collectively referred to as "Company") and AMERICAN
RE-INSURANCE COMPANY, a Delaware Corporation with Administrative Offices in
Princeton, New Jersey (hereinafter referred to as the "Reinsurer").

It is mutually understood and agreed by the parties hereto that effective
January 1, 2003, as respects the Company's in-force, new and renewal policies,
as respects losses occurring on or after said date, this Agreement is amended to
read as follows:

I.       Paragraph B. of ARTICLE III, RETENTION AND LIMIT, is amended to reflect
         the addition of an annual aggregate limit for "NBCR" Terrorist Activity
         and the Paragraph reads as follows:

         B.       Notwithstanding the aforementioned, the following limits shall
                  apply as respects all loss, cost or expense arising from or
                  related to, either directly or indirectly, any Terrorist
                  Activity, as defined in the DEFINITIONS Article:

                  $3,000,000 Ultimate Net Loss each Loss Occurrence, and
                  $6,000,000 Ultimate Net Loss in the aggregate as respects all
                  such Loss Occurrences for each Agreement Year. However, the
                  Reinsurer's liability shall be limited to $3,000,000 in the
                  aggregate as respects all such Occurrences arising from loss
                  as defined in Paragraph G.,3.,c, of the DEFINITIONS Article
                  for each Agreement Year.

II.      Exclusion B., 22., of ARTICLE V, EXCLUSIONS, is amended to include
Property Target Classes and the Exclusion reads in its entirety as follows:

         22.      A.       Any loss, cost or expense arising out of or related
                           to, either directly or indirectly, any Terrorist
                           Activity, as defined in the DEFINITIONS Article, with
                           respect to Risks with a Total Insured Value at the
                           time of loss greater than or equal to $50,000,000 and
                           the following risks, classes of business, or accounts
                           applicable to Policies reinsured hereunder:

                           (1)      Airports and Aircraft

                           (2)      Apartments/Condos/Co-Ops > 25 stories

                           (3)      Automobile Mfrs.

                           (4)      Bridges

                           (5)      Casinos and Casino Hotels

                           (6)      Chemical Mfg. and Distribution Cos.

                           (7)      Convention/Exhibition Centers

Revised: September 24, 2003

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                                                     No. 2521-0031-E001

                           (8)      Cruise Lines

                           (9)      Dams

                           (10)     Defense/Aerospace Industries

                           (11)     Financial Institutions with more than 10
                                    branch locations

                           (12)     Government Buildings (Fed/State) and
                                    National Landmarks

                           (13)     High Tech Mfg. Cos.

                           (14)     Hospitals

                           (15)     Hotels > 25 stories

                           (16)     Internet Cos.

                           (17)     Major Media Cos.

                           (18)     Nuclear Facility exposures

                           (19)     Office Buildings > 25 stories

                           (20)     Petrochemical/Oil and Gas Cos.

                           (21)     Pipelines (oil and gas)

                           (22)     Port/Transit Authorities

                           (23)     Property Management Cos - High Rise exposure
                                    > 25 stories

                           (24)     Railroads

                           (25)     Enclosed Shopping Malls - property owner
                                    only

                           (26)     Stadiums

                           (27)     Tunnels

                           (28)     Universities

                           (29)     Utility Cos. - electric, gas, water and
                                    sewer

                  B.       This exclusion applies regardless of any other cause
                           or event that in any way contributes concurrently or
                           in any sequence to loss, cost, or expense.

III.     Paragraph G., Terrorist Activity, of ARTICLE VI, DEFINITIONS, is
amended to add the definition of "chemical" and the definition reads as follows:

         The term "chemical" as used herein shall mean any substance obtained by
         a chemical process or used for producing a chemical effect for the
         purposes of Terrorist Activity.

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                                                     No. 2521-0031-E001

IV.      ARTICLE XIII, REINSURANCE PREMIUM, is amended to reflect the change in
the Commercial Property Rate to xx.xx% and the Article reads in its entirety as
follows:

                                  ARTICLE XIII

         REINSURANCE PREMIUM

         With respect to business in force and business becoming effective at
         and after the effective time and date of this Agreement, the rates for
         the reinsurance provided hereunder shall be as follows:

         1.       x.xx% of the Company's unearned premium on Homeowners Multiple
                  Peril (Section I) after deducting that portion, if any, paid
                  for share reinsurance, calculated on the monthly pro rata
                  basis as of the effective time and date of this Agreement; and

         2.       xx.xx% of the Company's unearned premium on all other classes
                  of business reinsured hereunder (except Automobile Physical
                  Damage), after deducting that portion, if any, paid for share
                  reinsurance, calculated on the monthly pro rata basis as of
                  the effective time and date of this Agreement.

Nothing herein contained shall alter, vary or extend any provision or condition
of the Agreement other than as above stated.

IN WITNESS WHEREOF the parties hereto have caused this Endorsement to be
executed in duplicate this            day of                     ,2003;

ACCEPTED:
MERCHANTS MUTUAL INSURANCE COMPANY
MERCHANTS INSURANCE COMPANY OF NEW HAMPSHIRE, INC.

-----------------------
and in Princeton, New Jersey this             day of            , 2003.

                                                AMERICAN RE-INSURANCE COMPANY

                                                -----------------------
                                                Vice President

DATED: February 27, 2003

                                       -3-<PAGE>
                                                                               .
                                                                               .
                                                                               .

                                                                   EXHIBIT 10(h)

            PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT

<TABLE>
<CAPTION>
ARTICLE                                                PAGE
-------                                                ----
<S>                                                    <C>
COVERAGE                                                 2
TERM                                                     2
TERRITORY                                                3
EXCLUSIONS                                               3
DEFINITIONS                                              6
LOSS OCCURRENCE                                          7
NET RETAINED LIABILITY                                   8
SELF INSURED OBLIGATIONS                                 9
OTHER REINSURANCE                                        9
REPORTS AND REMITTANCES                                  9
RESERVES AND FUNDING                                    10
SPECIAL FUNDING/TERMINATION                             12
LOSS NOTICES AND SETTLEMENTS                            13
LATE PAYMENT PENALTY                                    14
OFFSET                                                  15
SALVAGE AND SUBROGATION                                 15
DELAYS, ERRORS, OR OMISSIONS                            16
AMENDMENTS                                              16
ACCESS TO RECORDS                                       16
INSOLVENCY                                              16
ARBITRATION                                             17
CONFLICT WITH LAW                                       19
TAXES                                                   19
FEDERAL EXCISE TAX                                      20
CURRENCY                                                20
SERVICE OF SUIT                                         20
AGENCY                                                  21
INTERMEDIARY                                            21

EXHIBIT A -- FIRST LAYER                                22

EXHIBIT B -- SECOND LAYER                               23

EXHIBIT C -- THIRD LAYER                                24
</TABLE>

                                       1

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            PROPERTY CATASTROPHE EXCESS OF LOSS REINSURANCE AGREEMENT

         THIS AGREEMENT is made and entered into by and between MERCHANTS MUTUAL
INSURANCE COMPANY, a New York corporation, MERCHANTS INSURANCE COMPANY OF NEW
HAMPSHIRE, INC., a New Hampshire corporation, and any and all insurance
companies which are now or hereafter come under the same ownership or management
as Merchants Mutual Insurance Company (hereinafter called the "Company") of the
one part, and the various Reinsurers as identified by the Interests and
Liabilities Agreements attaching to and forming a part of this Agreement
(hereinafter called the "Reinsurers") of the other part.

         The parties hereto agree as hereinbelow in consideration of the mutual
covenants contained in the following Articles and attached Exhibits and upon the
terms and conditions set forth therein:

COVERAGE

         The Reinsurers will indemnify the Company for any loss or losses
occurring during the term of this Agreement under all policies, classified by
the Company as:

                  PROPERTY, INCLUDING BUT NOT LIMITED TO: FIRE, ALLIED LINES,
                  FARMOWNERS, HOMEOWNERS, BUSINESS OWNERS, COMMERCIAL MULTIPLE
                  PERIL, EARTHQUAKE, INLAND MARINE, BOILER AND MACHINERY,
                  AUTOMOBILE PHYSICAL DAMAGE, BURGLARY AND THEFT, EXTENDED
                  COVERAGE, AND GLASS.

         All reinsurance for which the Reinsurers will be obligated by virtue of
this Agreement will be subject to the same terms, conditions, interpretations,
waivers, modifications, and alterations as the respective policies of the
Company to which this Agreement applies. Nothing herein will in any manner
create any obligations or establish any rights against the Reinsurers in favor
of any third parties or any persons not parties to this Agreement except as
provided in the Insolvency Article.

TERM

         This Agreement will apply to all loss occurrences during the 12-month
term extending from 12:01 a.m. Eastern Standard Time on January 1, 2003 to 12:01
a.m. Eastern Standard Time on January 1, 2004.

         Should this Agreement expire while a loss occurrence covered hereunder
is in progress, all losses arising from such loss occurrence will be deemed to
have been

                                       2

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incurred prior to the expiration of this Agreement, subject to the other
conditions of this Agreement, and provided that no part of said loss occurrence
is claimed against any renewal or replacement of this Agreement.

         Notwithstanding the expiration of this Agreement as hereinabove
provided, the provisions of this Agreement will continue to apply to all
obligations and liabilities of the parties incurred hereunder to the end that
all such obligations and liabilities will be fully performed and discharged.

TERRITORY

         The territorial scope of this Agreement will be worldwide and identical
to that of the Company's policies.

EXCLUSIONS

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

         A.       Liability assumed by the Company under any form of treaty
                  reinsurance; however, group intra-company reinsurance, local
                  agency reinsurance accepted in the normal course of business,
                  and/or policies written by another carrier at the Company's
                  request and reinsured 100% by the Company will not be excluded
                  hereunder.

         B.       Liability accruing to the Company under:

                  1.       Accident and Health policies, Personal and Bodily
                           Injury Liability policies, Workers Compensation
                           policies/Employers' Liability policies, Fidelity
                           bonds and/or similar contracts of insurance and/or
                           reinsurance now written or which may hereafter be
                           written and coded and classified as Casualty and/or
                           Fidelity business.

                  2.       Property Damage Liability policies and/or contracts
                           of insurance and/or reinsurance now written or which
                           may hereafter be written or coded and classified as
                           Casualty business.

                  3.       Third Party Liability Coverages (including Medical
                           Payments).

         C.       Business classified as Crop Hail insurance or Multiple Peril
                  Crop insurance and insurance of growing or standing timber.

         D.       Aircraft Hulls in flight.

                                       3

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         E.       Loss or liability excluded by the Pools, Associations, and
                  Syndicates Exclusion Clause attached to this Agreement, except
                  that notwithstanding the provisions of the attached Clause,
                  this exclusion will not apply as respects Industrial Risk
                  Insurers and FM Global.

         F.       Insurances written in Co-Insurance with Nuclear Pools and
                  reinsurance thereof.

         G.       Mortgage Impairment insurances and similar kinds of insurances
                  however styled, providing coverage to an insured as respects
                  its mortgagee interest in property. However, this exclusion
                  does not apply to the standard Errors and Omissions Form and
                  any endorsement applicable thereto, attached to Fire policies
                  nor to Mortgage Holder's Protection policies.

         H.       Loss or liability excluded by the following clauses attached
                  to this Agreement.

                  1.       Nuclear Energy Risks Exclusion Clause (Reinsurance)
                           (1994) (Worldwide excluding U.S.A. & Canada).

                  2.       Nuclear Incident Exclusion Clause--Physical
                           Damage--Reinsurance - U.S.A. & Canada.

         I.       Loss or liability excluded by the Insolvency Funds Exclusion
                  Clause attached to this Agreement.

         J.       Loss/or damage/or costs/or expenses arising from seepage
                  and/or pollution and/or contamination, other than
                  contamination from smoke damage. Nevertheless, this exclusion
                  does not preclude any payment of the cost of the removal of
                  debris of property damaged by a loss otherwise covered
                  hereunder, but subject always to a limit of 25% of the
                  Company's property loss under the policy.

         K.       The interest of Public Utilities in overhead telephone and
                  electric power transmission and distribution lines.

         L.       War Risks for all classes of business in accordance with the
                  Coverage Article.

         M.       Financial Guarantee or Insolvency.

         N.       Loss or liability excluded by the Terrorism Exclusion Clause
                  attached to this Agreement.

         O.       Any loss, damage, cost, expense or liability arising from
                  Fungi that is not directly caused by or does not arise
                  directly from a loss event that is

                                       4

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                  covered under this Agreement. "Fungi" means any type or form
                  of fungus, mold or mildew and any mycotoxins, spores, scents
                  or byproducts produced or released by fungi.

         P.       Extra contractual obligations and excess policy limits
                  liability.

         If any risks reinsured hereunder as set forth in the Coverage Article
but falling within the scope of the above exclusions are assigned to the Company
under an Assigned Risk Plan the coverage afforded by this Agreement will apply
to such risks, but only for the policy limits prescribed by said Plan, and
subject to the limits of this Agreement.

         The exclusions enumerated above, with the exception of E., F., H., I.,
L., M., N., O. and P. will not apply when they are merely incidental to the main
operations of the insured, provided such main operations are covered by the
Company and are not themselves excluded from the scope of this Agreement. The
Company will be the sole judge of what is "incidental."

         Should the Company, by reason of an inadvertent act, error, or
omission, be bound to afford coverage excluded hereunder, the Reinsurers will
waive the exclusion(s) with the exception of E., F., H., I., L., M., N., O. and
P. The duration of said waiver will not extend beyond the time the notice of
such coverage has been received by the responsible underwriting authority of the
Company plus the minimum time period required thereafter for the Company to
terminate such coverage.

         The Company may submit to the Reinsurers, for special acceptance
hereunder, business not covered by this Agreement. In the event of agreement by
Lead Reinsurers, such special acceptance will be made and will be subject to the
terms hereof (except as modified by the special acceptance), and will be binding
on all Reinsurers with respect to their respective shares. In the event
agreement is not achieved, such special acceptance will be made only with
respect to the interests and liabilities of each Reinsurer who agrees to such
special acceptance, and will be subject to the terms hereof (except as modified
by the special acceptance), and will be binding on each such Reinsurer with
respect to its share. Any special acceptance business covered under the
reinsurance Agreement being replaced by this Agreement will be automatically
covered hereunder.

         Further, should Reinsurers become a party to this Agreement subsequent
to the acceptance of any business not normally covered hereunder, they will
automatically accept same as being a part of this Agreement.

         Should any judicial entity having jurisdiction invalidate any exclusion
in the Company's policy, any amount of loss for which the Company is liable
because of such invalidation will not be excluded hereunder.

                                       5

<PAGE>

DEFINITIONS

         The following definitions will apply to this Agreement:

         A.       "Gross net earned premium" will mean the gross earned premium
                  of the Company for classes of business reinsured hereunder as
                  specified in the Coverage Article, less the earned portion of
                  premium for reinsurance as set forth in the Other Reinsurance
                  Article. Further, the Company will include in the gross net
                  earned premium hereunder, 15% of its gross earned premium
                  under Commercial Multiple Peril policies (Coverall), 35% as
                  respects Commercial Multiple Peril policies (Non-Coverall),
                  40% as respects Business owners, and 85% as respects
                  Farmowners and Homeowners.

         B.       "Policies" will mean all policies, binders, contracts, or
                  agreements of insurance or reinsurance, whether written or
                  oral.

         C.       "Risk" will be subject to definition solely by the Company.

         D.       "Ultimate net loss" will mean the actual loss or losses
                  sustained by the Company under its policies, after deduction
                  of all salvages and recoveries, and inuring reinsurance
                  whether recoverable or not. Ultimate net loss will be
                  inclusive of loss expense arising from the settlement of
                  claims, and a pro rata share of salaries and expenses of the
                  Company's field employees while adjusting such claims,
                  expenses of the Company's officials incurred in connection
                  with such claims (but excluding salaries of the Company's
                  officials and office expenses of the Company). All salvages,
                  recoveries, or reinsurance received subsequent to any loss
                  settlement hereunder will be applied as if received prior to
                  the settlement, and all necessary adjustments will be made by
                  the parties hereto. Nothing in this definition, however,
                  should be construed to mean that losses under this Agreement
                  are not recoverable until the Company's ultimate net loss has
                  been ascertained.

                  As respects any one loss occurrence, all recoveries from the
                  Company's underlying reinsurance programs, will inure to the
                  benefit of Reinsurers unless otherwise indicated in this
                  Article or in the Retention and Limit sections of the attached
                  Exhibits.

                  At the Company's option, ultimate net loss may include the
                  actual loss expenses arising from the settlement of all claims
                  or a flat 7% factor may be applied to the actual losses in
                  lieu of the actual loss expense.

                                       6

<PAGE>

LOSS OCCURRENCE

         "Loss occurrence" as used in this Agreement will 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
within 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
territorial limitation of "loss occurrence" to one state of the United States or
province of Canada and states or provinces contiguous thereto will not apply to
loss occurrences involving Hawaii, Puerto Rico, or territories outside the
United States and Canada. The duration and extent of any one "loss occurrence"
will 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" will be
further defined as follows:

         A.       As regards windstorm, hail, tornado, hurricane, and 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. The event need not be limited to one state or
                  province or states or provinces contiguous thereto.

         B.       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 that occur beyond such 72
                  consecutive hours during the continued occupation of an
                  insured's premises by strikers, provided such occupation
                  commenced during the aforesaid period.

         C.       As regards earthquake (the epicenter of which need not
                  necessarily be within the territorial confines referred to in
                  the opening paragraph of this Article) and fire following
                  directly occasioned by the earthquake, only those individual
                  fire losses that commence during the period of 168 consecutive
                  hours may be included in the Company's "loss occurrence."

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

         Except for those "loss occurrences" referred to in B. 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

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provided that only one such period of 168 consecutive hours will apply with
respect to one event.

         As respects those "loss occurrences" referred to in B. 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 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 provisions may be included in any "loss occurrence" claimed under the 168
hours provisions.

         Losses directly or indirectly occasioned by:

                  (i)      loss of, alteration of, or damage to, or

                  (ii)     a reduction in the functionality, availability or
                           operation of

         a computer system, hardware, program, software, data, information
         repository, microchip, integrated circuit or similar device in computer
         equipment or non-computer equipment, whether the property of the
         policyholder of the Company or not, do not in and of themselves
         constitute an event unless arising out of one or more of the following
         perils:

                  fire, lightning, explosion, aircraft or vehicle impact,
                  falling objects, windstorm, hail, tornado, cyclone, hurricane,
                  earthquake, volcano, tsunami, flood, freeze or weight of snow.

         With respect to business classified by the Company as Inland Marine, if
two or more losses arise during the course of any one trip by land
transportation conveyance or any one voyage by a waterborne vessel, the Company
will have the option of adding them together and treating them as one loss
occurrence.

NET RETAINED LIABILITY

         This Agreement will apply only to that portion of any insurance or
reinsurance that the Company retains net for its own account, and such portion
will be used in calculating the amount of any loss hereunder as well as the
amount in excess of which this Agreement attaches; however, recovery from any
underlying reinsurance will inure to the sole benefit of the Company and will be
disregarded for the purposes of this Agreement. The amount of the Reinsurers'
liability hereunder with respect to any loss will not be increased by the
inability of the Company to collect from any other reinsurers

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any amounts that may have become due from them, whether such inability arises
from the insolvency of such reinsurers or otherwise.

SELF-INSURED OBLIGATIONS

         As respects business covered hereunder, this Agreement will cover all
obligations of the Company assumed by it as a self-insurer (or self-insured
obligations in excess of any valid collectible insurance available to the
Company) to the same extent as if all types of insurance or reinsurance covered
by this Agreement were afforded under the broadest form of policies issued by
the Company.

         Insurance or reinsurance wherein the Company is named as the insured or
reinsured party, either alone or jointly with some other party, will be deemed
to be insurance or reinsurance coming within the scope of this Agreement,
notwithstanding that no legal liability may arise in respect thereof by reason
of the fact that the Company is named as the insured or reinsured party or one
of the insured or reinsured parties.

OTHER REINSURANCE

         The Company is permitted to have other treaty reinsurance. The premium
for any such reinsurance that inures to the benefit of this Agreement will not
be included within the subject premium hereunder. Additionally, the Company may
purchase facultative reinsurance on any subject risk it deems advisable, and the
premium for that portion of the Company's policy reinsured elsewhere will not be
included within the subject premium hereunder.

REPORTS AND REMITTANCES

         Within 60 days following the expiration of this Agreement, the Company
will furnish the Reinsurers with a report of reinsurance premium due them for
that period. Such report will show and properly segregate the Company's premium
to which the reinsurance rate applies as well as contain such other information
as may be required by the Reinsurers for completion of their NAIC interim and/or
annual statements. The premium due the Reinsurers will be balanced against the
minimum and deposit premiums set forth in the Rate and Premium Sections of the
attached Exhibits, and any balance shown to be due the Reinsurers will be
remitted with said report. Any balance shown to be due the Company will be paid
within 30 days following receipt of said report by the Reinsurers.

                                       9

<PAGE>

RESERVES AND FUNDING

         (Applicable only if Reinsurers cannot qualify for credit by each
         governmental authority having jurisdiction over the Company's United
         States reserves and/or Canadian reserves.)

         With respect to policies issued by the Company coming within the scope
of this Agreement, the Company agrees that, when it files with the Insurance
Department or sets up on its books reserves for known losses that have been
reported to the Reinsurers (including loss and loss expense paid by the Company
but not recovered from the Reinsurers, loss and loss expense reported and
outstanding and an allowance for IBNR as determined by the Company), which it is
required by law to set up, it will forward to the Reinsurers a statement showing
the proportion of such reserves applicable to them. The Reinsurers hereby agree
that they will fund their portion of the aforementioned reserves by one of the
following methods of funding:

         A.       As regards Reinsurers unauthorized in any state of the United
                  States or the District of Columbia, such funding may be made
                  by cash advances, trust agreements, escrow accounts for the
                  benefit of the Company, letters of credit, or a combination
                  thereof.

         B.       As regards Reinsurers unauthorized in any province or
                  jurisdiction of Canada, such funding will be equal to 115% of
                  their proportion of reserves by a letter of credit for no more
                  than 15% of the total funding required and cash advances for
                  the remaining balance.

         The Reinsurers will have the option of determining the method of
funding referred to above, provided it is acceptable to the Company and the
applicable regulatory authorities.

         If a Reinsurer's choice of funding is or includes a letter of credit,
it will apply for and secure delivery to the Company of a clean, irrevocable,
unconditional letter of credit, dated on or before December 31 of the year in
which the request is made, issued by a member of the Federal Reserve System or
any bank approved for use by the NAIC Securities Valuation Office, provided that
said bank is at all times acceptable to the Company, and containing provisions
acceptable to the insurance regulatory authorities having jurisdiction over the
Company's reserves in an amount equal to that Reinsurer's proportion of said
reserves. In the event that the issuing bank becomes unacceptable to the
Company, the Company may request, at any time, that the letter of credit be
reissued by a bank that is acceptable to the Company and the applicable
regulatory authorities. The letter of credit will be issued for a period of not
less than one year, and will be automatically extended for one year from its
date of expiration or any future expiration date unless 30 days prior to any
expiration date the issuing bank notifies the Company by registered mail that it
elects not to consider the letter of credit extended for any additional period.
An issuing bank, not a member of the Federal Reserve System or not chartered in

                                       10

<PAGE>

the state of domicile of the Company, will provide 60 days notice to the Company
prior to any expiration in the event of nonextension.

         Notwithstanding any other provisions of this Agreement, the Company or
its court-appointed successor in interest may draw upon the cash advances, trust
agreements, escrow accounts and/or letters of credit at any time without
diminution because of the insolvency of the Company or of any Reinsurer for one
or more of the following purposes only:

         A.       To reimburse the Company for the Reinsurer's share of unearned
                  premium on policies reinsured hereunder on account of
                  cancellations of such policies.

         B.       To pay the Reinsurer's share or to reimburse the Company for
                  the Reinsurer's share of any loss reinsured by this Agreement,
                  which has not been otherwise paid.

         C.       To make refund of any sum in excess of the actual amount
                  required to pay the Reinsurer's share of any liability
                  reinsured by this Agreement.

         D.       In the event of nonextension of letters of credit as provided
                  for above, to establish deposits of the Reinsurer's share of
                  reserves for losses and/or unearned premium under this
                  Agreement.

         E.       To pay any other amounts the Company claims are due under this
                  Agreement.

         The issuing bank will have no responsibility whatsoever in connection
with the propriety of withdrawals made by the Company or the disposition of
funds withdrawn, except to ensure that withdrawals are made only upon the order
of properly authorized representatives of the Company.

         At annual intervals, or more frequently as agreed but never more
frequently than semi-annually, the Company will prepare and forward to the
Reinsurers a statement to reflect the Reinsurers' share of reserves for losses
and/or unearned premium. If the statement shows that the Reinsurers' share of
such reserves exceeds the balance available through cash advances, trust
agreements, escrow accounts and/or letters of credit as of the statement date,
then the Reinsurers will, within 30 days after receipt of notice of such excess,
make an adjustment to increase the amount available. If, however, the statement
shows that the Reinsurers' share of such reserves is less than the balance
available through the chosen method of funding as of the statement date, then
the Company will, within 30 days after receipt of written request from the
Reinsurers, release such excess by making the appropriate adjustment.

                                       11

<PAGE>

SPECIAL FUNDING/TERMINATION

         The Company may elect to request special funding for any Reinsurer's
participation or may terminate any Reinsurer's participation hereon at any time
on a cut-off basis by giving 30 days prior written notice to said Reinsurer upon
the happening of any one of the following circumstances:

         A.       The Reinsurer ceases assuming new and renewal property and
                  casualty treaty reinsurance;

         B.       A state insurance department or other legal authority orders
                  the Reinsurer to cease writing business;

         C.       The Reinsurer has become insolvent or has been placed into
                  liquidation or receivership (whether voluntary or
                  involuntary), or there has been instituted against it
                  proceedings for the appointment of a receiver, liquidator,
                  rehabilitator, conservator, or trustee in bankruptcy, or other
                  agent known by whatever name, to take possession of its assets
                  or control of its operations;

         D.       The Reinsurer's surplus has been reduced by whichever is
                  greater, either 20% of the amount of surplus at the inception
                  of this Agreement or 20% of the amount at the latest
                  anniversary, or has lost any part of, or has reduced its
                  paid-up capital (this provision D. will not apply to
                  Underwriting Members of Lloyd's, London);

         E.       The Reinsurer has undergone a material change in senior
                  management or has merged with or has become acquired or
                  controlled by any company, corporation, or individual(s) not
                  controlling the Reinsurer's operations previously; or

         F.       The Reinsurer has reinsured its entire liability under this
                  Agreement without the Company's prior written consent.

         G.       The Reinsurer has been assigned an A.M. Best's rating of less
                  than "A-" (a Standard & Poor's Insurance Solvency
                  International rating of less than "BBB" will apply as respects
                  alien Reinsurers other than Underwriting Members of Lloyd's,
                  London, and a Standard & Poor's Lloyd's Syndicate Stability
                  rating of less than "2" will apply as respects Underwriting
                  Members of Lloyd's, London).

         If the Company elects to exercise its special funding option, said
Reinsurer will, within 30 calendar days of the date of the Company's request to
do so, provide the Company with a cash advance, trust agreement, escrow account
for the benefit of the Company, letter of credit, or a combination thereof
acceptable to the Company to fund the Reinsurer's share of the reserves
hereunder for losses (including loss and loss expense

                                       12

<PAGE>

paid by the Company but not recovered from the Reinsurer, loss and loss expense
reported and outstanding, and an allowance for IBNR as determined by the
Company) and unearned premium, as if it were an unauthorized Reinsurer and
subject to the Reserves and Funding Article.

         If the Company instead elects to terminate the Reinsurer's
participation, said Reinsurer will immediately return the unearned portion of
any premium paid hereunder, less ceding commission thereon, if any, and any
applicable minimum premium provisions will be waived.

         For the purposes of this Article, unearned premium is defined as the
difference between the deposit premium and the premium earned as of the date of
termination.

         Additionally, if said Reinsurer's participation is terminated pursuant
to subparagraphs A. through G. of this Article, then the Company, at its sole
discretion, may elect to commute the Reinsurer's liability for losses, including
loss expense, whether known or unknown, on policies covered under this
Agreement. In the event the Company and the Reinsurer cannot agree upon the
capitalized value of the Reinsurer's liability on such policies, the two parties
will mutually appoint an actuary within 30 days to resolve the matter of
valuation and will share equally in any expense associated with such appointment
in a manner agreed upon at the time of appointment. The appointed actuary will
not be under the control of either party and will be a Fellow of the Casualty
Actuarial Society. The value determined by said actuary will be set forth in a
sworn statement expressing the actuary's professional opinion that said value is
fair for the complete release of all liabilities being commuted. Payment by the
Reinsurer of the amount of liability ascertained will constitute a complete and
final release of the Reinsurer with respect to its liability for all losses,
including loss expense, whether known or unknown, on policies covered under this
Agreement.

         Alternatively, if said Reinsurer's participation is terminated pursuant
to subparagraphs A. or B. of this Article, then the Company, at its sole
discretion, may require the Reinsurer to return all premium paid by the Company
to the Reinsurer under this Agreement, less paid losses and ceding commission,
if any. The Reinsurer then will be released completely from any and all
liability for all losses, including loss expense, whether known or unknown, on
policies covered under this Agreement.

LOSS NOTICES AND SETTLEMENTS

         The Company will advise the Reinsurers promptly of all losses that, in
the opinion of the Company, may involve the Reinsurers under this Agreement and
of all subsequent developments pertaining thereto that may materially affect the
Reinsurers as well. Inadvertent omission in dispatching the aforementioned
notices will in no way affect the obligation of the Reinsurers under this
Agreement, provided the Company informs the Reinsurers of such omission promptly
upon discovery.

                                       13

<PAGE>

         The Company will have the right to settle all claims under its
policies. The settlements, provided they are within the terms of this Agreement,
will be unconditionally binding on the Reinsurers in proportion to their
participation in this Agreement. When so requested, however, the Company will
afford the Reinsurers, at the Reinsurers' own expense, an opportunity to be
associated with the Company in the defense of any claim, suit, or proceeding
involving this Agreement, and the Company and the Reinsurers will cooperate in
every respect in such defense. Amounts due the Company hereunder in the
settlement of loss and loss expense will be payable by the Reinsurers within 10
days upon being furnished by the Company with reasonable evidence of the amount
paid or to be paid in excess of the Company's retention as set forth in the
Retention and Limit sections of the attached Exhibits. However, with respect to
any loss which has been previously individually advised and which is settled for
$1,000,000 or more, the Company may give the Reinsurers written notice of its
intention to imminently pay any such loss on a certain date and may require the
Reinsurers to have their share of such loss in the hands of the Company by such
date. Such written notice will allow the Reinsurers at least two working days
after their receipt to prepare and dispatch its payment by check or wire
transfer.

LATE PAYMENT PENALTY

         Payments from the Reinsurers to the Company will have as a due date the
date on which the proof of loss or demand for payment is received by the
Reinsurers, and will be overdue 60 days thereafter. For the purpose of this
paragraph only, payments received by the local Intermediary within the 60 day
deadline will not be considered overdue. Payments due from any Reinsurer to the
Company will not be considered overdue if the Reinsurer requests, in writing,
that such payment be made by drawing on a letter of credit or other similar
method of funding that has been established for this Agreement, provided that
there is an adequate balance in place, and further provided that such advice to
draw is received by the local Intermediary within the 60 day deadline set forth
above. Payments from the Company to the Reinsurers will have as a due date the
date specified in this Agreement and will be overdue 60 days thereafter. Premium
adjustments will be overdue 60 days from the Agreement due date or 120 days
after the expiration or renewal date, whichever is greater.

         The Company will provide the Reinsurers a proof of loss and a copy of
the claim adjuster's report(s) or any other evidence of indemnification. If,
subsequent to receipt of this evidence, the information contained therein is
insufficient or not in accordance with the contractual conditions of this
Agreement, then the payment due date as specified above will be deemed to be the
date upon which the Reinsurers received the additional information necessary to
approve payment of the claim and the claim is presented in an acceptable manner.
This paragraph is only for the purpose of establishing when a claim payment is
overdue, and will not alter the provisions of the Loss Notices and Settlements
Article or other pertinent contractual stipulations.

                                       14

<PAGE>

         Overdue amounts will bear simple interest from the overdue date at a
rate determined by the one month London Interbank Offered Rate for the first
business day of the calendar month in which the amount becomes overdue, as
published in The Wall Street Journal, plus one percentage point, to be
calculated weekly. If the sum of the compensating additional amount computed in
respect of any overdue payment is less than 0.25% of the amount overdue or
$1,000, whichever is greater, and/or the overdue period is one week or less,
then the interest amount will be waived.

         For the purpose of this Article, reinsuring Underwriting Members of
Lloyd's, London, will be considered to be one entity.

OFFSET

         All amounts due or otherwise accrued to any of the parties hereto or
any of their parents, affiliates, or subsidiaries, whether by reasons of
premiums, losses, expenses, or otherwise, under this Agreement or any other
contract will at all times be subject to the right of offset and the net balance
will be due and payable, unless expressly prohibited by law or regulation.

SALVAGE AND SUBROGATION

         The Reinsurers will be credited with their share of salvage and/or
subrogation in respect of claims and settlements under this Agreement, less
their share of recovery expense. Unless the Company and Reinsurers agree to the
contrary, the Company will enforce its right to salvage and/or subrogation and
will prosecute all claims arising out of such right. Should the Company refuse
or neglect to enforce this right, the Reinsurers are hereby empowered and
authorized to institute appropriate action in the name of the Company.

         Amounts recovered from salvage and/or subrogation will always be used
to reimburse the excess reinsurers (and the Company, should it carry a portion
of excess coverage net) in the reverse order of their participation in the loss
before being used in any way to reimburse the Company for its primary loss. If
the amount recovered exceeds the recovery expense, the recovery expense will be
borne by each party in proportion to its benefit from the recovery. If the
recovery expense exceeds the amount recovered, the amount recovered (if any)
will be applied to the reimbursement of recovery expense and the remaining
expense as well as any originally incurred loss expense will be added to the
ultimate net loss.

                                       15

<PAGE>

DELAYS, ERRORS, OR OMISSIONS

         Any inadvertent delay, error, or omission will not be held to relieve
either party hereto from any liability that would attach to it hereunder if such
delay, error, or omission had not been made, providing any error or omission
will be rectified upon discovery.

AMENDMENTS

         This Agreement may be altered or amended in any of its terms and
conditions by mutual consent of the Company and the Reinsurers either by addenda
hereto or by an exchange of letters; such addenda or letters will then
constitute a part of this Agreement.

ACCESS TO RECORDS

         Provided the Company receives prior notice, the Reinsurers, through
their designated representatives and at their own expense, will have the right
to inspect, at any reasonable time, all records of the Company that pertain in
any way to this Agreement.

INSOLVENCY

         (This Article will apply severally to each reinsured company referenced
         within the definition of "Company" in the Preamble to this Agreement.)

         In the event of the Company's insolvency, the reinsurance afforded by
this Agreement will be payable by the Reinsurers on the basis of the Company's
liability under the policies reinsured without diminution because of the
Company's insolvency or because its liquidator, receiver, conservator, or
statutory successor has failed to pay all or a portion of any claims, subject
however to the right of the Reinsurers to offset against such funds due
hereunder, any sums that may be payable to them by said insolvent Company in
accordance with applicable law. The reinsurance will be payable by the
Reinsurers directly to the Company, or to its liquidator, receiver, conservator,
or statutory successor except as otherwise provided by Section 4118(a) (relating
to Fidelity and Surety Risks) and Section 1114(c) (relating to physical damage)
of the Insurance Law of New York or except (a) where this Agreement specifically
provides another payee of such reinsurance in the event of the Company's
insolvency or (b) where the Reinsurers, with the consent of the direct insured
or insureds, have assumed such policy obligations of the Company as direct
obligations of themselves to the payees under such policies in substitution for
the Company's obligation to such payees. Then, and in that event only, the
Company, with the prior approval by the Superintendent of Insurance of the state
of New York of the Certificate of Assumption on New York risks, is entirely
released from its obligation and the Reinsurers will pay any loss directly to
payees under such policies.

                                       16

<PAGE>

         The Company's liquidator, receiver, conservator, or statutory successor
will give written notice of the pendency of a claim against the Company under
the policies reinsured within a reasonable time after such claim is filed in the
insolvency proceeding. During the pendency of such claim, the Reinsurers may
investigate said claim and interpose in the proceeding where the claim is to be
adjudicated, at their own expense, any defense that they may deem available to
the Company, or to its liquidator, receiver, conservator, or statutory
successor. The expense thus incurred by the Reinsurers will be chargeable
against the Company, subject to court approval, as part of the expense of
conservation or liquidation to the extent that such proportionate share of the
benefit will accrue to the Company solely as a result of the defense undertaken
by the Reinsurers. 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
will be apportioned in accordance with the terms of this Agreement as though
such expense had been incurred by the Company.

ARBITRATION

         As a condition precedent to any right of action under this Agreement,
any dispute (whether during the currency of this Agreement or after expiration
or termination of this Agreement) between the Company and any Reinsurer arising
out of or in connection with this Agreement, including its formation or actual
validity, will be submitted to the decision of a board of arbitration
(hereinafter called the "board") composed of two arbitrators and an umpire
meeting at a site in New York, unless some other site is mutually agreed by the
parties. Each member of the board will be disinterested in the outcome of the
arbitration, and will be an active or former official or experienced individual
who has operated in the United States insurance or reinsurance industry.

         To the extent not otherwise mutually agreed or provided for in this
Article, the procedures and rules applicable to arbitration under the laws of
New York, as from time to time set forth, will govern the procedures of the
arbitration. All time limitations stated in this Article may be amended by
mutual consent of the parties, and will be amended automatically to the extent
made necessary by any circumstances beyond the control of the parties.

         All notices in connection with the arbitration will be in writing and
sent certified or registered mail, return receipt requested. The claimant's
notice demanding arbitration will reference this Article, will state in
particulars all issues to be resolved in its view, and will name the arbitrator
appointed by it. Within 30 days of receipt of the claimant's notice, the
respondent will notify the claimant of any additional issues to be resolved in
the arbitration and of the name of its appointed arbitrator.

         If the respondent fails to appoint its arbitrator within 30 days after
having received the claimant's notice demanding arbitration, the claimant is
authorized to and will appoint the second arbitrator and will notify the
respondent of the name of the arbitrator appointed for it. The two arbitrators
will appoint an umpire before instituting

                                       17

<PAGE>

the hearing. If the two arbitrators fail to agree upon the appointment of an
umpire within 30 days after notification of the appointment of the second
arbitrator, within 10 days thereafter the claimant will petition the United
States District Court having geographical jurisdiction over the site of
arbitration to appoint the umpire (or if the federal court declines to act, the
state court having general jurisdiction in such area); the selection of the
umpire will be within the exercise of sound discretion by the court. The board
will notify the claimant and the respondent of the umpire's identity within 10
days of the umpire's appointment.

         The arbitration hearing will commence within 60 days of the appointment
of the umpire. Within 30 days of the date of notice of appointment of the
umpire, the claimant and respondent each will submit initial briefs to the board
outlining the issues in dispute and the basis and reasons for their respective
positions. Within 10 days after filing of the initial briefs the claimant and
the respondent may submit reply briefs. Initial and reply briefs may be amended
by the submitting party at any time, but not later than 10 days prior to the
date of commencement of the arbitration hearing. Reasonable responses will be
allowed at the hearing to new material contained in any amendments filed to the
briefs but not addressed previously.

         Subject to customary and recognized legal rules of privilege, each
party will have the obligation to produce as witnesses to the arbitration such
of its employees or those of its affiliates as the other party may request, and
any documents that the other party may request, providing always that those
witnesses and documents be relevant to the issues before the arbitration and
provided further that the parties may mutually agree as to further discovery
prior to the arbitration. The board may, at its discretion, request and consider
underwriting and placement information provided by the Company to the
Reinsurers, as well as any correspondence exchanged by the parties that is
related to this Agreement. The umpire will be the final judge of rules of
privilege and relevancy of any witnesses and documents, if there is any
disagreement by the parties.

         The board will conduct the hearing and make its award with regard to
the terms expressed in this Agreement, the original intentions of the parties to
the extent reasonably ascertainable, and the custom and usage of the
property-casualty insurance and reinsurance business. At the hearing, evidence
will be allowed but the formal rules of evidence will not apply; cross
examination and rebuttal will be allowed. Within 20 days of the close of the
hearing, at their own election or at the request of the board, the claimant and
the respondent may submit post-hearing briefs to be considered by the board
before making its decision.

         The board will make its award within 30 days following the close of the
hearing or the submission of post-hearing briefs, whichever is later. The
decision by the majority of the members of the board will be in writing and will
be final and binding upon the parties. The board is empowered to grant interim
relief as it may deem appropriate. Either the claimant or the respondent may
apply to any court having jurisdiction for an order confirming the award; a
judgment of such court will thereupon be entered on the award.

                                       18
<PAGE>

         The claimant and the respondent will each bear the expense of the
arbitrator appointed by or for it and will jointly and equally bear the expense
of the umpire and any stenographer requested. The remaining costs of the
arbitration proceedings will be allocated by the board.

         To the extent requested by the Company, the Reinsurer, or other
Reinsurers hereon, where the issues in dispute between the Company and the
Reinsurer are related or largely identical or similar to issues in dispute
between the Company and other Reinsurers, all parties may join together in a
consolidated arbitration under the terms and conditions contained in this
Article to resolve all common issues; provided, however, that:

         A.       The two arbitrators and umpire will be appointed by the
                  Company and the original arbitrating Reinsurer;

         B.       Each party to a consolidated arbitration will have the right
                  to its own attorney, position, and related claims and
                  defenses;

         C.       No party will be prevented from presenting its position by the
                  position put forth by any other party;

         D.       The consolidated arbitration will not be construed as changing
                  the liability of the Reinsurers under the terms of this
                  Agreement from several to joint; and

         E.       The cost and expenses of the arbitration, including the fees
                  of the arbitrators and the umpire (but exclusive of attorneys'
                  fees, which will be borne exclusively by the respective
                  retaining party), will be borne pro rata by each party
                  participating in the consolidated arbitration.

CONFLICT WITH LAW

         In the event any provision of this Agreement is rendered illegal or
unenforceable in any jurisdiction, such provision will be considered void as
respects that jurisdiction only, and such a consideration will not affect the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.

TAXES

         The Company will pay all taxes (except Federal Excise Tax) on premiums
reported to the Reinsurers on this Agreement.

                                       19

<PAGE>

FEDERAL EXCISE TAX

         (This Article applies to Reinsurers domiciled outside the United States
         of America, excepting Underwriting Members of Lloyd's, London, and
         other Reinsurers exempt from Federal Excise Tax.)

         The Reinsurers will allow for the purpose of paying Federal Excise Tax
the applicable percentage of the premium payable hereon (as imposed under
Section 4371 of the Internal Revenue Service Code) to the extent such premium is
subject to such tax. In the event of any return of premium, the Reinsurers will
deduct the aforesaid percentage from the return premium payable hereon and the
Company or its agent will recover such tax from the United States Government.

CURRENCY

         The sign "$" in this Agreement refers to United States of America
dollars, except in those cases where the policies are issued by the Company in
Canadian dollars, in which case it will refer to Canadian dollars.

         In the event the Company is involved in a loss requiring payments in
United States and Canadian currency, the Company's retention and the amount
recoverable hereunder will be apportioned between the two currencies in the same
proportion as the amount of loss in each currency bears to the total amount of
loss sustained by the Company.

         For the purposes of this Agreement, where the Company receives premiums
or pays losses in currencies other than United States or Canadian currency, such
premiums and losses will be converted into United States dollars at the actual
rates of exchange at which these premiums and losses are entered in the
Company's books.

SERVICE OF SUIT

         (This Article applies to Reinsurers domiciled outside the United States
         of America and/or unauthorized in any state, territory, or district of
         the United States of America that has jurisdiction over the Company and
         in which a subject suit has been instituted. This Article is not
         intended to conflict with or override the parties' obligation to
         arbitrate their disputes in accordance with the Arbitration Article.)

         In the event any Reinsurer hereon fails to pay any amount claimed due
hereunder, such Reinsurer, at the request of the Company, will submit to the
jurisdiction of a court of competent jurisdiction within the United States and
will comply with all requirements necessary to give that court jurisdiction.
Nothing in this Article constitutes or should be understood to constitute a
waiver of the Reinsurer's right to commence an action in any

                                       20

<PAGE>

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. Service of process in such suit may be made upon Mendes and Mount, 750
Seventh Avenue, New York, New York 10019-6829, or another party specifically
designated in the applicable Interests and Liabilities Agreement attached
hereto. In any suit instituted against it upon this Agreement, the Reinsurer
will abide by the final decision of such court or of any appellate court in the
event of an appeal.

         The above named are authorized and directed to accept service of
process on behalf of the Reinsurer in any such suit and/or upon the request of
the Company to give a written undertaking to the Company that they will enter a
general appearance upon the Reinsurer's behalf in the event such a suit is
instituted.

         Further, pursuant to any statute of any state, territory, or district
of the United States that makes provision therefor, the Reinsurer hereby
designates the Superintendent, Commissioner, or Director of Insurance or other
officer specified for that purpose in the statute, or the 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 Agreement, and
hereby designates the above named as the person to whom the said officer is
authorized to mail such process or a true copy thereof.

AGENCY

         For purposes of sending and receiving notices and payments required by
this Agreement, the reinsured company that is set forth first in the definition
of "Company" in the Preamble to this Agreement will be deemed the agent of all
other reinsured companies referenced in the Preamble. In no event, however, will
any reinsured company be deemed the agent of another with respect to the terms
of the Insolvency Article.

INTERMEDIARY

         Aon Re Inc., an Illinois corporation, or one of its affiliated
corporations duly licensed as a reinsurance intermediary, is hereby recognized
as the Intermediary negotiating this Agreement for all business hereunder. All
communications (including but not limited to notices, statements, premiums,
return premiums, commissions, taxes, losses, loss expenses, salvages, and loss
settlements) relating to this Agreement will be transmitted to the Company or
the Reinsurers through the Intermediary. Payments by the Company to the
Intermediary will be deemed payment to the Reinsurers. Payments by the
Reinsurers to the Intermediary will be deemed payment to the Company only to the
extent that such payments are actually received by the Company.

                                       21

<PAGE>

                                    EXHIBIT A
                                   FIRST LAYER

RETENTION AND LIMIT

         No claim will be made hereunder unless the Company has first sustained,
by reason of any one loss occurrence, an ultimate net loss in excess of
$5,000,000. The Reinsurers will then be liable for the amount of ultimate net
loss in excess of $5,000,000 any one loss occurrence, but the limit of liability
of the Reinsurers will not exceed $5,000,000 with respect to any one loss
occurrence.

         The Company will retain net for its own account 5% of the excess losses
hereunder.

REINSTATEMENT

         In the event that all or any portion of the reinsurance under this
Exhibit A is exhausted by loss, the amount so exhausted will be reinstated from
the time of occurrence of such loss. The Reinsurers' liability will not exceed
$5,000,000 in respect of any one loss occurrence nor $10,000,000 during the
12-month term of this Agreement.

         For each amount so reinstated, the Company will pay an additional
premium based upon the pro rata amount of the reinstatement only. The
provisional reinstatement premium, based on the deposit premium and finally
adjusted as set forth in the Rate and Premium section of this Exhibit A, will be
paid by the Company at the same time the Reinsurers pay the loss.

RATE AND PREMIUM

         For the term of this Agreement, there will be a deposit premium hereon
of $xxx,000 payable in equal quarterly installments of $xxx,000 on January 1st,
April 1st, July 1st, and October 1st. At Agreement expiration, the Company will
adjust the deposit premium against a rate of x.xxx% of its gross net earned
premium, subject to a minimum premium of $xxx,000.

                                       22

<PAGE>

                                    EXHIBIT B
                                  SECOND LAYER

RETENTION AND LIMIT

         No claim will be made hereunder unless the Company has first sustained,
by reason of any one loss occurrence, an ultimate net loss in excess of
$10,000,000, inclusive of underlying catastrophe reinsurance. The Reinsurers
will then be liable for the amount of ultimate net loss in excess of $10,000,000
any one loss occurrence, but the limit of liability of the Reinsurers will not
exceed $10,000,000 with respect to any one loss occurrence.

         The Company will retain net for its own account 5% of the excess losses
hereunder.

REINSTATEMENT

         In the event that all or any portion of the reinsurance under this
Exhibit B is exhausted by loss, the amount so exhausted will be reinstated from
the time of occurrence of such loss. The Reinsurers' liability will not exceed
$10,000,000 in respect of any one loss occurrence nor $20,000,000 during the
12-month term of this Agreement.

         For each amount so reinstated, the Company will pay an additional
premium based upon the pro rata amount of the reinstatement only. The
provisional reinstatement premium, based on the deposit premium and finally
adjusted as set forth in the Rate and Premium section of this Exhibit B, will be
paid by the Company at the same time the Reinsurers pay the loss.

RATE AND PREMIUM

         For the term of this Agreement, there will be a deposit premium hereon
of $xxx,000, payable in equal quarterly installments of $xxx,000 on January 1st,
April 1st, July 1st, and October 1st. At Agreement expiration, the Company will
adjust the deposit premium against a rate of x.xxx% of its gross net earned
premium, subject to a minimum premium of $xxx,000.

                                       23

<PAGE>

                                    EXHIBIT C
                                   THIRD LAYER

RETENTION AND LIMIT

         No claim will be made hereunder unless the Company has first sustained,
by reason of any one loss occurrence, an ultimate net loss in excess of
$20,000,000, inclusive of underlying catastrophe reinsurance. The Reinsurers
will then be liable for the amount of ultimate net loss in excess of $20,000,000
any one loss occurrence, but the limit of liability of the Reinsurers will not
exceed $40,000,000 with respect to any one loss occurrence.

         The Company will retain net for its own account 5% of the excess losses
hereunder.

REINSTATEMENT

         In the event that all or any portion of the reinsurance under this
Exhibit C is exhausted by loss, the amount so exhausted will be reinstated from
the time of occurrence of such loss. The Reinsurers' liability will not exceed
$40,000,000 in respect of any one loss occurrence nor $80,000,000 during the
term of this Agreement.

         For each amount so reinstated, the Company will pay an additional
premium based upon the pro rata amount of the reinstatement only. The
provisional reinstatement premium, based on the deposit premium and finally
adjusted as set forth in the Rate and Premium section of this Exhibit C, will be
paid by the Company at the same time the Reinsurers pay the loss.

RATE AND PREMIUM

         For the term of this Agreement, there will be a deposit premium hereon
of $x,xxx,000, payable in equal quarterly installments of $xxx,xxx on January
1st, April 1st, July 1st, and October 1st. At Agreement expiration, the Company
will adjust the deposit premium against a rate of x.xx% of its gross net earned
premium, subject to a minimum premium of $x,xxx,000.

                                       24

<PAGE>

                POOLS, ASSOCIATIONS & SYNDICATES EXCLUSION CLAUSE

SECTION A:

Excluding:

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

         (2)      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,
                  FM Global,
                  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,
                  Global Aerospace/Associated Aviation Underwriters.

Section B does not apply:

         (1)      Where the Total Insured Value over all interests of the risk
                  in question is less than $250,000,000.

         (2)      To interests traditionally underwritten as Inland Marine
                  and/or Stock and/or Contents written on a Blanket basis.

         (3)      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(1).

                                   Page 1 of 3

<PAGE>

         (4)      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 (4) only.

Where this clause attaches to Catastrophe Excesses, the following Sections C and
D are added:

SECTION C:

         Nevertheless the Reinsurer specifically agrees that liability accruing
to the Company from its participation in Residual Market Mechanisms including
but not limited to:

         (1)      The following so-called "Coastal Pools":

                  Alabama Insurance Underwriting Association Citizens Property
                  Insurance Corporation (CPIC) Louisiana Insurance Underwriting
                  Association Mississippi Windstorm Underwriting Association
                  North Carolina Insurance Underwriting Association South
                  Carolina Windstorm and Hail Underwriting Association Texas
                  Catastrophe Property Insurance Association

                                       AND

         (2)      All "Fair Plan" and "Rural Risk Plan" business,

                                       AND

         (3)      California Earthquake Authority (CEA),

for all perils otherwise protected hereunder shall not be excluded herefrom,
except however, that this reinsurance does not include any increase in such
liability resulting from:

                  (a)      The inability of any other participant in such
                           Residual Market Mechanisms to meet its liability.

                  (b)      Any claim against such Residual Market Mechanisms 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 Funds Exclusion Clause incorporated in
                           this Contract).

                                   Page 2 of 3

<PAGE>

SECTION D:

         (1)      Notwithstanding Section C above, in respect of the CEA, where
                  an assessment is made against the Company by the CEA, the
                  Company may include in its ultimate net loss only that
                  assessment directly attributable to each separate loss
                  occurrence covered hereunder. The Company's initial capital
                  contribution to the CEA shall not be included in the ultimate
                  net loss.

         (2)      Notwithstanding Section C above, in respect of CPIC, where an
                  assessment is made against the Company by CPIC, the maximum
                  loss that the Company may include in the ultimate net loss in
                  respect of any loss occurrence hereunder shall not exceed the
                  lesser of:

                  (a)      The Company's assessment from CPIC for the accounting
                           year in which the loss occurrence commenced, or

                  (b)      The product of the following:

                           (i)      The Company's percentage participation in
                                    CPIC for the accounting year in which the
                                    loss occurrence commenced; and

                           (ii)     CPIC's total losses in such loss occurrence.

                  Any assessments for accounting years subsequent to that in
                  which the loss occurrence commenced may not be included in the
                  ultimate net loss hereunder. Moreover, notwithstanding Section
                  C above, in respect of CPIC, the ultimate net loss hereunder
                  shall not include any monies expended to purchase or retire
                  bonds as a consequence of being a member of CPIC.

                  For the purposes of this Contract, the Company may not include
                  in the ultimate net loss any assessment or any percentage
                  assessment levied by CPIC to meet the obligations of an
                  insolvent insurer, member or other party, or to meet any
                  obligations arising from the deferment by CPIC of the
                  collection of monies.

                                   Page 3 of 3

<PAGE>

           NUCLEAR ENERGY RISKS EXCLUSION CLAUSE (REINSURANCE) (1994)
                      (WORLDWIDE EXCLUDING U.S.A. & CANADA)

This agreement shall exclude Nuclear Energy Risks whether such risks are written
directly and/or by way of reinsurance and/or via Pools and/or Associations.

For all purposes of this agreement Nuclear Energy Risks shall mean all first
party and/or third party insurances or reinsurances (other than Workers'
Compensation and Employers' Liability) in respect of:

         (I)      All Property on the site of a nuclear power station. Nuclear
                  Reactors, reactor buildings and plant and equipment therein on
                  any site other than a nuclear power station.

         (II)     All Property, on any site (including but not limited to the
                  sites referred to in (I) above) used or having been used for:

                  (a)      the generation of nuclear energy; or

                  (b)      the Production, Use or Storage of Nuclear Material.

         (III)    Any other Property eligible for insurance by the relevant
                  local Nuclear Insurance Pool and/or Association but only to
                  the extent of the requirements of that local Pool and/or
                  Association.

         (IV)     The supply of goods and services to any of the sites,
                  described in (I) to (III) above, unless such insurances or
                  reinsurances shall exclude the perils of irradiation and
                  contamination by Nuclear Material.

Except as undernoted, Nuclear Energy Risks shall not include:

         (i)      Any insurance or reinsurance in respect of the construction or
                  erection or installation or replacement or repair or
                  maintenance or decommissioning of Property as described in (I)
                  to (III) above (including contractors' plant and equipment);

         (ii)     Any Machinery Breakdown or other Engineering insurance or
                  reinsurance not coming within the scope of (i) above;

Provided always that such insurance or reinsurance shall exclude the perils of
irradiation and contamination by Nuclear Material.

                                   Page 1 of 3

<PAGE>

However, the above exemption shall not extend to:

         (1)      The provision of any insurance or reinsurance whatsoever in
                  respect of:

                  (a)      Nuclear Material;

                  (b)      Any Property in the High Radioactivity Zone or Area
                           of any Nuclear Installation as from the introduction
                           of Nuclear Material or - for reactor installations -
                           as from fuel loading or first criticality where so
                           agreed with the relevant local Nuclear Insurance Pool
                           and/or Association.

         (2)      The provision of any insurance or reinsurance for the
                  undernoted perils:

                  -        Fire, lightning, explosion;

                  -        Earthquake;

                  -        Aircraft and other aerial devices or articles dropped
                           therefrom;

                  -        Irradiation and radioactive contamination;

                  -        Any other peril insured by the relevant local Nuclear
                           Insurance Pool and/or Association;

                           in respect of any other Property not specified in (1)
                           above which directly involves the Production, Use or
                           Storage of Nuclear Material as from the introduction
                           of Nuclear Material into such Property.

Definitions

"Nuclear Material" means:

         (i)      Nuclear fuel, other than natural uranium and depleted uranium,
                  capable of producing energy by a self-sustaining chain process
                  of nuclear fission outside a Nuclear Reactor, either alone or
                  in combination with some other material; and

         (ii)     Radioactive Products or Waste.

"Radioactive Products or Waste" means any radioactive material produced in, or
any material made radioactive by exposure to the radiation incidental to the
production or utilisation of nuclear fuel, but does not include radioisotopes
which have reached the final stage of fabrication so as to be usable for any
scientific, medical, agricultural, commercial or industrial purpose.

                                   Page 2 of 3

<PAGE>

"Nuclear Installation" means:

         (i)      Any Nuclear Reactor;

         (ii)     Any factory using nuclear fuel for the production of Nuclear
                  Material, or any factory for the processing of Nuclear
                  Material, including any factory for the reprocessing of
                  irradiated nuclear fuel; and

         (iii)    Any facility where Nuclear Material is stored, other than
                  storage incidental to the carriage of such material.

"Nuclear Reactor" means any structure containing nuclear fuel in such an
arrangement that a self-sustaining chain process of nuclear fission can occur
therein without an additional source of neutrons.

"Production, Use or Storage of Nuclear Material" means the production,
manufacture, enrichment, conditioning, processing, reprocessing, use, storage,
handling and disposal of Nuclear Material.

"Property" shall mean all land, buildings, structures, plant, equipment,
vehicles, contents (including but not limited to liquids and gases) and all
materials of whatever description whether fixed or not.

"High Radioactivity Zone or Area" means:

         (i)      For nuclear power stations and Nuclear Reactors, the vessel or
                  structure which immediately contains the core (including its
                  supports and shrouding) and all the contents thereof, the fuel
                  elements, the control rods and the irradiated fuel store; and

         (ii)     For non-reactor Nuclear Installations, any area where the
                  level of radioactivity requires the provision of a biological
                  shield.

N.M.A. 1975a (10/3/94)
Form approved by Lloyd's Underwriters' Non-Marine Association Limited.

                                   Page 3 of 3

<PAGE>

U.S.A.

        NUCLEAR INCIDENT EXCLUSION CLAUSE--PHYSICAL DAMAGE--REINSURANCE

1.       This Reinsurance does not cover any loss or liability accruing to the
         Reassured, directly or indirectly and whether as Insurer or Reinsurer,
         from any Pool of Insurers or Reinsurers formed for the purpose of
         covering Atomic or Nuclear Energy risks.

2.       Without in any way restricting the operation of paragraph (1) of this
         Clause, this Reinsurance does not cover any loss or liability accruing
         to the Reassured, directly or indirectly and whether as Insurer or
         Reinsurer, from any insurance against Physical Damage (including
         business interruption or consequential loss arising out of such
         Physical Damage) to:

         I.       Nuclear reactor power plants including all auxiliary property
                  on the site, or

         II.      Any other nuclear reactor installation, including laboratories
                  handling radioactive materials in connection with reactor
                  installations, and "critical facilities" as such, or

         III.     Installations for fabricating complete fuel elements or for
                  processing substantial quantities of "special nuclear
                  material", and for reprocessing, salvaging, chemically
                  separating, storing or disposing of "spent" nuclear fuel or
                  waste materials, or

         IV.      Installations other than those listed in paragraph (2) III
                  above using substantial quantities of radioactive isotopes or
                  other products of nuclear fission.

3.       Without in any way restricting the operations of paragraphs (1) and (2)
         hereof, this Reinsurance does not cover any loss or liability by
         radioactive contamination accruing to the Reassured, directly or
         indirectly, and whether as Insurer or Reinsurer, from any insurance on
         property which is on the same site as a nuclear reactor power plant or
         other nuclear installation and which normally would be insured
         therewith except that this paragraph (3) shall not operate

         (a)      where Reassured does not have knowledge of such nuclear
                  reactor power plant or nuclear installation, or

         (b)      where said insurance contains a provision excluding coverage
                  for damage to property caused by or resulting from radioactive
                  contamination, however caused. However on and after 1st
                  January 1960 this sub-paragraph (b) shall only apply provided
                  the said radioactive contamination exclusion provision has
                  been approved by the Governmental Authority having
                  jurisdiction thereof.

                                   Page 1 of 2

<PAGE>

4.       Without in any way restricting the operations of paragraphs (1), (2)
         and (3) hereof, this Reinsurance does not cover any loss or liability
         by radioactive contamination accruing to the Reassured, directly or
         indirectly, and whether as Insurer or Reinsurer, when such radioactive
         contamination is a named hazard specifically insured against.

5.       It is understood and agreed that this Clause shall not extend to risks
         using radioactive isotopes in any form where the nuclear exposure is
         not considered by the Reassured to be the primary hazard.

6.       The term "special nuclear material" shall have the meaning given it in
         the Atomic Energy Act of 1954 or by any law amendatory thereof.

7.       Reassured to be sole judge of what constitutes:

         (a)      substantial quantities, and

         (b)      the extent of installation, plant or site.

NOTE:             Without in any way restricting the operation of paragraph (1)
                  hereof, it is understood and agreed that

         (a)      all policies issued by the Reassured on or before 31st
                  December 1957 shall be free from the application of the other
                  provisions of this Clause until expiry date or 31st December
                  1960 whichever first occurs whereupon all the provisions of
                  this Clause shall apply.

         (b)      with respect to any risk located in Canada policies issued by
                  the Reassured on or before 31st December 1958 shall be free
                  from the application of the other provisions of this Clause
                  until expiry date or 31st December 1960 whichever first occurs
                  whereupon all the provisions of this Clause shall apply.

N.M.A. 1119 (12/12/57)

                                   Page 2 of 2

<PAGE>

CANADA

         NUCLEAR INCIDENT EXCLUSION CLAUSE--PHYSICAL DAMAGE--REINSURANCE

1.       This Agreement does not cover any loss or liability accruing to the
         Reinsured directly or indirectly, and whether as Insurer or Reinsurer,
         from any Pool of Insurers or Reinsurers formed for the purpose of
         covering Atomic or Nuclear Energy risks.

2.       Without in any way restricting the operation of paragraph 1 of this
         clause, this Agreement does not cover any loss or liability accruing to
         the Reinsured, directly or indirectly, and whether as Insurer or
         Reinsurer, from any insurance against Physical Damage (including
         business interruption or consequential loss arising out of such
         Physical Damage) to:

         (a)      nuclear reactor power plants including all auxiliary property
                  on the site, or

         (b)      any other nuclear reactor installation, including laboratories
                  handling radioactive materials in connection with reactor
                  installations, and critical facilities as such, or

         (c)      installations for fabricating complete fuel elements or for
                  processing substantial quantities of radioactive materials,
                  and for reprocessing, salvaging, chemically separating,
                  storing or disposing of spent nuclear fuel or waste materials,
                  or

         (d)      installations other than those listed in (c) above using
                  substantial quantities of radioactive isotopes or other
                  products of nuclear fission.

3.       Without in any way restricting the operation of paragraphs 1 and 2 of
         this clause, this Agreement does not cover any loss or liability by
         radioactive contamination accruing to the Reinsured, directly or
         indirectly, and whether as Insurer or Reinsurer, from any insurance on
         property which is on the same site as a nuclear reactor power plant or
         other nuclear installation and which normally would be insured
         therewith, except that this paragraph 3 shall not operate:

         (a)      where the Reinsured does not have knowledge of such nuclear
                  reactor power plant or nuclear installation, or

         (b)      where the said insurance contains a provision excluding
                  coverage for damage to property caused by or resulting from
                  radioactive contamination, however caused.

                                   Page 1 of 2

<PAGE>

4.       Without in any way restricting the operation of paragraphs 1, 2 and 3
         of this clause, this Agreement does not cover any loss or liability by
         radioactive contamination accruing to the Reinsured, directly or
         indirectly, and whether as Insurer or Reinsurer, when such radioactive
         contamination is a named hazard specifically insured against.

5.       This clause shall not extend to risks using radioactive isotopes in any
         form where the nuclear exposure is not considered by the Reinsured to
         be the primary hazard.

6.       The term "radioactive material" means uranium, thorium, plutonium,
         neptunium, their respective derivatives and compounds, radioactive
         isotopes of other elements and any other substances which may be
         designated by or pursuant to any law, act or statute, or any law
         amendatory thereof as being prescribed substances capable of releasing
         atomic energy, or as being requisite for the production, use or
         application of atomic energy.

7.       Reinsured to be sole judge of what constitutes:

         (a)      substantial quantities, and

         (b)      the extent of installation, plant or site.

8.       Without in any way restricting the operation of paragraphs 1, 2, 3 and
         4 of this clause, this Agreement does not cover any loss or liability
         accruing to the Reinsured, directly or indirectly, and whether as
         Insurer or Reinsurer caused:

         (a)      by any nuclear incident as defined in or pursuant to the
                  Nuclear Liability Act or any other nuclear liability act, law
                  or statute, or any law amendatory thereof, or nuclear
                  explosion, except for ensuing loss or damage which results
                  directly from fire, lightning or explosion of natural, coal or
                  manufactured gas;

         (b)      by contamination by radioactive material.

NOTE:             Without in any way restricting the operation of paragraphs 1,
                  2, 3 and 4 of this clause, paragraph 8 of this clause shall
                  only apply to all original contracts of the Reinsured whether
                  new, renewal or replacement which become effective on or after
                  December 31, 1992.

N.M.A. 1980a (01/04/96)
Form approved by Lloyd's Underwriters' Non-Marine Association Ltd.

                                   Page 2 of 2

<PAGE>

                        INSOLVENCY FUNDS EXCLUSION CLAUSE

This Agreement excludes 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, howsoever denominated, established, or governed, that 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.

<PAGE>

                               TERRORISM EXCLUSION

Notwithstanding any provision to the contrary within this reinsurance agreement
or any endorsement thereto, it is agreed that this reinsurance agreement
excludes loss, damage, cost, or expense directly or indirectly caused by,
contributed to by, resulting from, or arising out of or in connection with any
act of terrorism, as defined herein, regardless of any other cause or event
contributing concurrently or in any other sequence to the loss.

An act of terrorism includes any act, or preparation in respect of action, or
threat of action designed to influence the government de jure or de facto of any
nation or any political division thereof, or in pursuit of political, religious,
ideological, or similar purposes to intimidate the public or a section of the
public of any nation by any person or group(s) of persons whether acting alone
or on behalf of or in connection with any organization(s) or government(s) de
jure or de facto, and which:

(i)      involves violence against one or more persons; or

(ii)     involves damage to property; or

(iii)    endangers life other than that of the person committing the action; or

(iv)     creates a risk to health or safety of the public or a section of the
         public; or

(v)      is designed to interfere with or to disrupt an electronic system.

This reinsurance agreement also excludes loss, damage, cost, or expense directly
or indirectly caused by, contributed to by, resulting from, or arising out of or
in connection with any action in controlling, preventing, suppressing,
retaliating against, or responding to any act of terrorism.

Notwithstanding the above and subject otherwise to the terms, conditions, and
limitations of this reinsurance agreement, in respect only of personal lines
this reinsurance agreement will pay actual loss or damage (but not related cost
or expense) caused by any act of terrorism provided such act is not directly or
indirectly caused by, contributed to by, resulting from, or arising out of or in
connection with biological, chemical, radioactive, or nuclear pollution or
contamination or explosion.

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