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                                                                   EXHIBIT 10.34

                            GENERAL AGENCY AGREEMENT

         THIS GENERAL AGENCY AGREEMENT (this "Agreement") is made and entered
into as of October 1, 2004, by and among STATE NATIONAL INSURANCE COMPANY, INC.,
an insurance company organized under the laws of the State of Texas ("Company"),
TOWER INSURANCE COMPANY OF NEW YORK, an insurance company organized under the
laws of the State of New York ("Reinsurer"), and TOWER RISK MANAGEMENT CORP., a
company organized under the laws of the State of New York ("General Agent");

                              W I T N E S S E T H:

         THAT, in consideration of the mutual covenants hereinafter contained
and upon the terms and conditions hereinbelow set forth, the parties hereto
agree as follows:

                                    PREAMBLE

         The Company and Platinum Underwriters Reinsurance, Inc. and Hannover
Ruchversicherungs AG. (collectively, the "2004 State National Quota Share
Reinsurers") have entered into a Quota Share Reinsurance Agreement dated as of
October 1, 2004 (the "2004 State National Quota Share Reinsurance Agreement"),
and the Company, General Agent and Reinsurer have entered into an Excess of
Liability Reinsurance Agreement dated as of October 1, 2004 (the "2004 Excess of
Liability Reinsurance Agreement"), true and complete copies of which are
attached hereto as Exhibits A and B respectively, and fully incorporated herein
by this reference (collectively and individually, the "Reinsurance Agreements"),
which Reinsurance Agreements require the appointment of the General Agent to
perform certain specified acts on behalf of the Company and the respective
reinsurers as set forth in the Reinsurance Agreements. The General Agent desires
to perform the functions and duties necessary under the Reinsurance Agreements.
It is therefore mutually agreed by the parties that the General Agent will
perform all functions necessary for the production, service and management of
policies issued under the Reinsurance Agreements in accordance with the terms
and conditions set forth therein and herein. To the extent that there is any
conflict between the terms of this Agreement and the Reinsurance Agreements, the
Reinsurance Agreements shall govern. Notwithstanding any provisions to the
contrary contained elsewhere herein or in any other document, it is expressly
understood that the execution and delivery of this Agreement and the Company's
performance hereunder shall not under any circumstances be interpreted to
affect, weaken or modify the Reinsurer's obligation to indemnify and hold the
Company harmless from and against the business, credit and insurance risks as
set forth in the 2004 Excess of Liability Reinsurance Agreement. The contractual
assumption by the Reinsurer of these risks in the 2004 Excess of Liability
Reinsurance Agreement is a condition precedent to the Company's entering into
this Agreement with the General Agent.

                                    ARTICLE I
                             APPOINTMENT AND DUTIES

1.01 The Company, at the direction of the Reinsurer, hereby appoints the General
Agent as its managing general agent for the purpose of producing and handling
the business, which is the subject of the Reinsurance Agreements, issued or
renewed on or after the effective date of this Agreement. The Company, at the
request of the Reinsurer, hereby grants authority to the General Agent to
solicit, accept and receive applications for such classes of coverage as are
specified in the Reinsurance Agreements; to secure, at its own expense,
reasonable underwriting information through reporting agencies or other
appropriate sources relating to each risk insured; to issue, renew and
countersign policies, certificates, endorsements and binders which the Company
may, from time to time, authorize to be issued, delivered, renewed and
countersigned; and to collect and receipt for the premiums thereon and therefor.

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1.02 All activities of the General Agent pursuant to this Agreement shall be in
strict compliance with the terms of the Reinsurance Agreements and all rules,
regulations and instructions of the Company, including, but not limited to, all
rules, instructions and specifications included in the Company's rate manuals,
rate brochures and rate schedules.

1.03 The Company, at the Reinsurer's request, further authorizes the General
Agent to perform all acts and duties under policies of insurance issued by the
Company as would otherwise be performed by the Company, including, but not
limited to, properly sending and/or receiving reports and notices and remitting
and/or receiving monies due from or to the Company, and adjusting and paying
losses or other claims. The Company grants to the General Agent the authority to
settle claims on behalf of the Company. However, the maximum dollar amount of
such authority per claim shall not exceed $100,000. For claims settlement in
excess of $100,000, the General Agent may only settle such claims with prior
approval of the Company and the 2004 State National Quota Share Reinsurers. The
Company retains final authority to determine any disputes relating to claims
settlement and setting of loss reserves. In performing each of the acts
mentioned above, the General Agent shall be under the direct supervision and
control of the Reinsurer, and the Reinsurer shall be solely responsible for the
acts of the General Agent. While there are acts of the General Agent which may
be required by applicable law to be performed on behalf of the Company, the
Reinsurer shall remain ultimately responsible for such acts and will indemnify
and hold the Company completely harmless for any damage, cost, liability,
expense and/or loss (including attorneys' fees and expenses) incurred by the
Company as respects such acts of the General Agent. The General Agent must send
to the Company a report, as soon as it becomes known, that a claim (i) involves
a coverage dispute; (ii) involves a demand in excess of policy limits; (iii)
alleges bad faith; (iv) exceeds General Agent's claims settlement authority; (v)
is open for more than six months; or (vi) alleges a violation of any applicable
unfair practices and unfair competition statutes. The Company may suspend or
terminate the settlement authority of the General Agent during the pendency of
any dispute regarding any event of default by the General Agent.

1.04 Claims handling shall be accomplished by the General Agent through its
designated representative ("Claims Administrator"), which designation is subject
to the Company's and Reinsurer's continuing approval. The agreement between the
General Agent and the Claims Administrator shall be subject to the approval of
the Reinsurer and the Company and shall not be inconsistent with the terms and
conditions of this Agreement. Payment to the Claims Administrator shall be made
by the General Agent, on behalf of the Company, directly to the Claims
Administrator. The Claims Administrator shall accept notice of and investigate
any claim arising under any of the Policies, and pay, adjust, settle, resist, or
compromise any such claim, unless the Company specifically directs to the
contrary with respect to any individual claim. All such loss settlements,
whether under strict policy conditions or by way of compromise, shall be
unconditionally binding upon the Company and the Reinsurer. However, should the
Company be ordered or instructed by the Texas Department of Insurance or any
other regulatory agency of competent jurisdiction to take any action or refrain
from taking any action with regard to any claim, the Reinsurer and the General
Agent shall be bound by and shall follow the order or instructions of such
regulatory agency as though the General Agent were the object of such order or
instruction. The General Agent will exercise the authority granted hereunder in
good faith and toward the end of paying any and all valid claims. The General
Agent is authorized to have claims adjusted through independent claims
adjusters, subject to the supervision of the Reinsurer. The selection of
independent claims adjusters shall be subject to prior written approval of the
Reinsurer and Company. Such independent claims adjusters are not the agents of
the Company and the Company shall be held harmless and indemnified by the
Reinsurer for any liability, claim, demand, expense and/or cost of whatever kind
or character as a result of, related to or connected with any action or inaction
of such claims adjusters.

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1.05 The Company shall not be responsible for the General Agent's expenses and
costs, including, but not limited to, salaries, bonuses, rentals, transportation
facilities, clerk hire, solicitors' fees, postage, advertising, exchange,
personal license fees, adjustment by the General Agent of losses under policies
issued by the General Agent, or any other agency expenses whatsoever. The
General Agent's sole compensation shall be the amounts payable to the General
Agent in Article III of this Agreement.

1.06 The General Agent understands and agrees that it has no power or authority
granted to it by the Company independent of the 2004 Excess of Liability
Reinsurance Agreement, and that this Agreement and the General Agent's authority
hereunder shall cease immediately upon termination, for any reason, of this
Agreement or of the Reinsurance Agreements (excepting only the General Agent's
responsibilities with regard to run-off and other matters as set forth herein or
in the Reinsurance Agreements).

1.07 The General Agent shall not have the power to accept or bind risk other
than as set forth herein, as set forth in the 2004 Excess of Liability
Reinsurance Agreement or as may be subsequently authorized by the Company and
Reinsurer in writing. The General Agent may not bind or cede reinsurance or
retrocession on behalf of the Company, may not commit the Company to
participation in insurance or reinsurance syndicates, and may not commit the
Company to a claim settlement with a reinsurer without the prior written
approval of the Company. If such prior written approval is given, the General
Agent shall forward promptly a report to the Company concerning such transaction
and/or payment. The Company hereby authorizes the General Agent to collect
payments for losses and loss adjustment expenses from a reinsurer. The General
Agent shall send a report to the Company concerning such transactions promptly.

1.08 The General Agent acknowledges that, with respect to any state in which
business is permitted to be written under the Reinsurance Agreements, this
Agreement shall not become effective until the General Agent is first duly
appointed by the Company with the applicable regulatory authority. The General
Agent agrees that any producing agent receiving commission pursuant to this
Agreement shall first be duly registered by the Company and said appointment on
file with any applicable state insurance department. The General Agent further
agrees to be responsible for the payment of any penalty assessed to the Company
for any violation by the General Agent or any producing agent or broker
registered by the General Agent pursuant to the provisions of Article IV hereof
of any license or appointment provision of the Texas Insurance Code, or other
applicable state statutes, and the rules and regulations promulgated thereunder.
If the General Agent fails to pay such penalty, the Reinsurer shall in
accordance with the 2004 Excess of Liability Reinsurance Agreement pay it
immediately upon written notification by the Company of the General Agent's
failure to pay such penalty.

1.09 It is understood that the Reinsurer has acknowledged that the Company shall
not be required to monitor the General Agent's compliance with the terms of
either the Reinsurance Agreements or this Agreement and the Reinsurer shall be
responsible for monitoring the General Agent's compliance with the Reinsurance
Agreements and this Agreement.

1.10  The authority and limitations of the General Agent to issue policies are
as follows:

         (a) the maximum annual premium volume the General Agent may produce
         under this Agreement is $2,500,000 (ten million dollars);

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         (b) the basis of the rates charged are as provided in the Company's
         rate manuals, rate brochures and rate schedules which the General Agent
         shall follow, and the General Agent shall not decrease rates or
         increase discounts without the prior approval of the Company and
         Reinsurer;

         (c) the only classes of business the General Agent is authorized to
         produce and handle under this Agreement are the classes of business
         specified in the Reinsurance Agreements;

         (d) the maximum limits of liability for policies to be produced
         pursuant to this Agreement are set forth in the Reinsurance Agreements;

         (e) the General Agent may issue policies under this Agreement only to
         insured residents in the states in which business is permitted to be
         produced under the Reinsurance Agreements; but this limitation shall
         not apply to losses if said policies provide coverage outside the
         aforesaid territorial limit;

         (f) the General Agent shall only cancel policies as set forth in the
         policy form for the policies produced hereunder or as otherwise
         permitted by applicable law;

         (g) the maximum term for any policy issued hereunder shall be twelve
         (12) months;

         (h) the General Agent shall employ all reasonable and appropriate
         measures to control and keep a record of the issuance of the Company's
         insurance policies hereunder, including, but not limited to, keeping
         records of policy numbers issued and maintaining policy inventories;

         (i) the excluded risks are those set forth in the 2004 Quota Share
         Reinsurance Agreement.

In underwriting policies, the General Agent shall follow the underwriting
guidelines developed by the General Agent, the Reinsurer and the Company, and
these guidelines are herein incorporated by reference.

                                   ARTICLE II
                                    PREMIUMS

2.01 It is expressly agreed and understood that all premiums collected by the
General Agent are collected on behalf of the Company; that such premiums are the
property of the Company, the 2004 State National Quota Share Reinsurers and the
Reinsurer as their respective interests may appear pursuant to the Reinsurance
Agreements, less such commissions and fees as are due the General Agent as
specified herein. All premiums on policies issued hereunder shall be collected
within seventy-five (75) days of the effective date of the policy or the General
Agent shall cancel such policy. All premiums collected by the General Agent on
the business produced under the Reinsurance Agreements shall be deposited in a
bank account separate and apart from all other bank accounts of the General
Agent which reflects the ownership of the account by the Company (the "Premium
Trust Account"). The Premium Trust Account shall be comprised of an Operating
Fund and a Reserve Fund.

         (a) All premiums collected by the General Agent shall be deposited in
         the Operating Fund. The only disbursements from the Operating Fund
         shall be the payment of claims, claims expenses, return premiums,
         commission due the General Agent as authorized herein, remittance of
         premiums in accordance with the Reinsurance Agreements, ceding fees due
         the Company and transfer of all funds contractually due in accordance
         with the Reinsurance Agreements to the Trust Account. Within ten (10)
         days after the end of each month, the General Agent will furnish an
         accounting of the cash transactions reported in the Operating Fund.
         Such accounting will include: (i) a summary of premiums, net of
         cancellations and returns, deposited in the account; (ii) losses and
         loss adjustment expenses paid, net of any salvage and subrogation;
         (iii) commissions paid or received; (iv) interest or other investment
         income received; (v) any bank charges deducted; (vi) ceding fees and
         premium taxes paid; (vii) detail of all such other amounts that
         increased or decreased the reported cash balance in a level of detail
         sufficient to enable the Company to meet its Statutory financial
         reporting requirements; and (viii) copies of bank statements and of the
         reconciliation of same to the reported financial amounts.

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The General Agent shall not make personal use of any funds in this account. The
commissions payable to the General Agent are debts due to the General Agent by
the Reinsurer and the privilege herein granted of deducting commissions from
said premiums should not be taken as a waiver by the Company of its exclusive
ownership rights of premiums as provided herein. Should any dispute arise
between the Company, the Reinsurer and/or the General Agent regarding payment of
premium, the General Agent shall remit immediately all money and property,
without deductions for commissions, to the Premium Trust Account with full
reservation of any and all rights reserved by the parties.

2.02 The General Agent shall furnish to the Company and the Reinsurer all
necessary premium and loss data (in a form acceptable to the Reinsurer and the
Company) no later than thirty (30) days following the end of the month during
which the business is written or losses are incurred to enable the Company to
record statistics required by statutes, regulation or upon call by authorities
having competent jurisdiction. Such data shall include, but is not limited to,
premiums written and unearned premium. Said data shall be segregated by lines of
insurance and location of risk.

2.03 The keeping of an account with the General Agent on the Company's books as
a creditor and debtor account is declared a record memorandum of business
transacted and neither such keeping of an account, nor alteration in commission
rate, nor failure to enforce prompt remittance or compromise or settlement or
declaration of balance of account, shall be held to waive assertion of the trust
relation as to premiums collected by the General Agent.

2.04 The General Agent shall be liable for the payment of all premiums upon all
policies of insurance written through the General Agent or any sub-agents of the
General Agent.

2.05 The General Agent shall remit to the Reinsurer, or Company as applicable,
any funds of or due to the Company under this Agreement at the earlier of the
following: (1) forty-five (45) days from the end of the month in which premium
is recorded; or (2) forty-five (45) days from the end of the month in which the
coverage under this Agreement became effective.

2.06 The General Agent shall hold all funds of or due the Company in a fiduciary
capacity.

                                   ARTICLE III
                        COMPENSATION TO THE GENERAL AGENT

3.01 In partial consideration for the services rendered hereunder and under the
Reinsurance Agreements, the General Agent is entitled to the commission payable
by the Reinsurer as specified herein. In addition, the Company shall allow the
General Agent a provisional commission as specified in Article 8 of the 2004
Quota Share Reinsurance Agreement.on all subject collected net earned premiums
with such amounts to be paid to the General Agent on all subject collected net
premiums produced under this Agreement. The General Agent shall pay the Company
directly its ceding fee and the 2004 State National Quota Share Reinsurers and
Reinsurer its premium as specified in the Reinsurance Agreements, and the
amounts for assignments, assessments, premium taxes, fines and penalties as
specified in the Reinsurance Agreements. The General Agent shall allow the
Company return commission on return premiums and policy fees at the same rates
as received by the General Agent.

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3.02 The General Agent's commission on premiums ceded to the various Reinsurers
is subject to adjustment as specified in Article 8 of the 2004 Quota Share
Reinsurance Agreement.

3.03 The Company shall not be liable for or responsible for any commissions or
other monies payable by the 2004 State National Quota Share Reinsurers to the
General Agent. The General Agent shall not sue or seek arbitration against the
Company for any actions by, or debts owing from, the 2004 State National Quota
Share Reinsurers.

3.04 In the event the Company or the 2004 State National Quota Share Reinsurers,
during the continuance of this Agreement or after its termination, refunds
premiums under any policy of insurance by reasons of cancellation or otherwise,
the General Agent agrees immediately to return to the Company or the 2004 State
National Quota Share Reinsurers, as applicable, the commission previously
received by it on the portion of the premium refunded. The General Agent shall
not be required to return, as commission or return commission, monies greater
than the total commission paid or otherwise payable to the General Agent.

                                   ARTICLE IV
                                   SUB-AGENTS

4.01 The General Agent shall comply with, and shall be responsible to insure the
compliance by, all such producing agents with the terms of this Agreement and
the Reinsurance Agreements and all other written rules and regulations of the
Company, and treat as confidential and use only in the interest of the Company
all instructions, information and materials received from the Company.

4.02 The General Agent shall be solely responsible for the performances of any
producing agents under all of the terms and provisions hereof, including, but
not limited to, the collections of premiums and refunds of premiums.

4.03 Each such producing agent must be registered or appointed, as required, as
an agent of the Company through the appropriate regulatory body before any
application shall be accepted from him or other insurance performances on behalf
of the Company are performed. The General Agent shall be ultimately responsible
for the obligation of the producing agent to obtain an appointment as provided
herein.

4.04 It is also specified that the General Agent shall be responsible for all
commissions payable to any producing agents. The General Agent and any producing
agent shall not seek to hold the Company or Reinsurer liable through litigation,
arbitration or otherwise for commissions payable to such producing agents.

4.05 The Company, in its sole discretion with or without cause, and without
prior written notice, may terminate the appointment of any producing agent.

4.06 The General Agent shall not permit its subagents or subproducers to serve
on its Board of Directors.

4.07 The General Agent shall not appoint sub-managing general agents.

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                                    ARTICLE V
                           ADDITIONAL DUTIES OF AGENT

5.01 The General Agent shall, at all times during the period of this Agreement,
comply with all applicable laws and all orders, policy decisions or other
requirements of the Texas Department of Insurance or other applicable state
insurance department.

5.02 All books, records, accounts, documents and correspondence of the General
Agent and any producing agent pertaining to the Company's and Reinsurer's
business shall, at all times, be open to examination by any authorized
representative of the Company or Reinsurer. The General Agent shall make copies
of records available upon request by the Company or Reinsurer, whether such
request is before or after termination of this Agreement or the Reinsurance
Agreements. The General Agent must maintain separate records of business,
including, but not limited to, underwriting files for each insurer for whom it
acts as a general agent. Such records must be maintained for five (5) years or
until the completion of a financial examination by the insurance department of
the state in which the Company is domiciled, whichever is longer.

5.03 The General Agent shall maintain adequate accounting procedures and
systems, at no cost or expense to the Company, and shall provide statistics in a
timely manner for all reporting requirements under the Reinsurance Agreements or
as shall be required from time to time by the regulatory authorities of the
State of Texas or any other applicable governmental agency or authority. Such
statistical information shall be provided to the Company by the General Agent at
the General Agent's sole cost and expense.

5.04 The General Agent shall forward to the Company, no later than the 30th day
of the month following the month being accounted for, a report in detail of all
policies of insurance written or placed, or liability increased or decreased, or
policies continued or renewed or canceled by or through the General Agent during
the month being accounted for, which shall include all premiums due thereon
whether collected or not. Such report shall show the net amount due to the
Company and Reinsurer on all such business on the lines of business authorized
to be written by the General Agent and the amounts paid in losses, loss
adjustment expenses and commissions. Such report shall also include, to the
extent not already included, both insurance and reinsurance transactions,
including:

       (i)   statement of written, earned and unearned premiums;

       (ii)  losses and loss expenses outstanding;

       (iii) losses incurred but not reported; and

       (iv)  any management fees.

The report shall be received by or confirmed to the Company no later than thirty
(30) days from the close of the month for which business is reported. The
Company shall maintain such account reports on file for at least five (5) years
and shall make the account reports available to the Commissioner of Insurance of
the State of Texas (the "Commissioner"), or other applicable state department of
insurance, for review upon request.

5.05 The General Agent shall account for and furnish to the Company, upon
request with reasonable notice, complete copies of all policies issued, copies
of all spoiled, voided or otherwise unissued policies, and copies of all claim
files created with respect to all loss occurrences under any policy issued under
this Agreement.

5.06 The title of all undelivered policies, books, supplies, or other property
related to the reinsured business is in the Company, and these shall be
delivered to the Company by the General Agent immediately upon the termination
of this Agreement. The General Agent agrees to surrender peaceably the same
without compelling the Company to resort to any legal proceedings whatsoever.

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5.07 The General Agent shall not insert any advertisement respecting the Company
in any publication or issue any circular or paper referring to the Company
without first obtaining the written consent of the Company. The General Agent
shall comply with all statutes and regulations pertaining to advertising, and
establish and maintain records of any such advertising as required by the
applicable laws of the states in which it is doing business.

5.08 The General Agent shall maintain on behalf of the Company and Reinsurer
complete copies of all policies issued hereunder and copies of all claim files
created with respect to all loss occurrences thereunder. Any or all policies
and/or claim files required to be maintained by General Agent pursuant to this
Section 5.08 may be maintained in electronic data storage form accessible by
computer and if so stored in this fashion, no physical copy of such items need
be maintained. Where electronic claims files are maintained by the General
Agent, any data from such files requested or required by the Company shall be
provided within thirty (30) days or less if so requested by the Company.

5.09 The General Agent shall pay to the account specified in Section 2.01 hereof
the positive balance, if any, no later than forty-five (45) days following the
end of the month during which the business was written net collected premiums
hereunder (being defined as premiums collected less return premiums) less the
General Agent's commissions and less loss adjustment expenses and loss payments.
Should such balance be a negative amount, the Reinsurer shall promptly pay the
General Agent upon receipt and verification of the amount due as reported by the
General Agent.

5.10 The General Agent shall be solely responsible for procuring any renewal,
extension, or new policy of insurance that may be required by any state or rule
or regulation of any state insurance department with respect to policies
originally written directly for the Company. The General Agent and Reinsurer, in
accordance with the Reinsurance Agreements, shall indemnify the Company and hold
it harmless from any loss, damage, cost, claim or expense whatsoever that the
Company may incur, or for which it may become liable, as a result of the said
General Agent's failure, refusal or neglect to fulfill said responsibility.

5.11 The General Agent agrees that its duties and obligations under this
Agreement shall be due and owing also to the Company's and Reinsurer's
successors and assigns.

5.12 Nothing in this Article V shall be construed as requiring the Company to
monitor the book of business which is the subject of the Reinsurance Agreements
for the benefit of the Reinsurer.

5.13 The Company shall conduct or cause to be conducted a semi-annual
examination of the General Agent, in accordance with the Company's audit
guidelines. Furthermore, if the Company's aggregate premium volume increases by
thirty (30) percent in any thirty (30) day period, the Reinsurer at no expense
to the Company, and on behalf of the Company, shall examine or cause to be
examined within ninety (90) days the General Agent if it writes more than twenty
(20) percent of the Company's volume and has also experienced a twenty (20)
percent increase in premium volume during that same thirty (30) day period.

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The examinations required under the preceding paragraph shall adequately provide
the Commissioner with the information outlined in (a) through (e) below, shall
be made available to the Commissioner for review, shall remain on file with the
Company for a minimum of three (3) years and shall, at a minimum, contain
information concerning the following:

         (a)   claims procedures of the General Agent;

         (b)   timeliness of claims payments by the General Agent (i.e., lag
               time between date claim is reported and date claim is paid);

         (c)   timeliness of premium reporting and collection by the General
               Agent;

         (d)   compliance by the General Agent with underwriting guidelines
               under Section 1.10 hereof; and

         (e)   reconciliation of policy inventory.

5.14 The General Agent shall return any unearned premium due insureds or other
persons on the business which is the subject of the Reinsurance Agreements; if
for any reason, the General Agent does not return such unearned premium, then
the Reinsurer shall pay such amount and/or amounts.

5.15 The General Agent shall be duly licensed as a managing general agent or as
otherwise required under applicable law to perform its duties hereunder.

5.16 Should any state insurance department make a request to the Company for any
data required to comply with a statistical data call, the General Agent shall be
solely responsible to provide the Company with such data. Should the request
from such state insurance department require the Company to contract the
services of an outside source, such as an actuarial firm, to compile the data
required, the General Agent shall be responsible for its proportionate share of
the total cost for services rendered.

5.17 General Agent, when placing business under this Agreement, may not charge a
per-policy fee in excess any fees allowed by the applicable insurance regulatory
authority.

5.18 The General Agent shall provide Company, at General Agent's expense, an
independent financial examination in a form acceptable to the applicable state
departments of insurance, or other regulatory body, if required.

5.19 The General Agent shall provide annually to Company, at General Agent's
expense, an independent actuary opinion attesting to the adequacy of loss
reserves established for losses incurred and outstanding on business produced
hereunder if General Agent establishes total loss reserves including IBNR, if
required by the applicable insurance regulatory authority.

5.20 The General Agent acknowledges receipt of the Company's Statistical
Reporting Policy and Procedure Manual, and will act in accordance therewith. The
General Agent will act, at its sole cost and expense, on behalf of the Company
to produce, prepare, and file statistical information with the designated
statistical reporting bureau. The General Agent will also furnish the Company,
and other parties as designated by the Company, with monthly, quarterly and
annual reports showing statistical data in respect of the business written as
required.

5.21 Company will provide to the General Agent the percentage of written premium
to remit directly to Company on a monthly basis for bureau fees related to
statistical reporting, and boards and bureaus participation ("Bureau Fees"). In
addition to the Bureau Fees, should the Company be charged any fines or
penalties for incomplete, inaccurate, or delinquent reporting, the General Agent
shall pay such fines or penalties immediately upon written notice. The General
Agent will remit Bureau Fees as designated by the Company until notified of any
necessary adjustments to the amount of the Bureau Fees. Should the General Agent
fail to remit any amounts due to Company under this Section 5.21, then the
Reinsurer shall pay such amounts within 60 days written notice from the Company.
The initial Bureau Fees shall be .25% of written premium. The Bureau Fees are in
addition to other fees and expenses expressly enumerated herein.

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                                   ARTICLE VI
                              TERM AND TERMINATION

6.01 The effective date of this Agency Agreement is 12:01 a.m., Eastern Standard
Time, on October 1, 2004, and shall remain continuously in force unless canceled
as follows:

         (a) This Agreement may be canceled by either party by giving at least
         ninety (90) days prior written notice to the other party any January 1,
         beginning January 1, 2006,. Notice shall be provided by registered
         mail, return receipt requested, and notice shall be deemed to have been
         provided on the date of mailing.

         (b) Immediately by mutual consent of the Company and General Agent.

         (c) At any time, by the Company, without prior notice in the event of
         the General Agent declaring bankruptcy or being declared or found
         bankrupt or insolvent, or being the subject of a cease and desist
         order, corrective order, or being placed in, or subject to, a
         proceeding of supervision, conservation, rehabilitation or liquidation.

         (d) Immediately upon written notice by the Company in the event of the
         cancellation or non-renewal of the General Agent's license, as it
         relates to the business produced in that state, by the New York
         Department of Insurance or other applicable state insurance department.

         (e) Immediately upon written notice by the General Agent in the event
         any action against the Company is commenced by Texas Department of
         Insurance or other applicable state insurance department pursuant to
         rehabilitation or liquidation. The Company agrees to furnish notice of
         such action immediately to the General Agent.

         (f) If the General Agent shall default in making remittance for net
         premiums then this Agreement shall be terminated according to the terms
         provided in Article 3 of the 2004Quota Share Reinsurance Agreement.

         (g) If the General Agent shall defraud or attempt to defraud the
         Company; or any policyholder, then the Company may at its sole
         discretion cancel this contract by giving the General Agent written
         notice of cancellation served personally or by mail, which shall be
         effective immediately.

         (h) As provided in Section 8.11 of this Agreement.

         (i) Automatically and immediately, without notice upon cancellation
         or termination of the 2004 Quota Share Reinsurance Agreement.

6.02 This Agreement shall automatically become renewed from year to year upon
the renewal of the license or certificate of authority granted to the Company by
the New York Department of Insurance and other applicable state insurance
department, provided this Agreement shall not be otherwise canceled.

6.03 It is expressly agreed and understood that nothing in this Article VI
authorizes the General Agent to write any new business under this Agreement
should the 2004 Quota Share Reinsurance Agreement terminate, except the business
that is required to be renewed or issued because of applicable law or
regulation, as provided in Article 3, B.. of the 2004 Quota Share Reinsurance
Agreement.

                                       10
<PAGE>

6.04 The Company shall have no liability to the General Agent by virtue of the
Company's termination of this Agreement as set forth in this Article; it being
expressly understood that partial consideration for the Company's grant of
agency authority to the General Agent is the General Agent's promise that the
Company shall not be responsible for any damages which might arise by virtue of
any termination of this Agreement.

6.05 In the event of termination of this Agreement, after the General Agent
having promptly accounted for and paid over premiums for which it may be liable,
the General Agent's records, use and control of expirations shall remain the
property of the General Agent and left in its undisputed possession.

6.06 In the event that this Agreement is terminated, the General Agent, for no
additional fee, shall have the authority (unless revoked by the Company at its
sole discretion in which case the Reinsurer shall appoint a successor at no cost
to the Company) as provided in this Agreement to continue to perform all of its
duties under this Agreement on the remaining policies during the run-off period.
The General Agent's duties during the run-off period shall include handling and
servicing of all policies through their natural expiration, together with any
policy renewals required to be made by the provisions of applicable law, whether
or not the effective date of such renewal is subsequent to the effective date of
cancellation of this Agreement. Further, upon termination of this Agreement, the
General Agent shall not be relieved of or released from any obligation created
by or under this Agreement in relation to payment, expenses, reports, accounting
or handling, which relate to the outstanding insurance business under this
Agreement existing on the date of such termination. The Company and the General
Agent will cooperate in handling all such business until the business has
expired either by cancellation or by the terms of the policies and all
outstanding losses and loss adjustment expenses have been settled.

6.07 As the 2004 Excess of Liability Reinsurance Agreement provides for
termination on a run-off basis, the relevant provisions of this Agreement shall
apply to business being run-off. It is also expressly agreed that the terms,
conditions and obligations of the Preamble and Articles II, IV and V, Sections
6.04, 6.05, 6.06, 6.07 and 6.08, Article VII, Section 8.11 and Article IX herein
shall survive termination of this Agreement.

6.08 The Company may suspend the authority of the General Agent during the
pendency of any dispute regarding any event of default by the General Agent.

                                   ARTICLE VII
                        HOLD HARMLESS AND INDEMNIFICATION

         The General Agent agrees to and does hereby indemnify and hold the
Company harmless from and against any and all actions, causes of actions, suits,
arbitrations, or proceedings of any kind, liabilities, losses, claims, damages,
costs, or expenses (including attorneys' fees and expenses), incurred by the
Company by reason of, arising out of, or relating in any way to this Agreement
or any action taken or inaction by the General Agent. In addition, if the
Reinsurer does not indemnify and hold the Company harmless as required by the
Reinsurance Agreements, the General Agent shall fulfill the obligations of the
Reinsurer and make the payments required pursuant to the Reinsurance Agreements.

                                  ARTICLE VIII
                                  MISCELLANEOUS

8.01 This Agreement has been made and entered into in the State of Texas and
shall be governed by and construed in accordance with the laws of the State of
Texas.

                                       11
<PAGE>

8.02 This Agreement is not exclusive and the Company reserves the right to
appoint other agents in the territory covered by this Agreement and the General
Agent reserves the right to act as General Agent for other insurers or
reinsurers.

8.03 This Agreement shall be binding upon the parties hereto, together with
their respective successors and permitted assigns.

8.04 The Company shall have no right of control over the General Agent as to
time, means or manner of the General Agent's conduct within the terms of the
Agreement and the Reinsurance Agreements and the authority herein granted and
nothing herein is intended or shall be deemed to constitute the General Agent an
employee or servant of the Company. The General Agent shall at all times be an
independent contractor.

8.05 This Agreement shall be deemed performable at the Company's administrative
office in Fort Worth, Texas, and it is agreed that the venue of any controversy
arising out of this Agreement, or for the breach thereof, shall be in Tarrant
County, Texas.

8.06 The General Agent shall not assign any of its rights or obligations under
this Agreement without the prior written consent of the Company. No verbal
modification will be recognized by any party hereto and this Agreement cannot be
modified by any subsequent practices or course of dealing by the parties
inconsistent herewith. If the Company or the General Agent shall fail to take
advantage of a breach, if any, by another party of the terms, conditions,
covenants, or any of them herein contained, such failure shall not be deemed to
constitute, or be construed as, a waiver of any rights on the part of the
General Agent or Company to thereafter enforce any of the said terms, conditions
or covenants.

8.07 This Agreement may be amended, modified or supplemented only by a written
instrument executed by all parties hereto. All such amendments or changes shall
specify the effective date of such amendments or changes.

8.08 This Agreement supersedes any and all provisions, terms and/or conditions
of any other general agency agreements, whether oral or written, by between and
among the parties with respect to the subject matter hereof.

8.09 The General Agent shall notify the Company in writing within thirty (30)
days when there is a change in the ownership of 10% or more of the outstanding
stock in the General Agent or when there is any change in the General Agent's
principal officers or directors.

8.10 The General Agent shall not offset balances due under this Agreement
against balances due or owing under any other contract.

8.11 This Agreement shall be interpreted in conformance with applicable Texas
law and regulation. If it is found or ordered by a court or regulatory body that
any provision or term of this Agreement does not conform to such law or
regulation then this Agreement shall be deemed to be amended, and modified to be
in accordance with such law. However, where this Agreement is found not to
comply with applicable law or regulations, the Company may in its sole
discretion terminate this Agreement immediately and without prior notice.

                                   ARTICLE IX
                                   ARBITRATION

9.01 As a condition precedent to any right of action hereunder, in the event of
any dispute or difference of opinion hereafter arising between the Company, on
the one hand, and the General Agent, on the other hand, with respect to this
Agreement or with respect to the General Agent's and/or the Company's
obligations hereunder, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to arbitration.

                                       12
<PAGE>

9.02 The Company shall choose one arbiter (an "Arbiter") and the General Agent
shall choose one Arbiter. An umpire (an "Umpire") shall be chosen by the two
Arbiters, all of whom shall be active or retired disinterested executive
officers of property and casualty insurance or reinsurance companies.

9.03 Both the General Agent and the Company shall choose an Arbiter within 30
days following a written request by one party to the other to name an Arbiter.
In the event either the Company or the General Agent fails to choose an Arbiter
within this time period, the party who has chosen its Arbiter may choose the
unchosen Arbiter. Thereafter, the Arbiters shall choose an Umpire before
entering upon arbitration. If the Arbiters fail to agree upon the selection for
the Umpire within 30 days following their appointment, each Arbiter shall name
three nominees, of whom the other shall decline two and the decision shall be
made by drawing lots.

9.04 Each side shall present its case to the Arbiters and Umpire, in a hearing
in Dallas, Texas. The Arbiters and Umpire shall consider this Agreement as an
honorable engagement, as well as a legal obligation, and they are relieved of
all judicial formalities and may abstain from following the strict rules of law
regarding entering of evidence. The decision in writing by a majority of the
Arbiters and Umpire when filed with the Company and the General Agent shall be
final and binding. Judgment upon the final decision of the Arbiters and Umpire
may be entered in any court of competent jurisdiction.

9.05 In the event of a dispute between the Company and the General Agent
concerning this Agreement and the Quota Share Reinsurance Agreement between the
Company and the Reinsurer, regardless of whether either party has claims against
the Reinsurer, the entire dispute between the Company and the General Agent
shall be subject to arbitration as provided under this Article IX.

9.06 The costs of the arbitration, including the fees of the Arbiters and the
Umpire, shall be borne equally by the sides unless the Arbiters and Umpire shall
decide otherwise.

9.07 This Agreement shall be interpreted under the laws of Texas and the
arbitration shall be governed by the Texas Arbitration Code.

                                    ARTICLE X
                                     PRIVACY

10.01 The General Agent shall provide to each new policyholder, prior to or upon
the issuance of any Policies written under this Agreement, and in accordance
with applicable state and federal laws, an initial notice of the Company's
privacy policies and practices. Not less than annually thereafter, the General
Agent, upon the request of the Company, distribute a copy of the Company's
annual privacy notice, as may be amended from time to time, to each existing
policyholder. In addition, the General Agent shall, upon the request of the
Company, distribute revised privacy notices and opt-out notices as applicable to
each policyholder to reflect any revisions which may be made to the Company's
privacy policies and practices. In each case, the Company shall be responsible
for providing the Agency with a copy of the form for its privacy policies and
practices notice, which forms the General Agent shall use to create and deliver
the notices described herein, at the Agency's sole cost and expense. These
notices shall be created and delivered independent of any separate legal
obligation the General Agent may have to create and deliver its own such
notices.

                                       13
<PAGE>

10.02 The General Agent shall not disclose or use any nonpublic personal
financial information or nonpublic personal health information related to any
policyholder, or to any consumer or customer (as such terms are defined under
applicable state and federal privacy laws), except as necessary to carry out its
duties and obligations under this Agreement or as otherwise permitted under
applicable state or federal law.

10.03 The General Agent shall develop and implement, in accordance with
applicable state and federal laws, a comprehensive written information security
program designed to (i) ensure the security and confidentiality of nonpublic
personal financial information and nonpublic personal health information related
to any policyholder, or to any consumer or customer (as such terms are defined
under applicable state and federal privacy laws), (ii) protect against any
anticipated threats or hazards to the security or integrity of such information,
and (iii) protect against unauthorized access to or use of such information that
could result in substantial harm or inconvenience to any customer.

         IN WITNESS WHEREOF, the Parties hereto by their respective duly
authorized representatives have executed this Agreement as of the date first
above written.

STATE NATIONAL INSURANCE COMPANY, INC.

BY:     /s/ Terry Ledbetter
   --------------------------------------------------

ITS:    President
    -------------------------------------------------

DATE:   12/27/04
     ------------------------------------------------

TOWER RISK MANAGEMENT CORP.

BY:     /s/ Marina Contiero
   --------------------------------------------------

ITS:    Vice President
    -------------------------------------------------

DATE:   10/13/04
     ------------------------------------------------

TOWER INSURANCE COMPANY OF NEW YORK

BY:     /s/ Marina Contiero
    -------------------------------------------------

ITS:    Vice President
     ------------------------------------------------

DATE:   10/13/04
     ------------------------------------------------

                                       14<PAGE>

                                                                   EXHIBIT 10.35

                    EXCESS OF LIABILITY REINSURANCE AGREEMENT

THIS EXCESS OF LIABILITY REINSURANCE AGREEMENT (this "Agreement") is made and
entered into as of October 1, 2004, by and among TOWER INSURANCE COMPANY OF NEW
YORK, an insurance company organized under the laws of New York ("Reinsurer"),
STATE NATIONAL INSURANCE COMPANY, INC., an insurance company organized under the
laws of the State of Texas ("Company"), and TOWER RISK MANAGEMENT CORPORATION, a
corporation organized under the laws of the State of New York ("General Agent");

                              W I T N E S S E T H:

THAT, in consideration of the mutual covenants hereinafter contained and upon
the terms and conditions hereinbelow set forth, the parties hereto agree as
follows:

                                    PREAMBLE

         It is understood that the Company, the Reinsurer and the General Agent
(hereinafter identified collectively as the "Parties") hereto wish to enter into
a reinsurance arrangement through which the Company is to bear no business,
credit or insurance risk whatsoever in connection with the insurance policies
issued through the General Agent (the "Subject Program"). In this regard, the
Company has reinsured the underwriting risks arising from the Subject Program
with Platinum Underwriters Reinsurance, Inc. and Hannover Ruchversicherungs AG
pursuant to that certain Quota Share Reinsurance Agreement dated effective
October 1, 2004, by and between the Company and Platinum Underwriters
Reinsurance, Inc. and Hannover Ruchversicherungs AG (the "2004 Quota Share
Reinsurance Agreement"), attached as Exhibit A hereto. As a condition precedent
to the Company's agreement to permit policies to be issued in the name of the
Company pursuant to the Subject Program, the Reinsurer shall hold the Company
harmless and indemnify it for these and all risks arising from the Subject
Program other than those reinsured by Platinum Underwriters Reinsurance, Inc.
and Hannover Ruchversicherungs AG pursuant to the 2004 Quota Share Reinsurance
Agreement. All provisions of this Agreement shall be interpreted so as to be in
accord with this Preamble. The sole consideration provided by the Company, in
exchange for the fees set forth in Article VII herein, is to permit the Policies
(as hereinafter defined) which are reinsured under this Agreement and under the
2004 Quota Share Reinsurance Agreement, to be issued in the name of the Company.
All provisions of this Agreement shall be interpreted so as to be in accord with
this Preamble.

                                    ARTICLE I
                               BUSINESS REINSURED

1.01 The Reinsurer hereby reinsures any and all liability accruing to the
Company in connection with the Subject Program (other than those liabilities
reinsured with Platinum Underwriters Reinsurance, Inc. and Hannover
Ruchversicherungs AG pursuant to the 2004 Quota Share Reinsurance Agreement),
including without limitation, every claim, demand, liability, loss, damage,
cost, charge, attorneys' fees, expense, suit, order, judgment, and adjudication
of whatever kind or character arising out of or in connection with the Subject
Program, the business reinsured thereunder (including, but not limited to,
credit loss, and/or run-off expense and/or all legal fees and expenses incurred
by the Company in asserting its rights under this Agreement). The Reinsurer
shall also pay any and all liability assumed by the Company in respect of the
Trust Account investment performance required in Article 12 of the 2004 Quota
Share Reinsurance Agreement. The Reinsurer's obligation hereto relates to, but
is not limited to, the following: all liability for agents' balances; return
premiums and commissions; deceptive trade practice liability; premiums, policy
fees or other charges; costs, liability, damages, fees and/or expenses incurred
by the Company due to a lawsuit between the Reinsurer and the General Agent (any
dispute involving the Company and the Reinsurer is subject to arbitration); all
actions or inactions by the General Agent relating to this Agreement, any
agreement with a premium finance company or claims administrator; and/or all
fees and/or commissions owing to the General Agent under this and the
aforementioned related agreements.

                                       1
<PAGE>

1.02 Maximum policy limits for Policies are as set forth in Article 6 of the
2004 Quota Share Reinsurance Agreement.

                                   ARTICLE II
                               ORIGINAL CONDITIONS

2.01 Business ceded hereunder shall include every original policy, rewrite,
renewal or extension (whether before or after the termination of this Agreement)
required by applicable statute, or by rule or regulation of any policy of
insurance ceded hereunder by the Company to the Reinsurer.

2.02 The liability of the Reinsurer shall commence obligatorily and
simultaneously with that of the Company as soon as the Company becomes liable,
and the premium on account of such liability shall be credited to the Reinsurer
from the original date of the Company's liability.

2.03 All reinsurance for which the Reinsurer shall be liable, by virtue of this
Agreement, shall be subject, in all respects, to the same rates, terms,
conditions, interpretations, waivers, the exact proportion of premiums paid to
the Company without any deduction for brokerage, and to the same modifications,
alterations and cancellations, as the respective insurance of the Company to
which such reinsurance relates, the true intent of this Agreement being that the
Reinsurer shall, in every case to which this Agreement applies and in the
proportion specified herein, follow the fortunes of the Company.

2.04 Nothing herein shall in any manner create any obligations, establish any
rights or create any direct right of action against the Reinsurer in favor of
any third party, or other person not party to this Agreement; or create any
privity of contract between the policyholders and the Reinsurer.

                                   ARTICLE III
                 COMMENCEMENT, TERMINATION, TERMS AND CONDITIONS

3.01 This Agreement shall become effective on October 1, 2004 at 12:01 A.M.,
Eastern Standard Time as respects losses arising out of occurrences commencing
under Policies written on or after such date at the offices of the Company, and
shall remain continuously in force unless terminated as provided herein.

3.02 This Agreement shall continue from the effective date and thereafter until
termination of the 2004 Quota Share Reinsurance Agreement. The parties may not
cancel this Agreement independent of the 2004 Quota Share Reinsurance Agreement,
and this Agreement shall terminate automatically and only upon termination of
the 2004 Quota Share Reinsurance Agreement.

                                       2
<PAGE>

3.03 When this Agreement terminates for any reason, reinsurance hereunder shall
continue to apply to the business in force at the time and date of termination
until expiration or cancellation of such business. It is understood that any
Policies with effective dates prior to the termination date but issued after the
termination date are covered under this Agreement. Additionally, the reinsurance
hereunder shall continue to apply as to Policies which must be issued or
renewed, as a matter of state law or regulation or because a sub-agent has not
been timely canceled, until the expiration dates on said Policies.

3.04 Upon termination of this Agreement, the Reinsurer, General Agent and the
Company shall not be relieved of or released from any obligation created by or
under this Agreement in relation to payment, expenses, reports, accounting or
handling, which relate to outstanding insurance business under this Agreement
existing on the date of such termination. The parties hereto expressly covenant
and agree that they will cooperate with each other in the handling of all such
run-off insurance business until all policies have expired either by
cancellation or by terms of such policies and all outstanding losses and loss
adjustment expenses have been settled. While by law and regulation, the Company
recognizes its primary obligations to its policyholders, the Reinsurer
recognizes that to the extent possible there shall be no cost or involvement by
the Company in servicing this run-off. All costs and expenses associated with
handling of such run-off business following the cancellation or termination of
this Agreement shall be borne solely by the General Agent and, to the extent not
borne by the General Agent, solely by Reinsurer. If for any reason the General
Agent fails or is unable to service any such run-off business (or any business
while this Agreement is still in effect), including the payment of claims, then
consistent with this Agreement, the Reinsurer's obligation with respect to such
run-off business shall continue and the Reinsurer shall either service such
run-off business directly or appoint, at the Reinsurer's expense, a successor to
the General Agent, subject to the approval of the Company, which approval shall
not be unreasonably withheld. Such successor shall perform all of the duties and
obligations of the General Agent with respect to servicing such run-off business
including the payment of claims.

3.05 This Agreement provides for termination on a run-off basis. The relevant
provisions of this Agreement shall apply to business being run off.

3.06 Upon termination of this Agreement, the Reinsurer shall ensure the General
Agent takes those actions necessary, including, but not limited to, sending
statutorily prescribed non-renewal notices to insureds in a timely manner to
effectuate the intent that there be no renewals or new policies (but for those
required by applicable law or regulation) after the termination of this
Agreement.

                                   ARTICLE IV
                        LOSS AND LOSS ADJUSTMENT EXPENSE

4.01 All loss settlements made by the Company or the General Agent under the
terms of this Agreement, whether under strict policy conditions or by way of
compromise, shall be unconditionally binding upon the Reinsurer in proportion to
its participation, and the Reinsurer shall benefit proportionately in all
salvage and recoveries. The Reinsurer shall assume and be liable for and pay on
behalf of the Company, all losses incurred in connection with the risks covered
by this Agreement, including, but not limited to, judgments (including interest
thereon) and settlements in connection therewith. The Reinsurer shall also be
liable for and pay on behalf of the Company all costs, expenses, and fees
(including, but not limited to, attorney's fees) incurred by the Company in
connection with the investigation or settlement or contesting the validity of
claims or losses covered under this Agreement (this shall include but, of
course, is not limited to, costs, expenses and fees resulting from a declaratory
judgment or injunctive action brought by an insured or other person).

                                       3
<PAGE>

4.02 The Reinsurer's share of losses, expense and loss recovery shall be carried
into the monthly accounting for which provision is hereinafter made.

4.03 All records pertaining to claims arising under insurance policies issued on
behalf of the Company through or by the General Agent subject to this Agreement
shall be deemed to be jointly owned records of the Company and the Reinsurer,
and shall be made available to the Company or the Reinsurer or their respective
representatives or any duly appointed examiner for any state within the United
States; and these records shall be kept in the State of New York or such other
jurisdiction as may be required by applicable state law or regulation.
Notwithstanding the foregoing, the Reinsurer is authorized to maintain duplicate
working files of all such records outside the State of New York. The Company,
the Reinsurer and the General Agent each agree that it will not destroy any such
records in its possession without the prior written approval of the other
parties except that the Company shall not be required to retain files longer
than required by the guidelines set forth by any applicable state department of
insurance.

4.04 The Reinsurer shall, or shall cause the General Agent to, establish a
separate claim register or method of recording claims arising under the Policies
covered by this Agreement so that all claims may be segregated and identified
separate and apart from other records of the Reinsurer or General Agent, with
such claims register to identify each claim on an individual case basis both as
to identify the insured(s) and the claimant, the reserve for loss and adjusting
expense. Such claim register shall be kept in a manner whereby the Company can,
at any time, determine the status of any claim arising under Policies covered by
this Agreement. Such records shall reflect the amount of reserves established
for the individual claim and the date when such reserve was established, and if
closed, whether such claim was closed with or without payment, and if with
payment, the amount paid thereon.

                                    ARTICLE V
                             REPORTS AND REMITTANCES

5.01 In lieu of the Company furnishing the Reinsurer with bordereaux showing the
particulars of all reinsurances ceded hereunder, the Reinsurer shall furnish or
cause to be furnished to the Company, within forty-five (45) days after the
close of each of the respective periods indicated below (on forms agreeable to
the Parties), with monthly, quarterly and annual reports showing the following
statistical data in respect to the business reinsured hereunder:

      (a)   Monthly, with the data segregated by the respective business
            segments.

            (i)    Net and ceded premiums written. (ii) Net and ceded unearned
                   premiums.

            (iii)  Net and ceded losses paid.

            (iv)   Net and ceded adjustment expenses paid during this month.

            (v)    Ceded adjustment expenses paid during this month.

            (vi)   Losses outstanding.

            (vii)  Ceding commission due the Company.

            (viii) Commission due the General Agent.

                                       4
<PAGE>

      (b)   Annually, with the data segregated by the respective business
            segments.

            (i)   Annual summaries of net premiums written, net losses paid, net
                  adjusting expenses paid during the year in such form so as to
                  enable the Company to record such data in its annual
                  convention statement. Such information is to be furnished not
                  later than February 15th of the following year. In force and
                  unearned premium segregated as to advance premiums, premiums
                  running twelve (12) months or less from inception date of
                  policy, and premiums running more than twelve (12) months from
                  inception date of policy in such form as to enable the Company
                  to record such data in its convention annual statement.

            (ii)  Annual summaries of net premiums written by geographical
                  location in such form as to enable the Company to record such
                  premiums in its annual report to the Texas Catastrophe
                  Property Insurance Association.

      (c)   Periodic, with data segregated by the respective business segments.

                  Statistical or other data as may be requested from time to
                  time by regulatory authorities.

5.02 In order to facilitate the handling of the business reinsured under this
Agreement, the Reinsurer agrees to furnish the Company with any additional
reports necessary to provide the information needed by the Company to prepare
its monthly, quarterly and annual statements to regulatory authorities.

5.03 Within 60 days after the end of each month, the General Agent shall remit
to the Reinsurer the following:

      (a)   Reinsurance Premium as collected in accordance with Section 7.06,
            less;

      (b)   ceded portion of Net Paid losses and loss adjustment expenses paid,
            provided such losses and loss adjustment expenses have not been
            deducted on behalf of the Company in any previous monthly report.

The positive balance of (a) less (b) shall be remitted by the General Agent with
its report. Any balance shown to be due the Company shall be remitted by the
Reinsurer as promptly as possible after receipt and verification of the General
Agent's report, but no later than 60 days after the end of each month.

                                   ARTICLE VI
                              ERRORS AND OMISSIONS

6.01 The Company shall not be prejudiced in any way by any omission through
clerical error, accident or oversight to cede to the Reinsurer any reinsurance
rightly falling under the terms of this Agreement, or by erroneous cancellation,
either partial or total, or any cession, or by omission to report, or by
erroneously reporting any losses, or by any other error or omission, but any
such error or omission shall be corrected immediately upon discovery.

                                       5
<PAGE>

6.02 Should the Company suffer any loss whatsoever, the Reinsurer shall assume
loss for its own account and save and hold the Company harmless therefore.

                                   ARTICLE VII
                             PREMIUM AND COMMISSION

7.01 It is understood that the General Agent shall pay, and the Reinsurer shall
guarantee, the Company directly a fee within forty-five (45) days following the
end of each month (to the Company's designated agent, T.B.A. Insurance Group,
Ltd. ("TBA"), as a ceding fee), 7.0% of Net Premiums, and in addition guarantees
the amount of assessments and state premium taxes as provided in this Article X.
(The ceding fee amount shall be computed on a calendar year basis based on
premium written in each annual period ended December 31st.)

"Net Premiums" shall mean the gross premiums (including policy fees) charged on
all original and renewal Policies written on behalf of the Company, less return
premiums.

7.02 The General Agent shall allow and pay within forty-five (45) days of the
end of each month to the Company an amount equal to the state premium tax on the
Net Premiums for the past month. Should any additional premium tax be assessed
at any time on written premium reinsured hereunder, the Reinsurer shall pay the
Company such additional premium tax within (fifteen) 15 days of being informed
by the Company of such additional premium tax. The Parties acknowledge that at
the effective date of this Agreement, the New York Department of Insurance (or
other state agency responsible for collecting premium taxes) may require the
payment of estimated premium taxes in advance on a semi-annual basis. The
Reinsurer shall, therefore, pay to the Company within five days prior to the due
date of any such estimated premium tax payment, the amount that would be due
based upon the business produced hereunder.

7.03 The Reinsurer hereby guarantees that (i) the Company will receive the
ceding fee provided hereunder irrespective of any events, losses or developments
for the term of this Agreement (Such payment is not dependent upon the
performance of the General Agent, underwriting experience, loss experience,
whether premium is collected or not, or any other event foreseen or unforeseen
by the parties at the inception of this Agreement.), and in addition (ii) those
amounts described in Section 7.05 of this Agreement and is directly responsible
for payment of the amount described in Article X. The Company shall allow return
ceding fees on return premiums at the same rates.

7.04 The General Agent shall not seek to recover from the Company, any
commissions due under the 2004 Quota Share Reinsurance Agreement and the
Reinsurer shall not seek to recover from the Company, any return commissions due
under the 2004 Quota Share Reinsurance Agreement. No funds are due the General
Agent from the Company under the 2004 Quota Share Reinsurance Agreement.

7.05 It is expressly agreed that the commission allowed the General Agent
includes provision for premium taxes and ceding fees. General Agent shall pay to
the Company all premium taxes payable for policies subject to reinsurance
hereunder. In the event that the ceding fee and premium taxes are not so paid by
the General Agent within 60 days following the end of the month, the unpaid
balance shall be paid directly to the Company by the Reinsurer

7.06 The General Agent on behalf of the Company shall pay the Reinsurer a
premium equal to 5.0% of Net Premium (the "Reinsurance Premium").The Reinsurance
Premium is payable by the General Agent on behalf of the Company to the
Reinsurer at the time premiums are paid under the 2004 Quota Share Reinsurance
Agreement.

                                       6
<PAGE>

                                  ARTICLE VIII
                                ACCESS TO RECORDS

         The Reinsurer or its duly appointed representatives shall have free
access at any and all reasonable times to such books and records of the Company
or General Agent, its departmental or branch offices, as shall reflect premium
and loss transactions of the Company and/or the business produced hereunder, for
the purpose of obtaining any and all information concerning this Agreement or
the subject matter thereof. Likewise, the Company or its duly appointed
representatives shall have free access at any and all reasonable times to such
books and records of the Reinsurer and/or General Agent, its departmental or
branch offices as shall reflect premium and loss transactions of the Company
and/or the business produced hereunder, for the purpose of obtaining any and all
information concerning this Agreement or the subject matter hereof.

                                   ARTICLE IX
                                   ARBITRATION

9.01 As a condition precedent to any right of action hereunder, in the event of
any dispute or difference of opinion hereafter arising between the Company and
the Reinsurer with respect to this Agreement, or with respect to these Parties'
obligations hereunder, it is hereby mutually agreed that such dispute or
difference of opinion shall be submitted to arbitration.

9.02 One arbiter (an "Arbiter") shall be chosen by the Company and one Arbiter
shall be chosen by the Reinsurer and an umpire (an "Umpire") shall be chosen by
the Arbiters, all of whom shall be active or retired disinterested executive
officers of property and casualty insurance or reinsurance companies.

9.03 In the event that a party fails to choose an Arbiter within thirty (30)
days following a written request by either party to the other to name an
Arbiter, the party who has chosen its Arbiter may choose the unchosen Arbiter.
Thereafter, the Arbiters shall choose an Umpire before entering upon
arbitration. If the Arbiters fail to agree upon the selection for the Umpire
within thirty (30) days following their appointment, each Arbiter shall name
three nominees, of whom the other shall decline two, and the decision shall be
made by drawing lots.

9.04 Each party shall present its case to the Arbiters and Umpire within a
reasonable amount of time after selection of the Umpire, unless the period is
extended by the Arbiters and the Umpire in writing and/or at a hearing in
Dallas, Texas. The Arbiters and Umpire shall consider this Agreement as an
honorable engagement, as well as a legal obligation, and they are relieved of
all judicial formalities and may abstain from following the strict rules of law
regarding entering of evidence. The decision in writing by a majority of the
Arbiters and Umpire when filed with the Parties shall be final and binding on
the parties. Judgment upon the final decision of the Arbiters and Umpire may be
entered in any court of competent jurisdiction.

9.05 In the event of a dispute between the Company and the Reinsurer concerning
this Agreement and the General Agency Agreement (regardless of whether either
party has claims against the General Agent), the entire dispute between the
Company and the Reinsurer shall be subject to arbitration as provided in this
Article IX.

                                       7
<PAGE>

9.06 The costs of the arbitration, including the fees of the arbitrators and the
umpire, shall be borne equally unless the Arbiters and Umpire shall decide
otherwise.

9.07 This Agreement shall be interpreted under the laws of Texas and the
arbitration shall be governed and conducted according to the Texas General
Arbitration Act.

                                    ARTICLE X
                  ASSESSMENTS, ASSIGNMENTS, FINES AND PENALTIES

10.01 The Reinsurer hereby assumes liability for any and all assessments and
assignments imposed as a result of Policies reinsured hereunder (whether before
or after the termination of this Agreement). The Reinsurer shall immediately
reimburse the Company for any assessments made against the Company pursuant to
those laws and regulations creating obligatory funds (including, but not limited
to, insurance guaranty and insolvency funds), pools, joint underwriting
associations, FAIR plans and similar plans. Amounts owed by the Reinsurer under
this Section shall be payable directly by the Reinsurer to the Company. The
Reinsurer shall be entitled to receive from the Company on or prior to the 31st
day of March of each year thereafter (or such date on which such premium taxes
are paid) a sum equal to the premium tax credit that is allowed to the Company
with respect to such assessments. The premium tax credit allowed the Reinsurer
hereunder is to be on a pro-rata and first-in, first-out basis. The Company
shall promptly return to the Reinsurer any amount of assessment refunded to or
credited to the Company.

10.02 This Agreement shall apply to risks assigned to the Company under any
assigned risk plan if, in the reasonable judgment of the Company, such risks
were assigned to the Company because of the business written and reinsured
hereunder.

10.03 The Reinsurer shall also pay promptly and directly to the Company the
fines, penalties and/or any other charge incurred by the Company as respects the
business reinsured hereunder arising out of the actions or inactions of the
General Agent unless such fines, penalties and/or any other charge was a direct
result of any willful misconduct on the part of the Company, which has been
finally determined by a court of competent jurisdiction after the exhaustion of
all appeals.

10.04 The Reinsurer shall cause the General Agent to act on behalf of the
Company to produce, prepare, and file statistical information with the
designated statistical reporting bureau. Such costs and expenses shall be
remitted in advance by the General Agent, and the Reinsurer hereby guarantees
the timely payment of such costs and expenses, to the Company with its monthly
account, based on the Company's good faith estimation. Adjustments to the
estimation shall be made annually by the Company to reflect the actual costs
related to the business produced hereunder. The Reinsurer shall also cause the
General Agent to furnish the Company, and other parties as designated by the
Company, with monthly, quarterly and annual reports showing statistical data in
respect of the business written as required.

                                       8
<PAGE>

                                   ARTICLE XI
                                PREMIUM FINANCING

         With respect to Policies covered under the provisions of this
Agreement, if any premiums are financed, the General Agent shall receive and
accept on behalf of the Company all notices required by statute, contract or
otherwise to be given to the Company, including, without limitation, notices of
the existence of premium finance agreements or of cancellation of policies the
premiums of which are financed ("financed policies"). No producing agent or any
other agent shall be entitled to receive or accept any notice on behalf of the
Company, and the General Agent shall be responsible for and will indemnify and
hold the Company harmless from and against any and all liabilities, losses,
claims, damages and expenses incurred by reason of or arising out of any action
taken or inaction suffered as a result of receipt of any notice by any person,
firm or entity other than the General Agent or the Company. Notwithstanding any
other term or provision of this Agreement, the General Agent agrees to return
and pay over to any premium finance company (whether affiliated with the Company
or not) which has sent notice of cancellation of a financed policy to the
General Agent, on behalf of the Company, within 30 days of receipt of such
notice of cancellation, any and all unearned commissions as of the date of
cancellation, together with any and all unearned premiums due any premium
finance company. The General Agent agrees to and does hereby relinquish any and
all rights to any unearned commissions for any such financed policy as of the
date of cancellation. The obligation of the General Agent to refund unearned
commissions and unearned premiums on a canceled financed policy shall survive
the termination or cancellation of this Agreement for so long as any policy
written under the terms of this Agreement remains in force. If the General Agent
does not fulfill its obligations to refund unearned commissions and unearned
premiums as provided in this Article XI and/or to indemnify the Company as
provided in this Article XI, then the Reinsurer shall pay the amount of the
refund owed and/or shall indemnify the Company even if the premium finance
company is an affiliate of the Company.

                                   ARTICLE XII
                                   INSOLVENCY

12.01 In the event of insolvency of the Company, this reinsurance shall be
payable directly to the Company or to its liquidator, receiver, conservator or
statutory successor on the basis of the liability of the Company without
diminution because of the insolvency of the Company or because the liquidator,
receiver, conservator or statutory successor of the Company has failed to pay
all or a portion of any claims.

12.02 It is agreed, however, that the liquidator, receiver, conservator or
statutory successor of the Company shall give written notice to the Reinsurer of
the pendency of a claim against the Company indicating the policy or bond
reinsured which claim would involve a possible liability on the part of the
Reinsurer within thirty (30) days after such claim is filed in the insolvency,
conservation or liquidated proceeding or in the receivership, and that during
the pendency of such claim, the Reinsurer may investigate such claims and
interpose, at its own expense, in the proceeding where such claim is to be
adjudicated, any defense or defenses that it may deem available to the Company
or its liquidator, receiver, conservator or statutory successor. The expense
thus incurred by the Reinsurer shall be chargeable, subject to the approval of
the Court, against the Company as part of the expense of conservation or
liquidation to the extent of a pro rata share of the benefit which may accrue to
the Company solely as a result of the defense undertaken by the Reinsurer.

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

12.04 It is further understood and agreed that, in the event of the insolvency
of the Company, the reinsurance under this Agreement shall be payable directly
by the Reinsurer to the Company or to its liquidator, receiver or statutory
successor, except (i) as provided by applicable law, (ii) where the Agreement
specifically provides another payee of such reinsurance in the event of the
insolvency of the Company and (iii) where the Reinsurer with the consent of the
direct insured or insureds has assumed such policy obligations of the Company as
direct obligations of the Reinsurer to the payees under such policies and in
substitution for the obligation of the Company to such payees.

                                       9
<PAGE>

                                  ARTICLE XIII
                                 ALTERNATE PAYEE

13.01 As respects subject business assumed as reinsurance under this Agreement,
it is agreed that if the Company has a conservator, liquidator or receiver
appointed for it, or becomes the subject of any conservation, liquidation or
insolvency proceeding, and the General Agent exercises its option to require the
Company to permit all its liabilities under the Policies reinsured hereunder to
be assumed by another licensed insurer as is permitted pursuant to the General
Agency Agreement, such assuming insurer shall be substituted for the Company as
payee of any reinsurance recoverable hereunder in respect of losses under
Policies subject hereto, and the Reinsurer, shall make payment thereof directly
to the substituted insurer. In the event of assumption, the Company shall,
however, be entitled to any fronting fees and other sums owing hereunder with
respect to Policies originally issued on its behalf.

13.02 In the event that an assuming insurer is submitted for the Company under
Section 13.01, all the other provisions of this Agreement shall apply to the
substituted insurer in the same manner as if said insurer were substituted for
the Company as the reinsured party hereunder, and to the extent this Agreement
reinsures such substituted insurer, coverage hereunder shall be excluded as
respects the Company.

                                   ARTICLE XIV
                            HOLD HARMLESS PROVISIONS

14.01 Notwithstanding anything else contained herein to the contrary, as
respects all matters related to this Agreement, in addition to those specific
provisions insulating the Company from specific risks hereunder, the Reinsurer
hereby covenants and agrees to reimburse and hold the Company harmless from and
against every claim, demand, liability, loss, damage, cost, charge, attorneys'
fees, expense, suit, order, judgment and adjudication of whatever kind or
character regarding (i) this Agreement, (ii) the 2004 Quota Share Reinsurance
Agreement, and/or (ii) the business reinsured hereunder (including, but not
limited to, underwriting loss, credit loss, and/or run-off expense and/or all
legal fees and expenses incurred by the Company in asserting its rights under
this Agreement) whether or not such claim, demand, loss, damage, cost, charge,
attorneys' fees, expense, suit, order, judgment or liability is within the terms
of Policies written and reinsured hereunder. The Reinsurer's obligation hereto
relates to, but is not limited to the following: all liability for agents'
balances; return premiums and commissions; deceptive trade practice liability;
premiums, policy fees or other charges (whether collected or not); costs,
liability, damages, fees and/or expenses incurred by the Company due to a
lawsuit between the Reinsurer and the General Agent (any dispute involving the
Company and the Reinsurer is subject to arbitration); all actions or inactions
by General Agent relating to this Agreement, any agreement with a premium
finance company or claims administrator; and/or all fees and/or commissions
owing to the General Agent under this and the aforementioned related agreements.

14.02 The Company shall not be liable to the Reinsurer for premiums unless the
Company itself has actually received those premiums and wrongfully not remitted
them to the Reinsurer. The Reinsurer may not offset any balances on account of
losses, loss adjustment expenses or any other amounts due except as to premiums
actually received by the Company itself (as distinct from premiums not
collected, or premiums collected by the General Agent, or premium placed in the
premium trust account pursuant to the General Agency Agreement) which have
wrongfully not been transmitted to the Reinsurer.

                                       10
<PAGE>

14.03 If for any reason the General Agent fails or is unable to administer the
policies reinsured hereunder (whether the Agreement is still in effect or the
business is being run-off), (i) the Reinsurer shall appoint a party (acceptable
and approved by the Company) to administer the business and the Reinsurer shall
be responsible for the cost of said administration and (ii) the General Agent
will fully cooperate with the Company (or its designated representative) in
providing access to such of the General Agent's personnel, computer systems or
other assets or procedures as the Company may deem necessary to provide for an
orderly transition of the administration of the Policies reinsured hereunder. If
return premiums or other funds need to be returned to premium finance companies,
policyholders or sub-agents, the Reinsurer shall pay of these amounts if the
successor or administrator does not.

14.04 The Reinsurer shall not sue, or seek arbitration, against the Company for
any acts of the General Agent for any monies which the General Agent owes unless
the Company has actually received those monies and has wrongfully not remitted
them to the Reinsurer; and the Reinsurer shall indemnify the Company for any
damages, liabilities and expenses incurred by reason of the General Agent's acts
or failure to act. The Company is not responsible for any commissions or other
monies payable to the General Agent in connection with this Agreement and the
General Agent shall not sue, or seek arbitration against, the Company for any
actions by, or debts owing from, the Reinsurer. The Reinsurer shall not seek to
recover from, or offset against, the Company any sums, whether premiums or other
monies, which the General Agent was unable or unwilling to remit to the Company
or the Reinsurer.

14.05 In the event the Reinsurer, or any agent appointed pursuant to this
Agreement, binds the Company for insurance coverage on insurance risks which are
in excess of the policy limits set forth in Article I, and/or are not within the
terms of business specified in Article I, and/or are not within the territory
specified in Article I, whether intentional or not, the Reinsurer and General
Agent will do such things and take such actions as may be necessary to reduce
the Company's exposure to such risks and to hold the Company harmless against
any liability or loss which may be incurred by the Company in excess hereof. At
the Company's request, the General Agent in accordance with applicable law, and
policy terms, shall cancel or not renew any risk bound which is not in
conformance with this Agreement. Any such insurance coverage on insurance risks
bound contrary to the limitations which are in excess of the policy limits set
forth in Article I, and/or are not within the classes of business specified in
Article I, and/or are not within the territory specified in Article I, whether
intentional or not, shall be reinsured and subject to this Agreement.

14.06 In furtherance of the protections afforded to the Company under this
Agreement, the Reinsurer expressly acknowledges that certain circumstances may
come to exist with respect to the Policies reinsured hereunder that require
adjustment to the timing of Reinsurer remittances. If, in the sole discretion of
the Company, an advance payment or payments of the Reinsurer's obligations under
this Agreement is necessary to avoid irreparable harm to the Company, the
Reinsurer shall make such payment or payments promptly upon the Reinsurer's
receipt of the Company's good faith estimate or calculation of the necessity
thereof.

14.07 In the event any provision, term and/or condition of this Agreement (other
than the Preamble hereof) is inconsistent with the provision, terms and/or
conditions of Section 14.01 above, the provision, terms, and/or conditions of
said Section 14.01 above shall control over and supercede such inconsistent
provision, terms, and/or conditions.

                                       11
<PAGE>

                                   ARTICLE XV
                       LOSS IN EXCESS OF POLICY LIMITS/ECO

15.01 In the event the Company pays or is held liable to pay an amount of loss
in excess of its policy limit, but otherwise within the terms of its policy
(hereinafter called "loss in excess of policy limits") or any punitive,
exemplary, compensatory or consequential damages, other than loss in excess of
policy limits (hereinafter called "extra contractual obligations") because of
alleged or actual bad faith or negligence on its part in rejecting a settlement
within policy limits, or in discharging its duty to defend or prepare the
defense in the trial of an action against its policyholder, or in discharging
its duty to prepare or prosecute an appeal consequent upon such an action, or in
otherwise handling a claim under a policy subject to this Agreement, 100% of the
loss in excess of policy limits and/or 100% of the extra contractual obligations
shall be added to the Company's loss, if any, under the Policy involved, and the
sum thereof shall be reinsured under this Agreement.

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

15.03 Notwithstanding anything stated herein, this Agreement shall not apply to
any loss incurred by the Company as a result of any fraudulent and/or criminal
act which has been finally determined by a court of competent jurisdiction,
after the exhaustion of all appeals, by any officer or director of the Company
acting individually or collectively or in collusion with any individual,
corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.

                                   ARTICLE XVI
                               REGULATORY MATTERS

16.01 It is the Parties' understanding that any premiums which are overdue from
the General Agent to the Company may be deemed non-admitted assets. In
confirmation of the liabilities assumed by the Reinsurer under this Agreement,
the Reinsurer hereby assumes all liability and responsibility for all premiums
in the course of collection.

16.02 The Reinsurer shall agree, at no cost to the Company, to take those
actions (including, but not limited to, modifications in how funds are handled
and how accounts are cleared, settled and the manner in which incurred losses
are accounted for) and agree to those arrangements necessary to ensure that the
Company suffers no adverse impact because of this reinsurance program and is in
compliance with any applicable laws of a state insurance department, insofar as
this reinsurance program is concerned.

                                  ARTICLE XVII
                                THE GENERAL AGENT

17.01 The Company, the Reinsurer and the General Agent have entered into a
General Agency Agreement effective October 1, 2004 (the "General Agency
Agreement"), a complete copy of which is attached hereto as Exhibit "B" and
fully incorporated herein by this reference. The Reinsurer has selected the
General Agent to administer the business reinsured hereunder. While for
regulatory purposes, the General Agent will need to be appointed as the
Company's agent, it is recognized that the General Agent is acting on behalf of
the Reinsurer. The Company is making no evaluation of the General Agent's
qualification, has no obligation to furnish reports or statistics to the
Reinsurer, or to monitor the performance of the General Agent. The Company shall
file with the State all reports requested by the State based upon information
received from the General Agent and Reinsurer.

                                       12
<PAGE>

17.02 The Company will, at the request of the General Agent and the Reinsurer,
appoint producing agents to produce business through the General Agent. The
Company, in its sole discretion, may refuse to appoint any such agent; provided,
however, that such appointment shall not be unreasonably withheld. The General
Agent will not establish any sub-general agencies or any agencies with the
authority of a general agency. The Reinsurer shall hold the Company harmless
from and indemnify it for any damage, liability, claim, expense, cost or fees
(including attorneys' fees and expenses) of whatever kind or character caused
directly or indirectly by any action of or failure to act, by any such producing
agent.

17.03 The General Agent shall be responsible for the control of the producing
agents appointed by the Company at the request of and on behalf of the
Reinsurer, including compliance with state licensing laws and the financial
condition of such agents.

17.04 The Reinsurer shall guarantee payment to the Company of any amounts due
the Company (or the Company's designated agent, TBA) from business produced by
and/or policies issued by or through the producing agents appointed by the
Company at the request of and on behalf of the General Agent and the Reinsurer.
The Reinsurer and the General Agent shall be solely responsible for notifying
such agents of this Agreement and of any termination hereof, and the Reinsurer
shall be responsible for the consequences of any failure to provide such
notification.

17.05 The General Agent shall not sue, or seek arbitration, against the Company
for any acts of the Reinsurer and shall indemnify and hold the Company harmless
from and against any damages, liabilities and expenses incurred by reason of the
Reinsurer's acts or failures to act.

17.06 The Company shall conduct or have conducted the examinations of the
General Agent as provided in Section 5.13 of the General Agency Agreement. The
examinations provided for herein shall be at no cost to the Company, and the
Reinsurer shall indemnify and hold the Company completely harmless as respects
any liability, damage, charge, cost, fine, or penalty, the Company may incur as
a result of such examinations.

                                  ARTICLE XVIII
                   REINSURER OR GENERAL AGENT SALE OR TRANSFER

         The Reinsurer or the General Agent agree to give the Company or its
designated agent, TBA, 90 days advance written notice of any sale or transfer of
such party's business, or such party's consolidation with a successor firm, in
order that the Company may, in its sole discretion:

        (a)   Assign this Agreement to the successor; or

        (b)   Enter into a new 2004 Quota Share Reinsurance Agreement with the
              successor; or

        (c)   Terminate this Agreement as provided in Section 4.02(g) of this
              Agreement.

                                       13
<PAGE>

                                  ARTICLE XIX
                                  MISCELLANEOUS

19.01 This Agreement has been made and entered into in the State of Texas and
the Agreement shall be subject to and construed under the laws of the State of
Texas. This Agreement shall be deemed performable at the Company's
administrative office in Fort Worth, Texas, and it is agreed that the venue of
any controversy arising out of this Agreement, or any breach thereof, shall be
in Tarrant County, Texas.

19.02 All notices required to be given hereunder shall be deemed to have been
duly given by personally delivering such notice in writing or by mailing it,
Certified Mail, return receipt requested, with postage prepaid. Any Party may
change the address to which notices and other communications hereunder are to be
sent to such Party by giving the other Party written notice thereof in
accordance with this provision.

19.03 This Agreement shall be binding upon the Parties hereto, together with
their respective successors and permitted assigns. Neither the Reinsurer nor the
General Agent may assign any of its rights or obligations under this Agreement
without the prior written consent of the Company.

19.04 This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

19.05 This Agreement is the entire agreement between the parties and supersedes
any and all previous agreements, written or oral, and amendments thereto with
respect to the subject matter hereof.

19.06 This Agreement may be amended, modified or supplemented only by a written
instrument executed by all Parties hereto.

19.07 A waiver by the Company, Reinsurer or General Agent of any breach or
default by the other party under this Agreement shall not constitute a
continuing waiver or a waiver by the Company or the Reinsurer of any subsequent
act in breach or of default hereunder.

19.08 Headings used in this Agreement are for reference purposes only and shall
not be deemed a part of this Agreement.

19.09 The Parties hereto intend all provisions of this Agreement to be enforced
to the fullest extent permitted. Accordingly, should a court of competent
jurisdiction or arbitration panel determine that the scope of any provision is
too broad to be enforced as written, the Parties intend that the court or
arbitration panel should reform the provision to such narrower scope as it
determines to be enforceable under present or future law; such provision shall
be fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance.

19.10 This Agreement is not exclusive and the Company reserves the right to
appoint or contract with other reinsurers, agents and/or managing agents in the
territory covered by this Agreement.

                                       14
<PAGE>

19.11 The Reinsurer or General Agent shall not insert any advertisement
respecting the Company or the business to be written under this Agreement in any
publication or issue any circular or paper referring to the Company or such
business without first obtaining the written consent of the Company. The
Reinsurer and/or General Agent shall establish and maintain records of any such
advertising as required by applicable statutes and regulations.

19.12 Policy cancellations at the Company's request will be made strictly
subject to requirements imposed by the Company's underwriting rules and
practices or the Reinsurer's underwriting rules and practices, as approved by
the Company, and in compliance with applicable statutes and regulations and the
applicable provisions contained in this Agreement and the pertinent policy. Such
cancellation authority shall be exercised only for causes inherent in the
particular risk and shall not be construed as authority to make general or
indiscriminate cancellations or replacement of the Policies with those of
another Company, except upon specific written instructions from the Company.
When directed by the Company, the Reinsurer will cancel any and all Policies
produced by it for any reason the Company deems necessary.

19.13 This Agreement shall be interpreted in conformance with applicable Texas
law and regulation. If it is found or ordered by a court or regulatory body that
a term or provision of this Agreement does not conform to such law or regulation
then this Agreement shall be deemed to be amended and modified in accordance
with such law. However, where this Agreement is found not to comply with
applicable law or regulation, the Company may in its sole discretion terminate
this Agreement immediately and without prior notice.

19.14 The Company agrees that the Reinsurer shall have the right, with the
approval of the Company, to determine the rates and prepare the rate filing for
the Company to file during the term of this Agreement and during the term of the
run-off. The Reinsurer and General Agent understand and agree that no business
shall be produced, until a written approval of the applicable rate rules and
forms is received from the regulatory authority of competent jurisdiction.

                                   ARTICLE XX
                    LOSS AND UNEARNED PREMIUM RESERVE FUNDING

20.01 The Reinsurer will secure its obligations under this Agreement via a
Security Fund Agreement or letter of credit to be obtained by the Reinsurer in
favor of the Company, which letter of credit shall be in all respects acceptable
to the Company.

       (a)    At a minimum, the letter of credit must:

              (i)   comply with the provisions of Texas Insurance Code, art
                    5.75-1(d)(3) and 28 Texas Administrative Code 7.610;and;

              (ii)  be issued by a Qualified United States Financial Institution
                    (as defined by the foregoing statute and regulation).

       (b)   The Company may draw the full amount of the letter of credit to
             satisfy, in whole or in part the obligations of reinsurer hereunder
             or, if:

              (i)   the Reinsurer fails to comply with the provisions of this
                    Article; or

              (ii)  the issuer of the letter of credit gives the Company notice
                    of cancellation or non-renewal under the evergreen
                    provisions of the letter of credit.

                                       15
<PAGE>

20.02 Within ten business days after the General Agent's monthly report reflects
the Loss Ratio (as hereinafter defined) is 75% or greater, the Reinsurer shall
obtain or establish a Trust Account via a Security Fund Agreement or a letter of
credit in an amount equivalent to 25% of the earned premium balance.
Subsequently, for each 25% increase in the Loss Ratio, as reflected on the
General Agent's monthly account, the Trust Account or letter of credit shall be
increased in increments of 25% of the earned premium balance. (For example, if
the Loss Ratio is 75%, the Trust Account or letter of credit shall reflect a
balance of 25% of the earned premium balance, if the Loss Ratio is 100%, the
Trust Account or letter of credit shall reflect a balance of 50% of the earned
premium balance.) Conversely, for each 25% decrease in the Loss Ratio, as
reflected on the General Agent's monthly account, the Trust Account or letter of
credit shall be decreased in increments of 25% of the earned premium balance.

20.03 If at any time, based upon the monthly reporting provided to the Company
under this Agreement, it shall be determined by the Company or the Reinsurer
that the amount of the Trust Account or letter of credit may not be equivalent
to the percentage of earned premium as required in Section 20.02, then the
Reinsurer shall immediately increase the amount of the Trust Account or letter
of credit to an amount equivalent to such amount. The Company shall, at all
times the Loss Ratio is in excess of 75%, be in possession of a Trust Account or
letter of credit equivalent to the percentage of earned premium as required in
Section 20.02.

20.04 "Loss Ratio" as used herein shall mean the ratio of the Company's incurred
losses for any one agreement year to its subject net earned premium for the same
agreement year. "Subject net earned premium" as used herein shall mean the
Company's net written premium allocated to the agreement year (i.e., net of
cancellations and return amounts and net of amounts ceded by the Company for
reinsurance which inures to the benefit of this Agreement), less the unearned
portion thereof as of the effective date of calculation. "Net paid losses" as
used herein shall mean net losses and loss adjustment expenses incurred, and any
and all other costs, expenses or liabilities, including loss in excess of policy
limits and extra contractual obligations, plus any assignments and/or
assessments.

20.05 The Company shall be entitled at any time, at its expense, to engage an
independent actuary to review the Loss Ratio and corresponding letter of credit
balance. In the event of a dispute or difference of opinion between the amount
of earned premiums or Loss Ratio, as determined by the actuary engaged by
Company, and such amounts as determined by the Reinsurer or its affiliate, the
amounts determined by the actuary engaged by Company shall govern for purposes
of determining the appropriate balance of the letter of credit required under
this Agreement.

                                       16
<PAGE>

                                   ARTICLE XXI
                      T.B.A. INSURANCE GROUP, LTD. ("TBA")

         The Company has contracted with TBA as its designated intermediate
agent to perform certain duties on the Company's behalf and to issue certain
checks on behalf of the Company in exchange for certain fees. The Reinsurer
agrees that TBA is to bear no business, credit or insurance risk and can bear no
liability whatsoever to the Reinsurer save liability for any actual fraud or
violation of criminal law it commits, which has been finally determined by a
court of competent jurisdiction after the exhaustion of any appeals. TBA shall
receive all the protections from liability which are contained herein for the
benefit of the Company.

                                  ARTICLE XXII
                                 SAVINGS CLAUSE

22.01 If any law or regulation of any Federal, State or local government of the
United States of America, or the ruling of officials having supervision over
insurance companies, should prohibit or render illegal this Agreement, or any
portion thereof, as to risks or properties located in the jurisdiction of such
authority, either the Company or the Reinsurer may upon written notice to the
other suspend or abrogate this Agreement insofar as it relates to risks or
properties located within such jurisdiction to such extent as may be necessary
to comply with such law, regulations or ruling. Such illegality shall in no way
affect any other portion thereof; provided, however, that the Reinsurer or the
Company may terminate or suspend this Agreement insofar as it relates to the
business to which such law or regulation may apply.

22.02 This Agreement shall be interpreted in accordance with the laws of the
State of Texas. All provisions of this Agreement are intended to be enforced to
the fullest extent permitted. Accordingly, should a court of competent
jurisdiction or arbitration panel determine that the scope of any provision is
too broad to be enforced as written, the Parties intend that the court or
arbitration panel should reform the provision to such narrower scope as it
determines to be enforceable under present or future law; such provision shall
be fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision were never a part hereof; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance; provided, however, that where this Agreement is so found not to
comply with applicable law or regulation, the Company may in it sole discretion
terminate this Agreement immediately without prior notice.

                                       17
<PAGE>

IN WITNESS WHEREOF, the Parties hereto by their respective duly authorized
representatives have executed this Agreement as of the date first above
mentioned.

DATED: December 27, 2004                  STATE NATIONAL INSURANCE COMPANY, INC.
       --------------------

                                          BY: /s/ Terry Ledbetter
                                              --------------------------------

                                          ITS: President
                                               -------------------------------

DATED: October 13, 2004                   TOWER INSURANCE COMPANY OF NEW YORK
       --------------------

                                          BY: /s/ Marina Contiero
                                              --------------------------------

                                          ITS: Vice President
                                               -------------------------------

DATED:  October 13, 2004                  TOWER RISK MANAGEMENT CORPORATION
        -------------------

                                          BY: /s/ Marina Contiero
                                              --------------------------------

                                          ITS: Vice President
                                               -------------------------------

                                       18
<PAGE>

                                TABLE OF CONTENTS
 ARTICLE                                                                    PAGE

          Preamble                                                           1

  1       Business Reinsured                                                 1

  2       Original Conditions                                                2

  3       Commencement, Termination, Terms & Conditions                      2

  4       Loss and Loss Adjustment Expense                                   3

  5       Reports and Remittances                                            4

  6       Errors and Omissions                                               5

  7       Premium and Commission                                             6

  8       Access to Records                                                  7

  9       Arbitration                                                        7

  10      Assessments, Assignments, Fines and Penalties                      8

  11      Premium Financing                                                  9

  12      Insolvency                                                         9

  13      Alternate Payee                                                   10

  14      Hold Harmless Provisions                                          10

  15      Loss in Excess of Policy Limits/ECO                               12

  16      Regulatory Matters                                                12

  17      The General Agent                                                 12

  18      Reinsurer or General Agent Sale or Transfer                       13

  19      Miscellaneous                                                     14

  20      Loss and Unearned Premium Reserve Funding                         15

  21      T.B.A. Insurance Group, Ltd. ("T.B.A.")                           17

  22      Savings Clause                                                    17

<PAGE>

                    EXCESS OF LIABILITY REINSURANCE AGREEMENT

                                      AMONG

                     STATE NATIONAL INSURANCE COMPANY, INC.,

                                       AND

                       TOWER INSURANCE COMPANY OF NEW YORK

                                       AND

                        TOWER RISK MANAGEMENT CORPORATION

                           EFFECTIVE: OCTOBER 1, 2004

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]