Document:

<PAGE>

                                                               EXHIBIT 10 (b)

                 AMENDMENT NO. 1 TO CREDIT AGREEMENT AND WAIVER

     This Amendment and Waiver (this "Amendment") is entered into as of March
23, 1999 by and among Fund American Enterprises Holdings, Inc., a Delaware
corporation (the "Borrower"), The First National Bank of Chicago,
individually and as agent ("Agent"), and the other financial institutions
signatory hereto (the "Lenders").

                                    RECITALS

     A. The Borrower, the Agent and the Lenders are party to that certain
$35,000,000 Second Amended and Restated Credit Agreement dated as of February
24, 1999 (the "Credit Agreement"). Unless otherwise specified herein,
capitalized terms used in this Amendment shall have the meanings ascribed to
them by the Credit Agreement.

     B. The Borrower, the Agent and the undersigned Lenders wish to amend the
Credit Agreement and waive certain provisions thereof on the terms and
conditions set forth below.

     Now, therefore, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:

          1. AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement shall be
amended as follows:

               (a) SCHEDULE 5.8 Upon the Effective Date (as defined below),
          Schedule 5.8 shall be amended in its entirety and replaced with
          Schedule 5.8 attached hereto.

               (b) SCHEDULE 5.10 Effective as of February 24, 1999, Schedule
          5.10, is amended in its entirety and replaced with Schedule 5.10
          attached hereto.

               (c) SCHEDULE 5.16 Upon the Effective Date, Schedule 5.16 shall
          be amended in its entirety and replaced with Schedule 5.16 attached
          hereto.

               (d) SECTION 6.15(e) Upon the Effective Date, Section 6.15(e)
          shall be amended in its entirety and replaced with the following:

               "(e) other Investments by the Borrower in any Person which is
          a Subsidiary as of the date hereof, so long as no Default or
          Unmatured Default has occurred and is continuing or would occur
          after giving effect to such Investment; PROVIDED, however, that the
          aggregate amount of Investments in SOMSC pursuant to this CLAUSE (e)
          after December 31, 1998 (when taken together with the aggregate
          amount of loans made to SOMSC pursuant to SECTION 6.15(f) after
          December 31, 1998) do not exceed the amount of net proceeds
          received from dividends, transfers, loans or other distributions
          from SOMSC after December 31, 1998

<PAGE>

          (less the aggregate amount of Investments made by the Borrower
          under SECTION 6.15(g) after December 31, 1998 to the extent such
          Investments under SECTION 6.15(g) are made from net proceeds
          traceable to dividends, sales, transfers or other distributions of
          equity interests in SOMSC after December 31, 1998 and are not held
          by SOMSC or SOMSC's Subsidiaries;"

               (e) SECTION 6.15(f) Upon the Effective Date, Section 6.15(f)
          shall be amended in its entirety and replaced with the following:

               "(f) loans made by (x) the Borrower to any Wholly-Owned
          Subsidiary and (y) any Wholly-Owned Subsidiary to a Wholly-Owned
          Subsidiary or the Borrower so long as, in all cases, no Default or
          Unmatured Default has occurred and is continuing or would occur
          after giving effect to such loan; PROVIDED, however, that the
          aggregate amount of loans to SOMSC pursuant to this CLAUSE (f)
          after December 31, 1998 (when taken together with the aggregate
          amount of Investments made in SOMSC pursuant to SECTION 6.15(e)
          after December 31, 1998) do not exceed the amount of net proceeds
          received from dividends, transfers, loans or other distributions
          from SOMSC after December 31, 1998 (less the aggregate amount of
          Investments made by the Borrower under SECTION 6.15(g) after
          December 31, 1998 to the extent such Investments under SECTION
          6.15(g) are made from net proceeds traceable to dividends, sales,
          transfers or other distributions of equity interests in SOMSC after
          December 31, 1998 and are not held by SOMSC or SOMSC's
          Subsidiaries;"

          2. CONSENT AND WAIVER. The Lenders hereby (a) waive any breach of
SECTION 6.4 of the Credit Agreement arising solely out of the sale by the
Borrower's Subsidiary, Source One Mortgage Services Corporation ("SOMSC"), of
substantially all of its business pursuant to that certain Asset Purchase
Agreement by and among SOMSC, the Borrower and Citicorp Mortgage, Inc., dated
as of March 23, 1999 (as it may be amended or otherwise modified, the
"Purchase Agreement"), and the resulting failure of such Subsidiary to carry
on and conduct its business in substantially the same manner and in
substantially the same fields of business as it conducted on February 24,
1999, (b) waive any breach of SECTION 6.22(b) of the Credit Agreement to and
including July 31, 1999 arising solely out of the Unfunded Liability of
certain Subsidiaries of the Borrower exceeding $500,000 as disclosed on
SCHEDULE 5.10 attached hereto (the "Excess Unfunded Liability") and (c) waive
any Default or Unmatured Default under SECTIONS 7.1, 7.3, 7.4 and 7.5 of the
Credit Agreement which has heretofore arisen as a result of the Purchase
Agreement, the Contingent Obligations of the Borrower related thereto, any
Funded Indebtedness of SOMSC which shall be declared to be due and payable or
required to be repaid (other than by a regularly scheduled payment) prior to
its stated maturity resulting from consummation of the Purchase Agreement, or
the Excess Unfunded Liability.

                                     -2-
<PAGE>

          3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants that:

               (a) The execution, delivery and performance by the Borrower of
     this Amendment has been duly authorized by all necessary corporate
     action and that this Amendment is a legal, valid and binding obligation
     of the Borrower enforceable against the Borrower in accordance with its
     terms, except as the enforcement thereof may be subject to the effect of
     any applicable bankruptcy, insolvency, reorganization, moratorium or
     similar law affecting creditors' rights generally;

               (b) After giving effect to this Amendment, each of the
     representations and warranties contained in the Credit Agreement is true
     and correct in all material respects on and as of the date hereof as if
     made on the date hereof; and

               (c) After giving effect to this Amendment, no Default or
     Unmatured Default has occurred and is continuing.

          4. EFFECTIVE DATE. This Amendment shall become effective upon the
execution and delivery hereof by the Borrower, the Agent and the Required
Lenders (without respect to whether it has been executed and delivered by all
the Lenders); provided that SECTIONS 1 and 2 hereof shall not become
effective until the date (the "Effective Date") when the following additional
conditions have also been satisfied:

               (a) delivery of a copy, certified by the Secretary or Assistant
     Secretary of the Borrower, of the fully executed Purchase Agreement with
     all schedules (as may be requested by the Agent) and amendments thereto;

               (b) a certificate, executed by the Secretary or Assistant
     Secretary of the Borrower, certifying the consummation of the
     transactions contemplated by the Purchase Agreement on the "Closing
     Date" (as defined in the Purchase Agreement);

               (c) a certificate, executed by the Secretary or Assistant
     Secretary of the Borrower, certifying (i) an attached copy of the
     Borrower's Board of Directors' resolutions authorizing its execution,
     delivery and performance under the Purchase Agreement and (ii) that
     there has been no amendments, supplements or modifications to the
     Articles of Incorporation, Bylaws or certificate of incumbency delivered
     to the Agent on February 24, 1999;

               (d) evidence satisfactory to the Agent that all credit
     arrangements of SOMSC and its Subsidiaries related to Funded
     Indebtedness of SOMSC and its Subsidiaries have been either (i)
     terminated and all Indebtedness, liabilities and obligations outstanding
     thereunder shall have been paid in full and all liens thereunder
     released or (ii) assumed by Citicorp Mortgage, Inc. pursuant to the
     Purchase Agreement; and

               (e) such other documents as the Agent, any Lender or their
     counsel may have reasonably requested.

                                     -3-
<PAGE>

     In the event the Effective Date has not occurred on or before June 30,
     1999, SECTIONS 1(a), (b), (d) AND (e) and 2 hereof shall not become
     operative and shall be of no force or effect.

          5. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.

               (a) Except as specifically amended above, the Credit Agreement
          and the other Loan Documents shall remain in full force and effect
          and are hereby ratified and confirmed.

              (b) The execution, delivery and effectiveness of this Amendment
          shall not operate as a waiver of any right, power or remedy of the
          Agent or any Lender under the Credit Agreement or any Loan
          Document, nor constitute a waiver of any provision of the Credit
          Agreement or any Loan Document, except as specifically set forth
          herein. Upon the effectiveness of this Amendment, each reference in
          the Credit Agreement to "this Agreement", "hereunder", "hereof",
          "herein" or words of similar import shall mean and be a reference
          to the Credit Agreement as amended hereby.

          6. COSTS AND EXPENSES. The Borrower hereby affirms its obligations
under Section 9.7 of the Credit Agreement to reimburse the Agent for all
reasonable costs, internal charges and out-of-pocket expenses paid or
incurred by the Agent in connection with the preparation, negotiation,
execution and delivery of this Amendment, including but not limited to the
attorneys' fees and time charges of attorneys for the Agent with respect
thereto.

          7. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION
105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.

          8. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.

          9. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but
all such counterparts shall constitute one and the same instrument.

                                     -4-
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date and year first above written.

                                     FUND AMERICAN ENTERPRISES HOLDINGS, INC.

                                     By:
                                        -------------------------------------

Name:
     -------------------------------

                                     Title:
                                           ----------------------------------

                                     -5-
<PAGE>

                                     THE FIRST NATIONAL BANK OF CHICAGO,
                                     Individually and as Agent

By:
   ---------------------------------

                                     Print Name:
                                                -----------------------------

Title:
      ------------------------------

                                     Address:  153 West 51st Street
                                               New York, NY 10019
                                               Attn: Samuel W. Bridges
                                                     First Vice President

                                     Fax No.:  (212) 373-1393
                                     Tel. No.: (212) 373-1142

                                     -6-
<PAGE>

                                     FLEET NATIONAL BANK

By:
   ---------------------------------

                                     Print Name:
                                                -----------------------------

Title:
      ------------------------------

                                     Address:  One Federal Street-MAOFD06H
                                               Boston, MA  02110-2010
                                               Attn:  David A. Bosselait
                                                      Vice President

                                     Fax No.:  (617) 346-5825
                                     Tel. No.: (617) 346-5823

                                     -7-
<PAGE>

                                     FIRST UNION NATIONAL BANK

By:
   ---------------------------------

                                     Print Name:
                                                -----------------------------

Title:
      ------------------------------

                                     Address:  1339 Chestnut Street, PA4819
                                               Philadelphia, PA 19101-4819
                                               Attn:  Joseph DiFrancesco

                                     Fax No.:  215-786-4114
                                     Tel. No.: 215-973-2944

                                     -8-
<PAGE>

                                     DEUTSCHE BANK AG,
                                     New York and/or Cayman Islands Branch

By:
   ---------------------------------

                                     Print Name:
                                                -----------------------------

Title:
      ------------------------------

By:
   ---------------------------------

                                     Print Name:
                                                -----------------------------

Title:
      ------------------------------

                                     Address:  31 West 52nd Street
                                               New York, NY  10019
                                               Attn: George Korchowsky

                                     Fax No.:  212-469-8366
                                     Tel. No.: 212-469-8242

                                     -9-
<PAGE>

                                     ABN AMRO BANK N.V.

By:
   ---------------------------------

                                     Print Name:
                                                -----------------------------

Title:
      ------------------------------

By:
   ---------------------------------

                                     Print Name:
                                                -----------------------------

Title:
      ------------------------------

                                     Address:  500 Park Avenue
                                               New York, NY  10022
                                               Attn:  Bruce Ballentine

                                     Fax No.:  212-446-4335
                                     Tel. No.: 212-446-4358

                    Fund American Enterprises Holdings, Inc.
                                  Schedule 5.8
                               To Credit Agreement

                         MATERIAL CONTINGENT OBLIGATIONS

Guaranty by Fund American Enterprises Holdings, Inc. (the "Company") of a
$15,000,000 term loan, dated as of October 23, 1995, by and between John J.
Byrne, as borrower, and First National Bank of Chicago, as agent. The term
loan is due December 31, 1999. The guaranty is provided pursuant to Mr.
Byrne's employment contract and is recourse to Mr. Byrne's net worth.

Guaranty dated February 28, 1997, in connection with Source One Mortgage
Services Corporation's ("Source One") February 28, 1997 sale of approximately
$17.0 billion of mortgage servicing rights to Chemical Mortgage Company
("Chemical") whereby the company made certain collection, payment and
performance guarantees to Chemical for a period of no more than ten years.
The aggregate amount of the Company's obligation is initially limited to
$20,000,000 and amortizes down to $15,000,000 as mortgage loans serviced
under the related servicing agreements are repaid. During 1998, the Company
permitted Chemical to include an

                                     -10-
<PAGE>

additional $2.9 billion of mortgage servicing rights that it purchased from
Source One during 1998 to be included in the guaranty, however, the inclusion
of the 1998 servicing rights sold did not serve to change the maximum amount
of the guaranty or the original term of the guaranty.

Stock Purchase Agreement dated as of October 19, 1998 by and between the
Company, Valley Insurance Company ("VIC") and Executive Risk Indemnity Inc.
("ERII") providing for the sale of all the outstanding capital stock of
Valley National Insurance Company ("VNIC") to ERII following the reinsurance
cession of all the insurance business of VNIC to VIC and Charter Indemnity
Company ("CIC") (the "VNIC Sale Agreement"). In conjunction with the VNIC
Sale Agreement, the Company and ERII entered into a Keep Well Agreement dated
as of October 19, 1998 whereby the Company has agreed to maintain the
shareholder's equity of Valley Group, Inc. ("VGI") at predetermined levels
(initially set at $60,000,000). In conjunction with the VGI Sale Agreement
(as defined below), The Company and VIC intend to amend the VNIC Sale
Agreement and Keep Well Agreement prior to closing to, among other items,
remove the obligation to maintain the shareholder's equity of VGI at
predetermined levels. The VNIC Sale Agreement and Keep Well Agreement are
subject to the receipt of regulatory approval.

Stock Acquisition Agreement dated as of February 10, 1999 by and between the
Company, and Unitrin, Inc. ("Unitrin") providing for the sale of all the
outstanding capital stock of VGI to Unitrin (the "VGI Sale Agreement"). In
conjunction with the VGI Sale Agreement the Company has agreed to guarantee
the Closing Date Loss and Loss Adjustment Expense Reserves of VGI's insurance
subsidiaries (the "Reserves") for a period of four years. The Company is
obligated to pay Unitrin an amount equal to 90% of the amount by which the
Reserves develop unfavorably to the extent that such unfavorable development
exceeds $500,000. Conversely, the Company is entitled to receive from Unitrin
an amount equal to 90% of the amount by which the Reserves develop favorably
to the extent that such favorable development exceeds $500,000. The Company's
exposure to the Reserves is limited to $50,000,000. The VGI Sale Agreement is
subject to the receipt of regulatory approval.

The Company has guaranteed the obligations of Source One (including but not
limited to indemnity obligations) under that certain Asset Purchase Agreement
dated as of March 23, 1999 by and among Source One as Seller, the Company as
Parent and Citicorp Mortgage, Inc. as Purchaser. Such Asset Purchase
Agreement provides for the sale by Source One to Citicorp Mortgage, Inc. of a
significant portion of the assets and liabilities of Source One (other than
the stock of Financial Security Assurance Holdings Ltd. held by Source One).

There is currently no litigation, arbitration, proceeding, inquiry or
governmental investigation pending or threatened against or affecting the
Borrower or any Subsidiary of the Borrower (outside of those in the ordinary
course of the insurance and mortgage banking businesses) which could
reasonably be expected to have a Material Adverse Effect upon the Borrower.

                                     -11-
<PAGE>

                    Fund American Enterprises Holdings, Inc.
                                  Schedule 5.16
                               To Credit Agreement

                                  INDEBTEDNESS

FUND AMERICAN ENTERPRISES HOLDINGS, INC.

Guaranty by Fund American Enterprises Holdings, Inc. (the "Company") of a
$15,000,000 term loan, dated as of October 23, 1995, by and between John J.
Byrne, as borrower, and First National Bank of Chicago, as agent. The term
loan is due December 31, 1999. The guaranty is provided pursuant to Mr.
Byrne's employment contract and is recourse to Mr. Byrne's net worth.

Guaranty dated February 28, 1997, in connection with Source One Mortgage
Services Corporation's ("Source One") February 28, 1997 sale of approximately
$17.0 billion of mortgage servicing rights to Chemical Mortgage Company
("Chemical") whereby the company made certain collection, payment and
performance guarantees to Chemical for a period of no more than ten years.
The aggregate amount of the Company's obligation is initially limited to
$20,000,000 and amortizes down to $15,000,000 as mortgage loans serviced
under the related servicing agreements are repaid. During 1998, the Company
permitted Chemical to include an additional $2.9 billion of mortgage
servicing rights that it purchased from Source One during 1998 to be included
in the guaranty, however, the inclusion of the 1998 servicing rights sold did
not serve to change the maximum amount of the guaranty or the original term
of the guaranty.

Stock Purchase Agreement dated as of October 19, 1998 by and between the
Company, Valley Insurance Company ("VIC") and Executive Risk Indemnity Inc.
("ERII") providing for the sale of all the outstanding capital stock of
Valley National Insurance Company ("VNIC") to ERII following the reinsurance
cession of all the insurance business of VNIC to VIC and Charter Indemnity
Company ("CIC") (the "VNIC Sale Agreement"). In conjunction with the VNIC
Sale Agreement, the Company and ERII entered into a Keep Well Agreement dated
as of October 19, 1998 whereby the Company has agreed to maintain the
shareholder's equity of Valley Group, Inc. ("VGI") at predetermined levels
(initially set at $60,000,000). In conjunction with the VGI Sale Agreement
(as defined below), The Company and VIC intend to amend the VNIC Sale
Agreement and Keep Well Agreement prior to closing to, among other items,
remove the obligation to maintain the shareholder's equity of VGI at
predetermined levels. The VNIC Sale Agreement and Keep Well Agreement are
subject to the receipt of regulatory approval.

Stock Acquisition Agreement dated as of February 10, 1999 by and between the
Company, and Unitrin, Inc. ("Unitrin") providing for the sale of all the
outstanding capital stock of VGI to Unitrin (the "VGI Sale Agreement"). In
conjunction with the VGI Sale Agreement the Company has agreed to guarantee
the Closing Date Loss and Loss Adjustment Expense Reserves of VGI's insurance
subsidiaries (the "Reserves") for a period of four years. The Company is
obligated to pay Unitrin an amount equal to 90% of the amount by which the
Reserves develop unfavorably to the extent that such unfavorable development
exceeds $500,000. Conversely, the Company is entitled to receive from Unitrin
an amount equal to 90% of the amount by which the Reserves develop favorably
to the extent that such favorable development exceeds $500,000. The Company's
exposure to the Reserves is limited to $50,000,000. The VGI Sale Agreement is
subject to the receipt of regulatory approval.

                                     -12-
<PAGE>

The Company has guaranteed the obligations of Source One (including but not
limited to indemnity obligations) under that certain Asset Purchase Agreement
dated as of March 23, 1999 by and among Source One as Seller, the Company as
Parent and Citicorp Mortgage, Inc. as Purchaser. Such Asset Purchase
Agreement provides for the sale by Source One to Citicorp Mortgage, Inc. of a
significant portion of the assets and liabilities of Source One (other than
the stock of Financial Security Assurance Holdings Ltd. held by Source One).

FUND AMERICAN ENTERPRISES HOLDINGS, INC. (cont.)

<TABLE>

     <S>                                       <C>
     Creditor                                                        Various
     Subject matter of debt/lease                          Medium Term Notes
     Date of note/lease                                     January 27, 1993
     Unpaid principal balance                                     $1,000,000
     Maturity date                                                      2003
     Interest rate                                                     7.86%
     Date to which interest has been paid                   November 1, 1998

     Creditor                                                        Various
     Subject matter of debt/lease                          Medium Term Notes
     Date of note/lease                                     February 4, 1993
     Unpaid principal balance                                    $10,000,000
     Maturity date                                                      2008
     Interest rate                                                      7.8%
     Date to which interest has been paid                   November 1, 1998

     Creditor                                                        Various
     Subject matter of debt/lease                          Medium Term Notes
     Date of note/lease                                    February 10, 1993
     Unpaid principal balance                                     $4,000,000
     Maturity date                                                      2000
     Interest rate                                                     7.39%
     Date to which interest has been paid                   November 1, 1998

     Creditor                                                        Various
     Subject matter of debt/lease                          Medium Term Notes
     Date of note/lease                                     February 3, 1993
     Unpaid principal balance                                   $101,250,000
     Maturity date                                                      2003
     Interest rate                                                     7.75%
     Date to which interest has been paid                   February 1, 1999

     Creditor(s)                                    AT&T Capital Corporation
     Subject matter of debt                    Telephone and video equipment
     Date of note                                               Feb. 1, 1996
     Original amount of note                                        $174,038
     Unpaid principal balance                                     $53,271.10
     Maturity date                                      Feb. 1999, Feb. 2001
     Interest rate                                                       n/a
     Monthly payment                                               $3,450.47
     Date to which interest has been paid                                n/a
</TABLE>
                                     -13-
<PAGE>

FOLKSAMERICA HOLDING COMPANY, INC.
<TABLE>

     <S>                                 <C>
     Creditor                                                       Swedbank
     Subject matter of debt/lease                                  Financing
     Date of note/lease                  July 14, 1996 (date of refinancing)
     Unpaid principal balance                                    $55,553,118
     Maturity date                                                     2005*
     Interest rate                                              LIBOR + .55%
</TABLE>

* to be refinanced in conjunction with the Folksamerica Credit Agreement

Folksamerica has obtained two Letters of Credit in the amount of
approximately $7.4 million which inure to the benefit of Folksamerica
Reinsurance Company as beneficiary as a result of unauthorized reinsurance
and an intercompany tax sharing agreement in the ordinary course of business.
Folksamerica Reinsurance Company has issued a Letter of Credit in the amount
of approximately $2.6 million in the ordinary course of its reinsurance
business.

Folksamerica $100,000,000 Credit Agreement, dated as of February 24, 1999,
among Folksamerica, the lenders named therein and First Chicago, as agent.

VALLEY GROUP, INC.

Valley Group $15,000,000 Third Amended and Restated Credit Agreement, dated
as of February 24, 1999, among Valley Group, the lenders named therein and
First Chicago, as agent.

VALLEY INSURANCE COMPANY

<TABLE>

     <S>                            <C>                  <C>                  <C>
     Creditor                                   IBM                   IBM                 IBM
     Subject matter of                   IBM Equip.            IBM Equip.          IBM Equip.
     debt/lease
                                    AS400/Model 530       AS400/Model 320     AS400/Model 320
     Date of note/lease                    10/01/97              03/01/96            03/01/96
     Original amount of note            $617,724.00           $340,000.00         $127,797.61
     Unpaid principal balance           $442,100.00            $20,504.00           $8,074.00
     Maturity Date                     Feb. 1, 2001          Mar. 1, 1999        Mar. 1, 1999
     Interest Rate                            4.51%                 5.90%               8.19%
     Monthly Payment                     $18,654.00            $10,328.06           $4,078.75
     Date to which interest/
       lease has been paid            Dec. 31, 1998         Dec. 31, 1998       Dec. 31, 1998
</TABLE>

                                     -14-
<PAGE>

CHARTER GENERAL AGENCY, INC.

<TABLE>

     <S>                            <C>
     Creditor(s)                                      Skandia U.S. Holdings, Inc.
     Subject matter of debt         Payable under the terms of the Stock Purchase
                                            Agreement Skandia U.S. Holdings, Inc.
     Date of note                                                  Sept. 30, 1996
     Original amount of note                                           $3,174,956
     Unpaid principal balance                                          $1,058,319
     Maturity date                                                 Sept. 30, 1999
     Interest rate                                                           6.5%
     Monthly payment                                       $1,058,319 due 9/30/99
     Date to which interest
       has been paid                                               Sept. 30, 1998
</TABLE>

CHARTER GROUP, INC.

<TABLE>

     <S>                                                 <C>
     Creditor(s)                                         AT&T Capital Corporation
     Subject matter of debt                              IBM Equip. - Lease AS400
     Date of note                                                    June 1, 1998
     Original amount of note                                             $455,370
     Unpaid principal balance                                            $363,971
     Maturity date                                                   June 1, 2001
     Interest rate                                                            n/a
     Monthly payment                                                      $14,373
     Date to which interest has                                               n/a
       been paid
</TABLE>

                                     -15-<PAGE>

                                                                EXHIBIT 10(C)

                 AMENDMENT NO. 2 TO CREDIT AGREEMENT AND WAIVER

     This Amendment (this "Amendment") is entered into as of July 30, 1999 by
and among White Mountains Insurance Group, Inc., a Delaware corporation,
formerly known as Fund American Enterprises Holdings, Inc., (the "Borrower"),
The First National Bank of Chicago, individually and as agent ("Agent"), and
the other financial institutions signatory hereto (the "Lenders").

                                    RECITALS

     A. The Borrower, the Agent and the Lenders are party to that certain
$35,000,000 Second Amended and Restated Credit Agreement dated as of February
24, 1999 (as amended, the "Credit Agreement"). Unless otherwise specified
herein, capitalized terms used in this Amendment shall have the meanings
ascribed to them by the Credit Agreement.

     B. The Borrower, the Agent and the undersigned Lenders wish to amend the
Credit Agreement on the terms and conditions set forth below.

     Now, therefore, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:

          1. AMENDMENT TO CREDIT AGREEMENT. Upon the Effective Date (as
defined below), the Credit Agreement shall be amended as follows:

               (a) ARTICLE I is amended by deleting the definitions of
     "Borrower" and "Unfunded Liability" and replacing each in its entirety
     to read as follows:

               "`Borrower' means White Mountains Insurance Group, Inc., a
          Delaware corporation, formerly known as Fund American Enterprises
          Holdings, Inc., and its successors and assigns"

               "`Unfunded Liability' means the amount (if any) by which the
          present value of all vested and unvested accrued benefits under a
          Single Employer Plan exceeds the fair market value of assets
          allocable to such benefits, all determined as of the then most
          recent valuation date for such Plans and valued on a basis
          consistent with that used to prepare the Borrower's annual audited
          financial statements."

<PAGE>

               (b) SECTION 5.10 is amended by deleting the first sentence in
     such section and replacing it in its entirety to read as follows:

          "Except as disclosed on SCHEDULE 5.10 or as otherwise disclosed by
          the Borrower in writing to the Lenders, neither the Borrower nor
          any other member of the Controlled Group maintains any Single
          Employer Plans, and no Single Employer Plan has any Unfunded
          Liability."

               (c) SECTION 6.22(b) is amended by deleting the second
     reference contained therein to the dollar amount of "$500,000" and
     replacing it with a reference to the dollar amount of "$1,000,000".

               (d) SCHEDULE 5.10 is amended in its entirety and replaced with
     SCHEDULE 5.10 attached hereto.

          2. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants that:

               (a) The execution, delivery and performance by the Borrower of
     this Amendment has been duly authorized by all necessary corporate
     action and that this Amendment is a legal, valid and binding obligation
     of the Borrower enforceable against the Borrower in accordance with its
     terms, except as the enforcement thereof may be subject to the effect of
     any applicable bankruptcy, insolvency, reorganization, moratorium or
     similar law affecting creditors' rights generally;

               (b) After giving effect to this Amendment, each of the
     representations and warranties contained in the Credit Agreement is true
     and correct in all material respects on and as of the date hereof as if
     made on the date hereof; and

               (c) After giving effect to this Amendment, no Default or
     Unmatured Default has occurred and is continuing.

          3. EFFECTIVE DATE. This Amendment shall become effective upon the
execution and delivery hereof by the Borrower, the Agent and the Required
Lenders (without respect to whether it has been executed and delivered by all
the Lenders); provided that SECTION 1 hereof shall not become effective until
the date (the "Effective Date") when the following additional conditions have
also been satisfied:

               (a) a certificate, executed by the Secretary or Assistant
     Secretary of the Borrower, certifying (i) an attached copy of the
     Borrower's Board of Directors' resolutions authorizing and directing any
     changes to the Borrower's Articles of Incorporation to effect a change
     in its corporate name and (ii) that there have been no amendments,
     supplements or modifications to any of the Articles of Incorporation,
     Bylaws or certificate of incumbency of the Borrower delivered to the
     Agent on February 24, 1999, or attached copies of such amendments,
     supplements or modifications; and

               (b) such other documents as the Agent, any Lender or their
     counsel may have reasonably requested.

                                     -2-
<PAGE>

     In the event the Effective Date has not occurred on or before July 31,
     1999, SECTION 1 hereof shall not become operative and shall be of no
     force or effect.

          4. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.

               (a) Except as specifically amended above, the Credit Agreement
     and the other Loan Documents shall remain in full force and effect and
     are hereby ratified and confirmed.

              (b) The execution, delivery and effectiveness of this Amendment
     shall not operate as a waiver of any right, power or remedy of the Agent
     or any Lender under the Credit Agreement or any Loan Document, nor
     constitute a waiver of any provision of the Credit Agreement or any Loan
     Document, except as specifically set forth herein. Upon the
     effectiveness of this Amendment, each reference in the Credit Agreement
     to "this Agreement", "hereunder", "hereof", "herein" or words of similar
     import shall mean and be a reference to the Credit Agreement as amended
     hereby.

          5. COSTS AND EXPENSES. The Borrower hereby affirms its obligations
under Section 9.7 of the Credit Agreement to reimburse the Agent for all
reasonable costs, internal charges and out-of-pocket expenses paid or
incurred by the Agent in connection with the preparation, negotiation,
execution and delivery of this Amendment, including but not limited to the
attorneys' fees and time charges of attorneys for the Agent with respect
thereto.

          6. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, 735 ILCS SECTION
105/5-1 ET SEQ, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.

          7. HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.

          8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but
all such counterparts shall constitute one and the same instrument.

                           [signature pages to follow]

                                     -3-
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date and year first above written.

                                     WHITE MOUNTAINS INSURANCE GROUP, INC.

                                     By:
                                        -------------------------------------

                                     Name:
                                          -----------------------------------

                                     Title:
                                           ----------------------------------

                                     -4-
<PAGE>

                                     THE FIRST NATIONAL BANK OF CHICAGO,
                                     Individually and as Agent

                                     By:
                                        -------------------------------------

                                     Print Name:
                                                -----------------------------

                                     Title:
                                           ----------------------------------

                                     Address:  153 West 51st Street
                                               New York, NY 10019
                                               Attn: Samuel W. Bridges
                                                     First Vice President

                                     Fax No.:  (212) 373-1393
                                     Tel. No.: (212) 373-1142

                                     -5-
<PAGE>

                                     FLEET NATIONAL BANK

                                     By:
                                        -------------------------------------

                                     Print Name:
                                                -----------------------------

                                     Title:
                                           ----------------------------------

                                     Address:  One Federal Street-MAOFD06H
                                               Boston, MA  02110-2010
                                               Attn:  David A. Bosselait
                                                      Vice President

                                     Fax No.:  (617) 346-5825
                                     Tel. No.: (617) 346-5823

                                     -6-
<PAGE>

                                     FIRST UNION NATIONAL BANK

                                     By:
                                        -------------------------------------

                                     Print Name:
                                                -----------------------------

                                     Title:
                                           ----------------------------------

                                     Address:  1339 Chestnut Street, PA4819
                                               Philadelphia, PA 19101-4819
                                               Attn:  Joseph DiFrancesco

                                     Fax No.:  215-786-4114
                                     Tel. No.: 215-973-2944

                                     -7-
<PAGE>

                                     DEUTSCHE BANK AG,
                                     New York and/or Cayman Islands Branch

                                     By:
                                        -------------------------------------

                                     Print Name:
                                                -----------------------------

                                     Title:
                                           ----------------------------------

                                     By:
                                        -------------------------------------

                                     Print Name:
                                                -----------------------------

                                     Title:
                                           ----------------------------------

                                     Address:  31 West 52nd Street
                                               New York, NY  10019
                                               Attn: George Korchowsky

                                     Fax No.:  212-469-8366
                                     Tel. No.: 212-469-8242

                                     -8-
<PAGE>

                                     ABN AMRO BANK N.V.

                                     By:
                                        -------------------------------------

                                     Print Name:
                                                -----------------------------

                                     Title:
                                           ----------------------------------

                                     By:
                                        -------------------------------------

                                     Print Name:
                                                -----------------------------

                                     Title:
                                           ----------------------------------

                                     Address:  500 Park Avenue
                                               New York, NY  10022
                                               Attn:  Bruce Ballentine

                                     Fax No.:  212-446-4335
                                     Tel. No.: 212-446-4358

                                     -9-

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