Document:

<PAGE>
                                                                    Exhibit 10.2

                                ENDORSEMENT NO. 4

                                       to

                       CASUALTY EXCESS OF LOSS REINSURANCE
                              AGREEMENT NO. 6404-07

                                     between

                         PENN-AMERICA INSURANCE COMPANY

                              Hatboro, Pennsylvania

                   (hereinafter referred to as the "COMPANY")

                                       and

                        NATIONAL REINSURANCE CORPORATION

                              Stamford, Connecticut

                  (hereinafter referred to as the "REINSURER")

<PAGE>

                                       -2-

IT IS MUTUALLY AGREED that effective at 12:01 a.m., January 1, 1994, this
Agreement is amended as follows:

1.   For losses occurring after the effective time and date of this Endorsement,
     as respects in force, new and renewal business, ARTICLE 6 - LIABILITY OF
     THE REINSURER is deleted and replaced by the following:

     ARTICLE 6 - LIABILITY OF THE REINSURER

     The REINSURER shall be liable to the COMPANY for the amount of net loss
     sustained by the COMPANY in excess of the COMPANY'S Retention, but not
     exceeding the Limit of Liability of the REINSURER as stipulated in the
     Schedule or Reinsurance.

                             SCHEDULE OF REINSURANCE

Class of Business          COMPANY                   Limit of Liability
                           Retention                 of the REINSURER

Casualty                   $300,000                  $2,700,000
                           Each Occurrence           Each Occurrence

2.   ARTICLE 8 - REINSURANCE PREMIUM is deleted in its entirety and replace by
     the following:

     ARTICLE 8 - REINSURANCE PREMIUM

     The COMPANY shall pay to the REINSURER 10.833% of the subject written
     premium for each annual period during the term of this Agreement.

3.   In consideration of the reduction in rate the REINSURER shall return to the
     COMPANY, as soon as practicable after the effective time and date of this
     Endorsement 9.167% of the unearned premium as respects policies the subject
     matter hereof, in force at such time.

4.   ARTICLE 24 - CONTINGENT COMMISSION is deleted in its entirety.

All other terms and conditions remain unchanged.

<PAGE>

                                       -3-

IN WITNESS WHEREOF, the parties hereto have caused this Endorsement No. 4 to be
executed in duplicate, in Hatboro, Pennsylvania this     day of     , 1994.

                                           PENN-AMERICA INSURANCE COMPANY

                                           /s/ Jon Saltzman
                                           -------------------------------------

ATTEST: /s/ Linda M. Cameron
       ---------------------

And in Stamford Connecticut, this 24th day of February, 1994.

                                           NATIONAL REINSURANCE CORPORATION

                                           /s/ ILLEGIBLE
                                           -------------------------------------
                                                       Vice President

ATTEST: /s/ ILLEGIBLE
       ----------------------

<PAGE>

                                ENDORSEMENT NO. 5

                                       to

                       CASUALTY EXCESS OF LOSS REINSURANCE
                              AGREEMENT NO. 6404-07

                                     between

                         PENN-AMERICA INSURANCE COMPANY

                              Hatboro, Pennsylvania

                   (hereinafter referred to as the "COMPANY")

                                       and

                        NATIONAL REINSURANCE CORPORATION

                              Stamford, Connecticut

                  (hereinafter referred to as the "REINSURER")

<PAGE>

                                       -2-

IT IS MUTUALLY AGREED that effective at 12:01 a.m., May 1,
1994, EXHIBIT A - EXCLUSIONS of this Agreement is amended as follows:

     Item x. of Exclusion 14. is deleted and replaced by the following:

       x.   Liquor law liability other than the following: host liquor; and,
            Liquor law liability when written in conjunction with the COMPANY'S
            Restaurant Pak program;

All other terms and conditions remain unchanged.

IN WITNESS WHEREOF, the parties hereto have caused this Endorsement No. 5 to be
executed in duplicate, in Hatboro, Pennsylvania this     day of           ,1994.

                                             PENN-AMERICA INSURANCE COMPANY

                                             /s/ Jon Saltzman
                                             -----------------------------------
ATTEST: /s/ John DiBiasi
       ------------------

And in Stamford Connecticut, this 29th day of April, 1994.

                                             NATIONAL REINSURANCE CORPORATION

                                             /s/ ILLEGIBLE
                                             -----------------------------------
                                                     Vice President

ATTEST: /s/ ILLEGIBLE
       ------------------------

<PAGE>

                            CASUALTY EXCESS OF LOSS
                             REINSURANCE AGREEMENT

                              NATIONAL REINSURANCE
                                  CORPORATION

                              Commercial Liability:
                              2,700,000 xs 300,000

*Includes: EPL, ECO, and CLASH Coverages

<PAGE>

                       CASUALTY EXCESS OF LOSS REINSURANCE
                              AGREEMENT NO. 6404-07

                                    between

                        NATIONAL REINSURANCE CORPORATION
                              Stamford, Connecticut
                  (hereinafter referred to as the "REINSURER")

                                      and

                         PENN-AMERICA INSURANCE COMPANY
                              Hatboro, Pennsylvania
                   (hereinafter referred to as the "COMPANY")

<PAGE>

                                ENDORSEMENT NO. 6
                            (TERMINATION ENDORSEMENT)

                                       to

                       CASUALTY EXCESS OF LOSS REINSURANCE
                              AGREEMENT NO. 6404-07

                                     between

                         PENN-AMERICA INSURANCE COMPANY
                              Hatboro, Pennsylvania
                   (hereinafter referred to as the "COMPANY")

                                       and

                        NATIONAL REINSURANCE CORPORATION
                              Stamford, Connecticut
                  (hereinafter referred to as the "REINSURER")

IT IS MUTUALLY AGREED that effective at 12:01 a.m., January 1, 1995, this
Agreement is terminated. The REINSURER shall not be liable for losses taking
place after the effective time and date of termination, in consideration of
which the REINSURER shall return the unearned premium, if any, (less applicable
commission) with respect to business the subject matter hereof, in force at the
effective time and date of termination.

IN WITNESS WHEREOF, the parties hereto have caused this Endorsement No. 6 to be
executed in duplicate, in Hatboro, Pennsylvania this      day of          ,1995.

                                             PENN-AMERICA INSURANCE COMPANY

                                             /s/ Jon Saltzman
                                             -----------------------------------
ATTEST: /s/ John DiBiasi
       -------------------

And in Stamford Connecticut, this 4th day of January, 1995.

                                             NATIONAL REINSURANCE CORPORATION

                                             /s/ ILLEGIBLE
                                             -----------------------------------
                                                     Vice President

ATTEST: /s/ ILLEGIBLE
       -------------------<PAGE>

                                                                   EXHIBIT 10.13

                          MULTIPLE LINE EXCESS OF LOSS
                        REINSURANCE AGREEMENT NO. 6404-09

                                     between

                         PENN-AMERICA INSURANCE COMPANY
                              Hatboro, Pennsylvania
                   (hereinafter referred to as the "COMPANY")

                                       and

                        NATIONAL REINSURANCE CORPORATION
                              Stamford, Connecticut
                  (hereinafter referred to as the "REINSURER")

<PAGE>

                          MULTIPLE LINE EXCESS OF LOSS
                        REINSURANCE AGREEMENT NO. 6404-09

                                INDEX OF ARTICLES

ARTICLE                                                                PAGE #

   1 PARTIES TO THE AGREEMENT                                            1
   2 BUSINESS COVERED                                                    1
   3 COMMENCEMENT                                                        1
   4 TERRITORY                                                           1
   5 SPECIAL ACCEPTANCE                                                  1
   6 LIABILITY OF THE REINSURER                                          1
   7 WARRANTY                                                            2
   8 REINSURANCE PREMIUM                                                 2
   9 COMMISSION                                                          2
  10 PREMIUM REPORTS AND REMITTANCES                                     2
  11 CLAIM REPORTS                                                       3
  12 LOSS SETTLEMENTS                                                    4
  13 LOSS IN EXCESS OF ORIGINAL POLICY LIMITS                            4
  14 EXTRA CONTRACTUAL OBLIGATIONS                                       4
  15 OFFSET                                                              5
  16 STATISTICS                                                          5
  17 ERRORS AND OMISSIONS                                                5
  18 ACCESS TO COMPANY RECORDS                                           5
  19 CONFORMATION TO STATUTES                                            6
  20 TAXES                                                               6
  21 TERMINATION                                                         6
  22 ARBITRATION                                                         7
  23 INSOLVENCY                                                          8
  24 DEFINITIONS                                                         8

ATTACHMENTS:

     EXHIBIT A - EXCLUSIONS

     Nuclear Incident Exclusion Clause - Liability - Reinsurance and Physical
     Damage - Reinsurance

<PAGE>

                                       -1-

ARTICLE 1 - PARTIES TO THE AGREEMENT

This Agreement is solely between the COMPANY and the REINSURER. When more than
one COMPANY is named as a party to this Agreement, the first COMPANY named shall
be the agent of the other companies as to all matters pertaining to this
Agreement. Performance of the obligations of each party under this Agreement
shall be rendered solely to the other party. In no instance shall an insured of
the COMPANY, any claimant against an insured of the COMPANY, or any other third
party have any rights under this Agreement.

ARTICLE 2 - BUSINESS COVERED

The REINSURER, subject to the terms and conditions hereunder and the exclusions
set forth in EXHIBiT A1 agrees to indemnify the COMPANY in respect of the net
excess liability stipulated in this Agreement which may accrue to the COMPANY as
a result of each loss on any one risk as respects Property Business, and as a
result of one or more losses arising out of any occurrences as respects Casualty
Business, which may occur during the currency of this Agreement under any and
all binders, policies, or contracts of insurance issued by the COMPANY (all
hereinafter referred to as "policies") and classified by the COMPANY as Property
Business or Casualty Business.

ARTICLE 3 - COMMENCEMENT

This Agreement shall become effective at 12:01 a.m., Standard Time, January 1,
1995 as respects in force, new and renewal business of the COMPANY and shall
remain in force thereafter, subject to the terms and conditions for termination
stipulated in the article entitled TERMINATION.

ARTICLE 4 - TERRITORY

This Agreement shall follow the territorial limits of the COMPANY'S original
policies but is limited to policies issued to and covering insureds domiciled in
the United States of America, its territories and possessions, or the Dominion
of Canada.

ARTICLE 5 - SPECIAL ACCEPTANCE

Business not within the terms and conditions of this Agreement may be submitted
to the REINSURER for special acceptance and, if accepted by the REINSURER, shall
be subject to all of the terms and conditions of this Agreement except as
modified by the special acceptance.

ARTICLE 6 - LIABILITY OF THE REINSURER

The REINSURER shall be liable to the COMPANY for the amount of net loss
sustained by the COMPANY in excess of the COMPANY'S Retention, but not exceeding
the Limit of Liability of the REINSURER as stipulated in the Schedule of
Reinsurance.

<PAGE>

                                       -2-

                             SCHEDULE OF REINSURANCE

                            COMPANY                   Limit of Liability
Class of Business           Retention                 of the REINSURER

Property                 $200,000 Each Risk           $800,000 Each risk subject
                                                      To a maximum of
                                                      $2,400,000 in any one Loss
                                                      Occurrence

Casualty                 $300,000 Each Occurrence     $2,700,000 Each Occurrence

Combinations of Above    $300,000 Each Combination    $200,000 Each
Retentions               Loss                         Combination Loss

ARTICLE 7 - WARRANTY

It is warranted by the COMPANY that in the event it issues a policy providing
limits in excess of $1,000,000 per occurrence, as respects Bodily Injury and
Property Damage Liability combined, the excess thereof shall be deemed to have
been reinsured elsewhere on an excess of loss basis.

ARTICLE 8 - REINSURANCE PREMIUM

The COMPANY shall pay to the REINSURER 10.833% of the subject written premium
for each annual period during the term of this Agreement.

Furthermore, the COMPANY shall pay to the REINSURER, as soon as practicable
after the effective time and date of this Agreement, 10.833% of the unearned
premium as respects policies the subject matter hereof, in force at such time.

ARTICLE 9 - COMMISSION

The REINSURER shall allow the COMPANY a commission of 40% on premiums ceded
under this Agreement.

Such commission allowance shall include provision for all commission,
brokerages, taxes, board, exchange or bureau assessments, and for all other
expenses of whatever nature, excepting loss adjustment expenses.

ARTICLE 10 - PREMIUM REPORTS AND REMITTANCES

Within 45 days after the end of each quarter during the currency of this
Agreement, the COMPANY shall report to the REINSURER the subject earned premium
for the quarter by line of business.

<PAGE>

                                       -3-

The reinsurance premium due for the quarter shall be calculated as stipulated in
the article entitled REINSURANCE PREMIUM and shall be paid to the REINSURER with
the above report.

ARTICLE 11 - CLAIM REPORTS

The COMPANY shall give prompt notice to the REINSURER of any claim or loss which
in the sound judgment of the COMPANY may result in a net loss to the REINSURER.
The COMPANY shall indicate its estimate of net loss and loss adjustment expense
and shall provide subsequent reports to the REINSURER when such estimates
change. In addition, the COMPANY shall give prompt notice to the REINSURER of
all casualty claims involving any of the following:

1.   All claims involving policies with limits in excess of the COMPANY'S
     Retention when the indemnity reserve reaches or exceeds 50% of the
     COMPANY'S Retention;

2.   Brain damage or alleged brain damage;

3.   Quadriplegics;

4.   Paraplegics;

5.   Amputations of one or more limbs or loss of use of one or more limbs;

6.   Major burns;

7.   Severe lacerations or disfigurement involving serious cosmetic deformity;

8.   Extended hospital, wheelchair or walker confinement;

9.   Fatalities;

10.  Severe injuries with high residual impairment;

11.  Serious back injury involving multiple surgeries (including
     laminectomies/fusions);

12.  Loss of sight or hearing;

13.  Child molestation;

14.  High wage loss or total loss of economic livelihood.

On open claims follow up reports shall be submitted approximately every six
months. Important developments (such as major reserve increases or decreases,
settlements, or new information changing the liability situation or value) shall
be reported as they occur.

The COMPANY shall furnish the REINSURER, upon request, paid and outstanding
losses and loss adjustment expenses, subject to this Agreement, with respect to
catastrophe losses.

<PAGE>

                                       -4-

ARTICLE 12 - LOSS SETTLEMENTS

The COMPANY shall investigate and settle or defend all claims arising under
policies reinsured under this Agreement.

When requested by the REINSURER, the COMPANY shall permit the REINSURER, at the
expense of the REINSURER, to be associated with the COMPANY in the defense or of
an claim, loss, or legal proceeding which involves or is likely to involve the
REINSURER.

All payments of claims or losses by the COMPANY within the limits, terms, and
conditions of its policies and within the limits, terms, and conditions of this
Agreement shall be binding upon the REINSURER.

Upon receipt of proof of loss payment, the REINSURER shall promptly pay the
COMPANY for that share of the net loss and loss adjustment expense due in
accordance with the reinsurance stipulated in this Agreement.

ARTICLE 13 - LOSS IN EXCESS OF ORIGINAL POLICY LIMITS

One hundred percent (100%) of any loss in excess of the limit of its original
policy may be included in the COMPANY'S net loss, such loss in excess of the
limit of its original poLicy having been incurred because of failure by the
COMPANY to settle within the policy limits or by reason of alleged or actual
negligence, fraud or bad faith in rejecting an offer of settlement or in the
preparation of the defense or in the trial of any action against its insured or
in the preparation or prosecution of an appeal consequent upon such action, or
in otherwise handling a claim under a policy subject to this Agreement.

Also, this Article shall not apply where the loss has been incurred due to the
fraud of a member of the Board of Directors or a corporate officer of the
COMPANY acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.

For the purposes of this Article, the word "loss" shall mean any amounts for
which the COMPANY would have been contractually liable to pay had it not been
for the limit of the original policy.

ARTICLE 14 - EXTRA CONTRACTUAL OBLIGATIONS

Eighty (80%) percent of any Extra Contractual Obligations, arising from losses
occurring during the currency of this Agreement, shall be included in the
calculation of net loss when the REINSURER is given written notice of the Extra
Contractual Obligations claim by the COMPANY during the currency of this
Agreement, or within 36 months after the termination of this Agreement.

"Extra Contractual Obligations" are defined as those liabilities not covered
under any other provision of this Agreement and which arise from the handling of
any claim on business covered hereunder, such, liabilities arising because of,
but not Limited to, the following:

<PAGE>

                                       -5-

     Failure by the COMPANY to settle within the policy limit, or by reason of
     alleged or actual negligence, fraud and bad faith in rejecting an offer of
     settlement or in the preparation of the defense or in the trial of any
     action against its insured or in the preparation or prosecution of an
     appeal consequent upon such action.

The date on which any Extra Contractual Obligation is incurred by the COMPANY
shall be deemed, in all circumstances, to be the date of the original net loss.

However, this Article shall not apply where the loss has been incurred due to
the fraud of a member of the Board of Directors or a corporate officer of the
COMPANY acting individually or collectively or in collusion with any individual
or corporation or any other organization or party involved in the presentation,
defense or settlement of any claim covered hereunder.

ARTICLE 15 - OFFSET

The COMPANY or the REINSURER may offset any balance, whether on account of
premium, commission, claims or losses, loss adjustment expenses, recoveries,
salvage, or any other amount due from one party to the other under this
Agreement or any other agreement heretofore or hereafter entered into between
the COMPANY and the REINSURER, whether acting as assuming reinsurer or ceding
company. In the event of the insolvency of either party to this Agreement the
offsets shall only be allowed to the extent permitted by the provisions of
Section 221.32 of the Pennsylvania Insurance Law.

ARTICLE 16 - STATISTICS

The COMPANY shall furnish such other statistics as may be required by the
REINSURER for the completion of the REINSURER'S statutory requirements and
internal records.

ARTICLE 17 - ERRORS AND OMISSIONS

The REINSURER shall not be relieved of liability because of an error or
accidental omission by the COMPANY in reporting any claim, loss, or any business
reinsured under this Agreement, provided that the error or omission is rectified
promptly after discovery. The REINSURER shall be obligated only for the return
of the premium paid for business reported but not reinsured under this
Agreement.

ARTICLE 18 - ACCESS TO COMPANY RECORDS

The COMPANY shall comply with the REINSURER'S request for any information
relating to this Agreement. Additionally, the REINSURER or its authorized
representatives shall have the right to inspect at any reasonable time at the
office of the COMPANY all papers, books, accounts, documents, claims files and
other records of the COMPANY relating to this Agreement. The REINSURER'S right
of inspection shall continue to exist after the termination of this Agreement.

<PAGE>

                                       -6-

ARTICLE 19 - CONFORMATION TO STATUTES

If any provision of this Agreement is invalid under the law of any state, that
provision shall be deemed amended to comply with the minimum requirements of
such law, giving due consideration to the original intentions of the parties,
but this shall not affect the validity or enforceability of the remaining
provisions of this Agreement, nor shall it affect the enforceability of the
original provision in any other jurisdiction.

ARTICLE 20 - TAXES

The COMPANY shall be liable for paying all taxes other than income or profit
taxes levied on the REINSURER for business reinsured under this Agreement. If
the REINSURER is obligated to pay taxes other than income or profit taxes for
business reinsured under this Agreement the COMPANY shall reimburse the
REINSURER, provided that the COMPANY shall not be required to pay the same tax
twice.

ARTICLE 21 - TERMINATION

This Agreement is unlimited as to its duration but may be terminated at 12:01
a.m., January 1, 1996, or any time thereafter, by either party giving to the
other party hereto not less than 90 days notice of termination in writing by
registered or certified mail.

Furthermore, the COMPANY or the REINSURER also may terminate this Agreement in
the event of any of the following:

1.   If any amount payable under this Agreement becomes more than 30 days
     overdue, the party due to be paid may terminate this Agreement;

2.   If a state insurance department or other competent authority has ordered
     either party to cease writing business, either party may terminate this
     Agreement;

3.   If either party has become insolvent, or has been put into liquidation or
     receivership (whether voluntary or involuntary), or there have been
     instituted against it proceedings for the appointment of a receiver,
     liquidator, rehabilitator, conservator, or trustee in bankruptcy or other
     agent known by whatever name, to take possessions of its assets or control
     of its operations, either party may terminate this Agreement;

4.   If either party has become merged with, acquired or controlled by any
     company, corporation, individual or individuals not controlling that
     party's operations previously the other party may terminate this Agreement;

5.   If either party's policyholder's surplus is reduced to 50% or less of the
     amount of its policyholder's surplus at either the inception of this
     Agreement or at the latest renewal or anniversary date of this Agreement,
     the other party may terminate this Agreement;

6.   If either party has lost any part of, or has reduced its paid up capital,
     the other party may terminate this Agreement; or,

7.   If either party has reinsured its entire liability under this Agreement
     without the other party's prior written consent, the other party may
     terminate this Agreement.

<PAGE>

                                       -7-

Termination for any of the above events numbered 1. through 7. shall take place
by the terminating party sending to the other party, by registered or certified
mail to the principal office of the other party, notice stating the time and
date when, not less than 10 days after the mailing of such notice for event
number 1. and not less than 30 days after the mailing of such notice for events
numbered 2. through 7., termination shall be effective.

In any instance where the COMPANY or the REINSURER terminates this Agreement,
the REINSURER shall not be liable for claims or losses taking place after the
effective time and date of termination, in consideration of which the REINSURER
shall return to the COMPANY the unearned premium, if any, as respects business,
the subject matter hereof, in force at the time and date of termination.

ARTICLE 22 - ARBITRATION

All unresolved differences of opinion between the COMPANY and the REINSURER
relating to this Agreement, including its formation and validity, shall be
submitted to a Board of Arbitration consisting of one arbitrator chosen by the
COMPANY one arbitrator chosen by the REINSURER, and a third arbitrator chosen by
the first two arbitrators.

The party demanding arbitration shall communicate its demand for arbitration to
the other party by registered or certified mail, identifying the nature of the
dispute and the name of its arbitrator, and the other party shall then be bound
to name its arbitrator within thirty days after receipt of the demand.

Failure or refusal of the other party to so name its arbitrator shall empower
the demanding party to name the second arbitrator within thirty days thereafter.
If the first two arbitrators are unable to agree upon a third arbitrator within
thirty days after the second arbitrator is named, each arbitrator shall name
three candidates within ten days thereafter, two of whom shall be declined by
the other arbitrator within fifteen days after receiving their names and within
the next five days the choice shall be made between the two remaining candidates
by drawing lots. The arbitrators shall be impartial and shall be active or
retired officers of property or casualty insurance or reinsurance companies
authorized to transact business in the United States of America.

The Board of Arbitration shall have the power to fix all procedural rules for
the holding of the arbitration, including discretionary power to make orders as
to any matters which it may consider proper in the circumstances of the case
with regard to pleadings, discovery, inspection of documents, examination of
witnesses, and any other matter whatsoever relating to the conduct of the
arbitration. The Board of Arbitration shall have the power to receive and act
upon such evidence, whether oral or written, strictly admissible or not, as it
shall in its discretion think fit. It is expressly agreed that the jurisdiction
of the arbitrators to make or render any decision or award shall be limited by
the limits of liability expressly set forth in this Agreement.

The decision of the majority of the arbitrators shall be in writing and shall be
final and binding upon the parties. If either of the parties fails to comply
with this decision, the other party may apply for its enforcement to a court of
competent jurisdiction in which the party in default is domiciled, or has
assets, or carries on business.

Each party shall bear the cost of its own arbitrator and shall jointly and
equally bear with the other party the expense of the third arbitrator. In the
event both arbitrators are chosen by one party, the fees of all arbitrators
shall be equally divided between the parties. The remaining costs of the
arbitration proceeding shall be allocated by the Board of Arbitration.

<PAGE>

                                       -8-

The arbitration shall be held at the times and places agreed upon by the Board
of Arbitration.

ARTICLE 23 - INSOLVENCY

In the event of the insolvency of the COMPANY claims or losses arising under
this Agreement shall be payable by the REINSURER directly to the COMPANY or its
liquidator, receiver or statutory successor without diminution because of such
insolvency, except as otherwise specified in the statutes of any state having
jurisdiction of the insolvency proceedings or except where this Agreement
specifically provides another payee of such reinsurance in the event of the
insolvency of the COMPANY. Prior to the implementation of a novation, the
certificate of assumption on New York risks shall be approved by the
Superintendent of New York. The REINSURER shall be given written notice of the
pendency of each claim or loss which may involve the reinsurance afforded by
this Agreement within a reasonable time after such claim or loss is filed in the
insolvency proceeding.

The REINSURER shall have the right to investigate each such claim or loss and
interpose, at its own expense, in the proceeding where the claim or loss is to
be adjudicated, any defense which it may deem avail able to the COMPANY or its
liquidator, receiver or statutory successor. A proportionate share of the
expense thus incurred by the REINSURER shall be chargeable, subject to court
approval, against the insolvent COMPANY as part of the expense of liquidation to
the extent of the benefit accruing to the COMPANY solely as a result of the
defense undertaken by the REINSURER.

ARTICLE 24 - DEFINITIONS

Net Loss

The term "net loss" shall mean the sum actually paid or to be paid by the
COMPANY in settlement of losses for which it is liable, including prejudgment
interest on such losses, after making deductions for all inuring reinsurance,
whether collectible or not, and all other recoveries, including salvage and
subrogation recoveries. Net loss shall include liability for loss adjustment
expenses as well as 100% of any Loss in Excess of Original Policy Limits and 80%
of any Extra Contractual Obligations as stipulated in the Articles entitled LOSS
IN EXCESS OF ORIGINAL POLICY LIMITS and EXTRA CONTRACTUAL OBLIGATIONS.

Nothing in this definition shall imply that losses are not recoverable under
this Agreement until the COMPANY'S net loss has been finally ascertained.

Loss Adjustment Expenses

The term "loss adjustment expenses" shall mean court costs, postjudgment
interest, and allocated investigation, adjustment and legal expenses, but shall
not include office expenses and salaries and expenses of employees and officials
of the COMPANY.

Recoveries

The COMPANY shall pay to or credit the REINSURER with the REINSURER'S portion of
any recovery connected with a net loss obtained from salvage, subrogation, or
other insurance.

<PAGE>

                                       -9-

Any such recoveries of the COMPANY shall be distributed to the parties to this
Agreement in an order inverse to that in which their liabilities accrued.

The REINSURER shall be subrogated to the rights of the COMPANY to the extent of
its loss payments to the COMPANY. The COMPANY agrees to enforce its right of
salvage, subrogation, and its rights against insurers.

Risk

The COMPANY shall establish what constitutes one risk and shall make such
determination based on the peril of fire, provided:

1.   A building and its contents, including time element coverages, shall never
     be considered more than one risk; and,

2.   When two or more buildings and their contents including time element
     coverages, are situated at the same general location, the COMPANY shall
     identify on its records at the time of acceptance by the COMPANY those
     individual buildings and their contents, including time element coverages,
     that are considered to constitute each risk; if such identification is not
     made, each building and its contents, including time element coverages,
     shall be considered to be a separate risk.

Building

The term "building" shall mean each separately roofed structure enclosed within
exterior walls.

Subject Written Premium

The term "subject written premium" shall mean the net written premium of the
COMPANY in respect of business reinsured under this Agreement.

Net Written Premium

The term "net written premium" shall mean gross written premium in respect of
business reinsured under this Agreement, less return premium, and less written
premium ceded for reinsurance, recoveries under which inure to the benefit of
this Agreement.

Occurrence

The term "occurrence" shall mean each accident or occurrence, or series of
accidents or occurrences arising out of one event, whether involving one or more
of the COMPANY'S policies. Said term shall also mean the sum of all losses
sustained by the COMPANY as respects each insured, proceeding from or traceable
to the same causative agency. Such losses shall be deemed to have occurred at
the beginning of a policy period; it being understood and agreed that each
renewal or annual anniversary date of the policy involved shall be deemed the
beginning of a new policy period.

Loss Occurrence

The term "loss occurrence" shall follow the definition of such term as may be
found in the COMPANY'S Catastrophe Reinsurance Program.

Absent such a definition, the term "loss occurrence" shall mean all losses
directly occasioned by any one disaster, accident or loss or series of
disasters, accidents or losses arising out

<PAGE>

                                      -10-

of one event which occurs within the area of one state of the United States of
America or province of Canada and states or provinces contiguous thereto and to
one another. However, the duration and extent of any one loss occurrence shall
be limited to 168 consecutive hours except that the term loss occurrence shall
be further defined as follows:

1.   As regards windstorm, hail, tornado, hurricane, cyclone, including ensuring
     collapse and water damage, all individual losses sustained by the COMPANY
     occurring during any period of 72 consecutive hours arising out of and
     directly occasioned by the same event. However, the event need not be
     limited to one state or province or states or provinces contiguous thereto.

2.   As regards riot, riot attending a strike, civil commotion, vandalism and
     malicious mischief, all individual losses sustained by the COMPANY
     occurring during any period of 72 consecutive hours within the area of one
     municipality or county and the municipalities or counties contiguous
     thereto. The maximum duration of 72 consecutive hours may be extended in
     respect of individual losses which occur beyond such 72 consecutive hours
     during the continued occupation of an insured's premises by strikers,
     provided such occupation commenced during the aforesaid period.

3.   As regards flood, all individual losses sustained by the COMPANY in a
     territory forming one and the same river basin. The term "river basin"
     means the basin of a river, including the basins of all tributaries of such
     river, which flows directly into an ocean sound, bay or gulf or into one of
     the Great Lakes of North America.

4.   As regards earthquake (the epicentre of which need not necessarily be
     within the territorial confines referred to in the opening paragraph of
     this article) and fire following directly occasioned by the earthquake,
     only those individual fire losses which commence during the period of 168
     consecutive hours may be included in the COMPANY'S loss occurrence.

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

For all loss occurrences the COMPANY may choose the date and time when any such
period of consecutive hours commences provided that it is not earlier than the
date and time of the occurrence of the first recorded individual loss sustained
by the COMPANY arising out of that disaster, accident or loss and provided that
only one such period of 168 consecutive hours shall apply with respect to one
event except for those loss occurrences referred to in sub-paragraphs 1 and 2
above, where only one such period of 72 consecutive hours shall apply with
respect to one event.

Loss resulting from a combination of two or more of the perils reinsured under
this Agreement at the same time and at the same general location shall be
treated as one loss and not as a separate loss for each peril.

No individual loss occasioned by an event that would be covered by 72 hours
clauses may be included in any loss occurrence claimed under the 168 hours
provision.

Combination Loss

The term "Combination Loss" shall mean the accumulated COMPANY retentions
resulting from the same event involving both Property and Casualty Business
described in the Schedule of Reinsurance. It is agreed, however, that not more
than one property risk shall be considered in such accumulation of COMPANY
Retentions.

<PAGE>

                                      -11-

This Agreement No.6404-09 made and executed in Hatboro, Pennsylvania, this 19th
day of December, 1994.

                                              PENN-AMERICA INSURANCE COMPANY

                                              /s/ Jon Saltzman
                                              ----------------------------------

ATTEST: /s/ Linda M. Cameron
        ---------------------------

And in Stamford, Connecticut, this 19th day of December, 1994

                                              NATIONAL REINSURANCE CORPORATION

                                              /s/ [ILLEGIBLE]
                                              ----------------------------------

ATTEST: /s/ [ILLEGIBLE]
        ---------------------------

<PAGE>

                             EXHIBIT A - EXCLUSIONS

This Agreement does not apply to:

1.   Reinsurance assumed by the COMPANY, excepting reinsurance of primary
     business assumed from affiliates companies;

2.   Any loss or damage which is occasioned by war, invasion, hostilities, acts
     of foreign enemies, civil war, rebellion, insurrection, military or usurped
     power, or martial Law, or confiscation by order of any government or pub
     lie authority, but not excluding loss or damage which would be covered
     under a standard form of policy containing a standard war exclusion clause;

3.   Any loss or liability accruing to the COMPANY directly or indirectly from
     any insurance written by or through any pool association, or syndicate
     including pools, associations, or syndicates in which membership by the
     COMPANY is required under any statute or regulation;

4.   Any liability of the COMPANY arising by contract, operation of law, or
     otherwise, from its participation or membership, whether voluntary or
     involuntary, in any insolvency fund. "Insolvency Fund" includes any
     guaranty fund, insolvency fund, plan, pool, association, fund, or other
     arrangement, howsoever denominated, established, or governed, which
     provides for any assessment of, payment, or assumption by the COMPANY of
     part or all of any claim, debt, charge, fee, or other obligation of an
     insurer, or its successors or assigns, which has been declared by any
     competent authority to be insolvent, or which is otherwise deemed unable to
     meet any claim, debt, charge, fee, or other obligation in whole or in part;

5.   Nuclear Incident as provided in the Nuclear Incident Exclusion Clauses -
     Liability - Reinsurance and Physical Damage - Reinsurance, which are
     attached to and mane a part of this Agreement;

6.   Policies written on a co-indemnity basis not controlled by the COMPANY,

7.   Fidelity, surety, aviation, ocean marine, system performance, boiler and
     machinery, political risk, kidnap, ransom and extortion, credit,
     retroactive liability, financial guarantee and insolvency business, or
     strike insurance;

8.   Policies written to apply in excess of a deductible or self insured amount
     of more than $10,000 or policies written to apply specifically in excess
     over underlying insurance;

9.   As respects Casualty Business - Pollution Liability or Environmental
     Impairment Liability with respect to new and renewal policies written on
     and after January 1, 1986, but this Exclusion does not preclude liability
     for loss, damage, costs, or expenses which are covered under Insurance
     Service Organization wordings promulgated on or after January 1, 1986.
     However, if the insured elects to purchase any "buy back" or additional
     coverage options, such options shall not be covered under this Agreement
     even if such options are provided by or covered under such Insurance
     Service Organization wordings;

10.  As respects Property Business - loss, damage costs, or expenses arising out
     of: the release, discharge, dispersal, or escape of pollutants; the
     extraction, removal, clean up, containment, monitoring, or detoxification
     of pollutants; or, the removal,

<PAGE>

                                       -2-

     restoration, or replacement of polluted land or water. However, this
     Exclusion does not preclude liability for loss, damage, costs, or expenses
     which are covered under Insurance Service Organization wordings promulgated
     on or after April 1, 1986. Nevertheless, if the insured elects to purchase
     any "buy back" or additional coverage options, such options shall not be
     covered under this Agreement even if such options are provided by or
     covered under such Insurance Service Organization wordings;

11.  Policies written on a claims made basis where the retroactive date of such
     policies precedes the effective date of the original insured's first claims
     made policy;

12.  Liability arising out of the manufacturing, mining, transportation,
     distribution, use, removal, encapsulation, or exposure to asbestos,
     asbestos products, asbestos fibers, or asbestos dust;

13.  Policies covering liability of any original insured whose annual gross
     sales, receipts, or revenues exceed $250,000,000;

14.  Automobile liability insurance, except non owned and hired auto when
     written as part of a general liability policy;

15.  Liability other than automobile insurance relating to risks involving:

     a.   Wrecking of buildings or structures, except when three stories or less
          in height;

     b.   Amusement parks, amusement devices, fairs, exhibitions, carnivals,
          circuses, and zoos, except when written within the guidelines of the
          COMPANY'S Special Events Program;

     c.   sports or other entertainment events with an expected capacity, at any
          one time, of 10,000 or more people;

     d.   Arenas, grandstands, stadiums, theatres, halls and any other indoor
          venues with an expected capacity, at any one time, of 5,000 or more
          people;

     e.   Blasting operations;

     f.   Motion picture production;

     g.   All mining or quarrying operations;

     h.   Subway construction or tunnelling, other than sewer construction;

     i.   Navigation, towing, construction, repair, conversion, cleaning, work
          on, stevedoring, demolition, wrecking, uprighting, or salvage of any
          commercial vessel, barge, dry dock, oil rig, and any other commercial
          vessel;

     j.   Offshore or subaqueous operations;

     k.   Railroads, including street railways, except sidetrack agreements;

     l.   Aircraft, helicopters, airports, or flight operations;

     m.   Governmental subdivisions, bodies, authorities, or agencies over
          10,000 people in population, except OL&T related exposures;

<PAGE>

                                       -3-

     n.   Storage, production, marketing, handling, refinement, distribution, or
          transmission of natural or artificial fuels, except with respect to:

          1.   Wholesale distribution of gasoline, kerosene, or fuel oils;

          2.   Storage of gasoline, kerosene or fuel oils with a combined total
               capacity of less than 75,OOO gallons at any one location; and,

          3.   Retail sales of gasoline or diesel fuel or fuel oil;

     o.   Manufacture, transportation, marketing, handling, storage, or use of
          explosives (Note: An explosive substance is defined as an substance
          manufactured for the express purpose of exploding as differentiated
          from other commodities used industrially which are fortuitously
          explosive such as gasoline, celluloid, fuel gases, and dyestuffs),
          caps, primers, or detonators and other similar materials, fireworks,
          ammunition, or ammonium nitrate;

     p.   Gas, electric, and water utility companies;

     q.   Shoring, underpinning, or moving of buildings or structures;

     r.   Manufacture, marketing, blending, mixing, repackaging or relabeling of
          agricultural and industrial chemicals;

     s.   Steeple or chimney shaft work (other than residential chimney sweep
          operations) and tower construction;

     t.   Construction or maintenance of cofferdams;

     u.   Malpractice or professional liability and/or errors and omissions
          insurance including liability of any insurer or reinsurer for alleged
          misconduct in the handling of claims or in any of its dealings with
          policyholders, except for beauticians, barbers, morticians, opticians,
          optometrists, hearing aid specialists clergymens counseling, animal
          grooming, exercise studios, day care centers and those classes
          mutually agreed upon in writing;

     v.   Directors and Officers, Public Officials, Security Exchange
          Commission, and ERISA liability;

     w.   Broadcasters, telecasters, and publishers liability;

     x.   Liquor law liability other than the following: host liquor; and,
          Liquor law liability when written in conjunction with the COMPANY'S
          Restaurant Pak program;

     y.   Products Recall, Products Integrity, or Products Impairment Insurance;
          and,

     z.   Products and completed operations as respects:

          1.   The manufacture, sale, handling, or distribution of aircraft,
               aerospacecraft, satellites, and missiles and parts for or
               components of, aircraft, aerospacecraft, satellites, and
               missiles;

<PAGE>

                                       -4-

          2.   The manufacture, blending, mixing, repackaging, relabeling, or
               importing of ethical and non-ethical drugs, and cosmetics;

          3.   The manufacture, or wholesale distribution of tobacco based
               products; and,

          4.   The manufacture of all motorized vehicles, mobile equipment,
               heavy equipment or machinery, home power tools, and oil drilling
               equipment;

          5.   The manufacture, blending, mixing, repackaging, or relabeling of
               farm animal feed.

16.  Workers' Compensation Insurance, except when written in conjunction with a
     Homeowners Policy;

17.  Homeowners Section II and comprehensive Personal Liability; and,

18.  The following kinds of insurance and risks classified by the COMPANY as
     Property Business:

     a.   The perils of flood, surface water, waves, tidal water or tidal wave,
          overflow of streams, or other bodies of water or spray from any of the
          foregoing, all whether driven by wind or not, when written as such;

     b.   The peril of earthquake, when written as such;

     c.   Difference in conditions insurance or similar kinds of insurance,
          howsoever styled;

     d.   Insurance on growing or standing crops, or timber;

     e.   Mortgage impairment insurance and similar kinds of insurance,
          howsoever styled;

     f.   Risks having a total insurable value of more than $50,000,000;

     g.   Any collection of fine arts with an insurable value of $5,000,000 or
          more;

     h.   All bridges, tunnels, and dams;

     i.   Mobile homes, when written on a personal lines policy;

     j.   All offshore property risks;

     k.   Railroad property;

     l.   Automobile Physical Damage business;

     m.   Inland Marine business with respect to the following:

          1.   Cargo insurance with respect to ocean, lake, or inland waterway
               vessels;

          2.   Motor-truck cargo insurance written for common carriers operating
               beyond

<PAGE>

                                       -5-

               a radius of 1,000 miles, or that require an ICC, PUC or similar
               filing;

          3.   Commercial negative film insurance and cast and/or non-appearance
               insurance;

          4.   Drilling and/or production rigs and all machinery and equipment
               used in the exploration of natural fuels;

          5.   Furriers' customers and garment contractors policies;

          6.   Insurance on livestock, birds, or other animals under so-called
               "mortality policies";

          7.   Jewelers' block policies and furriers' block policies;

          8.   Mining equipment while underground;

          9.   Radio and television broadcasting towers, exceeding 100 feet in
               height;

          10.  Registered mail and armored car insurance; and,

          11.  Watercraft, other than watercraft insured under personal property
               floaters, yacht, or outboard policies.

The exclusions set forth in paragraph 15., items, a, b, e, g, n, o, q, s, z.2.
and z.5. above, shall not apply when the exposure subject to such exclusion is
only incidental to the major operation of the risk.

                              * * * * * * * * * *

<PAGE>

           NUCLEAR INCIDENT EXCLUSION CLAUSE - LIABILITY - REINSURANCE

     (1)  This reinsurance does not cover any loss or liability accruing to the
COMPANY as a member of, or subscriber to, any association of insurers or
reinsurers formed for the purpose of covering nuclear energy risks or as a
direct or indirect reinsurer of any such member, subscriber or association.

     (2)  Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that for all purposes of this reinsurance
all the original policies of the COMPANY (new, renewal and replacement) of the
classes specified in Clause II of this paragraph (2) from the time specified in
Clause III in this paragraph (2) shall be deemed to include the following
provision (specified as the Limited Exclusion Provision):

     LIMITED EXCLUSION PROVISION*

     I.   It is agreed that the policy does not apply under any Liability
          Coverage, to (injury, sickness, disease, death or destruction
                        -----------------------------------------------
                       (bodily injury or property damage

          with respect to which an insured under the policy is also an insured
          under a nuclear energy liability policy issued by Nuclear Energy
          Liability Insurance Association, Mutual Atomic Energy Liability
          Underwriters or Nuclear Insurance Association of Canada, or would be
          an insured under any such policy but for its termination upon
          exhaustion of its limit of liability.

     II.  Family Automobile Policies (liability only), Special Automobile
          Policies (private passenger automobiles, liability only), Farmers
          Comprehensive Personal Liability Policies (liability only),
          Comprehensive Personal Liability Policies (liability only) or policies
          of a similar nature; and the liability portion of combination forms
          related to the four classes of policies stated above, such as the
          Comprehensive Dwelling Policy and the applicable types of Homeowners
          Policies.

     III. The inception dates and thereafter of all original policies as
          described in II above, whether new, renewal or replacement, being
          policies which either

          (a)  become effective on or after May 1, 1960, or

          (b)  become effective before that date and contain the Limited
               Exclusion Provision set out above;

          provided this paragraph (2) shall not be applicable to Family
          Automobile Policies, Special Automobile Policies, or policies or
          combination policies of a similar nature, issued by the COMPANY on New
          York risks, until 90 days following approval of the Limited Exclusion
          Provision by the Governmental Authority having jurisdiction thereof.

<PAGE>

     (3)  Except for those classes of policies specified in Clause II of
paragraph (2) and without in any way restricting the operation of paragraph (1)
of this Clause, it is understood and agreed that for all purposes of this
reinsurance the original liability policies of the COMPANY (new, renewal and
replacement) affording the following coverages:

     Owners, Landlords and Tenants Liability, Contractual Liability, Elevator
     Liability, Owners or Contractors (including railroad) Protective Liability,
     Manufacturers and Contractors Liability, Product Liability, Professional
     and Malpractice Liability, Storekeepers Liability, Garage Liability,
     Automobile Liability (including Massachusetts Motor Vehicle or Garage
     Liability)

shall be deemed to include, with respect to such coverages, from the time
specified in Clause V of this paragraph (3), the following provision (specified
as the Broad Exclusion Provision):

     BROAD EXCLUSION PROVISION*

     It is agreed that the policy does not apply:

     I.   Under any Liability Coverage,
          to (injury, sickness, disease, death or destruction
              -----------------------------------------------
             (bodily injury or property damage

          (a)  with respect to which an insured under the policy is also an
               insured under a nuclear energy liability policy issued by Nuclear
               Energy Liability Insurance Association, Mutual Atomic Energy
               Liability Underwriters or Nuclear Insurance Association of
               Canada, or would be an insured under any such policy but for its
               termination upon exhaustion of its limit of liability; or

          (b)  resulting from the hazardous properties of nuclear material and
               with respect to which (1) any person or organization is required
               to maintain financial protection pursuant to the Atomic Energy
               Act of 1954, or any law amendatory thereof, or (2) the Insured
               is, or had this policy not been issued would be, entitled to
               indemnity from the United States of America, or any agency
               thereof, under any agreement entered into by the United States of
               America, or any agency thereof, with any person or organization.

     II.  Under any Medical Payments Coverage, or under any Supplementary
          Payments Provision
          relating to (immediate medical or surgical relief,
                       ------------------------------------
                      (first aid,
          to expenses incurred with respect

          to (bodily injury, sickness, disease or death
              ------------------------------------------
             (bodily injury

          resulting from the hazardous properties of bodily injury nuclear
          material and arising out of the operation of a nuclear facility by any
          person or organization.

<PAGE>

     III. Under any Liability Coverage,
          to (injury, sickness, disease, death or destruction
              -----------------------------------------------
             (bodily injury or property damage

          resulting from the hazardous properties of nuclear material, if

          (a)  the nuclear material (1) is at any nuclear facility owned by, or
               operated by or on behalf of, an insured or (2) has been
               discharged or dispersed therefrom;

          (b)  the nuclear material is contained in spent fuel or waste at any
               time possessed, handled, used, processed, stored, transported or
               disposed of by or on behalf of an insured; or

          (c)  the (injury, sickness, disease. death or destruction
                    -----------------------------------------------
                   (bodily injury or property damage

               arises out of the furnishing

               by an insured of services, materials, parts or equipment in
               connection with the planning, construction, maintenance,
               operation or use of any nuclear facility, but if such facility is
               located within the United States of America, its territories, or
               possessions or Canada, this exclusion (c) applies only

               to (injury to or destruction of property at such nuclear
                   ----------------------------------------------------
                  (facility
                   --------
                  (property damage to such nuclear facility and any
                  (property thereat.

     IV.  As used in this endorsement:

          "hazardous properties" include radioactive, toxic or explosive
          properties; "nuclear material" means source material, special nuclear
          material or by-product material; "source material", "special nuclear
          material", and "by-product material" have the meanings given them in
          the Atomic Energy Act of 1954 or in any law amendatory thereof; "spent
          fuel" means any fuel element or fuel component, solid or liquid, which
          has been used or exposed to radiation in a nuclear reactor; "waste"
          means any waste material (1) containing by-product material other than
          the tailings or wastes produced by the extraction or concentration of
          uranium or thorium from any ore processed primarily for its source
          material content and (2) resulting from the operation by any person or
          organization of any nuclear facility included within the definition of
          nuclear facility under paragraph (a) or (b) thereof; "nuclear
          facility" means

          (a)  any nuclear reactor,

          (b)  any equipment or device designed or used for (1) separating the
               isotopes of uranium or plutonium, (2) processing or utilizing
               spent fuel, or (3) handling, processing or packaging waste,

          (c)  any equipment or device used for the processing, fabricating or
               alloying of special nuclear material if at any time the total

<PAGE>

               amount of such material in the custody of the insured at the
               premises where such equipment or device is located consists of or
               contains more than 25 grams of plutonium or uranium 233 or any
               combination thereof, or more than 250 grams of uranium 235,

          (d)  any structure, basin, excavation, premises or place prepared or
               used for the storage or disposal of waste,

          and includes the site on which any of the foregoing is located, all
          operations conducted on such site and all premises used for such
          operations; "nuclear reactor" means any apparatus designed or used to
          sustain nuclear fission in a self-supporting chain reaction or to
          contain a critical mass of fissionable material;

          (with respect to injury to or destruction of property, the
           ---------------------------------------------------------
          (word "injury" or "destruction"
           ------------------------------
          ("property damage" includes all forms of radioactive
          (contamination of property.
          (includes all forms of radioactive contamination
           -----------------------------------------------
          (of property.
           -----------

     V.   The inception dates and thereafter of all original policies affording
          coverages specified in this paragraph (3), whether new, renewal or
          replacement, being policies which become effective on or after May 1,
          1960, provided this paragraph (3) shall not be applicable to

          (a)  Garage and Automobile Policies issued by the COMPANY on New York
               risks, or

          (b)  statutory liability insurance required under Chapter 90, General
               Laws of Massachusetts,

          until 90 days following approval of the Broad Exclusion Provision by
          the Governmental Authority having jurisdiction thereof.

     (4) Without in any way restricting the operation of paragraph (1) of this
Clause, it is understood and agreed that paragraphs (2) and (3) above are not
applicable to original liability policies of the COMPANY in Canada and that with
respect to such policies this Clause shall be deemed to include the Nuclear
Energy Liability Exclusion Provisions adopted by the Canadian Underwriters
Association or the Independent Insurance Conference of Canada.

* NOTE. The words underlined in the Limited Exclusion Provision and in the Broad
Exclusion Provision shall apply only in relation to original liability policies
which include a Limited Exclusion Provision or a Broad Exclusion Provision
containing those words.

                                   * * * * *

<PAGE>

        NUCLEAR INCIDENT EXCLUSION CLAUSE - PHYSICAL DAMAGE - REINSURANCE

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

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

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

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

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

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

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

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

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

<PAGE>

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

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

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

     (7) COMPANY to be sole judge of what constitutes:

          (a)  substantial quantities, and

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

                                   * * * * *

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