Document:

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                                                                    EXHIBIT 10.4

                    RELIANCE STANDARD LIFE INSURANCE COMPANY

                     MANAGEMENT INCENTIVE COMPENSATION PLAN

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ARTICLE I - INTRODUCTION, OBJECTIVES AND DURATION

         1.1 INTRODUCTION. Reliance Standard Life Insurance Company ("RSL" or
         the "Company"), hereby establishes an incentive compensation plan to be
         known as the RSL Management Incentive Compensation Plan ("the Plan"),
         as set forth below in this plan document.

         The Plan permits the payment of annual awards, pursuant to achievement
         of certain pre-established goals, in cash, stock options or a
         combination thereof.

         The Plan shall become effective as of January 1, 2001 (the "Effective
         Date") and shall remain in effect as provided in Section 1.3 hereof.
         The first Performance Period (as defined in Section 4.1) shall be
         calendar year 2001.

         1.2 PLAN OBJECTIVE. To promote profitable growth of the Company by
         providing eligible employees with incentive based compensation, linked
         to the financial performance of RSL. Thus, RSL will attract and retain
         employees of the highest caliber who will demonstrate outstanding
         performance and will assist in the achievement of overall objectives.

         1.3 DURATION. The Plan will commence on the Effective Date, as
         described in Section 1.1 hereof, and shall remain in effect, subject to
         the right of the Committee to amend or terminate the Plan at any time.
         It is expressly understood that while the Plan may remain in effect
         from year to year, the Incentive Bonus, Measuring Objectives,
         Participation Percentages, Achievement Percentages and any and all
         other Exhibits will be separately adopted for each Performance Period,
         such that following the conclusion of a Performance Period, amended
         Exhibits must be adopted for the next Performance Period and Plan.

ARTICLE II - DEFINITIONS

         When used in the Plan, the following terms will have the definitions
set forth below:

         2.1 "ACHIEVEMENT PERCENTAGE" means the percentage amount as determined
         by the Chairman of the Board of RSL and as indicated in Exhibit D
         hereof, as may be amended from time to time.

         2.2 "AWARD" means individually or collectively, a payment under this
         plan of cash, stock options, or some combination thereof.

         2.3 "BASE SALARY" means the employee's base annual salary at calendar
         year end in the year immediately preceding the Performance Period.

         2.4 "BOARD" or "BOARD OF DIRECTORS" means Board of Directors of the
         Company.

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         2.5 "COMMITTEE" means, as specified in Article 3 herein, the
         Compensation Committee of the Board or such other Committee as may be
         appointed by the Board to administer the Plan, including the Executive
         Committee of the Board.

         2.6 "COMPANY" means Reliance Standard Life Insurance Company, an
         Illinois corporation, and any successor thereto.

         2.7 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
         Section 1.1 hereof.

         2.8 "INCENTIVE BONUS" means the bonus and calculation thereof as
         described in Exhibit B hereof, as may be amended from time to time.

         2.9 "MEASURING OBJECTIVE" shall have the meaning ascribed to such term
         as indicated in Exhibit C hereof, as may be amended from time to time.

         2.10 "PARTICIPANT" means any employee of the Company so designated as a
         Participant in this Plan by the Board of Directors and as indicated in
         Exhibit A hereof, as may be amended from time to time.

         2.11 "PARTICIPATION PERCENTAGE" is an amount as determined by the
         Participant's manager based on the Manager's assessment of the
         Participant's performance during the Performance Period. The actual
         Participation Percentage to be awarded is discretionary and will be
         based on recommendations of the Participant's senior officer, subject
         to the approval of the President of RSL. Exhibit A, as may be amended
         from time to time, sets forth the maximum Participation Percentage
         amount up to which a Participant may participate in the Plan.

ARTICLE III - ADMINISTRATION

         3.1 ADMINISTRATION. The Plan will be administered by the Committee. The
         Committee is responsible for establishing appropriate rationale,
         strategy and targets within the organizational structure for approval
         by the Board of Directors.

         3.2 AUTHORITY OF COMMITTEE. Except as limited by law and subject to the
         provisions herein, the Committee shall have the authority to adopt
         procedures for the administration of the Plan and to take any and all
         action necessary to implement such procedures.

         The Committee shall have full power to select Participants who shall
         receive Awards under the Plan; determine the amounts and forms of
         Awards; determine the terms and conditions of Awards in a manner
         consistent with the Plan; construe and interpret the Plan and any
         agreement or instrument entered into under the Plan; make factual
         determinations; and establish, amend, or waive rules and regulations
         for the Plan's administration. Further, the Committee shall make all
         other determinations which may be necessary or advisable for the

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         administration of the Plan. As permitted by law and consistent with
         Section 3.1, the Committee may delegate its authority as identified
         herein.

         3.3 DECISIONS BINDING. All determinations and decisions made by the
         Committee pursuant to the provisions of the Plan (a) shall be final,
         conclusive and binding on all persons, including the Company, its
         employees, Participants, and their estates and beneficiaries, (b) shall
         be in the sole discretion of the Committee, and (c) need not be uniform
         as to similarly situated individuals.

ARTICLE IV - INCENTIVE PARTICIPATION

         4.1 ELIGIBILITY, PARTICIPANTS AND PERFORMANCE PERIOD. Eligibility to
         participate in the Plan is restricted to the Participants identified in
         Exhibits A-1 and A-2, as may be amended from time to time. Eligibility
         for Awards and Award amounts for which Participants are eligible will
         be determined by the Committee for each calendar year (or other fiscal
         year or partial year performance period established by the Committee)
         (the "Performance Period").

         4.2 PARTICIPATION. The Participation Percentages relate to each
         employee's Base Salary. Changes in Participation Percentages,
         Achievement Percentages or Participants shall be approved by the
         Committee, which has absolute discretion to determine Participants,
         Participation Percentages and/or Achievement Percentages. No employee
         shall participate in more than one Incentive Compensation Plan, except
         as required by transfer within a given year.

         4.3 FORM OF AWARDS. Awards may be paid in cash, stock options or any
         combination thereof, as determined by the Committee in its sole
         discretion or, to the extent expressly authorized and directed by the
         Committee, by each Award recipient.

         4.4 DISTRIBUTION. After the close of each Performance Period a
         Participant's actual Participation Percentage, if any, and Award will
         be determined. Awards will be paid as soon as practical thereafter.
         Each Participant will be notified of his or her participation in the
         Plan, either in terms of the actual Participation Percentage or
         Incentive Bonus, if the specified results are achieved.

         4.5 PARTIAL AWARDS. Participants entering the Plan during the
         Performance Period may be eligible to receive prorated Awards based on
         the number full months employed and covered under the Plan during that
         Performance Period. Employees hired after the last day of the tenth
         month of a Performance Period are ineligible for an Award for that
         Performance Period.

         4.6 TERMINATION OF EMPLOYMENT, DISABILITY. Except as provided below, an
         employee must be employed by the Company at the close of the
         Performance Period in order to participate in and receive an Award
         under the Plan. If employment is terminated during

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         the Performance Period on account of death, disability, or retirement,
         the employee may participate proportionately for the part of the
         Performance Period he or she was employed prior to termination to the
         extent (if any) deemed appropriate by the President of RSL at his sole
         discretion. If employment is terminated during the Performance Period
         for the convenience of RSL, but not for cause or by resignation, the
         employee may participate to the extent (if any) deemed appropriate by
         the President of RSL at his sole discretion. If an employee is
         terminated for cause during the Performance Period or after the close
         of the Performance Period but prior to the date for actual payment of
         an Award under this Plan no Award will be paid and the employee will
         not participate in this Plan.

         If an employee terminates employment (other than on account of death,
         disability, or retirement) after the close of the Performance Period
         but prior to the date for actual payment of an Award under this Plan,
         the President of RSL will unilaterally determine, at his sole
         discretion, whether and to what extent (if any), under the
         circumstances, payment of an Award to the former employee under the
         terms of the Plan would be appropriate.

         Employees hired or promoted during the Performance Period and named as
         a Participant will become a Participant on the first day of the month
         following approval by the Committee or the President of RSL.
         Notwithstanding the foregoing provisions, the Committee or the
         President of the Company, acting on behalf of the Committee, reserves
         the right, in its or his sole discretion, to grant Awards to
         Participants who are otherwise ineligible by reason of terminating
         employment during the Performance Period and to determine the amounts
         of any such Awards.

ARTICLE V - PERFORMANCE CRITERIA, CALCULATIONS, AND CHANGE OF STRATEGY

         5.1 PERFORMANCE CRITERIA AND CALCULATIONS. Incentive Bonus Calculation,
         Participants, Achievement Percentages, and Measuring Objectives, must
         be approved by the Committee. The Award is calculated as outlined in
         Exhibit B (Incentive Bonus Calculation) for each eligible Participant.

         5.2 CHANGE OF STRATEGY. If the agreed upon operating strategy for RSL
         is changed during the year, objectives and strategies in the Plan may
         be changed accordingly, with approval of the Committee or the Board of
         Directors. The Committee may, in its sole discretion, modify, reduce or
         eliminate the Award otherwise payable to any eligible Participant. In
         addition, the Committee may, in its sole discretion, grant Awards to
         employees, which Awards need not be determined in accordance with this
         Article but may be in such amounts and on such terms as the Committee
         determines in its sole discretion.

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ARTICLE VI - DEFERRALS

         The Committee may permit or require an eligible Participant to defer
         his or her Award. If any such deferral is permitted or required, the
         Committee shall, in its sole discretion, establish rules and procedures
         for such deferrals.

ARTICLE VII - RIGHTS OF EMPLOYEES

         7.1 NOT A CONTRACT. This Plan does not constitute a contract between
         RSL and the Participants, and no Participant shall have any legal
         rights by reason of the existence of this Plan. No right, benefit or
         Award under this Plan shall be subject to anticipation, alienation,
         sale, assignment, pledge, encumbrance or charge, and any attempt to
         anticipate, alienate, sell, assign, pledge, encumber or charge the same
         shall be void; and, if any Participant hereunder should become bankrupt
         or attempt to participate, alienate, sell, assign, pledge, encumber or
         charge any right or benefit hereunder, then such right, benefit or
         Award shall, at the discretion of the Committee or the Board of
         Directors, cease and terminate. RSL may offset any claim it has against
         the Participant against any amount to which a Participant may otherwise
         be entitled to hereunder, but rights hereunder shall not otherwise be
         subject to debts or liabilities of the Participant.

         7.2 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
         any way the right of the Company to terminate any Participant's
         employment at any time, or confer upon any Participant any right to
         continue in the employ of the Company.

         7.3 PARTICIPATION. No Participant shall have the right to be selected
         to receive an Award under this Plan, or, having been so selected in a
         particular Performance Period, to be selected to receive an Award in
         any future Performance Period.

ARTICLE VIII - AMENDMENT, MODIFICATION, AND TERMINATION

         8.1 AMENDMENT, MODIFICATION, AND TERMINATION. The Committee may at any
         time and from time to time, alter, amend, modify or terminate the Plan
         or any Exhibits thereto, in whole or in part.

         8.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
         modification of the Plan shall adversely affect in any material way any
         Award previously granted under the Plan, to the extent such Award has
         not yet been paid, without the written consent of the Participant to
         whom such Award is granted.

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ARTICLE IX - WITHHOLDING

         The Company shall deduct or withhold from Awards or other amounts
         payable to a Participant, or require the Participant to remit to the
         Company, an amount sufficient to satisfy Federal, state and local
         taxes, domestic or foreign, required by law or regulation to be
         withheld with respect to any taxable event arising as a result of this
         Plan.

ARTICLE X - INDEMNIFICATION

         Each person who is or shall have been a member of the Committee, shall
         be indemnified and held harmless by the Company against and from any
         loss, cost, liability, or expense that may be imposed upon or
         reasonably incurred by him or her in connection with or resulting from
         any claim, action, suit, or proceeding to which he or she may be a
         party or in which he or she may be involved by reason of any action
         taken or failure to act under the Plan and against and from any and all
         amounts paid by him or her in a settlement approved by the Company, or
         paid by him or her in satisfaction of any judgment in any such action,
         suit, or proceeding against him or her, provided he or she shall give
         the Company an opportunity, at its own expense, to defend the same
         before he or she undertakes to defend it or his or her own behalf. The
         foregoing right of indemnification shall not be exclusive of any other
         rights of indemnification to which such persons may be entitled under
         the Company's Articles of Incorporation or By-Laws, as a matter of law,
         or otherwise, or any power that the Company may have to indemnify them
         or hold them harmless.

ARTICLE XI - SUCCESSORS

         All obligations of the Company under the Plan with respect to Awards
         granted hereunder shall be binding on any successor to the Company,
         whether the existence of such successor is the result of a direct or
         indirect purchase of all or substantially all of the business and/or
         assets of the Company, or a merger, consolidation, or otherwise.

ARTICLE XII - LEGAL CONSTRUCTION

         12.1 GENDER AND NUMBER. Except where otherwise indicated by the
         context, any masculine term used herein also shall include the
         feminine; the plural shall include the singular and the singular shall
         include the plural.

         12.2 SEVERABILITY. In the event any provision of the Plan shall be held
         illegal or invalid for any reason, the illegality or invalidity shall
         not affect the remaining part of the Plan, and the Plan shall be
         construed and enforced as if the illegal or invalid provision had not
         been included.

         12.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
         stock and/or cash payouts under the Plan shall be subject to all
         applicable laws, rules, and regulations, and to such approvals by any
         governmental agencies or national securities exchanges as may be

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         required.

         12.4 SECURITIES LAW COMPLIANCE. Transactions under this Plan are
         intended to comply with all applicable conditions of Rule 16b-3 under
         the Exchange Act, or any successor rule. To the extent any provision of
         the plan or action by the Committee fails to so comply, it shall be
         deemed null and void, to the extent permitted by law and deemed
         advisable by the Committee.

         12.5 GOVERNING LAW. To the extent not preempted by federal law, the
         Plan and all agreements hereunder shall be construed in accordance with
         and governed by the laws of the Commonwealth of Pennsylvania.

         12.6 RSL'S RESPONSIBILITY. RSL is responsible for providing full
         financial data to establish appropriate rates to compute results,
         obtaining approval of the Plan, and for coordination of the total
         program.

In witness thereof, the Company has caused this Plan to be executed by its duly
authorized Officer, effective January 1, 2001.

                                Reliance Standard Life Insurance Company

                                By: /s/ LAWRENCE E. DAURELLE
                                    ------------------------
                                    Signature

                                Title: /s/ PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                       -----------------------------------------

                                Date: August 6, 2001

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                 AMENDED EXHIBIT A-1 FOR PERFORMANCE PERIOD 2003

                         SENIOR MANAGEMENT PARTICIPANTS

<TABLE>
<CAPTION>
                                                                                                  MAXIMUM
                                                                                               PARTICIPATION
 NAME                                                POSITION                                    PERCENTAGE
------------------------------------------------------------------------------------------------------------
<S>                           <C>                                                              <C>
SENIOR MANAGEMENT

Lawrence E. Daurelle                     President & Chief Executive Officer                         85%
</TABLE>

             [Information Regarding Other Plan Participants Omitted]

                                       9

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                  AMENDED EXHIBIT B FOR PERFORMANCE PERIOD 2003

                           INCENTIVE BONUS CALCULATION

An Incentive Bonus will be earned by a Participant based upon RSL's achieving
the Measuring Objective of the Plan as set forth in Exhibit C. The Incentive
Bonus will be the product of the Achievement Percentage as set forth in Exhibit
D multiplied by the Participation Percentage times Base Salary.

The Participation Percentage is an amount as determined by the Participant's
manager based on the Manager's assessment of the Participant's performance
during the Performance Period, subject to the maximum percentage set forth in
Exhibits A-1 and A-2. The actual Participation Percentage to be awarded is
discretionary and will be based on the recommendations of the Participant's
senior officer, subject to the approval of the President of RSL.

For Participants set forth in Exhibit A-1, the Committee in its sole discretion
may elect to award the Incentive Bonus as either (a) cash or (b) a grant of
options to purchase shares of Delphi Class A Common Stock ("Incentive Options"),
or a combination of both, subject to the approval by the Stock Option and
Compensation Committee of the Board of Directors of Delphi Financial Group, Inc.
("Delphi"). With regard to Incentive Options, the Incentive Bonus amount shall
be divided by the fair market value of the Delphi Class A Common Stock on the
date of grant of the option, and the quotient then multiplied by three (3),
yielding the total number of Incentive Options awarded.

For Participants set forth in Exhibit A-2, the Incentive Bonus is payable in
cash.

All Incentive Options shall be granted under Delphi's Second Amended and
Restated Employee Stock Option Plan, as amended from time to time, and have the
same characteristics and properties. The Incentive Option price per share shall
be one hundred percent (100%) of the Fair Market Value of a share on the date of
grant. For purposes hereof, "Fair Market Value" shall be the closing price on
the date of grant of a share of Delphi Class A Common Stock, as reported on the
New York Stock Exchange (the "NYSE"), or, if the shares are not then listed for
trading on the NYSE, the closing price of the shares as reported on another
recognized securities exchange or system. If the shares did not trade on the
grant date on the NYSE or such other applicable exchange or system, the Fair
Market Value for purposes hereof shall be the reported closing price on the last
business day on which the shares were traded preceding the grant date. Each
Incentive Option shall have a term of ten (10) years, exercisable immediately in
full. In the case of termination of employment, by either party, for any reason
whatsoever (subject to the following sentence), options may be exercised any
time during the remainder of the ten (10) year term. If a Participant's
employment is terminated by the Company on account of any act of (a) fraud or
intentional misrepresentation or (b) embezzlement, misappropriation or
conversion of assets or opportunities of the Company, or any unauthorized
disclosure of confidential information or trade secrets of the Company, all
unexercised Incentive Options shall terminate as of the date of such
termination.

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                  AMENDED EXHIBIT C FOR PERFORMANCE PERIOD 2003

                              MEASURING OBJECTIVES

The 2003 Measuring Objective of the Plan is Life Insurance Companies Operating
Income per the Elements of Profit on page two of the monthly financial package,
for the life companies only. For 2003, this amount is $82,354,000.

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                  AMENDED EXHIBIT D FOR PERFORMANCE PERIOD 2003

                             ACHIEVEMENT PERCENTAGE

If the actual results of RSL in the 2003 Plan year equal or exceed the 2003
Measuring Objective, the 2003 Achievement Percentage will be equal to an amount
as determined by the Chairman of the Board of RSL, such amount will not be less
than 90% or greater than 110%.

If the actual results of RSL in the 2003 Plan year are less than the 2003
Measuring Objective, the Achievement Percentage will be an amount, if any, as
determined by and at the sole discretion of the Chairman of the Board of RSL.

                                       12<PAGE>

                                                                    EXHIBIT 10.5

                                  July 8, 2003

Harold F. Ilg
Safety National Casualty Corporation
2043 Woodland Parkway, Suite 200
St. Louis, Missouri 63146

Re: Stock Option Award Agreement

Dear Mr. Ilg:

         We are pleased to inform you that, pursuant to action taken by the
Stock Option and Compensation Committee (the "Committee") of the Board of
Directors of Delphi Financial Group, Inc. ("Delphi") under Section 5 of the 2003
Employee Long-Term Incentive and Share Award Plan (the "Plan"), you have been
granted options to purchase up to 150,000 shares of Delphi's Class A Common
Stock (the "Stock") at the price of $43.45 per share (the "Options"), which was
the fair market value of the Stock as of May 28, 2003, the date of such action,
as determined under the Plan.

         Such option grant is subject to the terms and conditions described
herein, including but not limited to the condition to exercisability set forth
in the penultimate paragraph hereof. This notice, once countersigned by you,
shall constitute an "Award Agreement" as defined in Section 2(c) of the Plan.

         The Options will become exercisable, in accordance with the procedures
described herein, if and to the extent that SIG Holdings, Inc. and its
consolidated subsidiaries (collectively, "SIG") meet the following financial
performance goals, as measured and determined in accordance with the provisions
of Exhibit A hereto:

            (a) If SIG's aggregate Pre-Tax Operating Income (as such term is
defined in Exhibit A hereto) for the period consisting of Delphi's 2003, 2004
and 2005 fiscal years is at least $216,700,000, 75,000 Options shall become
exercisable.

<PAGE>

Harold F. Ilg
July 8, 2003
Page 2

Alternatively, if SIG's aggregate Pre-Tax Operating Income for such
period does not reach $216,700,000, but is greater than $196,134,656, a reduced
number of the Options shall become exercisable, to be determined by
interpolating between zero and 75,000 in relation to the point at which the
Pre-Tax Operating Income amount falls in the range between $196,134,656 and
$216,700,000. For example, if Pre-Tax Operating Income for such period were
exactly $206,417,328, 37,500 Options would become exercisable.

         (b) If SIG's aggregate Pre-Tax Operating Income for the period
consisting of Delphi's 2003, 2004, 2005, 2006 and 2007 fiscal years is at least
$429,085,000, 150,000 Options, less the number of Options, if any, as shall
previously have become exercisable pursuant to the preceding clause (a) (the
"Previously Vested Options"), shall become exercisable. Alternatively, if SIG's
aggregate Pre-Tax Operating Income for such period does not reach $429,085,000,
but is greater than $380,824,993, a reduced number of the Options shall become
exercisable, to be determined by interpolating between zero and 150,000 in
relation to the point at which the Pre-Tax Operating Income amount falls in the
range between $380,824,993 and $429,085,000, and subtracting the number of the
Previously Vested Options. For example, if Pre-Tax Operating Income for such
period was $404,954,997, and the number of the Previously Vested Options was
37,500, 37,500 Options would become exercisable. If, in such example, there were
no Previously Vested Options, 75,000 Options would become exercisable.

         (c) In addition, if your employment with Delphi's subsidiary, Safety
National Casualty Corporation ("SNCC"), terminates due to death or Disability or
is terminated by SNCC without Cause (other than a termination pursuant to the
Annual Termination Option) or by you for Good Reason, then, notwithstanding any
provisions hereof or of the Plan to the contrary, with respect to Options that
have not become exercisable prior to such termination pursuant to the provisions
of the preceding clauses (a) and/or (b), such Options will become exercisable at
such times, if any, as would have been the case pursuant to such clauses if not
for such termination; provided, however, that the number of Options that becomes
exercisable will, in each case, be reduced by a percentage equal

<PAGE>

Harold F. Ilg
July 8, 2003
Page 3

to the applicable percentage of the three-year period (in the case of clause
(a)) and the five-year period (in the case of clause (b)) during which you were
not employed by SNCC by reason of such termination. For purposes of this clause
(c), the terms "Disability," "Cause," "Annual Termination Option" and "Good
Reason" shall have the definitions set forth in the Employment Agreement between
SNCC and you dated as of the date first set forth above (the "Employment
Agreement").

         Options which do not become exercisable pursuant to the provisions of
the preceding clauses (a), (b) and/or (c) shall expire and terminate in their
entirety without becoming exercisable.

         For purposes of application of the foregoing provisions relating to the
exercisability of the Options, the following procedures shall apply:

         Each determination of Pre-Tax Operating Income shall be made by Delphi,
based upon a statement of operations of SIG for the applicable period in form
and substance reasonably acceptable to Delphi, applying the calculation
methodology set forth in Exhibit A to this Notice.

         Delphi shall notify you in writing, within 105 days following the close
of each of the multi-year periods referenced in the preceding clauses (a) and
(b) of its determination as to the level of aggregate Pre-Tax Operating Income
achieved and, based on such determination, the extent to which the Options have
become exercisable pursuant to the applicable provision of such clauses (a) and
(b) or, if applicable, clause (c). Options having become exercisable, as
described in such notice, shall for all purposes of the Plan be exercisable
immediately as of the date of such notice.

         Options that become exercisable as provided herein will, if not sooner
exercised or terminated pursuant to the provisions hereof, terminate at the
close of business on May 28, 2013. The Options are in all respects subject to
each of the terms and conditions of the Plan, a copy of which is attached hereto
as Exhibit B, except as otherwise provided herein and except that: (i) the
provisions of Sections 5(b)(iii), (iv), (vi) and (viii)

<PAGE>

Harold F. Ilg
July 8, 2003
Page 4

of the Plan will not limit your ability to exercise, following a termination of
your employment by SNCC or for the other reasons set forth therein, Options that
have become exercisable as of the date of such termination or that become
exercisable thereafter pursuant to the provisions of clause (c) above; subject,
however, to the provisions of Section 5.4 of the Employment Agreement; (ii) for
purposes of Section 5(b)(v) of the Plan, a determination that you have been
discharged for cause shall be made only where the Committee determines that the
discharge was based upon the commission of fraud or intentional
misrepresentation, embezzlement, misappropriation or conversion of assets or
opportunities of Delphi or any Subsidiary thereof, or any unauthorized
disclosure of confidential information or trade secrets of Delphi or any
Subsidiary thereof; (iii) notwithstanding the provisions of Section 5(b)(ix) of
the Plan, the exercise price for the Options may be paid by your directing that
Delphi withhold from the Option shares a number of shares having a market value,
at the time of exercise, equal to such exercise price, so long as such payment
method will not, in Delphi's judgment, result in adverse accounting consequences
for Delphi; and (iv) the provisions of Section 8(a) of the Plan shall not apply
to the Options.

         In addition, in accordance with Section 6(d) of the Plan, this will
confirm that you may, upon written notice to Delphi, transfer the Options, for
or without consideration, to members of your immediate family (as defined
below), to a partnership or limited liability company in which one or more of
your immediate family members are the only partners or members, or to a trust or
trusts established for your exclusive benefit or the exclusive benefit of one or
more members of your immediate family. Any Options held by the transferee will
continue to be subject to the same terms and conditions that were applicable to
the Options immediately prior to the transfer, except that the Options will be
transferable by the transferee only by will or the laws of descent and
distribution. For purposes hereof, "immediate family" means your children,
grandchildren, and spouse. You are further advised that, under existing rules of
the Securities and Exchange Commission, any Form S-8 registration statement
filed by Delphi relating to the Plan will not cover the exercise of Options
transferred for consideration, and therefore, such exercise would be required to
be covered by

<PAGE>

Harold F. Ilg
July 8, 2003
Page 5

an effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), or otherwise be exempt from registration under the 1933 Act,
and shares of Stock acquired on such exercise would constitute "restricted
securities" within the meaning of Rule 144 under the 1933 Act. No assurance can
be given that, under such circumstances, registration under the 1933 Act with
respect to such exercise or such shares can or will be effected or that an
exemption from such registration will be available.

         If you are in agreement with and accept each of the terms and
conditions of the Options, as described above, please confirm such agreement and
acceptance by executing and dating both counterparts of this Stock Option Award
Agreement and returning one fully executed counterpart to me. The other
counterpart should be retained for your files.

                                Very truly yours,

                                /s/ CHAD W. COULTER
                                -------------------------
                                Chad W. Coulter
                                Vice President, Secretary
                                 and General Counsel

Agreed to and accepted:

/s/ HAROLD F. ILG                           Date: July 9, 2003
---------------------------
Harold F. Ilg

cc: Robert Rosenkranz

<PAGE>

EXHIBIT A
TO
STOCK OPTION AWARD AGREEMENT

General

This Exhibit A sets forth the definitions, methodology and assumptions to be
applied in determining the level of Pre-Tax Operating Income achieved for
purposes of the Stock Option Award Agreement to which this Exhibit A is attached
(the "Option Agreement"). Capitalized terms used but not defined herein shall
have the meanings set forth in the Option Agreement. It is intended that SIG's
Pre-Tax Operating Income will be adjusted, upward or downward, to eliminate the
effect of any items or transactions implemented, initiated, imposed or
determined by Delphi, its affiliates or related parties (collectively, "Excluded
Items"), including but not limited to the following: additional expenses imposed
by Delphi; structured settlement transactions; new affiliated reinsurance
arrangements; asset transfers; Federal Home Loan Bank-related activities and
affiliated and related party transactions. The determination of Pre-Tax
Operating Income will be made by Delphi annually within 90 days of the end of
each year.

For purposes of the Option Agreement, "Pre-Tax Operating Income" shall mean the
operating income of SIG, excluding realized investment gains and losses, net of
interest expense and before extraordinary gain or loss and federal income tax
expense, all as determined in accordance with Generally Accepted Accounting
Principles, as in effect as of January 1, 2003 ("GAAP").

Special Adjustments

For purposes of calculating Pre-Tax Operating Income, the following elements
thereof, as reflected in the applicable line items of SIG's income statement for
each fiscal year, the format for which is attached to and made part of this
Exhibit A, shall be adjusted as follows:

         Investment income: In lieu of actual investment income, shall be based
         on annual average assets available for investment (based on beginning
         of year and end of year balances) multiplied by the crediting rate.
         Average assets available for investment includes cash, investments,
         other investable balances and balances due from affiliates.

<PAGE>

         Fixed maturity investments will be included at amortized cost to
         eliminate any effects of classification for SFAS 115 purposes. Average
         assets available will be (a) increased or decreased, as applicable, to
         eliminate the effect of any Excluded Items, (b) increased (decreased)
         for dividends in excess of (lesser than) the following amounts:
         $10,000,000 in 2003, $1,000,000 in 2004, $1,000,000 in 2005, $4,000,000
         in 2006 and $4,000,000 in 2007, and (c) will be decreased for any
         capital contributed by Delphi. The crediting rate is based upon assumed
         investment yields of 6.32% in 2003, 6.39% in 2004, 6.43% in 2005, 6.47%
         in 2006 and 6.51% in 2007.

         Investment expenses: Shall be fixed at the following amounts for the
         following years: 2003 - $3,926,000; 2004 - $4,151,450; 2005 -
         $4,367,673; 2006 - $4,605,206; and 2007 - $4,854,616.

         Losses and loss adjustment expense (LAE) incurred: Per SIG's income
         statement. Tabular and non-tabular reserves established with respect to
         new or renewal excess workers' compensation and large deductible
         workers' compensation business written on or after January 1, 2003 are
         (to the extent permitted to be discounted under GAAP) to be discounted
         at a 5.5% discount rate. Safety National Casualty Corporation's
         ("SNCC") management will establish loss and LAE reserves, subject to
         audit thereof by Delphi's external auditors and certification thereof
         by PricewaterhouseCoopers.

         Interest on long-term debt: Fixed at $269,622 for 2003; otherwise zero.

         Employee option expenses: SFAS 123 expenses attributable to options
         granted under the SNCC Employee Stock Option Pool (and similar and
         successor programs) shall be included as items of expense.

         Expenses incurred/income generated due to Excluded Items: SIG's results
         will be adjusted to eliminate the effect of Excluded Items.

         Discontinued operations: Included for all purposes, per SIG's income
         statement.

<PAGE>

Arbitration

         Delphi shall provide each holder of Stock options whose terms contain
         goals relating to Pre-Tax Operating Income for the 2003-2007 period
         (collectively, the SIG Optionholders") with a detailed written
         calculation supporting Delphi's determination as to whether the
         applicable goal has been achieved (each, a "Delphi Determination") and,
         where such calculation indicates such goal having been achieved,
         confirming the number of Options having become exercisable as a result
         thereof, within ninety (90) days after the completion of each of the
         2005 and 2007 fiscal periods. If a majority of the SIG Optionholders
         shall disagree with any Delphi Determination, the SIG Optionholders
         shall give written notice of such disagreement to Delphi within ten
         (10) business days after receipt of the such Delphi Determination. If
         within twenty (20) business days after Delphi's receipt of the notice
         of disagreement from the SIG Optionholders referenced in the
         immediately preceding sentence, Delphi and the SIG Optionholders are
         unable to agree with regard to any Delphi Determination, the
         disagreement may be submitted to arbitration by either Delphi or the
         SIG Optionholders, which arbitration determination shall be final and
         binding on the parties. The party instituting the arbitration
         procedures shall give written notice to the other party of its desire
         to arbitrate and such notice shall specify the name and address of the
         person designated to act as an arbitrator on its behalf. Within twenty
         (20) business days after the service of this notice, the other party
         shall notify the first party of the appointment of its arbitrator
         within the twenty (20) business day period specified above, then the
         appointment of the second arbitrator shall be made in the same manner
         as hereinafter provided for the appointment of a third arbitrator in a
         case where the two appointed arbitrators are unable to agree upon a
         third arbitrator. The two arbitrators so chosen shall meet within 10
         business days after the second arbitrator is appointed and shall select
         the third arbitrator by mutual agreement. If the two arbitrators shall
         fail to appoint a third arbitrator within 10 business days after the
         second arbitrator is appointed, then the third arbitrator shall be
         appointed by the American Arbitration Association ("AAA"), or any
         organization successor thereto, in accordance with its prevailing
         rules. Each arbitrator chosen or appointed pursuant to the foregoing
         provisions shall be an active or

<PAGE>

         retired officer of an insurance or reinsurance company and shall be a
         disinterested person.

         The arbitrators shall review the provisions of this Exhibit A and the
         Option Agreement, as well as any other documents or materials supplied
         by either party supporting such party's position. The arbitrators shall
         render their decision with regard to the disputed Delphi Determination
         upon the concurrence of at least two of their number not later than
         thirty (30) business days after the appointment of the third
         arbitrator. The decision of the arbitrators shall be in writing and
         counterpart copies shall be delivered to each of Delphi and the SIG
         Optionholders. In rendering their decision, the arbitrators shall have
         no power to modify any of the provisions of this Agreement. All
         arbitration proceedings shall occur in St. Louis, Missouri. Judgment
         may be entered on the award of the arbitrators and may be enforced in
         accordance with the laws of the State of Missouri.

         Immediately upon a party hereto giving written notice of its desire to
         arbitrate hereunder, Delphi agrees upon request to provide the SIG
         Optionholders with access to the books and records of SIG which
         reasonably relate to the Delphi Determinations (including, without
         limitation, examination rights and the right to make abstracts or
         copies from such books and records) during the normal business hours of
         SIG.

         Each party shall pay the fees and expenses of the original arbitrator
         that it appointed (or in the case of the second party, the arbitrator
         appointed on its behalf if it should fail to appoint its own
         arbitrator). The fees and expenses of the third arbitrator and all
         other expenses of the arbitrators shall be borne by Delphi, on one
         hand, and the SIG Optionholders, on the other hand, equally. Each party
         shall bear the expense of its own counsel and the preparation and
         presentation of proof or supportive documentation.

<PAGE>

                                                                    EXHIBIT 10.5

                                    FORMAT OF
                       SIG HOLDINGS, INC. INCOME STATEMENT

<TABLE>
<CAPTION>
                                                                                 THREE YEAR                              FIVE YEAR
                                             2003         2004          2005     CUMULATIVE       2006         2007      CUMULATIVE
                                             ----         ----          ----     ----------       ----         ----      ----------
<S>                                       <C>          <C>          <C>          <C>           <C>         <C>          <C>
GROSS PREMIUMS WRITTEN

NET PREMIUMS WRITTEN

PREMIUMS EARNED

OTHER INCOME

LOSSES AND LAE INCURRED

OTHER INSURANCE EXPENSES

AMORTIZATION OF DAC - COMMISSIONS

OPERATING EXPENSES

SNCC EMPLOYEE OPTION EXPENSES

     UNDERWRITING INCOME

INVESTMENT INCOME

     LESS: INVESTMENT EXPENSES            $ 3,926,000  $ 4,141,450  $ 4,367,673  $ 12,435,123  $4,605,206  $ 4,854,616  $ 21,894,945

INTEREST ON LONG-TERM DEBT                $   269,622

POSITIVE OR NEGATIVE ADJUSTMENT FOR
     AGGREGATE OF EXCLUDED ITEMS

     OPERATING INCOME BEFORE FIT

     OPERATING INCOME BEFORE FIT,
        EXCLUDING
     CUMULATIVE EFFECT OF POST-1/1/03
        ACCOUNTING CHANGES
     AND EXTRAORDINARY ITEMS

     PRE-TAX OPERATING INCOME GOAL                                               $216,700,000                           $429,085,000

     OVER (UNDER) INCOME GOAL
</TABLE>

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