Document:

Service Agreement Amendment

     Agreement effective July 1, 2000, by and between Penn Independent
Corporation, 420 S. York Road, Hatboro, Pennsylvania, 19040 ("PIC") and
Penn-America Group, Inc., 420 S. York Road, Hatboro, Pennsylvania, 19040
("PAGI").

     WHEREAS, the parties hereto are parties to a Service Agreement dated August
20, 1993, as most recently amended effective January 1, 2000 (the "Service
Agreement"); and,

     WHEREAS, the Service Agreement currently provides for the payment by PAGI
to PIC of a monthly expense estimate, which estimate consists of PAGI's share of
(a) telephone, insurance and building rental; and, (b) expenses for the salaries
of Irvin Saltzman, Human Resources and office services and facilities management
expenses; and,

     WHEREAS, the parties to this Amended Service Agreement desire to clarify
that the monthly expense estimate in the Service Agreement refers to PAGI's
share of the telephone, insurance, building rental, facilities management
expenses and salaries of Irvin Saltzman, Human Resources and Office Services
personnel in connection with their services for PAGI; and,

     WHEREAS, the parties to this Amended Service Agreement desire to confirm
the amount of the monthly expense estimate owed by PAGI to PIC effective July 1,
2000 through December 31, 2000;

     NOW, THEREFORE, in consideration of the foregoing, the parties, intending
to be legally bound, agree that effective July 1, 2000 through December 31,
2000, PAGI will pay to PIC $16,700 as a monthly expense estimate, which estimate
constitutes PAGI's share of monthly expenses for the telephone, insurance,
building rental, facilities management expenses and salaries of Irvin Saltzman,
Human Resources, and Office Services personnel.

     IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first above written.

PENN INDEPENDENT CORPORATION           PENN-AMERICA GROUP, INC.

BY: /s/ Jason M. Waksman                BY: /s/ Garland P. Pezzuolo
   --------------------------              -----------------------------
   V.P. Finance & CFO                      Secretary & General CounselRosemary R. Ferrero                                   Direct Dial:  215/443-3612
Vice President and Chief Financial Officer            Fax:          215/443-3603

                                  June 2, 2000

Via Certified Mail,
Returned Receipt Requested

Mr. Carl J. Domino
C/o Northern Trust Quantitative Advisors, Inc.
Northern Trust Value Investors
580 Village Boulevard, Suite 225
West Palm Beach, Fla.  33409

RE:      Investment Advisory Agreement dated September 1, 1997

Dear Carl:

Pursuant to paragraph 6 of the Investment Advisory Agreement ("the Agreement")
dated September 1, 1997, between and among Penn-America Insurance Company,
Penn-Star Insurance Company (hereinafter collectively referred to as
"Penn-America") and Northern Trust Quantitative Advisors (pursuant to assignment
dated April 7, 2000), this letter constitutes written notice that Penn-America
hereby terminates the Agreement effective July 1, 2000.

Fees for services rendered through June 30, 2000, shall be generated pursuant to
paragraph 6 and Addendum C.

Should you have any questions, please feel free to give me a call.

<PAGE>
PENN-AMERICA INSURANCE COMPANY
March 26, 2001
Page 2

Thank you for your years of service.

Sincerely,

/s/ Rosemary R. Ferrero
------------------------------
VP and Chief Financial Officer
RRF:gpp

Bcc:  Robert LearGarland P. Pezzuolo                          Direct Dial Number:  (215) 443-3649
Secretary & General Counsel                  Direct Fax Number:   (215) 443-3603

                                November 13, 2000

Via Fax Transmittal

Gerard T. Lynch, President
General Re - New England Asset Management, Inc.
Pond View Corporate Center
76 Batterson Park Road
Farmington, CT  06032

RE:      Additional Assets for Management with NEAM

Dear Gerry:

You will by now have received a copy of the November 7th letter that Jim Mack
forwarded to you in connection with the transfer of management of certain
Preferred Stock and U.S. Treasury Bills from Madison Monroe, Inc. to NEAM.

I just wanted to confirm with you that the annual fee to which NEAM will be
entitled for the management of these assets will be as follows:

 .05% of the market value of the U.S. Treasury Bills, currently valued at approx.
                                  $10,000,000
                                       and
 .05% of the market value of the Preferred Stock, currently valued at approx.
                                   $17,700,000

If our understanding of the additional annual fees to which you will be entitled
is incorrect, please let me know. Otherwise, we will assume this fee will go
into effect December 1, 2000.

Your signature on the line provided can serve as confirmation of our
understanding, and your acceptance of the management of these additional assets
pursuant to Section 1 of the Investment Management Agreement.

<PAGE>
PENN-AMERICA INSURANCE COMPANY
March 26, 2001
Page 2

I appreciate your time and attention to this matter. Please give me a call with
any questions. Otherwise, I look forward to receiving a signed copy of this
letter from you.

Sincerely,

/s/ Garland P. Pezzuolo
Garland P. Pezzuolo

GPP:s
Cc:  Joe Morris, Sr. Vice President and CFO
     Jim Mack, Vice President, Treasurer and Controller

ACCEPTED:

By: /s/ Gerry Lynch                         Date:  12/20/00
   ------------------------------------           ------------------------------
   New England Asset Management, Inc.AMENDMENT TO INVESTMENT MANAGEMENT AGREEMENT

     This Amendment to the Investment Management Agreement, dated this 2nd day
of August, 2000 (the "Amendment"), is made between Penn-America Insurance
Company, a Pennsylvania corporation ("Client"), and Madison Monroe, Inc., a
Pennsylvania corporation ("MMI").

                                    RECITALS

     WHEREAS, Client and MMI are parties to an Investment Management Agreement
dated February 25, 1999 ("Agreement"), providing for the terms and conditions
relative to MMI's accounting and investment of certain of Client's assets placed
in a separate custodial account with PNC Bank, N.A., as custodian ("Custodian").

     WHEREAS, Client and MMI desire to amend the Agreement to reflect new
effective dates, the addition of certain assets for management by MMI and an
alternative fee schedule.

                             STATEMENT OF AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

                                   AMENDMENTS

     I.   The "Effective Date" of the Agreement is amended to be from February
          25, 1999 through February 25, 2002;

     II.  Paragraph 15 of the Agreement is amended to read as follows:

          "15. Term of Agreement. The term of this Agreement shall commence on
          February 25, 1999 and shall terminate automatically, unless otherwise
          noted below, on February 25, 2002. Either party may terminate this
          Agreement at will before February 25, 2002, in accordance with the
          written notice of termination required by paragraph 8 hereof. If this
          Agreement is terminated by the Client, the Client shall, prior to the
          effective date of the termination, provide MMI with written
          instructions as to the liquidation or settlement of the Account, which
          instructions may, at Client's option, limit the discretion of MMI to
          enter into further transactions after the date such instructions are
          first received. MMI agrees to be bound by such instructions after
          receipt thereof."

<PAGE>
     III. Paragraph I of Appendix B, entitled "Administrative Procedures", is
          amended to read as follows:

     " I. ACCOUNT ASSETS: Penn-America Insurance Company (hereinafter "Client")
     has deposited the following securities, cash and other assets with the
     Custodian identified below to be managed by Madison Monroe, Inc.
     (hereinafter "MMI") under the Agreement attached hereto (the "Agreement")
     and of which this Appendix is a part:

    U.S. Treasury Bills, representing approximately $10,000,000 as of August
                                    2, 2000;
      Preferred Stock, valued at approximately $17,713,688 as of August 2,
                2000, as set forth on the attached Exhibit `1'."

     IV.  The first full paragraph of Appendix C, entitled "Investment Plan of
          Penn-America Insurance Company for Madison Monroe, Inc.", is hereby
          amended to read:

          "The Board of Directors of PENN-AMERICA INSURANCE COMPANY (the
          "Company") authorizes the Company's officers to engage the services of
          Madison Monroe, Inc. ("MMI") to manage a portion of the Company's
          investment portfolio. The portfolio consists of fixed income
          obligations, preferred securities and cash equivalents."

     All other provisions in Appendix C remain the same.

     IV.  Exhibit "1", attached hereto, is attached as "Exhibit 1" to amended
          Appendix B.

     V.   Appendix A, entitled "MMI Fee Schedule", is amended to read as
          follows:

                                   "APPENDIX A
                                MMI Fee Schedule

     The sum of $19,209.14, representing the Management Fee to which MMI is
     entitled for its services under the attached Agreement (and as calculated
     on the attached Schedule `1'), shall be paid by Client to MMI at an annual
     rate of 0.03296%, over 36 months, as set forth on the attached Schedule
     `2'.

     The monthly fees to which MMI is entitled shall be paid quarterly in
     arrears based upon the fee invoicing and payment schedule in paragraph 6."

<PAGE>
     VI.  Schedules 1 and 2, attached hereto, are attached as "Schedules 1 and
          2" to amended Appendix A.

     VII. The name and address to which Client and/or the Custodian is to mail
          notice to MMI, as set forth at paragraph 16 of the Agreement, entitled
          "Notices", is hereby amended to read:

     "Madison Monroe, Inc. (Attn: Mr. Ted Ginsberg)
     1250 Germantown Pike (Suite 105)
     Plymouth Meeting, PA 19462".

     All other provisions in paragraph 16 remain the same.

                                  MISCELLANEOUS

     From and after the effective date of the amendments set forth above, all
references to the Agreement, unless otherwise specifically provided, shall be
references to the Agreement as amended by this Amendment and as may be further
amended, modified, restated or supplemented from time to time. This Amendment is
limited as specified and shall not constitute or be deemed to constitute an
amendment, modification or waiver of any provision of the Agreement except as
expressly set forth herein. Except as expressly amended hereby, the Agreement
shall remain in full force and effect in accordance with its terms.

     This Amendment shall be governed by, and construed and enforced in
accordance with, the laws of the State of Pennsylvania.

     To the extent any provision of this Amendment is prohibited by or invalid
under the applicable law of any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity and only in any
such jurisdiction, without prohibiting or invalidating such provision in any
other jurisdiction or the remaining provisions of this Amendment in any
jurisdiction.

     This Amendment shall be binding upon, inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto.

<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers as of the date first above written.

MADISON MONROE INC.                    PENN-AMERICA INS. CO.

By: /s/ Ted C. Ginsberg                By: /s/ Garland P. Pezzuolo
   -----------------------------          -------------------------------

Title: President                       Title: Secretary & General Counsel
      --------------------------              ----------------------------

       Receipt of a copy of this Amendment acknowledged by the Custodian:

                                              PNC BANK, N.A.

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

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

                                              Date:
                                                   ----------------------

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