Document:

EXHIBIT 10.32

                                                                  EXECUTION COPY

                            STOCK PURCHASE AGREEMENT

                                     BETWEEN

                   THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

                                       AND

                       EVEREST REINSURANCE HOLDINGS, INC.

                        --------------------------------
                          DATED AS OF FEBRUARY 24, 2000
                         ------------------------------

                              SALE OF COMMON STOCK

                                       OF

                           GIBRALTAR CASUALTY COMPANY

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                                TABLE OF CONTENTS

Section                                                                    Page
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ARTICLE I
         DEFINITION OF TERMS

1.1      Definitions .........................................................1

ARTICLE II
         PURCHASE AND SALE OF SHARES

2.1      Purchase of Shares ..................................................5
2.2      Purchase Consideration ..............................................5
2.3      Time and Place of Closing ...........................................5
2.4      Transactions to Be Effected at Closing ..............................6

ARTICLE III
         REPRESENTATIONS AND WARRANTIES OF THE SELLER

3.1      Due Incorporation and Authority .....................................6
3.2      Outstanding Capital Stock, Options and Other Rights .................7
3.3      Transfer of the Shares ..............................................7
3.4      Organization and Qualification of Gibraltar .........................7
3.5      No Violation; Consents ..............................................7
3.6      Financial Statements ................................................8
3.7      Statutory Statements ................................................8
3.8      Assets ..............................................................9
3.9      Investments .........................................................9
3.10     Absence of Certain Changes and Events Since December 31, 1999 .......9
3.11     Liabilities ........................................................10
3.12     Insurance Reserves .................................................11
3.13     Judgments, Decrees and Orders in Restraint of Business .............11
3.14     Litigation and Proceedings .........................................11
3.15     Permits, Licenses and Franchises ...................................12
3.16     Relationships With Affiliates, Officers and Directors ..............12
3.17     Compliance with Applicable Law .....................................12
3.18     Employee Benefit Plans .............................................12
3.19     Intellectual Property ..............................................13
3.20     Governmental Consents ..............................................14
3.21     Contracts and Binding Commitments ..................................14

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Section                                                                    Page
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3.22     Insurance and Reinsurance ..........................................15
3.23     Operations Insurance ...............................................16
3.24     Taxes ..............................................................16
3.25     Accounts with Financial Institutions ...............................18
3.26     Broker's, Finder's or Similar Fees .................................19
3.27     Employees ..........................................................19
3.28     Actions Taken Prior to December 31, 1999 ...........................19
3.29     Dispute Resolution .................................................19
3.30     GAAP Book Value ....................................................19
3.31     Information Supplied ...............................................19
3.32     Accuracy of Statements .............................................19

ARTICLE IV
         REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

4.1      Due Incorporation and Authority ....................................20
4.2      No Violation .......................................................20
4.3      Consents ...........................................................21
4.4      Financing ..........................................................21
4.5      Broker's, Finder's or Similar Fees .................................21
4.6      Purchase for Investment ............................................21
4.7      Information Supplied ...............................................21
4.8      Indemnification ....................................................21

ARTICLE V
         COVENANTS OF THE SELLER PENDING THE CLOSING

5.1      Operations in the Ordinary Course ..................................22
5.2      Intentionally Omitted ..............................................22
5.3      Restrictions .......................................................22
5.4      Investment Portfolio ...............................................24
5.5      Investigation by the Purchaser .....................................24
5.6      Financial Statements ...............................................25
5.7      Regulatory Filings and Compliance ..................................25
5.8      Intercompany Accounts; Surplus Notes ...............................26
5.9      Tax Matters ........................................................26
5.10     Investment Income ..................................................26
5.11     Purchase of Shares .................................................26
5.12     Gibraltar Marks License ............................................26

                                      -ii-
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Section                                                                    Page
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ARTICLE VI
         COVENANTS OF THE PURCHASER PENDING THE CLOSING

6.1      Regulatory and Other Consents ......................................27
6.2      Confidential Information Memorandum ................................27
6.3      Release from Certain Obligations ...................................27

ARTICLE VII
         COVENANTS AND AGREEMENTS

7.1      Confidentiality; Return of Documents ...............................28
7.2      Employee Benefit Plans .............................................28
7.3      The Seller's Access to Records .....................................29
7.4      Taxes ..............................................................29
7.5      Commercial Reasonableness ..........................................34
7.6      Termination of Agreements ..........................................35
7.7      Use of Gibraltar Marks .............................................35

ARTICLE VIII
         SURVIVAL OF REPRESENTATIONS AND WARRANTIES

8.1      Survival of Covenants, Agreements, Representations
          or Warranties .....................................................35

ARTICLE IX
         JOINT CONDITIONS TO THE OBLIGATIONS OF THE PARTIES TO CLOSE

9.1      Insurance Regulatory Approvals .....................................36
9.2      Regulatory Consents ................................................36
9.3      No Proceedings .....................................................36
9.4      MUF Agreement ......................................................36
9.5      Additional Stop-Loss Coverage ......................................36

ARTICLE X
         CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE

10.1     Covenants ..........................................................37
10.2     Representations and Warranties of the Seller .......................37
10.3     Certificates .......................................................37
10.4     Other Approvals ....................................................37
10.5     Other Consents .....................................................37

                                     -iii-
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Section                                                                    Page
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10.6     Resignation of Directors and Officers ..............................37
10.7     No Material Adverse Change .........................................37

ARTICLE XI
         CONDITIONS TO THE OBLIGATIONS OF THE SELLER TO CLOSE

11.1     Covenants ..........................................................38
11.2     Representations and Warranties of the Purchaser ....................38
11.3     Certificates .......................................................38

ARTICLE XII
         INDEMNIFICATION

12.1     Indemnification by the Seller ......................................38

ARTICLE XIII
         TERMINATION, AMENDMENT AND WAIVER

13.1     Termination ........................................................42
13.2     Effect of Termination ..............................................42

ARTICLE XIV
         MISCELLANEOUS

14.1     Amendment ..........................................................43
14.2     Extension; Waiver ..................................................43
14.3     Notices ............................................................43
14.4     Interpretation .....................................................44
14.5     Governing Law ......................................................44
14.6     Assignment; Binding Effect .........................................44
14.7     Counterparts .......................................................44
14.8     Entire Agreement; Third Party Beneficiaries ........................45
14.9     No Waiver ..........................................................45
14.10    Construction .......................................................45
14.11    Fees and Expenses ..................................................45

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                                    EXHIBITS

Exhibit A           Form of Opinion of Counsel to the Seller
Exhibit B           Form of Opinion of Counsel to the Purchaser
Exhibit C           Form of MUF Agreement
Exhibit D           Form of Additional Stop-Loss Coverage Agreement

                             SCHEDULES

Schedule 3.5        Consents
Schedule 3.7        Statutory Statements
Schedule 3.9        Liens on the Investments of Gibraltar
Schedule 3.10       Changes and Events since December 31, 1999
Schedule 3.11       Liabilities of Gibraltar which under GAAP are required to be
                     disclosed
Schedule 3.12       Pending or Threatened Insurance Claims or Assessments
Schedule 3.13       Judgments, Decrees and Orders in Restraint of Business
Schedule 3.14       Material   Actions,    Suits,   Arbitrations    or    Legal,
                     Administrative or Other Proceedings
Schedule 3.15       Jurisdiction   of   Incorporation   and   Jurisdictions   of
                     Qualification of Gibraltar
Schedule 3.16       Material  Contracts with Affiliates, Officers, Directors and
                     Interested Parties
Schedule 3.17       Compliance with Applicable Law
Schedule 3.20       Governmental Consents
Schedule 3.21       Contracts,  Agreements or Arrangements to which Gibraltar is
                     a party or by which  Gibraltar's  Assets  or  Property  are
                     bound
Schedule 3.22       Contractual    Reinsurance,    Insurance   and   Commutation
                     Agreements
Schedule 3.23       Liability,  Property  and  Casualty,  Workers  Compensation,
                     Directors and Officers Liability,  Surety  Bonds,  Key  Man
                     Life Insurance and Other Insurance Contracts of Gibraltar
Schedule 3.24       Taxes
Schedule 3.25       Safe  Deposit  Boxes,  Bank  Accounts  and Other Deposits of
                     Gibraltar
Schedule 3.27       Employee Titles; Aggregate Annual Compensation and Bonuses
Schedule 5.1        Exceptions to Operations in the Ordinary Course
Schedule 5.3        Restrictions on Gibraltar
Schedule 6.3        Indemnification and Guarantee Obligations
Schedule 7.6        Agreements and Arrangements to be Terminated

                                      -v-
<PAGE>
         STOCK   PURCHASE   AGREEMENT   dated  as  of  February  24,  2000  (the
"AGREEMENT"),  among THE  PRUDENTIAL  INSURANCE  COMPANY  OF  AMERICA,  a mutual
insurance  company  domiciled  in the State of New Jersey  (the  "Seller"),  and
EVEREST REINSURANCE  HOLDINGS,  INC., a corporation organized and existing under
the laws of the State of Delaware (the "Purchaser").

                               W I T N E S S E T H

         WHEREAS  the  Seller is the sole  owner of the  Shares  (as  defined in
Section 1) of Gibraltar Casualty Company ("GIBRALTAR"),  which Shares constitute
all the issued and outstanding shares of Gibraltar's capital stock; and

         WHEREAS the  Purchaser  desires to purchase the Shares from the Seller,
and the Seller desires to sell the Shares to the  Purchaser,  upon the terms and
subject to the conditions set forth herein.

         NOW,   THEREFORE,   in   consideration   of   the   mutual   covenants,
representations,  warranties and agreements  contained herein and other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  and intending to be legally  bound,  the parties  hereto agree as
follows:

                                    ARTICLE I
                              DEFINITION OF TERMS

         1.1   DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:

         "ADDITIONAL  STOP-LOSS  AGREEMENT" shall have the meaning  specified in
Section 9.5.

         "AFFILIATE"  shall have the meaning  specified  in Rule 12b-2 under the
Exchange Act.

         "ANNUAL STATEMENTS" shall have the meaning specified in Section 3.7.

         "BUSINESS"  of any Person  means all the  assets,  property,  business,
business operations, goodwill, practices, contract rights and privileges of such
Person.

         "BUSINESS  DAY" means any day other than a Saturday,  a Sunday or a day
on which  commercial  banks in New York City or New  Jersey  are  authorized  or
required by law to close.

         "CLOSING" shall have the meaning specified in Section 2.3.

         "CLOSING DATE" shall have the meaning specified in Section 2.3.

         "CODE" means the Internal Revenue Code of 1986, as amended.

<PAGE>
         "COMMON STOCK" shall have the meaning specified in Section 3.2.

         "CONFIDENTIALITY    AGREEMENTS"    means,    collectively,    (i)   the
Confidentiality  Agreement  dated  September 15, 1998 between the Seller and the
Purchaser and (ii) the Confidentiality  Agreement dated May 26, 1999 between the
Seller and Everest Re.

         "CONSOLIDATED  GROUP" means the affiliated group (within the meaning of
the Code) of Persons of which the Seller and Gibraltar are members.

         "CONTRACTS" shall have the meaning specified in Section 3.21.

         "DECEMBER  31  BALANCE  SHEET"  means the  unaudited  balance  sheet of
Gibraltar as of December 31, 1999, prepared in conformity with GAAP.

         "EMPLOYEE,"  means,  as  Gibraltar  has no common  law  employees,  all
individuals  who are  employed  by the Seller and who are set forth in  Schedule
3.27.

         "EMPLOYEE  BENEFIT  PLANS" shall have the meaning  specified in Section
3.18(a)(1).

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended.

         "ERISA   AFFILIATE"  means  any  corporation   which  is  a  member  of
Gibraltar's controlled group of corporations,  or any trade or business (whether
or not  incorporated)  which is under common  control with Gibraltar or would be
considered a single employer with Gibraltar  pursuant to Section 414 (b), (c) or
(m) of the Code and the regulations thereunder.

         "ERISA  AFFILIATE  PLAN"  shall have the meaning  specified  in Section
3.18(b)(1).

         "EVEREST RE" means Everest Reinsurance Company, a corporation organized
and  existing  under  the  laws of the  State  of  Delaware  and a  wholly-owned
subsidiary of the Purchaser.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "EXCLUDED TAXES" shall have the meaning specified in Section 7.4(a).

         "FORMER   EMPLOYEE"   means  all  Employees  who  are  not  Transferred
Employees.

         "GAAP" means the  accounting  principles  generally used and recognized
from time to time within the United States which have  substantial  support from
authoritative  agencies  or  bodies,   including  the  Securities  and  Exchange
Commission,  the  American  Institute  of  Certified  Public  Accountants,   the
Financial  Accounting  Standards  Board and  general  industry  practice,  which
principles  have been  applied in a  consistent  manner  throughout  the periods
involved.

                                      -2-
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         "GAAP  BOOK   VALUE"  on  any  date  means  the  amount  of  the  total
stockholders'  equity of Gibraltar  as shown on a balance  sheet as of such date
prepared in accordance with GAAP consistently applied.

         "GAAP  FINANCIALS"  shall have the meaning  specified  in Section  3.6.

         "GIBRALTAR" shall have the meaning specified in the recitals.

         "GIBRALTAR MARKS" shall have the meaning specified in Section 3.19.

         "GIBRALTAR  MARKS LICENSE" shall have the meaning  specified in Section
3.19.

         "GOVERNING  INSTRUMENTS" means the memorandum,  articles or certificate
of  incorporation  or association and by-laws,  if applicable,  in the case of a
corporation,  the limited liability issuer  agreement,  in the case of a limited
liability issuer, the partnership agreement, in the case of a partnership or the
comparable document or documents in the case of another kind of entity.

         "HSR ACT" means the  Hart-Scott-Rodino  Antitrust  Improvements  Act of
1976, as amended, and the rules and regulations promulgated thereunder.

         "INDEMNIFIED   PERSON"   means  the  Person  or  Persons   entitled  to
indemnification under Article XII.

         "INDEMNIFYING  PERSON" means the Person or Persons obligated to provide
to an Indemnified Person the indemnification under Article XII.

         "INVESTMENT  PORTFOLIO"  means the list  provided  by the Seller to the
Purchaser  setting forth all investments,  including  stocks,  bonds and limited
partnership interests, owned by Gibraltar as of a particular date, the issuer of
the investments, and the amount owned.

         "LIEN" means any lien,  pledge,  mortgage,  security  interest,  lease,
charge, option, right of first refusal, easement, transfer restriction under any
shareholder or similar agreement or any other similar encumbrance.

         "LOSS RESERVES" means all reserves customarily  established by property
and casualty  insurance  companies  under  Statutory  Accounting  Principles for
incurred losses, including case reserves, reserves for incurred but not reported
losses  and  reserves  for  loss   adjustment   expenses,   both  allocated  and
unallocated.

         "LOSSES" shall have the meaning specified in Section 12.1(a).

         "MATERIAL  ADVERSE  EFFECT" with  respect to any Person  hereto means a
material adverse effect on (a) the financial  condition,  results of operations,
cash flows or Business of such Person and its  subsidiaries,  if any, taken as a
whole, or (b) the ability of such Person to perform its  obligations  under this
Agreement.

                                      -3-
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         "MEMORANDUM" shall have the meaning specified in Section 6.2.

         "MUF" means Everest Re's management  underwriting  facility which began
in 1977 and was a  reinsurance  arrangement  pursuant to which  Everest Re ceded
business to a number of insurance and reinsurance companies.

         "MUF AGREEMENT" shall have the meaning specified in Section 9.4.

         "OCCUPANCY  AGREEMENT" means the Occupancy  Agreement between Gibraltar
and The Prudential Service Company dated July 1, 1995.

         "PBGC" means the Pension Benefit Guaranty Corporation.
          ----

         "PERMITTED LIENS" shall have the meaning specified in Section 3.8(a).

         "PERSON" means an individual,  corporation,  partnership,  firm,  joint
venture,  association,  limited liability company,  joint stock company,  trust,
unincorporated  organization,  governmental  or  regulatory  authority  or other
entity.

         "PROPERTY" means the real property and personal property of Gibraltar.

         "PURCHASE PRICE" shall have the meaning specified in Section 2.2.

         "PURCHASER" shall have the meaning specified in the recitals.

         "QUARTERLY  STATEMENTS"  shall have the  meaning  specified  in Section
3.7(a).

         "REQUIRED RESERVE  INCREASES" means the aggregate  increase in the Loss
Reserves of Gibraltar  required under Section 5.10 and the $80,000,000  increase
in the Loss Reserves described in Section 3.28.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SELLER" shall have the meaning specified in the recitals.

         "SERVICE CONTRACT" means the Service Contract between Gibraltar and the
Seller dated May 10, 1990.

         "SHARES" means all the issued and outstanding shares of Common Stock of
Gibraltar.

         "STATE INSURANCE COMMISSIONER" means the Insurance Commissioner of  the
State of Delaware.

         "STATE  INSURANCE  COMMISSION"   means  the  Office  of  the  Insurance
Commissioner of the State of Delaware.

                                      -4-
<PAGE>
         "STATUTORY  ACCOUNTING  PRINCIPLES" means the accounting procedures and
practices  prescribed or permitted from time to time by the National Association
of Insurance  Commissioners  and adopted or promulgated by the State of Delaware
or  the  State  Insurance  Commissioner  and  employed  in a  consistent  manner
throughout the periods involved.

         "STRADDLE PERIOD" means any taxable year or period beginning before and
ending after the Closing Date.

         "SURPLUS NOTES" means the surplus notes issued by Gibraltar and held by
the Seller or one of its subsidiaries (other than Gibraltar).

         "TAX OR TAXES"  means  any  federal,  state,  local,  foreign  or other
income, premium, profits, franchise,  license, sales, use, payroll, withholding,
employment,  wage, occupation,  value added, property (real or personal), excise
or other similar taxes,  fees,  duties,  assessments or withholdings  (including
interest or penalties on such items), imposed by any governmental authority.

         "TAX CLAIM" shall have the meaning specified in Section 12.1(f).

         "TAX PACKAGE" shall have the meaning specified in Section 7.4(c).

         "TAX RETURN" means any return,  report or similar statement required to
be filed with respect to any Tax (including any attached  schedules),  including
any information return, amended return or declaration of estimated Tax.

         "THIRD  PARTY  CLAIM"  shall  have the  meaning  specified  in  Section
12.1(e).

         "TRANSFERRED  EMPLOYEE"  shall have the  meaning  specified  in Section
7.2(a).

         "UNAUDITED  STATUTORY  STATEMENTS"  shall  have  meaning  specified  in
Section 3.7(a).

                                   ARTICLE II
                           PURCHASE AND SALE OF SHARES

         2.1 PURCHASE OF SHARES.  Upon  the  terms and subject to the conditions
contained  in this Agreement,  the Seller agrees to sell,  assign,  transfer and
deliver to the Purchaser,  and the Purchaser agrees to purchase and  accept from
the Seller,  on  the  Closing  Date,  the Shares for the consideration specified
herein.

         2.2  PURCHASE CONSIDERATION.  The purchase  price for the Shares  shall
be  an  amount  in  cash  equal  to $51.8 million (the "Purchase Price"). At the
Closing  (as defined  in  Section 2.3  below),  the  Purchaser  shall pay to the
Seller  by  wire  transfer (to the bank  account of the Seller  specified by the
Seller  in  writing  to  the  Purchaser  at  least one Business Day prior to the
Closing), immediately available funds in an amount equal to the Purchase Price.

                                      -5-
<PAGE>
         2.3  TIME AND PLACE OF CLOSING.  The  consummation  of the purchase and
sale of the Shares and the other transactions contemplated by this  Agreement to
occur simultaneously therewith  (the "Closing")  shall take place at the offices
of Sidley & Austin, 875 Third Avenue, New York, New York, or at such other place
as  may  be mutually agreed upon by the parties. The Closing will occur at 10:00
a.m. New York City time on or before the tenth Business Day  following  the date
on which all the conditions set forth in Articles  IX, X and XI shall  have been
satisfied  or waived,  as may be agreed upon by the parties  hereto,  or at such
other time as may be agreed upon by the parties hereto. The time and date of the
Closing are referred to herein as the "Closing Date".

         2.4  TRANSACTIONS TO BE EFFECTED AT CLOSING.  At the Closing:

         (a)  The Seller shall  deliver to the  Purchaser  free and clear of all
Liens (i)  the  certificates  representing  the  Shares,  properly  endorsed  in
blank  or  accompanied  by  stock powers or other  instruments  of transfer duly
executed in  blank, and accompanied by all requisite stock transfer  stamps,  if
any, (ii) an opinion of counsel, substantially to the effect provided in Exhibit
A, (iii)  good standing certificates, incumbency certificates and all such other
documents as the  Purchaser  and its counsel may  reasonably  request;  and (iv)
all other documents and instruments required by this  Agreement  to be delivered
by the Seller at the Closing.

         (b)  The Purchaser shall pay to the Seller the Purchase Price and shall
deliver to the Seller (i) good standing  certificates,  incumbency  certificates
and  all  such  other  documents  as  the  Seller and its counsel may reasonably
request;  (ii) an opinion of counsel  substantially  to the effect  provided  in
Exhibit B;  and  (iii)  all other  documents  and  instruments  required by this
Agreement to be delivered by the Purchaser at the Closing.

         (c)  The Gibraltar Marks  License  shall be  terminated  and the Seller
and the  Purchaser  shall cause Gibraltar to file with the Secretary of State of
the State  of  Delaware,  on  the Closing  Date, a  certificate  of amendment to
Gibraltar's Governing Instruments that changes the name of Gibraltar to any name
designated  by the Purchaser,  as long as such name is not  confusingly  similar
to the word "Gibraltar", "Prudential" or any other "Pru" formative mark.

                                   ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE SELLER

         REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents and
warrants to the Purchaser as follows:

         3.1  DUE INCORPORATION AND AUTHORITY.  The Seller is a mutual insurance
company  domiciled,  validly existing and in good standing under the laws of the
State of  New  Jersey  and  has  all  requisite  corporate  power  and authority
to  execute  and  deliver  this  Agreement  and each  other  agreement  required
to  be  executed  and  delivered  by  the  Seller  pursuant  hereto,  to perform
its   obligations   hereunder   and    thereunder   and   to   consummate    the
transactions   contemplated   hereby  and   thereby.   The  execution,  delivery
and   performance   by   the  Seller   of  this   Agreement   and   each   other

                                      -6-
<PAGE>
agreement  required to be executed and delivered by the Seller pursuant  hereto,
and the consummation by the Seller of the transactions  contemplated  hereby and
thereby,  have been  duly and  validly  authorized  by all  necessary  corporate
action,  and no  other  corporate  proceedings  on the  part of the  Seller  are
necessary to authorize the execution,  delivery and performance by the Seller of
this Agreement and each of the other agreements  contemplated by this Agreement,
or the consummation of the transactions  contemplated  hereby and thereby.  This
Agreement  has been duly and validly  executed  and  delivered by the Seller and
constitutes a legal,  valid and binding  obligation  of the Seller,  enforceable
against the Seller in accordance with its terms,  except as such enforcement may
be limited by bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally and except as rights to specific  enforcement may be
limited by the  application  of equitable  principles  (whether  such  equitable
principles are applied in a proceeding at law or in equity).

         (b)  Gibraltar is a corporation duly organized, validly existing and in
good  standing  under  the  laws  of the State of Delaware and has all requisite
power and  authority  to own, lease and operate its Business and to carry on its
Business  as  now  conducted.  Gibraltar  is  duly  licensed  or qualified to do
business in each jurisdiction in which the nature of the  Business conducted  by
it or the  character  of the  assets  owned by it makes  such  qualification  or
licensing  necessary,  except  where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a Material Adverse Effect.

         3.2  OUTSTANDING  CAPITAL  STOCK,  OPTIONS  AND  OTHER   RIGHTS.    The
authorized capital stock of Gibraltar  consists solely of 2,000 shares of common
stock, $5,000 par value per share, all of which are issued and outstanding  (the
"COMMON STOCK").   The  Shares constitute all the issued and outstanding capital
stock of  Gibraltar.  All  the  outstanding  Shares  are  owned  of  record  and
beneficially by the Seller  free and clear of all Liens. All the Shares are duly
authorized, validly issued,  fully  paid and  nonassessable.  Gibraltar does not
beneficially own any interest  in  any  Person  except  through  its  Investment
Portfolio  made in the  ordinary  course  of  business.  There is no outstanding
right, subscription,  warrant, call,  preemptive right,  option or other similar
agreement to purchase or otherwise to receive  from the Seller or Gibraltar  any
of the  outstanding,  authorized  but unissued,  unauthorized or treasury shares
of the capital stock of Gibraltar, and there is no outstanding  security  of any
kind  convertible  into such  capital stock.

         3.3  TRANSFER OF THE SHARES.  The  Seller  has and on the Closing  Date
shall have full power  and  authority to convey, transfer and sell the Shares to
the Purchaser as contemplated  hereby. Upon the Closing as contemplated  hereby,
the Purchaser  shall have good and valid title to the Shares,  free and clear of
all Liens (except as may be or have been created or permitted by the Purchaser).

         3.4  ORGANIZATION  AND  QUALIFICATION  OF  GIBRALTAR.   The  Seller has
delivered to  the  Purchaser  true and complete copies of Gibraltar's  Governing
Instruments as  in effect on the date  hereof  and such  instruments  will be in
full force and effect on the Closing Date.

         3.5  NO VIOLATION;  CONSENTS.  Except  as  set  forth in Schedule  3.5,
neither the execution, delivery and  performance of this Agreement by the Seller
or  of  each  other  agreement  required  to  be  executed and  delivered by the
Seller  pursuant  hereto,  nor  the  sale  of   the   Shares  pursuant  to  this
Agreement  nor  the consummation by the Seller of the transactions  contemplated
hereby   or   thereby,   will,   with   or  without  the  giving  of  notice  or
the   passage   of    time,   or   both,   (i)   violate   any    provision   of

                                      -7-
<PAGE>
the Governing Instruments of the Seller; (ii) violate or result in any breach of
or  constitute  a  default  under,  or give  rise to a right of  termination  or
cancellation of, or accelerate the performance  required by any terms of, as the
case  may  be,  any  contract,   agreement,   lease,  license,  mortgage,  note,
reinsurance agreement,  franchise,  permit or instrument to which Gibraltar is a
party or by which any of its assets are bound,  or result in the creation of any
Lien  upon  any of the  Property  owned by  Gibraltar;  (iii)  violate  any law,
regulation,   judgment,   order,  writ,  injunction  or  decree  of  any  court,
governmental  body  (domestic  or  foreign),  or  administrative  agency  of any
jurisdiction  applicable to the Seller or Gibraltar; or (iv) require the consent
or approval of any third  parties;  other than,  in the case of (ii),  (iii) and
(iv),  such  violations,   breaches,  defaults,   terminations,   cancellations,
accelerations, consents, approvals and Liens, the failure to obtain which or the
creation of which would not, in the aggregate,  reasonably be expected to have a
Material Adverse Effect on Gibraltar.

         3.6  FINANCIAL STATEMENTS. The Seller has  delivered  to the  Purchaser
the unaudited balance sheets as of December 31,  1999 and  December  31, 1998 of
Gibraltar,  and the related statements of income,  stockholders' equity and cash
flows for the two years then ended, including the related notes thereon, each of
which  presents  fairly in all  material  respects  the  financial  position  of
Gibraltar,  as of  December  31, 1999 and  December  31, 1998 and its results of
operations  and cash flows for the years then  ended,  in  conformity  with GAAP
(except  as  may be  indicated  therein  or in the  notes  thereto)  (the  "GAAP
FINANCIALS"),  except that no representation or warranty is made with respect to
any Loss Reserves in this Section 3.6.

         3.7 STATUTORY STATEMENTS. (a) The Seller has delivered to the Purchaser
complete  and  correct  copies of (i) the  Annual  Statements  of  Gibraltar  to
the  State  Insurance  Commissioner  for the  years ended  December 31, 1999 and
December  31,  1998,   together   with  all  exhibits  and   schedules   thereto
(the "ANNUAL STATEMENTS"), and (ii) the unaudited statutory financial statements
of Gibraltar for the years ended  December 31, 1999 and  December  31, 1998 (the
"UNAUDITED STATUTORY  STATEMENTS").  The Seller has furnished,  or will  furnish
to the  Purchaser, as soon as practicable after their preparation,  complete and
correct   copies  of  the  Quarterly   Statements  of  Gibraltar  to  the  State
Insurance  Commissioner  for  periods  subsequent  to  December 31, 1999 and all
exhibits  and  schedules  thereto  (the  "QUARTERLY  STATEMENTS").   The  Annual
Statements, Unaudited  Statutory  Statements  and the  Quarterly  Statements  of
Gibraltar  have   been   prepared  in   accordance   with  Statutory  Accounting
Principles  throughout  the periods involved  and in  accordance  with the books
and records of  Gibraltar,  except  as  expressly  set forth or disclosed in the
notes,  exhibits or schedules  thereto.  Except as set forth in Schedule 3.7 and
except that no  representation  or  warranty  is  made  with respect to any Loss
Reserves  in  this  Section 3.7, each  of  the  statutory  financial  statements
contained in the Annual Statements,  the  Unaudited  Statutory   Statements  and
the  Quarterly   Statements  fairly  and accurately  presents or will fairly and
accurately  present, as the case may be, in all material  respects,  the assets,
liabilities  and capital and surplus of  Gibraltar  as of the dates  thereof  in
accordance  with  Statutory  Accounting Principles, subject, in  the case of the
Quarterly Statements, to normal year-end  adjustments  and any other adjustments
described therein.

         (b)  The  Seller  has  delivered  to the Purchaser complete and correct
copies of all reports of examination and market conduct  examinations  issued by
any insurance  regulatory  commissions,  agencies or authorities with respect to
Gibraltar since January 1, 1996 and all written  responses made by the Seller or
Gibraltar with respect to any written comments since January 1,  1998,  from any

                                      -8-
<PAGE>
insurance regulatory commissions,  agencies or authorities concerning the Annual
Statements, the Unaudited Statutory Statements, Quarterly Statements, reports of
examination and market conduct examinations.

         (c)  Except  as  set  forth  in  Schedule 3.7, as of December 31, 1999,
Gibraltar  had  no  material  liability,   whether  accrued,   absolute,  fixed,
contingent  or  otherwise,  of  a nature required to be reflected on its balance
sheet prepared in  accordance  with Statutory Accounting Principles which is not
fully and correctly  reflected or reserved  against in the balance sheet forming
a part of the Annual  Statement  of  Gibraltar  for  the year ended December 31,
1999.

         3.8  ASSETS. (a) Gibraltar owns all personal property which it purports
to own, as reflected  on the  December 31 Balance  Sheet and that it acquired in
the normal and ordinary  course of business  since  December 31, 1999 (in either
case other  than  that disposed of in the ordinary course of business), free and
clear of all  Liens  except  for  (i)  Liens  on  the portfolio  investments  of
Gibraltar set forth in Schedule 3.9; (ii) the claims of  materialmen,  carriers,
landlords and like  Persons not yet due, all of which are not  delinquent or are
being  contested  in  good  faith;  (iii)  Liens  securing  Taxes,  assessments,
governmental  charges or levies not yet due, all of which are not yet delinquent
or are being  contested  in  good  faith;  and  (iv) statutory  liens on special
deposit funds held by state regulatory authorities (collectively, the "PERMITTED
LIENS").

         (b)  Gibraltar owns  no real property.  Gibraltar is not a party to any
lease for real property except for the Occupancy Agreement.

         3.9  INVESTMENTS.  Except  as set forth in Schedule 3.9,  Gibraltar has
legal  and  valid  title,  free  and  clear  of  all Liens, to all its portfolio
investments.  The  Seller has delivered an Investment Portfolio to the Purchaser
as  of  December  31,  1999.  Such  Investment  Portfolio  is,  and  each  other
Investment  Portfolio  delivered  by the Seller to the Purchaser shall be, as of
their respective dates, complete and correct in all material respects.

         3.10  ABSENCE  OF  CERTAIN  CHANGES AND EVENTS SINCE DECEMBER 31, 1999.
Except as set forth in Schedule  3.10,  from  December 31, 1999 through the date
hereof,  Gibraltar  has  operated  in  the ordinary course  consistent with past
practice and there has not been:

         (a)  Any change in the business policies of  Gibraltar,  including  the
establishment or adjustment of Loss Reserves or investment or claims  adjustment
policies  and  practices,  or any  change in any  activity  that (i) has had the
effect of  materially  accelerating  the  recording  of accounts  receivable  or
materially  retarding the payment of expenses or  establishing or adjusting Loss
Reserves in  connection  with any  accounts or Business of Gibraltar or (ii) has
had the effect of  materially  altering,  modifying  or  changing  the  historic
financial or accounting  practices or policies of Gibraltar,  including accruals
of and reserves for Tax  liabilities;

         (b)  Any  damage, destruction  or  loss  (whether  or  not  covered  by
insurance)  to any Property of Gibraltar  which could reasonably  be expected to
have a Material  Adverse  Effect on  Gibraltar or its Business;

                                      -9-
<PAGE>
         (c)  Any declaration,  setting  aside  or  payment  of  any dividend or
other  distribution  in respect of any class of capital stock of Gibraltar;

         (d)  Any   employment,   bonus,   incentive  or  deferred  compensation
agreement or  arrangement  between  Gibraltar  or  the  Seller and an Affiliate,
director, officer  or other  employee or  consultant  of Gibraltar or the Seller
principally  with respect to Gibraltar  and/or the  Business of  Gibraltar;

         (e)  Any  indebtedness  incurred by  Gibraltar  for  borrowed  money or
any commitment to borrow money entered into or any guarantee given by Gibraltar;

         (f)  Any amendment to any Governing Instrument of Gibraltar;

         (g)  Any Material Adverse Effect on Gibraltar or its Business;

         (h)  Any change in the employment  terms or conditions or  terminations
of any Employee or any increase in the compensation payable or to become payable
by the Seller to any Employee, other than in the ordinary course consistent with
past practice;

         (i)  The  creation  of  any  Lien,  except  for Permitted Liens, on any
portion of the assets,  properties  or  rights  of  Gibraltar;

         (j)  Any amounts paid in  settlement  or  compromise  of  any  suits or
claims  against  Gibraltar,  other than  insurance claims paid or settled in the
ordinary course of business;

         (k)  Any loans,  advances or capital contributions made by Gibraltar to
any other Person;

         (l)  Any  acquisition or lease of any assets other than in the ordinary
course of business;

         (m)  Any sale, transfer or other disposition of any assets,  properties
or  business of Gibraltar  other than  portfolio  investments  in  the  ordinary
course of business;

         (n)  Any new material contract, agreement or license to which Gibraltar
is a party,  other than in the  ordinary  course of business;

         (o)  Any  amendment,  modification,  alteration  or  termination of any
material  contract,  agreement or license to which  Gibraltar is a party; or

         (p)  Any waiver of any  rights of  material  value or any  cancellation
of any claims,  debts or  accounts  receivable  owing to  Gibraltar  other  than
in the ordinary course of business.

                                      -10-
<PAGE>
         3.11  LIABILITIES. (a) As of the date of this Agreement, Gibraltar  has
no liabilities, whether accrued, absolute,  fixed,  contingent or otherwise (but
excluding  liabilities of a type for which  Gibraltar  carries Loss Reserves and
excluding  liabilities  for Taxes),  of a nature required to be reflected on its
balance sheet prepared in accordance with GAAP other than:

         (i)   liabilities disclosed or provided for in the December 31 Balance
Sheet;

         (ii)  liabilities  incurred  by Gibraltar in the ordinary course of its
Business since December 31, 1999; and

         (iii) liabilities set forth in Schedule 3.11.

         (b)   To the knowledge of Gibraltar,  as of the date of this  Agreement
Gibraltar  has  no  material  liabilities,  whether  accrued,  absolute,  fixed,
contingent or otherwise (but excluding liabilities of a type for which Gibraltar
carries Loss Reserves and excluding liabilities for Taxes), other than:

         (i)   liabilities  disclosed or provided for in the December 31 Balance
Sheet;

         (ii)  liabilities  incurred  by Gibraltar in the ordinary course of its
Business since December 31, 1999; and

         (iii) liabilities set forth in Schedule 3.11.

         3.12  INSURANCE RESERVES.  Notwithstanding  anything  to  the contrary,
expressly  or  implicitly,  contained  in  this Agreement, this Section 3.12 and
Section 3.22 set forth the only representations  or  warranties  by  the  Seller
relating  to Gibraltar's Loss Reserves.

         (a)   Gibraltar's  aggregate  Loss  Reserves  as recorded in its Annual
Statements,   Unaudited  Statutory  Statements  and  Quarterly  Statements  were
determined  in   accordance   with  generally   accepted   actuarial   standards
consistently  applied (except as otherwise noted therein), were fairly stated in
accordance with sound  actuarial  principles  and  met  the  requirements of the
insurance laws of the State of Delaware.

         (b)   Gibraltar's  aggregate  Loss  Reserves  as  recorded  in its GAAP
Financials were determined in accordance with   generally   accepted   actuarial
standards  consistently  applied  (except  as  noted  therein)  and were  fairly
stated in accordance with GAAP.

         (c)   Except for regular  periodic  assessments in the ordinary  course
of business and except as set forth in Schedule  3.12, no claim or assessment is
pending nor, to the knowledge of Gibraltar,  threatened against Gibraltar by any
state  insurance  guaranty  association in connection  with  that  association's
fund relating to insolvent insurers.

                                      -11-
<PAGE>
         3.13  JUDGMENTS, DECREES AND ORDERS IN RESTRAINT OF BUSINESS. Except as
set  forth  in  Schedule  3.13,  Gibraltar  is not a party to or subject  to any
judgment or decree or order entered in any suit or arbitration or any proceeding
(other than  any market conduct  examinations  commenced  after the date hereof)
brought by a governmental agency or by any other Person  enjoining it in respect
of (a) any business  practice,  (b) the  acquisition  of any property or (c) the
conduct of business in any area.

         3.14  LITIGATION AND PROCEEDINGS. Except as set forth in Schedule 3.14,
as  of  the  date  hereof  there  are no actions, suits,  arbitrations or legal,
administrative  or  other  proceedings  pending or (other than those relating to
insurance claims)  threatened  against  or  affecting  Gibraltar,  at law  or in
equity, or before or by any   governmental   department,    commission,   board,
bureau, agency or instrumentality, domestic or foreign, or before any arbitrator
of any kind. Gibraltar  is not subject to any material  judgment,  order,  writ,
injunction, decree or award of any court, arbitration,  governmental department,
commission, bureau, board, agency or instrumentality.

         3.15  PERMITS, LICENSES AND FRANCHISES.  Schedule 3.15  contains a true
and  complete  list,  as  of  the  date  hereof,  of  all jurisdictions in which
Gibraltar is licensed as an insurer or reinsurer and all  jurisdictions in which
Gibraltar is  operating  as  an  insurer  or reinsurer, whether on a licensed or
unlicensed basis, and all  jurisdictions  in which  Gibraltar is qualified as an
eligible surplus lines insurer.  Gibraltar has all material  permits,  licenses,
franchises and  other  authorizations  necessary  to,  and  has  complied in all
material respects with all laws  applicable  to, the conduct of its  Business in
the manner and in the areas in which such Business is presently being conducted,
all such permits,  licenses,  franchises  and  authorizations  are  valid and in
full force and effect  and  Gibraltar is in  compliance in all material respects
with  all  its   obligations  under  such  permits,   licenses,  franchises  and
authorizations.  Gibraltar has not  engaged  in  any activity  which would cause
revocation or suspension of any such  material  permit,  license,  franchise  or
authorization.  No action or proceeding seeking  the  revocation  or  suspension
of any  thereof is pending or, to the knowledge of Gibraltar, threatened. Except
for compliance with periodic renewal procedures and as set forth in Section 9.1,
no approvals or  authorizations are required to permit Gibraltar to continue its
Business,  as presently  conducted,  after  the consummation of the transactions
contemplated hereby.

         3.16  RELATIONSHIPS WITH AFFILIATES, OFFICERS AND DIRECTORS.  Except as
set forth  in  Schedule  3.16,  the Seller has not, and no officer,  director or
Affiliate of  the  Seller  has,  entered into any written  contract or agreement
with Gibraltar that is binding upon Gibraltar  following the Closing, except for
agreements or  contracts  that  are  cancelable  at  will  by  Gibraltar without
penalty.

         3.17  COMPLIANCE WITH APPLICABLE LAW. Gibraltar is in compliance in all
material  respects  with  all   applicable  laws,  rules,  regulations,  orders,
ordinances,  judgments,   decrees,   orders,   writs  and   injunctions  of  all
governmental authorities (Federal, state, local, or foreign) except as disclosed
in Schedule 3.17.  Gibraltar has not received notification from any governmental
authority of any asserted failure to so comply or material deficiency  which has
not been resolved  or  otherwise  settled.  Except for the  stop-loss  agreement
between  Gibraltar  and  Everest  Re, Gibraltar has not written any insurance or
reinsurance  since  1991.  Gibraltar  was an  authorized  insurer,  whether on a
licensed  or  unlicensed  basis,  in  each  state  in which it previously  wrote
insurance for  the  type  of  insurance  it  wrote  in  such  states and met all
statutory  and  regulatory  requirements of all governmental  authorities  which

                                      -12-
<PAGE>
had  jurisdiction  over it to be an  authorized  insurer.  To the  knowledge  of
Gibraltar,  all policy form and rate  filings  required to be made by  Gibraltar
have been made and are up to date,  and all  material  policies  which have been
written  are on forms  approved by the  insurance  regulatory  authority  of the
jurisdiction  where issued or are on forms which comply with applicable laws and
regulations.

         3.18  EMPLOYEE  BENEFIT  PLANS.  (1)  Gibraltar  does  not  sponsor  or
maintain any  separate  or  "stand  alone"  employee  benefit  plan  within  the
meaning of Section 3(3) of ERISA, or any separate or stand alone  retirement  or
deferred   compensation  plan,  incentive   compensation   plan,   stock   plan,
unemployment  compensation plan,  vacation pay,  severance pay, bonus or benefit
arrangement,  insurance or  hospitalization  program or any other fringe benefit
arrangements for any Transferred  Employee or Former Employee,  whether pursuant
to  contract,  arrangement,  custom or informal  understanding,  which does  not
constitute an employee benefit plan  (collectively,  "EMPLOYEE  BENEFIT  PLANS")
and does not  contribute  to  or have any  obligation to contribute to any ERISA
Affiliate Plan (as defined below). Gibraltar has no common law employees.

         (2)   Since January 1, 1995, neither Gibraltar nor any ERISA  Affiliate
has incurred any  withdrawal  liability  with  respect to a  multiemployer  plan
within the meaning of Section 3(37) of ERISA.

         (b)   (1) To  the  extent  applicable  to  any  Employee  Benefit  Plan
sponsored  or  maintained  by  the  Seller or any other ERISA Affiliate  ("ERISA
AFFILIATE PLAN"),  as  of  the Closing Date there will not exist any accumulated
funding deficiency or unpaid required  installment within the meaning of Section
412 of the Code  or  Section  302 of ERISA,  nor has there been  issued a waiver
or variance of the minimum funding standards imposed by the Code with respect to
any such plan, nor  has  any  lien been created under Section 302(f) of ERISA or
412(n) of the Code or security  been  required  under  Section 307 of ERISA, nor
are there any excise  Taxes due or hereafter to become due under  Section  4971,
4972 or 4980B of the Code with respect to any fiscal  period ending on or before
the Closing Date for which Gibraltar has or may have any liability.

               (2) With  respect  to  each ERISA Affiliate Plan subject to Title
IV of ERISA,  (A) there has not  occurred  any  "reportable  event"  within  the
meaning of Section 4043(b) of ERISA or the  regulations  thereunder with respect
to which the 30 day notice  requirement  has not been  waived  under  applicable
regulations,  and (B) there  exists no ground  upon which the PBGC  under  ERISA
Section 4042 could demand termination of the ERISA Affiliate Plan or appointment
of itself or its nominee as trustee  thereunder.  The PBGC has not instituted or
threatened a proceeding to terminate an ERISA Affiliate Plan subject to Title IV
of ERISA.  All PBGC  premiums  due on or before the Closing Date with respect to
each ERISA Affiliate Plan subject to Title IV of ERISA have been paid in full or
appropriately accrued on the balance sheet of the Seller or any ERISA Affiliate,
including late fees,  interest and penalties,  if and to the extent  applicable.
Neither  Gibraltar or any ERISA  Affiliate has any liability under Section 4062,
4063,  4064  or  4069  of  ERISA.  None  of  the  ERISA  Affiliate  Plans  is  a
multiemployer plan.

         (c)   Each  ERISA   Affiliate  Plan  complies  in  form  and  has  been
administered  in  operation  in  all  material  respects  with  all   applicable
requirements of law.

                                      -13-
<PAGE>
         3.19  INTELLECTUAL PROPERTY.  Gibraltar owns or has licenses to use all
intellectual property necessary to carry on the Business as presently conducted,
and to its knowledge the use of any such  intellectual  property licensed from a
third  party  does not  infringe  upon or  otherwise  violate  any  intellectual
property  rights of any third  party.  Neither  the  Seller  nor  Gibraltar  has
received any written notice alleging that the use of such intellectual  property
infringes upon or otherwise  violates any  intellectual  property  rights of any
third party. Gibraltar owns no copyright or trademark  registrations or patents.
The only  servicemarks  and  logos  used by  Gibraltar  in  connection  with its
Business  are  GIBRALTAR  and the  Rock of  Gibraltar  logo  (collectively,  the
"GIBRALTAR  MARKS").  The use of the  Gibraltar  Marks  by  Gibraltar  does  not
infringe upon or otherwise violate any intellectual property rights of any third
party. Neither the Seller nor Gibraltar has received any written notice alleging
that its use of the Gibraltar Marks infringes the  intellectual  property rights
of any third party.  Gibraltar  uses the Gibraltar  Marks  pursuant to a license
from the Seller (the "GIBRALTAR MARKS LICENSE").

         3.20  GOVERNMENTAL CONSENTS.  Except as set forth in Schedule  3.20, no
consent, authorization, order or approval of, or  filing or  registration  with,
any governmental authority, board or other regulatory body is required for or in
connection  with the execution and delivery of this  Agreement by the Seller and
each  other  agreement  required  to be  executed  and  delivered  by the Seller
pursuant  hereto  or  the   consummation  by  the  Seller  of  the  transactions
contemplated  hereby and thereby,  except for (i) the  notifications to be given
to, and the approval to be obtained from, the State Insurance Commissioner, (ii)
notifications and filings under the HSR Act; and (iii) those as may be necessary
as a result of any facts or circumstances relating solely to the Purchaser.

         3.21  CONTRACTS AND BINDING COMMITMENTS. (a) Schedule  3.21  contains a
true and complete list, as of the date hereof, of all contracts,  agreements  or
arrangements  (but,  with respect to the contracts,  agreements or  arrangements
entered into prior to November 16, 1994,  only to the extent  available or known
to Gibraltar after conducting a reasonable  investigation of its records) of the
following types to which Gibraltar is a party or by which Gibraltar's  assets or
Property  are or may be bound  ("CONTRACTS"),  as such  Contracts  may have been
amended, modified or supplemented:

               (i)   All Contracts out of the ordinary course of business;

               (ii)  All Contracts or similarly  binding  arrangements  with any
         Person  containing  any  provision or covenant  limiting the ability of
         Gibraltar to engage in any line of business or compete with any Person;

               (iii) All partnership, joint venture or  profit-sharing Contracts
         with any Person (other than participations in reinsurance  arrangements
         and underwriting agreements entered  into  in  the  ordinary  course of
         business);

               (iv)  Except  with  respect to the agreements and arrangements to
         be terminated as set forth on Schedule 7.6, all Contracts  relating  to
         the  borrowing  of  money,  or  the direct or indirect guarantee of any
         obligation for, or Contract to service the repayment of, borrowed money
         or  any  other  liability  in  respect  of  indebtedness  for  borrowed
         money  of  any   other   Person,   including   any   Contract  relating
         to   (A)   the    maintenance    of    compensating    balances    that

                                      -14-
<PAGE>

         are not terminable by Gibraltar without  penalty  upon not more than 30
         days'  notice,  (B) any lines of credit,  (C) the payment for property,
         products or services which are not conveyed, delivered or rendered, (D)
         any  obligation to keep-well, make-whole or maintain working capital or
         earnings levels or perform similar requirements or (E) the guarantee of
         any lease or other similar periodic payments to be  made  by  any other
         Person;

               (v)   All  leases,  subleases or rental or use Contracts to which
         Gibraltar  is  a  party  with  respect  to  personal  property  used by
         Gibraltar in the conduct of its business operations or affairs;

               (vi)  All  Contracts  relating  to  the  future  disposition   or
         acquisition of any  investment  in any Person or of any interest in any
         business enterprise  (other  than  the  disposition  or  acquisition of
         portfolio investments in  the  ordinary  course  of  business), and all
         Contracts requiring Gibraltar  to purchase  any  security  (other  than
         such purchases of portfolio  investments  in  the  ordinary  course  of
         business);

               (vii)  All Contracts  between  or among (x) Gibraltar and (y) the
         Seller or any of the Seller's Affiliates or any  director,  officer  or
         employee of the Seller;

               (viii) All  reinsurance  pools  pursuant  to  which Gibraltar has
         assumed  reinsurance  risks  and  all  assigned  risk  pools  in  which
         Gibraltar is participating;

               (ix)   All  Contracts  relating to computer software licensing or
         data processing services utilized in its Business;

               (x)    All  Contracts  relating  to licenses of trademarks, trade
         names, service marks or other similar property rights;

               (xi)   Each Contract (other than  Contracts  cancelable  at will)
         involving payments of more than,  or a series of payments  which in the
         aggregate  are more than,  $100,000 during its term for the purchase of
         materials,  supplies or services or which has a term of or requires the
         performance of obligations in excess of, six months; and

               (xii)  Any power of attorney  which is  presently  effective  and
         outstanding  other than powers of  attorney  which exist as a matter of
         law or which have been granted pursuant to requirements  of  applicable
         state insurance or securities regulatory authorities;

         (b)  All the Contracts are valid and binding in all  material  respects
in  accordance with their terms and are in full force and effect.  Gibraltar has
not breached any  provision  of, and is not in material  default under the terms
of,  any  Contract.  No condition  exists or event has occurred  which,  with or
without  notice  or  the  passage  of time or both,  would  constitute  a breach
of,  or  a  default  under,  any  Contract  by  Gibraltar.  To the  knowledge of
Gibraltar, no other party to any  Contract has  breached  any  provision  of, or
is in default under the terms of, any  Contract,  other than in connection  with
insurance  or  reinsurance agreements where Gibraltar is in good faith disputing
coverage.

                                      -15-
<PAGE>
         3.22  INSURANCE AND  REINSURANCE.  Except  with  respect to information
relating to  outstanding facultative certificates, Schedule 3.22 contains a true
and complete  list,  as of the date hereof, of all the contractual  reinsurance,
insurance and commutation agreements entered into since January 1, 1995 to which
Gibraltar is  a party.  Except as set forth in Schedule  3.22,  (i) the reserves
recorded for potential  liabilities  that  Gibraltar  may incur  pursuant to the
contractual reinsurance, insurance and commutation agreements listed in Schedule
3.22 are  properly  determined  in  accordance  with  the  applicable  statutory
and  GAAP  requirements;  (ii)  receivables  due  to Gibraltar  pursuant to such
reinsurance, insurance and commutation agreements have been properly recorded in
the books of  account  of  Gibraltar and reflected in its Annual  Statements and
GAAP  Financials  for  the  year  ended  December  31, 1999  and  its  Quarterly
Statements for periods subsequent to December  31, 1999  and to the knowledge of
Gibraltar are  collectible  (less  any  reserves  for  uncollectability)  in due
course; and (iii) no  notice  of  intended  cancellation  has  been  received by
Gibraltar  in  connection  with  the  contractual  reinsurance,   insurance  and
commutation agreements listed on  Schedule  3.22.  Any letters of credit held by
Gibraltar that support  receivable balances from unauthorized  reinsurers comply
in all material respects with the applicable insurance laws or regulations.

         3.23  OPERATIONS  INSURANCE.    Schedule   3.23  contains   a   summary
description  of  all  liability,  property  and  casualty, workers compensation,
directors  and officers  liability,  surety bonds,  key man life  insurance  and
other  similar  insurance  contracts  that  insure  Gibraltar  or  its  Business
specifying  the  insurer  (including  whether the insurer is an Affiliate of the
Seller or Gibraltar), the amount of coverage, the type of  insurance  under each
such  policy  and  whether such  insurance  will  continue to be  applicable  to
Gibraltar following the Closing.  All such insurance is in full force and effect
as of the date hereof  and  will be in full  force  and  effect  on the  Closing
Date.  No notice of cancellation or termination  has been received by the Seller
or Gibraltar with respect to any  such  policy.  To the knowledge of  Gibraltar,
such insurance is in  accordance  with  normal industry practice  including self
insurance  and,  in  light  of  the  Business of  Gibraltar,  is in amounts  and
provides  coverage  that  is  reasonable, adequate and customary for Persons  in
similar Businesses.

         3.24  TAXES.  Except as set forth on Schedule 3.24,

                       (i)   The amount accrued on the December 31 Balance Sheet
               for all  Taxes  imposed by any taxing  authority  are adequate to
               cover  all  material  unpaid  Tax  liabilities,  whether  or  not
               disputed,  that have  accrued with  respect to or are  applicable
               to all years or periods  ending on or prior to December  31, 1999
               and  for  which Gibraltar may be directly or contingently  liable
               in its  own  right  or as a  transferee  of  the  assets  of,  or
               successor to, any Person.

                       (ii)  Gibraltar  has  not  incurred  any   material   Tax
               liabilities other  than in  the  ordinary  course of business for
               any taxable yearfor which the applicable statute  of  limitations
               has  not  expired;  there  are no Tax liens (other than liens for
               current  Taxes  not yet due and payable)  upon the  properties or
               assets of Gibraltar.

                       (iii) Gibraltar  has not  granted  or been  requested  in
               writing to grant waivers of any statute of limitations applicable
               to any  claim for Taxes  which  requests  are  pending or waivers
               are currently in effect.

                                      -16-
<PAGE>
                       (iv)  No member of the Consolidated Group has  waived  or
               been requested in writing to waive any statute of  limitations in
               respect  of  Taxes  for  which  Gibraltar  may  be  liable  which
               requests are pending or waivers are currently in effect.

                       (v)   All   Tax   Returns  for  Gibraltar   required   by
               applicable law to have  been  filed  for  Gibraltar  prior to the
               Closing Date  (taking into account  extensions)  have been filed.
               All Taxes  shown  as  due on all such Tax Returns have been paid.
               Each  such  Tax  Return  is  true  and  correct  in  all material
               respects.

                       (vi)  Either all of the income Tax Returns  that  include
               the operations of  Gibraltar  have been  audited by the  Internal
               Revenue  Service  or  the  appropriate  taxing  authority and all
               liabilities therefor  have  been  paid in full, or the statute of
               limitations with respect to  assessment  of  Taxes for the period
               for  which  such  Tax  Returns  were  required  to  be  filed has
               expired.  No  material  issues have been raised in writing in any
               examination  by   any  taxing  authority   with  respect  to  the
               business  and  operations  of  Gibraltar  for any taxable  period
               for   which  the   statute  of   limitations   with  respect   to
               assessment of Taxes for such taxable period has not expired.

                       (vii)  No  federal,  state,  local  or  foreign audits or
               other administrative proceeding or court  proceeding  exist  with
               regard  to  any  Taxes or Tax Returns of Gibraltar. Gibraltar has
               not  received  any   written   notice  that  an  audit  or  other
               administrative   proceeding   is   pending  or   threatened  with
               respect  to  any  Taxes due from or with  respect to Gibraltar or
               any Tax Return filed by or with respect to Gibraltar.

                       (viii) No  written  position  has  been  taken on any Tax
               Return with respect to the business or  operations  of  Gibraltar
               for a taxable year for which the statute  of limitations  for the
               assessment  of  any  Taxes with  respect  thereto has not expired
               that is directly in  violation of the Code,  final  or  temporary
               Treasury regulations  promulgated  under  the  Code, or published
               Internal  Revenue  Service  revenue rulings promulgated under the
               Code and not superseded.

                       (ix)   All material Taxes which Gibraltar is  required by
               law to withhold or collect,  including without limitation,  sales
               and use taxes, and amounts  required to be withheld  for Taxes of
               employees,  have  been  duly  withheld  or collected and , to the
               extent   required,   have   been   paid   over  to   the   proper
               governmental  authorities  or  are held in separate bank accounts
               for such purpose.

                       (x)    The Seller is not a "foreign person" as defined in
               Section 1445(f)(3) of the Code.

                       (xi)   Gibraltar  is  not  a  party to any joint venture,
               partnership  or  other  arrangement  or contract which is treated
               as   a   partnership  for   Federal  income  tax  purposes  other
               than  any  joint   venture,  partnership  or  other   arrangement
               or  contract   that  is  held   as  a  portfolio   investment  in
               the     ordinary    course    of     business.    Gibraltar    is

                                      -17-
<PAGE>
               not a party  to any  tax  sharing  agreement,  other than the tax
               sharing agreement currently in  effect  among  the members of the
               Consolidated Group, a true, complete  and  correct  copy of which
               is attached hereto in Schedule 3.24.

                       (xii)  None of the assets of Gibraltar  constitutes  tax-
               exempt bond financed property or tax-exempt use  property  within
               the meaning of  Section  168 of the Code,  and none of the assets
               reflected  on the  December  31  Balance  Sheet  is  subject to a
               lease,  safe  harbor lease or  other  arrangement  as a result of
               which  Gibraltar  is  not treated as the owner for Federal income
               tax purposes.

                       (xiii) Gibraltar  has  not  made  or become  obligated to
               make, and will  not  as  a direct result of the sale contemplated
               herein become obligated to make, any "excess  parachute  payment"
               as  defined  in  Section  280G  of  the Code  (without  regard to
               subsection (b)(4) thereof).

                       (xiv)  The  basis  of  all  depreciable  or   amortizable
               assets,  and  the  methods   used   in   determining    allowable
               depreciation or amortization (including cost recovery) deductions
               of Gibraltar, are correct and in compliance with the Code and the
               Treasury  regulations  thereunder  in  each case, in all material
               respects.

                       (xv)   All  Surplus  Notes  will be canceled on or before
               the  Closing  in transactions that did not create cancellation of
               indebtedness income to Gibraltar.

                       (xvi)  Gibraltar is not required to include in income any
               adjustment pursuant  to  Section  481(a)  of the Code for any Tax
               period after  the Closing Date by  reason  of  any  voluntary  or
               involuntary  change   in  accounting  method  for  a  Tax  period
               ending  on  or  before  the  Closing  Date  (nor  has any  taxing
               authority  proposed  in  writing any such adjustment or change of
               accounting method).

                       (xvii)  None  of the assets of Gibraltar are subject to a
               consent   pursuant  to  Section  341(f)  of  the  Code  (or   any
               predecessor provision).

                       (xviii) No excess loss account exists with respect to the
               stock of a  member of the Consolidated  Group that is a direct or
               indirect  subsidiary  of   Gibraltar  under  Treasury  regulation
               Section  1.1502-19  (or  similar provision under state,  local or
               foreign law).

                       (xix)  Gibraltar  has  not  executed, entered into nor is
               subject to any  closing agreement pursuant to Section 7121 of the
               Code, or  any  predecessor  provisions  thereof or any comparable
               provisions of state,  local or  foreign  law with  respect to any
               period for which the statute of limitations has not expired.

                       (xx)   No  power  of attorney has been granted by or with
               respect  to  Gibraltar  with  respect  to  any matter relating to
               Taxes, which is currently effective.

                                      -18-
<PAGE>
                       (xxi)  Gibraltar has filed its Federal income tax returns
               as an insurance company subject to subchapter L of the Code.

Notwithstanding  anything  to the  contrary in this  Agreement,  nothing in this
Section  3.24  shall  cause the  Seller to be liable for any Taxes for which the
Seller is not expressly liable pursuant to Section 7.4.

         3.25  ACCOUNTS WITH  FINANCIAL  INSTITUTIONS.  Schedule 3.25 sets forth
a true and correct list, as of the date hereof, of all safe deposit boxes,  bank
accounts,  custody  accounts  and other  time,  demand,  statutory or regulatory
deposits of Gibraltar, together  with the names and  address  of the  applicable
financial  institution  or other depository, the account number and the names of
all persons authorized to draw thereon or who have access thereto.

         3.26  BROKER'S,  FINDER'S  OR  SIMILAR  FEES.   There are no  brokerage
commissions, finder's fees or similar fees or commissions payable in  connection
with the transactions contemplated  hereby based  on  any agreement, arrangement
or understanding with the Seller, or any action taken by the Seller,  except for
a fee payable by the  Seller to  Goldman,  Sachs & Co.  or  except as  otherwise
disclosed to the Purchaser in writing. Neither the Purchaser nor Gibraltar shall
have any obligation or responsibility for the payment of said fee.

         3.27  EMPLOYEES.  There  are  no employees of Gibraltar.  Schedule 3.27
sets forth a  true and correct  list as of the date  hereof of the titles or job
descriptions and the hourly  rate  schedule  or  aggregate  annual  compensation
and bonuses  payable for the current fiscal year of the Employees.  The Seller's
relationship  with  the  Employees  is good and no labor dispute or  disturbance
exists  and,  to  the  knowledge  of  Gibraltar, none is threatened. None of the
Employees is covered by any collective bargaining agreement.

         3.28  ACTIONS TAKEN PRIOR TO DECEMBER 31, 1999.  Prior  to December 31,
1999  and  in  connection with the transactions  contemplated by this Agreement,
Gibraltar (i) received a capital  contribution  from the Seller in the amount of
$64,168,131; and (ii)  increased  the total  amount of its Loss  Reserves by (1)
$80,000,000  above the level carried at December 31, 1998,  less (2) Gibraltar's
net incurred losses  (excluding the $80,000,0000 increase in its Loss Reserves),
for the period January 1, 1999 through June 30, 1999.

         3.29  DISPUTE RESOLUTION.  Pursuant  to the  Report of the  Independent
Examiner  issued on December 20, 1999 to Gibraltar and Everest Re, the aggregate
claim of Everest Re against  Gibraltar was reduced by the amount of  $60,800,000
and  the  amount of such  reduction  has not been  used by  Gibraltar  to reduce
its Loss Reserves.

         3.30  GAAP BOOK VALUE.  The GAAP Book Value on the Closing Date will be
at least $55,800,000.

         3.31  INFORMATION SUPPLIED.  None  of the information supplied or to be
supplied by the Seller in  writing  specifically  for any  document  to be filed
with  any  regulatory  agency  by  the  Seller,  Gibraltar  or  the Purchaser in
connection  with  the  transactions  contemplated by this Agreement will, at the

                                      -19-
<PAGE>
respective times filed with such regulatory agency, contain any untrue statement
of a material  fact or omit to state any  material  fact  required  to be stated
therein or necessary in order to make the  statements  therein,  in light of the
circumstances under which they are made, not misleading.

         3.32  ACCURACY OF STATEMENTS.  Neither this Agreement nor any schedule,
certificate or other  agreement  furnished or to be furnished by or on behalf of
the Seller to the Purchaser or any  representative or Affiliate of the Purchaser
in connection with this Agreement  contains or will contain any untrue statement
of a material fact.

                                   ARTICLE IV
                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

         REPRESENTATIONS   AND  WARRANTIES  OF  THE  PURCHASER.   The  Purchaser
represents and warrants to the Seller as follows:

         4.1  DUE INCORPORATION AND AUTHORITY.  The Purchaser  is a  corporation
duly  organized,  validly  existing  and  in good standing under the laws of the
State  of  Delaware  and  has all  requisite  corporate  power and  authority to
execute and  deliver  this  Agreement  and each other  agreement  required to be
executed and  delivered  by  the  Purchaser  pursuant  hereto,  to  perform  its
obligations  hereunder  and  thereunder,  and  to  consummate  the  transactions
contemplated  hereby  and  thereby.  The  execution,  delivery  and  performance
by the  Purchaser  of  this  Agreement  and each other agreement  required to be
executed and delivered by the Purchaser pursuant hereto, and the consummation by
the  Purchaser  of  the  transactions  contemplated  hereby  and  thereby,  have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings  on  the  part of the Purchaser are necessary to authorize
the execution,  delivery and  performance  by the  Purchaser  of this  Agreement
and  each  of the other  agreements  contemplated  by  this  Agreement,  or  the
consummation of the transactions contemplated hereby and thereby. This Agreement
has  been  duly  and  validly  executed  and  delivered  by  the  Purchaser  and
constitutes a legal, valid and binding obligation of the Purchaser,  enforceable
against the Purchaser in accordance  with  its terms, except as such enforcement
may be  limited  by  bankruptcy,  insolvency,  moratorium or other similar  laws
affecting   creditors'  rights  generally  and  except  as  rights  to  specific
enforcement may be limited by  the application of equitable  principles (whether
such equitable  principles are applied in a proceeding at law or in equity).

         4.2  NO VIOLATION . Neither the  execution,  delivery  nor  performance
of this Agreement  by the  Purchaser,  nor the  purchase of the Shares  pursuant
to  this  Agreement  or  the  consummation  by the Purchaser of the transactions
contemplated hereby,  will,  with or without the giving of notice or the passage
of time, or both, (i) violate any provision of the Governing  Instruments of the
Purchaser; (ii)  violate or  result  in  any  breach  of or constitute a default
under,  or give rise to a right of termination or cancellation of, or accelerate
the performance  required  by  any  terms of, as the case may be, any  contract,
agreement, lease,  license,  mortgage,  note, reinsurance agreement,  franchise,
permit or instrument  to which the  Purchaser  is a party or by which any of its
assets is bound, or result in the creation of any material  Lien upon any of the
property owned by it; (iii) violate any law, regulation,  judgment, order, writ,
injunction  or  decree  of  any court,  governmental  body (domestic or foreign)

                                      -20-
<PAGE>
or  administrative  agency of any  jurisdiction;  or (iv) require the consent or
approval of any third parties;  other than, in the case of (ii), (iii) and (iv),
such violations, breaches, defaults, terminations, cancellations, accelerations,
consents,  approvals  and Liens,  the failure to obtain or the creation of which
would not in the  aggregate  reasonably  be expected to have a Material  Adverse
Effect on the Purchaser.

         4.3  CONSENTS.  No  consent,  authorization,  order or approval  of, or
filing  or  registration  with,  any  governmental  authority,  board  or  other
regulatory body is required for or in connection with the execution and delivery
of this Agreement by the  Purchaser  or the  consummation  by the  Purchaser  of
the  transactions contemplated  hereby,  except for (i) the  notifications to be
given  to,  and  the  approvals  to  be  obtained  from,  the  State   Insurance
Commissioner; (ii) notifications and filings under the HSR Act; and (iii) as may
be necessary as a  result of  any  facts or circumstances relating solely to the
Seller.

         4.4  FINANCING.  As of the date of this Agreement, the Purchaser has no
reason to  believe  that  it will not be able timely to perform its  obligations
under this Agreement.  The Purchaser or any permitted assignee of the  Purchaser
has sufficient financial resources to consummate the  transactions  contemplated
hereby and to pay all of the Purchaser's, or such permitted assignee's, fees and
expenses.

         4.5  BROKER'S,  FINDER'S  OR  SIMILAR FEES.   There  are  no  brokerage
commissions, finder's fees or similar fees or commissions payable in  connection
with the transactions  contemplated hereby based  on  any agreement, arrangement
or understanding with the Purchaser, or any action taken by the Purchaser.

         4.6  PURCHASE FOR INVESTMENT.  The  Purchaser  represents  that  it  is
acquiring the  Shares  for  its  own  account  for  investment  and  not  with a
view to or in  connection with their  distribution and will not sell or transfer
such Shares in violation of the Securities  Act and the  rules  and  regulations
promulgated   thereunder.   The  Purchaser  is  a  sophisticated   institutional
"accredited  investor"  within  the  meaning  of Rule 501(a)(1), (2), (3) or (7)
under  the Securities Act.  The  Purchaser  acknowledges  that  the  Shares  are
not  registered  under the Securities Act and constitute "restricted securities"
under Rule 144 thereunder.

         4.7  INFORMATION SUPPLIED.  None  of the  information supplied or to be
supplied by the Purchaser in writing specifically  for any  document to be filed
with  any  regulatory  agency  by  the  Purchaser,  Gibraltar  or  the Seller in
connection  with  the  transactions  contemplated by this Agreement will, at the
respective times filed with such regulatory agency, contain any untrue statement
of a material fact or omit to state any  material  fact  required  to be  stated
therein  or  necessary  in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

         4.8  INDEMNIFICATION. To the knowledge  of the  Purchaser  there are no
other  indemnification  or  guarantee  obligations  of  Gibraltar  or  any Third
Party in  respect  of  the  Business  of  Gibraltar  other  than those listed on
Schedule 6.3.

                                      -21-
<PAGE>
                                    ARTICLE V
                   COVENANTS OF THE SELLER PENDING THE CLOSING

         5.1  OPERATIONS IN THE ORDINARY COURSE. Prior to the Closing Date,  the
Seller  agrees  to cause the Business of  Gibraltar  to be operated  only in the
ordinary course consistent with past practice, except as otherwise  contemplated
by this Agreement or except as provided in Schedule 5.1. Prior to and  including
the  Closing  Date  and except as otherwise contemplated by this Agreement,  the
Seller  shall  cause  Gibraltar  to (a)  maintain  insurance  coverages  and its
books, accounts and records in the usual manner on a basis consistent  with past
practice;  (b) comply in all material  respects  with all laws,  ordinances  and
regulations of governmental  authorities  applicable to Gibraltar;  (c) maintain
and  keep its  properties  and  equipment  in good  repair,  working  order  and
condition, subject to normal wear and tear; (d) perform in all material respects
its  obligations  under  all  Contracts  to which it is a party  and (e) use its
commercially reasonable efforts to maintain and preserve its Business.

         5.2  INTENTIONALLY OMITTED.

         5.3  RESTRICTIONS.  Except  as  otherwise  set forth in Schedule 5.3 or
contemplated by this  Agreement,  subsequent  to the date of this  Agreement and
prior to the Closing Date without the prior  written  consent of the  Purchaser,
the Seller  agrees  to cause  Gibraltar  not to or (where and only to the extent
noted below) Seller agrees not to:

              (a)  incur  any  indebtedness or encumber or grant any Lien (other
         than Permitted Liens) on any asset of Gibraltar;

              (b)  Seller  agrees not to grant or promise to grant to any of the
         Employees,  any  new  or  increased  salary,  commission,  fee or other
         benefit, other than those that are consistent with the Seller's current
         compensation  plan  or as may be required by law and excluding any stay
         or transaction  bonuses  paid  or payable to Employees by the Seller in
         connection  with  this  transaction  or,  make  any  commitment  to any
         Employee regarding such  Employee's  employment by Gibraltar subsequent
         to the Closing provided, however, for purposes of this Section  5.3(b),
         the term "commitment"  shall not include any  discussion  by the Seller
         with any Employee with respect to the Seller's Employee Benefit Plans;

              (c)  hire  any  new  employees or agents or enter into any written
         employment  agreements  except  to  the extent necessary  to replace an
         Employee who has been terminated or has resigned;

              (d)  issue or sell any  security  issued by  Gibraltar, grant  any
         option,  warrant  or  any  other  right  to  purchase  or  convert  any
         obligation into any security issued by Gibraltar;

              (e)  declare  or  pay  any  dividend  on,  or   make   any   other
         distribution in respect of the Shares;

                                      -22-
<PAGE>
              (f)  amend any of its Governing Instruments, except as required to
         change the name of Gibraltar;

              (g)  merge or consolidate with any other  Person,  acquire  all or
         substantially  all the assets of any other Person or sell,  transfer or
         otherwise  dispose  of any  part of its  assets  other  than  sales  of
         portfolio investments in the ordinary course of business;

              (h)  enter into any leases for real property or personal property;

              (i)  Seller agrees not to terminate the employment of any Employee
         except in the ordinary course consistent  with past practice;  provided
         that the  Seller  shall  have  no  liability  to  the Purchaser for the
         failure to keep the services of any Employee who voluntarily resigns;

              (j)  except as provided in Section 7.6, forfeit, abandon,  modify,
         waive,  terminate  or  otherwise  change  Gibraltar's rights, duties or
         obligations  under  any  of  the  Contracts  other than in the ordinary
         course consistent with past practice;

              (k)  forfeit,  abandon,  modify,  waive,  terminate  or  otherwise
         change Gibraltar's licenses, operating rights or registrations;

              (l)  pay  any  amounts in settlement or compromise of any suits or
         claims against Gibraltar, other than  insurance or  reinsurance  claims
         paid in the ordinary course of business;

              (m)  make  any  loans,  advances  or  capital contributions to any
         other Person;

              (n)  acquire  any  assets  other  than  in  the ordinary course of
         business;

              (o)  enter  into  any  contract,  agreement  or  license  that  is
         material or is not in the ordinary course of business;

              (p)  change any of its accounting or investment policies;

              (q)  enter  into  any  transaction  with  or pay any amount to the
         Seller or its Affiliates involving an amount  in  excess of or a series
         of  related  amounts  that  in the aggregate are in excess of $100,000,
         including the  transfer of  investments  or other assets of  Gibraltar,
         but  excluding  amounts  payable to the Seller or any of its Affiliates
         pursuant to the  Service  Contract that in the aggregate  are less than
         $1,500,000 per quarter;

              (r)  after  the  applicable waiting period under the HSR Act shall
         have expired or early termination shall have been granted in connection
         with  this Agreement, pay or settle any insurance or reinsurance claims
         (other than pursuant to  agreements  in  existence  prior  to  the date
         hereof) (i)  in excess of two hundred fifty thousand dollars ($250,000)
         but  equal  to  or  less  than   two   million  five  hundred  thousand
         dollars  ($2,500,000),  without  notifying  the  Purchaser on a monthly
         basis  of  the   payment  or  settlement  of  such  claims;   (ii)   in
         excess  of  two  million  dollars  five  hundred thousand ($2,500,000),
         but    equal     to    or    less    than    five    million    dollars

                                      -23-
<PAGE>
         ($5,000,000), without providing notice  to the  Purchaser in advance of
         the payment  or  settlement  of  such  claims  and  consulting with the
         Purchaser  with  respect  thereto;  or  (iii) in excess of five million
         dollars  ($5,000,000),   without  the  prior  written  consent  of  the
         Purchaser, which consent shall not be unreasonably withheld;

              (s)  reduce  the  amount  of  any  of  its Loss Reserves except on
         account of payments in the ordinary course of business  consistent with
         past practice; or

              (t)  enter into any Contract to do any of the foregoing.

         5.4  INVESTMENT PORTFOLIO. Prior to the Closing  Date, the Seller shall
cause Gibraltar to update the Investment  Portfolio  as of the end of each month
and shall deliver the updated  Investment Portfolio to the Purchaser as promptly
as  practicable,  but  in  no event later than thirty days after the end of such
month.

         5.5  INVESTIGATION BY THE PURCHASER. (a)  Prior  to  the  Closing Date,
upon reasonable notice,  the Seller will cause  Gibraltar to give the  Purchaser
and its agents  access  at  all  reasonable  times  and  upon  reasonable  prior
notice  to  the  properties  and  non-privileged,  non-proprietary  portions  of
its books  and records,  employees,  accountants  and actuaries of Gibraltar and
furnish to the  Purchaser and  its agents such  non-privileged,  non-proprietary
portions  of its documents, financial,  operating  data  and  other  information
(including  information  concerning Loss Reserves) with respect to the  Business
and Property of Gibraltar as the Purchaser or its agents shall from time to time
reasonably request.

              (b)  The  Purchaser  acknowledges  and agrees that it (i) has made
its  own  inquiry  and  investigation  into,  and, based thereon,  has formed an
independent  judgment  concerning,  Gibraltar  and  its Business,  (ii) has been
furnished with or given adequate access to such information  about Gibraltar and
its Business as it has  requested,  and (iii) will not assert  (except  pursuant
to the terms of Section  12)  any  claim  against  the  Seller  or  any  of  its
directors,  officers,  employees, agents, stockholders, affiliates, consultants,
investment bankers or representatives, or hold the Seller  or any  such  persons
liable,  for  any  inaccuracies,  misstatements  or  omissions  with  respect to
information  furnished  by  the  Seller  or such persons  concerning the Seller,
Gibraltar or the Business  of  Gibraltar  in  connection  with  the transactions
contemplated by this Agreement.

              (c)  In connection with the Purchaser's investigation of Gibraltar
and its  Business,  the  Purchaser  received  from the Seller certain estimates,
projections  and  other  forecasts  for  Gibraltar,  and certain plan and budget
information.  The Purchaser  acknowledges that there are  uncertainties inherent
in attempting to make such estimates, projections, forecasts, plans and budgets,
that the  Purchaser  is  familiar with such uncertainties, that the Purchaser is
taking full  responsibility  for  making  its own evaluation of the adequacy and
accuracy  of  all  estimates,  projections,  forecasts,  plans  and  budgets  so
furnished to it, and that the  Purchaser  will not assert any claim  against the
Seller or any of its  affiliates or any of its directors,  officers,  employees,
agents,   stockholders,   affiliates,   consultants,   investment   bankers   or
representatives,  or hold  the  Seller or  any  such persons liable with respect
thereto.  Accordingly, the Seller  makes  no representation or warranty,  either
express or implied, with respect to  any such estimates, projections, forecasts,
plans or budgets.

                                      -24-
<PAGE>
         5.6  FINANCIAL  STATEMENTS.   (a)  The  Seller  shall  provide  to  the
Purchaser as promptly  as  practicable,  but  in any event, prior to the Closing
Date, the audited balance  sheets  of  Gibraltar  as of  December  31,  1999 and
December  31, 1998 and the related  statements  of income,  stockholders' equity
and cash flow for the two years then ended, including the related notes thereon,
prepared in accordance  with  GAAP  and  the  audited  statutory  statements  of
Gibraltar for the years ended  December 31, 1999 and December 31, 1998  prepared
in accordance  with  Statutory Accounting Principles.

              (b)  Through  the  Closing  Date the Seller  shall  provide to the
Purchaser as promptly as practicable, but in no event  later  than  thirty  (30)
days after the end of each  fiscal quarter, (a) the unaudited quarterly  balance
sheets  of  Gibraltar  and related  statements  of income and cash flows for the
period then  ended, each of which shall present fairly the financial position of
Gibraltar as  of the balance sheet date and its results of  operations  and cash
flows for the period then ended in  conformity  with GAAP,  and will include all
adjustments,  consisting  of normal recurring accruals,  which in the opinion of
the Seller are  consistent  for  a fair  presentation  of results on an  interim
basis; and (b) copies of the Quarterly Statements filed by Gibraltar which shall
be prepared in accordance with Statutory Accounting Principles.

              (c)  The  Seller  shall  provide  to  the Purchaser as promptly as
practicable, not in no event later than thirty days after the Closing  Date,  an
unaudited  balance  sheet  of  Gibraltar  as of the Closing Date and the related
statement of income, stockholders'  equity  and cash  flow for the  period  then
ended prepared in accordance with GAAP.

         5.7  REGULATORY FILINGS AND COMPLIANCE. (a) The Seller will furnish the
Purchaser  with  such  information  as  the  Purchaser may reasonably request in
connection with  any  application  or  notification  the  Purchaser  may make to
applicable Federal, State, local or foreign law  authorities  in connection with
the transactions contemplated hereby.

              (b)  The Seller shall promptly  prepare  and  file  and  prosecute
diligently  (including  responding  promptly  to  all  reasonable  requests  for
supplemental  information)  with the appropriate  regulatory  agency or body all
documentation  and  information  required by law or  requested by such agency or
body to be filed by the Seller or  Gibraltar  to  permit   consummation  of  the
transactions contemplated hereby.  The Seller shall prepare and file or cause to
be prepared and filed promptly,  and in any event within twenty Business Days of
the date of  this  Agreement,  the notifications and filings required to be made
under the HSR Act in connection with the transactions contemplated  hereby.  The
Seller shall use all commercially  reasonable efforts to obtain prompt favorable
action from any such agency or body.

              (c)  The Seller shall timely  deliver to the  Purchaser  copies of
all  documents  filed  after the date  hereof  with  regulatory  authorities  by
the Seller with respect to the transactions contemplated hereby or by Gibraltar,
and  copies  of  all  correspondence  after  the  date  hereof  to and from such
regulatory authorities  in connection therewith. The Seller shall timely deliver
to the Purchaser copies  of all  regulatory  reports that may be filed after the
date hereof with respect to Gibraltar.

                                      -25-
<PAGE>
         5.8  INTERCOMPANY ACCOUNTS; SURPLUS NOTES. (a) All receivables, if any,
of Gibraltar  from  the  Seller  or its Affiliates and all payables,  if any, of
Gibraltar to the Seller or any of its Affiliates shall be cancelled prior to the
Closing without  any payment by any Person in respect of such  cancellation (or,
at the option of  the  Seller  in  the  case of the Gibraltar payables,  paid in
accordance with their terms prior to the Closing).

              (b)  Prior  to  the  Closing,  the Seller shall or shall cause its
Affiliates to (i)  cancel the Surplus  Notes and deliver such notes to Gibraltar
without any payment by Gibraltar in respect of such cancellation.

         5.9  TAX MATTERS.   All  current  Federal  income  Tax  receivables  or
payables of Gibraltar as of the Closing Date shall be  determined in  accordance
with GAAP (calculated  assuming full current use of net operating  losses and/or
capital  losses),  shall be paid in full in cash by the Seller or Gibraltar,  as
the case may  be, on or prior to the  Closing  Date,  and shall be  redetermined
and paid accordingly  within  thirty  days  after the tax  returns of  Gibraltar
for the taxable year ending on December 31, 1999 and for the taxable year ending
on the Closing Date are filed.

         5.10  INVESTMENT INCOME. (a)  The Seller shall cause  Gibraltar to take
an amount equal to its  investment  income  from July 1, 1999 until the later of
April 30, 2000  and  twenty  days  after  the  later of (i) the  receipt  of all
consents,  approvals and waivers of the State Insurance Commission  contemplated
by Section 9.1 and (ii) the  satisfaction  of the condition set forth in Section
9.2, less  investment  and  operating  expenses  of  Gibraltar  incurred in  the
ordinary course of business consistent with past practice during such period and
less unrealized and  realized  depreciation  on any  bonds  (after  Taxes)  less
$4  million  of  after-tax net investment  income,  plus unrealized and realized
appreciation on  any  bonds (after Taxes) during such period, collectively,  and
use  such  amount  to increase its Loss Reserves.  Any such increase in the Loss
Reserves of Gibraltar  pursuant to this Section 5.10 shall be made in conformity
with GAAP.

              (b)  No  more than ten  Business  Days prior to the Closing  Date,
the Seller  shall cause  Gibraltar to liquidate its  portfolio  investments in a
commercially reasonable manner and invest the proceeds in short-term investments
reasonably satisfactory to the Purchaser.

         5.11  PURCHASE OF SHARES. Prior  to  the end of the three-month  period
commencing three trading days after the public announcement by the Purchaser and
the Seller  of the transactions contemplated by this Agreement, the Seller shall
purchase or  cause  one  of its Affiliates (or a trustee or other third party on
its behalf) to purchase on The New York Stock  Exchange  shares of common  stock
of Everest Re Group, Ltd. in an amount equal to  $25,000,000  in the  aggregate;
provided,  however,  that  the  Seller  shall  be  obligated  to  purchase  such
securities pursuant to this  Section  5.11  only if the  average  daily  closing
prices  for  such  securities  on such exchange during such  three-month  period
is $25 per share or  less (such  price to be adjusted to  equitably  reflect any
stock  splits,  stock dividends, recapitalizations or other similar transactions
occurring during such three-month period).

         5.12  GIBRALTAR  MARKS  LICENSE.  The Gibraltar  Marks License shall be
terminated  upon  the  Closing  of this  Agreement  and  thereafter  neither the
Purchaser nor  Gibraltar shall have any rights to use the Gibraltar Marks in any
manner.

                                      -26-
<PAGE>
                                   ARTICLE VI
                 COVENANTS OF THE PURCHASER PENDING THE CLOSING

         6.1  REGULATORY AND OTHER CONSENTS.  The  Purchaser  shall  prepare and
file or  cause to be prepared and filed promptly, and in any event within twenty
Business  Days  of  the  date  of  this Agreement,  the notification and filings
required to be  made  under  the  HSR  Act  in  connection with the transactions
contemplated hereby,  and  shall  file  or cause to be filed within ten Business
Days  of  the  date  of  this  Agreement  the  filings with the State  Insurance
Commissioner  contemplated  by Section 9.1.  The Purchaser will promptly file or
cause to be  filed, and prosecute diligently  (including  responding promptly to
all reasonable requests for  supplemental  information),  all other applications
and documents required to  be  filed  with applicable authorities, including all
amendments thereto, in order  to  effect as soon as practicable the transactions
contemplated hereby, including filings with the appropriate  authorities  of the
states,  countries  and other  jurisdictions  where such  filings  are  required
for the consummation  of the transactions  contemplated  hereby.  The  Purchaser
will  use all commercially reasonable  efforts  promptly  to obtain the  consent
or  approval  of   the  State  Insurance  Commissioner  and   other  appropriate
authorities  whose  consent  or  approval  will be required to be obtained  as a
condition to  consummation  of the  transactions herein  contemplated.  Promptly
following the execution hereof, the  Purchaser  will notify the State  Insurance
Commissioner   and  other  appropriate  authorities  of  the  states,  countries
and   other  jurisdictions   where  such   notification  is  necessary  for  the
consummation of the transactions contemplated hereby.

         6.2  CONFIDENTIAL INFORMATION MEMORANDUM.  The  Purchaser  acknowledges
receipt  of  the  Confidential  Information Memorandum related to Gibraltar (the
"Memorandum"). The Purchaser acknowledges that neither the Seller nor  Gibraltar
makes any  representation or warranty,  express or implied,  with respect to the
Memorandum  and  that  the  Purchaser  has not relied on the  Memorandum  in its
decision  to execute  this  Agreement  but  rather  has  relied  solely  on  the
Purchaser's independent investigation of  Gibraltar  and its Business and on the
terms and  provisions hereof including the representations and warranties of the
Seller and Gibraltar set forth in Article III.

         6.3  RELEASE FROM CERTAIN OBLIGATIONS.   The  Purchaser  will  use  all
commercially  reasonable  efforts  to  assist  the  Seller in arranging  for the
complete release and discharge of the Seller at or prior to the Closing from its
indemnification and guarantee  obligations  to  Gibraltar  or any third party in
respect of the  Business  of Gibraltar  listed on Schedule 6.3. The form of such
release shall be  evidenced  by  one  or more duly executed  instruments in form
satisfactory to the Seller and its counsel.

                                      -27-
<PAGE>
                                   ARTICLE VII
                            COVENANTS AND AGREEMENTS

         7.1  CONFIDENTIALITY;  RETURN  OF  DOCUMENTS.   (a)   All   information
provided to  the  Purchaser  or  its   Affiliates   pursuant   hereto  shall  be
subject to the Confidentiality Agreements and all documents (and copies thereof)
provided  to  the  Purchaser or its Affiliates  shall be promptly  returned upon
termination of this Agreement.

              (b)  Except as provided in Section  7.1(c), neither the Seller nor
the Purchaser shall, and each shall cause  their respective  Affiliates  not to,
publicly  disclose the execution,  delivery or contents of this Agreement, other
than with the prior written  consent of the other party hereto, or other than as
required  by law or any securities exchange upon prior notice to the other party
hereto.

              (c)  The  Seller and the Purchaser  shall agree with each other as
to the form and substance of any press release related to this  Agreement or the
transactions  contemplated  hereby,  and shall consult each other as to the form
and substance of other public disclosures  related thereto;  provided,  however,
that   nothing   contained   herein   shall  prohibit  either  party,  following
notification  to the other  party if practicable,  from  making  any  disclosure
which its counsel determines to be required by law or any securities exchange.

         7.2  EMPLOYEE BENEFIT PLANS. (a) TRANSFERRED EMPLOYEES. Effective as of
the  Closing  Date,  the  Purchaser  shall  make offers  of  employment to those
Employees as the Purchaser shall determine in its sole discretion, on such terms
and conditions  as determined in the sole discretion of Purchaser. Each Employee
who accepts the Purchaser's  offer of  employment  and  becomes an  employee  of
the  Purchaser, Gibraltar  or an  Affiliate of the  Purchaser  as of the Closing
Date shall be  referred  to  herein  as  a "Transferred  Employee".  Transferred
Employees  shall  be  eligible  to  participate in such employee  benefit plans,
programs,  policies or  arrangements   as  are  determined  from  time  to  time
by the Purchaser on  substantially  the same  terms and  conditions  as apply to
similarly situated employees of the  Purchaser.  The Purchaser  shall notify the
Seller  at  the  time  any  Transferred  Employee terminates employment with the
Purchaser.  In addition,  the  Purchaser  shall  provide  to  the  Seller   such
additional  information  as the Seller may reasonably  request  relating  to the
payment of  benefits  to  the  Transferred  Employees  from any ERISA  Affiliate
Plan which is  intended to be subject to Code Section 401(k).

              (b) SERVICE  CREDIT.  With  respect to any  Transferred  Employee,
the  Purchaser  shall  cause service with the Seller,  Gibraltar or any of their
Affiliates  (or their  respective  predecessors)  prior to the  Closing  Date to
be  treated  as  service  for  all benefit plans and  arrangements  described in
Section 7.2(a)  for  all  purposes  of   eligibility   and  vesting  under  such
benefit plans and arrangements (but not benefit accrual), including for purposes
of pre-existing  conditions  limitations and waiting periods; PROVIDED, HOWEVER,
that this Section 7.2(b) shall not require  that  credit  for any prior  service
be given to the extent it would result in a duplication of benefits.

              (c)  ROLLOVER  DISTRIBUTION.   With  respect  to  any  Transferred
Employee who (i) as  a  result of the sale of  Gibraltar,  becomes  eligible  to
receive an "eligible rollover  distribution" (as  such  term  is  defined  under
Code  Section  402(f)(2)(A)  and  Code  Section  402(c)(4))  from  any   defined

                                      -28-
<PAGE>
contribution  plan sponsored by the Seller or an ERISA  Affiliate of the Seller,
and (ii) elects to transfer such eligible rollover  contribution from such plans
in accordance with the provisions of Code Section  401(a)(31),  Purchaser agrees
to take all  necessary  and  appropriate  action to permit the  transfer of such
amounts  to an  "eligible  retirement  plan"  (as such term is used  under  Code
Section  401(a)(31))  sponsored by the  Purchaser or any ERISA  Affiliate of the
Purchaser on or after the Closing Date; provided,  however, that nothing in this
paragraph (c) shall require any plan of the Purchaser or any ERISA  Affiliate of
the Purchaser to accept a rollover contribution  consisting of assets other than
cash and promissory notes or other evidence of outstanding loans.

         7.3  THE SELLER'S ACCESS TO RECORDS.  The  Purchaser  agrees that after
the Closing Date it shall,  preserve and keep all books and records of Gibraltar
relating to  periods prior to the Closing in the  Purchaser's  possession  for a
period of at least six years from the Closing  Date and the  Purchaser shall and
shall cause Gibraltar to, allow the  Seller to  examine  and make  copies of the
books and records pertaining to the Business conducted by Gibraltar pertinent to
this Agreement and the transactions contemplated hereby, for reasonable business
purposes, including the preparation and examination of Tax Returns and financial
statements  and conduct of any  litigation  or  regulatory  dispute  resolution,
whether pending or threatened, concerning the Business of Gibraltar pertinent to
this Agreement and the transactions  contemplated hereby.  Access to and copying
of such books and records shall be restricted to normal business hours, shall be
at the Seller's expense and shall not  unreasonably  interfere with the Business
or  operations  of the Purchaser or Gibraltar and shall be subject to the Seller
agreeing  to  reasonable  restrictions  regarding  the  use  and  disclosure  of
confidential  information.  Before the  Purchaser  shall  dispose of any of such
books and  records,  at least 90  calendar  days' prior  written  notice to such
effect shall be given by the  Purchaser  to the Seller,  and the Seller shall be
given an opportunity,  at its cost and expense,  to remove and retain all or any
part of such books and records as the Seller may select.

         7.4 TAXES.(a) LIABILITY FOR TAXES; INDEMNIFICATION.(i) The Seller shall
be liable for and pay, and indemnify the Purchaser against any and all liability
for Taxes, but net of any tax  benefits  that would be realized by the Purchaser
or any of its Affiliates, including Gibraltar,  assuming  that  the  payment  or
accrual of the Taxes with respect to which  indemnification  is being made would
give rise to a  currently  utilizable tax benefit  calculated  using the maximum
applicable tax rate then in effect,  (A) imposed on the  Purchaser  or Gibraltar
as a result of the Seller's breach of any  representation  made in Section 3.24;
(B) imposed on  the  Purchaser or  Gibraltar as a result of the Seller's  breach
of any covenant  requiring  performance after the Closing Date contained in this
Section 7.4; (C)  imposed  on  Gibraltar pursuant to Treasury regulation Section
1.1502-6 or similar  provision  of  state  or  local  law  solely as a result of
Gibraltar  having been a member of the Consolidated Group or, for state or local
tax purposes,  any other  combined  filing for Tax purposes;  and (D) imposed on
Gibraltar, or for which Gibraltar may otherwise be liable, in either case,  that
relate to any taxable  year  or  period  that ends on or before the Closing Date
and,  with respect to any  Straddle  Period, the portion of such Straddle Period
ending on and including the  Closing Date,  PROVIDED,  HOWEVER,  that the Seller
shall  not  have  any  liability  under  this  Section  7.4  for any breach of a
representation  made in Section 3.24  or  contained  in the  exhibit  thereto or
in any  document  delivered  pursuant thereto if the  Seller sustains the burden
of proof that the chief  executive  officer,  the  chief operating officer,  the
chief financial officer,  and/or the  tax  director  of the Purchaser had actual
knowledge  of  such  breach  on  or  prior  to  the  date of this Agreement; and
PROVIDED  FURTHER,  HOWEVER,  that  the  Seller  shall  not  indemnify  or  hold

                                      -29-
<PAGE>
harmless the Purchaser and Gibraltar against, (I) any Taxes shown as a liability
or reserve on the December 31 Balance Sheet, (II) any Taxes that result from any
actual  or  deemed  election  under  Section  338 of  the  Code  or any  similar
provisions  of state,  local or foreign  law as a result of the  purchase of the
Shares or that result from the  Purchaser,  any  Affiliate  of the  Purchaser or
Gibraltar  engaging  in  any  activity  or  transaction  that  would  cause  the
transactions  contemplated by this Agreement to be treated as a purchase or sale
of assets of Gibraltar for federal,  state or local Tax purposes,  and (III) any
Taxes  imposed on Gibraltar or for which  Gibraltar may otherwise be liable as a
result of transactions occurring on the Closing Date that are properly allocable
(based on, among other relevant  factors,  factors set forth in Treas.  Reg. ss.
1.1502-76(b)(1)(ii)(B))  to the  portion of the  Closing  Date after the Closing
(Taxes described in this proviso,  hereinafter  "EXCLUDED TAXES"). The Purchaser
and the Seller agree that, with respect to any  transaction  described in clause
(III) of the preceding sentence,  Gibraltar and all persons related to Gibraltar
under Section 267(b) of the Code  immediately  after the Closing shall treat the
transaction for all federal income tax purposes in accordance  with Treas.  Reg.
ss.1.1502-76(b)(1)(ii)(B),  and (to the extent  permitted)  for other income Tax
purposes,  as occurring at the  beginning of the day following the Closing Date.
The Seller shall be entitled to any refund of (or credit for) Taxes allocable to
any taxable  year or period that ends on or before the  Closing  Date and,  with
respect to any Straddle  Period,  the portion of such Straddle  Period ending on
and including the Closing Date.

                (ii)   The Purchaser shall be liable for and pay, and  indemnify
         the Seller against any and all liability,  for (A) all Taxes imposed on
         Gibraltar,  or  for  which  Gibraltar  may otherwise be liable, for any
         taxable year or period that  begins  after the Closing  Date and,  with
         respect to any  Straddle  Period,  the portion of such Straddle  Period
         beginning after  the  Closing  Date  and (B) Excluded Taxes.  Except as
         otherwise  provided  herein,  the  Purchaser  shall be  entitled to any
         refund of (or credit for) Taxes allocable to any taxable year or period
         that begins after  the  Closing  Date and, with respect to any Straddle
         Period, the portion of such Straddle period beginning after the Closing
         Date.

                (iii)  For  purposes  of  paragraphs (a)(i)  and (a)(ii) of this
         Section 7.4, whenever it is necessary  to determine the  liability  for
         Taxes  of  Gibraltar  for  a  Straddle Period, the determination of the
         Taxes of Gibraltar for the portion of the Straddle Period ending on and
         including, and the portion of the Straddle Period beginning  after, the
         Closing Date shall be  determined by  assuming that the Straddle Period
         consisted of two taxable years or periods, one which ended at the close
         of  the  Closing Date and the other which began at the beginning of the
         day following the Closing Date, and items of income,  gain,  deduction,
         loss or  credit of Gibraltar for the Straddle Period shall be allocated
         between such two taxable years or  periods  on  a "closing of the books
         basis" by assuming that the books of Gibraltar were closed at the close
         of the Closing Date, provided, however, that (A) transactions occurring
         on the Closing Date that are properly allocable (based on, among  other
         relevant  factors,  factors  set  forth in  Treas.  Reg.ss.1.1502-76(b)
         (1)(ii)(B)) to the portion of the Closing Date after  the Closing shall
         be  allocated  to the taxable year or period that is deemed to begin at
         the beginning of the day following  the  Closing  Date,  and  for  this
         purpose   the  cancellation  of   Surplus  Notes  and  the  transaction
         contemplated by Section 9.5  shall  be  presumed to be pre-Closing Date
         transactions,   (B)  exemptions,  allowances  or  deductions  that  are
         calculated   on   an  annual   basis,   such   as   the  deduction  for
         depreciation,  shall  be  apportioned  between  such  two taxable years

                                      -30-
<PAGE>
         or periods on a  daily  basis,  and  (C)  in the case of a franchise or
         similar  Tax  not  based on income, Tax allocable to the portion of the
         Straddle Period ending on and including the Closing Date shall be equal
         to the amount of franchise Tax for the taxable year  which  would  have
         been  imposed  if  such  Tax  were  determined  based on the assets and
         liabilities of Gibraltar as of the Closing,  or the amount of franchise
         Tax for  the  taxable year based on the number of Shares outstanding as
         of the Closing, whichever amount is applicable, in each case multiplied
         by a fraction, the numerator of which shall be the number of days  from
         the  beginning  of  the  taxable  year  to  the  Closing  Date  and the
         denominator of which shall be the number of days in the taxable year.

                (iv)   If,  as  a  result  of  any  action, suit, investigation,
         audit, claim, assessment or amended Tax Return,  there  is  any  change
         after  the  Closing  Date  in an item of income, gain, loss, deduction,
         credit or amount of Tax that results in an  increase in a Tax liability
         for  which  the  Seller would otherwise be liable pursuant to paragraph
         (a)(i) of this Section 7.4,  and such change would result in a decrease
         in  the  Tax  liability of Gibraltar, the Purchaser or any Affiliate or
         successor of any thereof for any taxable year or period beginning after
         the Closing Date or for the portion of any  Straddle  Period  beginning
         after  the  Closing  Date assuming that Gibraltar, the Purchaser or any
         Affiliate  or  successor  of  any  thereof  were  to  claim  any  loss,
         deduction, credit or  refund which it was eligible to claim as a result
         of such change and such claim  resulted in a currently fully utilizable
         tax  benefit,  including  any utilizable Tax benefit attributable to an
         increase in  the  adjusted  Tax  basis  of the assets of Gibraltar, the
         Seller  shall  not  be  liable  pursuant to  such paragraph (a)(i) with
         respect to such increase to the extent of such  decrease  (and,  to the
         extent such increase in Tax liability is paid to a  taxing authority by
         the Seller or any Affiliate thereof, the Purchaser shall pay the Seller
         an amount equal to such  decrease);  provided,  however,  that if  such
         claim  does  not result in a currently fully utilizable tax benefit but
         does result  in  a  utilizable  tax  benefit  in one or more subsequent
         periods,  then  Purchaser  shall pay the Seller an amount equal to such
         decrease in a post-Closing  Date  Tax period no later than the time the
         statute of limitation expires for adjustments  to  the  Purchaser's  or
         Gibraltar's  tax return for the post-Closing Date Taxable year in which
         Gibraltar claimed the benefit.

                (v)    The Seller shall promptly notify Purchaser  and Gibraltar
         of  any  proposed  adjustment  of  any  item  on  any tax return of the
         Consolidated Group for any period,  if such  proposed  adjustment would
         materially  affect  the tax liability of Gibraltar or the Purchaser for
         the Straddle  Period  or  any  period  beginning after or including the
         Closing Date.  The Seller shall advise the  Purchaser  of the status of
         any  conferences,  meetings  and  proceedings  with  tax authorities or
         appearances   before  any  court  pertaining   to  such  adjustment  or
         adjustments, and  shall  advise  the  Purchaser  of the outcome of such
         proceedings.  However, nothing  herein  shall  entitle the Purchaser to
         interfere with the Seller's right to make any  judgments or to take any
         actions it deems appropriate in  connection with the disposition of any
         such proposed adjustments.

              (b)  TAX  RETURNS  AND  PAYMENTS.  (i)  The  Purchaser shall cause
Gibraltar  to   consent   to   join,   for   all  taxable periods  of  Gibraltar
ending   on   or   before   the   Closing    Date   for   which   Gibraltar   is
eligible    to   do   so,   in    any    consolidated,   combined   or   unitary
federal,     state,     local    or     foreign     income     and     franchise

                                      -31-
<PAGE>
Tax Returns which the Seller shall request it to join. The Seller shall cause to
be prepared  and filed all such  consolidated,  combined or unitary Tax Returns.
The  Purchaser  agrees  to take  no  position  inconsistent,  and to  cause  its
Affiliates to take no position inconsistent,  with Gibraltar's being a member of
the consolidated,  combined or unitary group of which the Seller is a member for
such  periods.  The Seller shall cause to be timely paid all Taxes to which such
Tax Returns relate for all periods  covered by such Tax Returns.  Within fifteen
(15) days of the Seller's written request therefor, but in no event earlier than
five days prior to the date on which the Seller is  required to cause to be paid
the related Tax liability,  whichever is later,  the Purchaser  shall pay to the
Seller an amount equal to the Taxes for which the  Purchaser is liable  pursuant
to paragraph (a)(ii) of this Section 7.4 but which are payable with a Tax Return
to be filed by the Seller pursuant to this paragraph (b).

                (ii)   The  Seller  shall cause to be prepared and the Purchaser
         shall cause to be timely filed all required federal, state,  local  and
         foreign  Tax  Returns  of Gibraltar (other than those to be prepared by
         the Seller pursuant to Section 7.4(b)(i)) for  any period which ends on
         or  before  the Closing Date, for which Tax Returns have not been filed
         as of the Closing Date. The Seller shall provide a copy of all such Tax
         Returns  to  the Purchaser within thirty (30) days of their completion.
         The  Purchaser shall cause to be prepared and timely filed all required
         federal, state, local and foreign Tax Returns of  Gibraltar (other than
         those  to  be prepared by the Seller pursuant to Section 7.4(b)(i)) for
         any Straddle Period.  The  Purchaser  shall submit all such Tax Returns
         to  the  Seller  no later than 30 days prior to the due date for filing
         such Tax  Returns  for  review  and  approval in writing by the Seller,
         which approval may not be unreasonably withheld.

                (iii)  The Purchaser shall timely cause to be paid all Taxes for
         the periods to which the Tax Returns  to be  caused  to be filed by the
         Purchaser  pursuant  to  clause (ii) of this paragraph (b) relate.  The
         Seller shall  pay  to  the  Purchaser an  amount equal to the Taxes for
         which the Seller is liable pursuant to paragraph (a)(i) of this Section
         7.4  but  which  are  payable  with  any  Tax Return to be filed by the
         Purchaser pursuant to this  paragraph  upon the written  request of the
         Purchaser, which  request  shall set forth in detail the computation of
         the amount owed by the Seller, within  fifteen days of the  Purchaser's
         written request therefor but in no event  earlier  than five days prior
         to the date on  which the  Purchaser  is  required  to cause to be paid
         the related Tax liability, whichever is later.

                (iv)   If  the  Seller's liability pursuant to Section 7.4(a)(i)
         with respect to Taxes of Gibraltar for the portion of a Straddle Period
         ending  on  and  including  the  Closing Date is less than the payments
         previously made by  or  credited  to  Gibraltar  with  respect to  such
         Straddle Period, the  Purchaser  shall  cause  Gibraltar  to pay to the
         Seller the excess of such previous  payments over such Tax liability of
         the Seller within fifteen days of  Gibraltar's  receiving  the  benefit
         of such excess payments through a reduction in any Tax payment required
         to be made by Gibraltar after the Closing.

                (v)    Neither   the    Purchaser    nor   any    Affiliate   of
         the   Purchaser   shall   (or   shall   cause   or   permit   Gibraltar
         to)   amend,   refile   or    otherwise    modify    (or    grant    an
         extension      of      any     statute     of      limitation      with

                                      -32-
<PAGE>
         respect to)  any  Tax Return  relating in whole or in part to Gibraltar
         with respect  to  any  taxable  year or period  ending on or before the
         Closing Date (or with respect to any Straddle Period) without the prior
         written consent of the Seller.

              (c)  ASSISTANCE AND COOPERATION.  After the Closing Date, each  of
the Seller and the Purchaser shall (and shall cause their respective  Affiliates
to) assist the other party in (i) preparing any  Tax  Return  which  such  other
party  is  responsible  for  preparing  in accordance with paragraph (b) of this
Section 7.4, and (ii) contesting any proposed adjustment in an audit examination
or otherwise by any government taxing authority of any Tax Return referred to in
clause (i), which assistance shall include (x) making available to the other, as
reasonably requested,  and to any taxing  authority all  information, records or
documents relating to Tax liabilities or potential Tax  liabilities of Gibraltar
for all periods prior to or including the Closing  Date and (y)  preserving  all
such information, records and documents until the expiration  of any  applicable
statute of  limitations  or  extensions  thereof.  After the  expiration  of any
applicable  statute  of  limitations  or  extensions  thereof,  before  any such
information,  records and  documents  are disposed of, at least ninety  calendar
days prior  written  notice to such effect shall be given to the other party and
such other party shall be given an opportunity at its cost and expense to remove
and retain all or any part of such information,  records and documents as it may
select. The Purchaser shall cause Gibraltar to prepare and provide to the Seller
a package of Tax information materials, including, without limitation, schedules
and work papers (the "Tax Package")  required by the Seller to enable the Seller
to prepare Tax Returns  required to be prepared by it pursuant to paragraph  (b)
of this Section 7.4. The Tax Package shall be completed in accordance  with past
practice, including past practice as to providing such information and as to the
method of  computation of separate  taxable income or other relevant  measure of
income of  Gibraltar.  Such tax  information  packages  shall be provided to the
Seller within 45 days after the Seller's request therefor.  Notwithstanding  any
other  provisions  hereof,  each party shall bear its own  expenses in complying
with the foregoing provisions.

              (d)  TAX ELECTIONS GENERALLY. Without the prior written consent of
the Purchaser, Gibraltar shall not make or change any Tax  election,  change  an
annual  Tax  accounting  period,  adopt or change  any method of Tax accounting,
enter into any  closing  agreement,  settle  or  compromise  any  Tax  claim  or
assessment, surrender any right to claim a Tax refund, consent to any  extension
or waiver of the limitations period applicable to any Tax claim or assessment or
take  or  omit  to  take any other action except,  in each case, in the ordinary
course of business  consistent  with  past  practice, if  any action or omission
referred to above would (i) have a legally  binding  effect upon  Gibraltar with
respect to items in any  taxable  year  ending on or  before  the  Closing  Date
or any  Straddle Period (including without limitation, under a closing agreement
pursuant to Section 7121 of the Code or comparable  provision under state, local
or foreign law) and  (ii)  have  the  effect of  materially  increasing  the Tax
liability of Gibraltar with respect  to any  taxable  year that ends  after  the
Closing  Date or any Straddle  Period

              (e)  TREATMENT OF REQUIRED RESERVE INCREASES.  (i)  The  Purchaser
and the Seller agree that the Federal  income tax  deduction  for  the  Required
Reserve  Increases,  after  appropriate  discounting as required by Sections 832
and 846 of the Code,  shall be claimed by  Gibraltar  in a taxable  year  ending
on  or prior to the Closing Date, and that except as  provided  in this  Section
7.4(e),  Gibraltar  shall  not  increase its discounted  unpaid  losses  for  an
amount  attributable  to the  Required  Reserve  Increases  in  any taxable year
commencing after the Closing Date.

                                      -33-
<PAGE>
                (ii)   In the event that the Internal Revenue Service ultimately
determines  that  Gibraltar  may  not  appropriately  claim  a  deduction  in  a
pre-Closing  Date Tax period  for all or any  portion  of the  Required  Reserve
Increases, then:

                           (A)  Gibraltar  shall have no  obligation to repay to
         the Seller the payment the Seller made to Gibraltar pursuant to the Tax
         Sharing  Agreement in accordance with Section 5.9 except as provided in
         this Section 7.4(e);

                           (B) At the Seller's request, Gibraltar shall file its
         federal income tax returns for one or more post-Closing  Periods (or to
         amend a  previously  filed  return) to claim a deduction or Tax benefit
         (including any Tax benefit  attributable to an increase in the adjusted
         Tax basis of the assets of  Gibraltar)  for all or part of the Required
         Reserve  Increase  in the  applicable  Tax  year;  provided  that  such
         deduction or tax benefit is either (a)  consistent  with the  rationale
         given by the Internal  Revenue Service in writing for the  disallowance
         of the deduction for the Required  Reserve  Increase in the pre-Closing
         Date Tax year in which it was initially claimed by Gibraltar, or (b) in
         accordance  with some  rationale  for which the Seller  delivers to the
         Purchaser  an opinion of  nationally  known tax counsel  familiar  with
         insurance  company  taxation  to the effect that it is more likely than
         not that  Gibraltar  would be entitled to the  deduction or Tax benefit
         for  all or part  of the  Required  Reserve  Increase  in a  particular
         post-Closing Date Taxable year;

                           (C) The Purchaser shall cause Gibraltar to pay to the
         Seller the amount of actual  federal  income tax  savings  obtained  by
         Gibraltar  or the  Purchaser  by complying  with  Seller's  request for
         Gibraltar  to  claim a  deduction  or Tax  benefit  (including  any Tax
         benefit  attributable  to an increase in the  adjusted Tax basis of the
         assets of Gibraltar) for all or part of the Required  Reserve  Increase
         in a post-Closing Date Tax period no later than the time the statute of
         limitations  expires for  adjustments to the Purchaser's or Gibraltar's
         tax return for the  post-Closing  Date Taxable year in which  Gibraltar
         claimed the deduction; and

                           (D) If  Gibraltar  receives  cash due to a refund  of
         federal income taxes or a deduction in actual taxes paid as a result of
         complying  with the  Seller's  request  in  clause B  above,  then,  in
         addition to the payment to the Seller  described in clause C above, the
         Purchaser shall cause Gibraltar to pay interest to the Seller at a rate
         equal to the  applicable  Federal short term rate as defined in Section
         1274(d)(1) of the Code.

         7.5  COMMERCIAL REASONABLENESS. Subject to the terms and  conditions of
this Agreement, each party will use all commercially reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things  necessary,  proper or
advisable  to  consummate  and make  effective  in the most  expeditious  manner
practicable,  the  Closing  and  the  other  transactions  contemplated  by this
Agreement,  including (a) the obtaining of all necessary  actions or nonactions,
waivers, consents and approvals from governmental entities and the making of all
necessary  registrations  and filings and the taking of all reasonable  steps as
may  be  necessary  to  obtain  an  approval  or  waiver  from,  or  to avoid an
action or  proceeding  by, any  governmental  entity,  (b) the  obtaining of all
necessary   consents,  approvals  or  waivers  from   third   parties,  (c)  the
defending  of  any  lawsuits  or  other  legal  proceedings, whether judicial or

                                      -34-
<PAGE>
administrative,  brought  against such party  challenging  this Agreement or the
consummation of the transactions  contemplated hereby, including seeking to have
any  stay  or  temporary  restraining  order  entered  by  any  court  or  other
governmental  entity  vacated or reversed and (d) the  execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by this Agreement.

         7.6  TERMIATION OF AGREEMENTS. The Seller shall (i) terminate, or cause
the termination of, in writing, as of  the  Closing  Date,  the  agreements  and
arrangements  listed on Schedule 7.6, without requiring  additional  payments or
other  consideration and without any further liability or obligation on or after
the Closing Date of any party to any other party pursuant to those agreements or
arrangements,  and  (ii)  cause  all  Tax  allocation  agreements,  Tax  sharing
agreements or agreements  between the Seller and its Affiliates on the one hand,
and Gibraltar on the other,  to be  extinguished  and terminated with respect to
Gibraltar  and any  rights or  obligations  existing  under  such  agreement  or
arrangement to be no longer  enforceable.  The Seller further agrees that it and
its Affiliate,  Prudential  Property and Casualty Insurance Company will release
Gibraltar  from all  liabilities  under the Service  Contract  dated May 1, 1997
between Gibraltar and Prudential Property and Casualty Insurance Company.

         7.7  USE OF GIBRALTAR MARKS.  The Purchaser  shall cause  Gibraltar  to
cease all  use  whatsoever of the Gibraltar  Marks effective  immediately  after
the Closing Date.  The  Purchaser may continue to use the  Gibraltar  name for a
sixty-day period commencing on the Closing Date for the purpose of preparing and
filing  with the Secretary of State and/or Office of the Insurance  Commissioner
in each State where Gibraltar is licensed or qualified  to conduct business, the
regulatory or other filings necessary to effect the transactions contemplated by
this  Agreement.  The  Purchaser  shall  provide the Seller with  representative
samples of its use of the  Gibraltar  name  pursuant to this  Section 7.7 at the
conclusion of each calendar  month during such sixty-day  period.  The Purchaser
acknowledges  that any use of the  Gibraltar  name  pursuant to this Section 7.7
shall inure to the benefit of the Seller. The Purchaser further acknowledges the
Seller's  rights in the Gibraltar name and the Gibraltar  Marks and the goodwill
pertaining  thereto.  The  Purchaser  agrees that neither it nor its  Affiliates
shall challenge the validity of the Seller's ownership of the Gibraltar name and
the Gibraltar Marks or contest the validity of the Gibraltar Marks.

                                  ARTICLE VIII
                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES

         8.1  SURVIVAL OF COVENANTS, AGREEMENTS, REPRESENTATIONS OR  WARRANTIES.
The representations and warranties in this Agreement  and in any other  document
delivered in connection  herewith  shall survive the Closing solely for purposes
of Sections  12.1(a) and (b) of this Agreement and shall  terminate at the close
of business 15 months  following the Closing Date (except those  representations
and  warranties  contained  in  Sections 3.1, 3.2 and 3.3, which representations
and  warranties  shall  survive  forever  and  except  those representations and
warranties   with   respect   to   Taxes   provided   in   Section  3.24,  which
representations   and   warranties   shall   terminate   90   days   after   the

                                      -35-
<PAGE>
expiration  of any  statute of limitations in respect of Taxes).  The  covenants
contained in this  Agreement shall survive the Closing.

                                   ARTICLE IX
          JOINT CONDITIONS TO THE OBLIGATIONS OF THE PARTIES TO CLOSE

         The  obligations of the Purchaser and the Seller to consummate the sale
of the  Shares  and  the  other transactions  contemplated by this Agreement are
subject to  the  satisfaction or waiver by each party on or prior to the Closing
Date of the following conditions:

         9.1  INSURANCE  REGULATORY  APPROVALS.   All  consents,  approvals  and
waivers  of  the   State   Insurance  Commission  required   to  consummate  the
transactions  contemplated  hereby shall have been obtained without any material
conditions,  restrictions  or  limitations  (it   being   understood   that  any
conditions, restrictions or limitations relating to risk based  capital shall be
deemed not to be material) and such consents, approvals and waivers shall remain
in full force and effect  and all statutory  waiting  periods in respect thereof
shall have expired (it is expressly understood  that  nothing in this  Agreement
shall be construed as granting to the Purchaser any power, right or authority to
control, directly or indirectly, the management, policies, business,  operations
or affairs of Gibraltar  until the  conditions  precedent  to the closing of the
transactions  contemplated  hereby  have been satisfied, including obtaining the
approval of the State Insurance Commissioner described in this Section).

         9.2  REGULATORY CONSENTS.  The  applicable waiting period under the HSR
Act shall have expired or early termination shall have been granted.

         9.3  NO PROCEEDINGS.  No  order  of any court or administrative  agency
shall be in  effect which restrains or prohibits the  transactions  contemplated
hereby  and  no suit,  action  or  legal  or  administrative proceeding shall be
pending which (i)  has  been  brought  by a  governmental  entity and challenges
consummation  of the  transactions  contemplated hereby or (ii) has a reasonable
probability of having  a Material Adverse Effect on the Business of Gibraltar or
(iii) has a reasonable  probability  of having a Material  Adverse Effect on the
ability of the Purchaser to own and control such Business or the Shares.

         9.4  MUF AGREEMENT. The Seller and Gibraltar shall have entered into an
indemnification  agreement (the "MUF  AGREEMENT")  substantially  in the form of
Exhibit C to this Agreement,  relating to certain  uncollectible MUF reinsurance
recoveries  and the Purchaser  shall or shall cause Everest Re to provide to the
Seller  Schedule  A to the MUF  Agreement  on or before the first  Business  Day
following  the date on which all of the  conditions  set forth in Articles IX, X
and XI shall have been satisfied or waived.

         9.5 ADDITIONAL STOP-LOSS COVERAGE. The Seller (or one of its Affiliates
so long  as  the  Seller  provides  a  guarantee  (in  a form  acceptable to the
Purchaser)   of   such   Affiliate's   obligations)  and  Gibraltar  shall  have
entered   into  an   indemnification  agreement   (the   "ADDITIONAL   STOP-LOSS

                                      -36-
<PAGE>
AGREEMENT")  substantially in the form of Exhibit D to this Agreement,  relating
to the  provision  by the  Seller  (or  one of  its  Affiliates)  of  additional
stop-loss coverage.

                                    ARTICLE X
             CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE

         The  obligation  of the  Purchaser  to  consummate  the purchase of the
Shares and the other  transactions  contemplated by this Agreement is subject to
the  satisfaction  or waiver by the Purchaser on or prior to the Closing Date of
the following conditions:

         10.1  COVENANTS. The Seller  shall have  performed  and complied in all
material respects with all covenants and  agreements  required by this Agreement
and each  other document  required hereby to be delivered to the Purchaser to be
performed or complied with by it on or prior to the Closing Date.

         10.2  REPRESENTATIONS AND WARRANTIES OF THE SELLER. The representations
and  warranties  of  the  Seller  contained in this Agreement and in each  other
document required hereby to be delivered by the Seller shall be true and correct
on  and  as  of  the  Closing  Date  with   the  same  effect  as   though  such
representations  and  warranties had been made on and as of such date (except to
the extent an earlier date is specified in such representations and warranties),
except where the failure to be true and  correct  would not,  in the  aggregate,
reasonably be expected to have a Material Adverse Effect on Gibraltar.

         10.3  CERTIFICATES.  The  Purchaser  shall have received a certificate,
dated the Closing Date and executed by the President or  any  Vice  President of
the  Seller,  certifying  that,  to  the  best  knowledge  of  such officer, the
conditions set forth in Sections 10.1 and 10.2 and have been satisfied.

         10.4  OTHER APPROVALS.  Gibraltar  shall  be  authorized as an eligible
surplus lines  insurer in the State of New Jersey and shall  hold all  approvals
and licenses necessary to enable  it to  continue  to carry on its  Business  as
presently conducted after consummation of the sale of the Shares and  the  other
transactions  contemplated  hereby, other than approvals or licenses the failure
to obtain which would not, in the  aggregate,  reasonably  be expected to have a
Material Adverse Effect on Gibraltar.

         10.5  OTHER CONSENTS.  Gibraltar  shall  have  received all consents of
other parties to the Contracts of Gibraltar necessary to permit the consummation
of  the  transactions  contemplated  hereby  other  than consents the failure to
obtain  which  would  not, in  the  aggregate,  reasonably be expected to have a
Material Adverse Effect on Gibraltar.

         10.6  RESIGNATION OF DIRECTORS AND OFFICERS.  Written resignations from
each of the directors and officers  of  Gibraltar  shall have been  delivered to
the Purchaser.

                                      -37-
<PAGE>
         10.7  NO MATERIAL ADVERSE CHANGE.  Since December 31, 1999, there shall
have been  no  material  adverse change in the financial  condition,  results of
operations, cash flows or Business of Gibraltar.

                                   ARTICLE XI
              CONDITIONS TO THE OBLIGATIONS OF THE SELLER TO CLOSE

         The  obligations of the Seller to consummate the sale of the Shares and
the  other  transactions  contemplated  by  this  Agreement  is  subject  to the
satisfaction  or waiver by the  Seller  on or prior to the  Closing  Date of the
following conditions:

         11.1  COVENANTS. The Purchaser shall have performed and complied in all
material respects with all covenants,  agreements  and  conditions  required  by
this  Agreement  and each other document  required hereby to be delivered to the
Seller to be performed or complied with by it on or prior to the Closing Date.

         11.2  REPRESENTATIONS   AND   WARRANTIES   OF   THE   PURCHASER.    The
representations and warranties of the Purchaser  contained in this Agreement and
each other document required  hereby to be delivered by the  Purchaser  shall be
true and correct in all material  respects  on and as of the  Closing  Date with
the same effect as  though such  representations and warranties had been made on
and  as  of such date (except to the extent an earlier date is specified in such
representations and warranties).

         11.3  CERTIFICATES. The Seller shall have received a certificate, dated
the Closing Date and executed  by the  President  or any  Vice  President of the
Purchaser,  certifying  that,  to  the  best  knowledge  of  such  officer,  the
conditions set forth in Sections 11.1 and 11.2 have been satisfied.

                                   ARTICLE XII
                                INDEMNIFICATION

         12.1  INDEMNIFICATION BY THE SELLER. (a) The Seller shall indemnify the
Purchaser and  its  directors,  officers,  employees and Affiliates against, and
hold each of them harmless from, any loss, liability, claim, damage  or  expense
(including reasonable legal fees and expenses,  but excluding any  consequential
or special  damages)  (collectively,  for purposes of this Article 12, "Losses")
suffered or  incurred  by any such  Indemnified  Person  (other  than any Losses
relating to Taxes, for which indemnification provisions are set forth in Section
7.4(a)) to  the  extent  arising  from  (i) any breach of any  representation or
warranty of the  Seller  contained  in this  Agreement  (other  than in  Section
3.24) or in  any  certificate,  instrument or other document  delivered pursuant
hereto or thereto  (all  of which representations and warranties shall be deemed
to  have  been  remade  on  and  as of the Closing Date (except to the extent an
earlier  date  is  specified   in  such   representations  and  warranties))  or
(ii)  any breach of any covenant of  the  Seller  contained  in  this  Agreement
which   breach   continues   for   ten   Business  Days   after  notice  thereof
has    been   furnished   by   the   Purchaser    to   the   Seller;   PROVIDED,

                                      -38-
<PAGE>
HOWEVER,  that the Seller  shall not have any  liability  under clause (i) above
unless the sum of the  aggregate  of all Losses  relating  thereto for which the
Seller would, but for this proviso, be liable,  exceeds on a cumulative basis an
amount  equal to  $499,000,  and then  only to the  extent  of any such  excess;
PROVIDED  FURTHER,  HOWEVER,  that the Seller shall not have any liability under
clause  (i) above to the  extent  that the sum of the  aggregate  of all  Losses
relating thereto exceeds $20,000,000;  and PROVIDED FURTHER,  HOWEVER,  that the
Seller shall not have any liability under this Section 12.1(a) to the extent the
liability or obligation  arises as a result of any action taken or omitted to be
taken by the  Purchaser  or any of its  Affiliates  other than those  actions or
omissions  arising out of the  operation of Gibraltar in the ordinary  course of
business; and PROVIDED, FURTHER, HOWEVER, that the limitations set forth in this
Section 12.1(a) shall not apply to any Losses caused by fraud on the part of the
Seller.

         The Purchaser acknowledges and agrees that, from and after the Closing,
its sole and exclusive remedy with respect to any and all claims relating to the
subject matter of this Agreement  (other than claims under the MUF Agreement and
the Additional  Stop-Loss Agreement or claims of fraud) shall be pursuant to the
indemnification  provisions set forth in this Section 12.1(a) and Section 7.4(a)
(solely with respect to Taxes).  In furtherance of the foregoing,  the Purchaser
hereby  waives,  and releases and  discharges  the Seller and its  affiliates in
respect of, from and after the Closing,  to the fullest extent  permitted  under
applicable  law,  any and all  rights,  claims and causes of action  (other than
claims of, or causes of action  arising  from,  fraud) it, may have  against the
Seller,  its  Affiliates,  directors,  officers,  employees,  agents or  assigns
relating to the subject matter of this Agreement  except under the MUF Agreement
and the Additional  Stop-Loss Agreement or the ownership prior to the Closing of
Gibraltar by the Seller or its Affiliates or Gibraltar's  Business,  and arising
under  or  based  upon any  federal,  state,  local  or  foreign  statute,  law,
ordinance, rule or regulation.

         (b)  INDEMNIFICATION BY THE PURCHASER.  The  Purchaser  shall indemnify
the  Seller  and its directors,  officers, employees and Affiliates against, and
hold each of them  harmless  from,  any Losses  suffered or incurred by any such
Indemnified Person (other than any relating to Taxes, for which  indemnification
provisions are set forth in Section 7.4(a)) to the extent  arising  from (i) any
breach  of  any  representation  or warranty of the Purchaser  contained in this
Agreement or in any certificate, instrument or other document delivered pursuant
hereto or thereto (all of which representations and  warranties  shall be deemed
to have  been  remade  on  and  as of the Closing  Date (except to the extent an
earlier date  is specified in such  representations  and warranties)),  (ii) any
breach of any  covenant  of  the  Purchaser  contained in this Agreement,  which
breach  continues for ten Business Days after notice  thereof has been furnished
by the Seller to the Purchaser, (iii)  from and  after  the  Closing  Date,  any
guarantee or obligation to assure  performance given or made by the Seller or an
Affiliate of the Seller with respect to any  obligation  of  Gibraltar,  that is
specified on Schedule  6.3  and  is  required to  be performed after the Closing
Date;  PROVIDED, HOWEVER,  that the Purchaser shall not have any liability under
clause (i) above unless the aggregate of all Losses  relating  thereto for which
the  Purchaser  would,  but for this proviso,  be liable exceeds on a cumulative
basis an amount equal to  $499,000,  and then only to the  extent  of  any  such
excess;  PROVIDED  FURTHER,  HOWEVER,  that  the  Purchaser  shall  not have any
liability under clause  (i)  above  to  the  extent  Losses  relating thereto in
aggregate exceed $20,000,000; PROVIDED FURTHER,  HOWEVER,  that the  limitations
set  forth in  this  Section  12.1(b)  shall  not  apply  to any  Losses  caused
by fraud on the part of the Purchaser.

                                      -39-
<PAGE>
         The Seller  acknowledges  and agrees that,  from and after the Closing,
its sole and exclusive remedy with respect to any and all claims relating to the
subject matter of this Agreement  (other than claims of fraud) shall be pursuant
to the indemnification  provisions set forth in this Section 12.1(b) and Section
7.4(b) (solely with respect to Taxes).  In  furtherance  of the  foregoing,  the
Seller  hereby  waives,  and  releases  and  discharges  the  Purchaser  and its
Affiliates  in respect of,  from and after the  Closing,  to the fullest  extent
permitted under applicable law, any and all rights,  claims and causes of action
(other  than  claims of, or causes of action  arising  from,  fraud) it may have
against the Purchaser, its Affiliates, directors, officers, employees, agents or
assigns  relating to the subject matter of this Agreement,  and arising under or
based upon any federal, state, local or foreign statute, law, ordinance, rule or
regulation.

         (c)  LOSSES NET OF INSURANCE, ETC.  The amount of any  Loss  for  which
indemnification  is provided under this Section 12.1 shall be net of any amounts
recovered or recoverable by the Indemnified Person under insurance policies with
respect to such Loss and shall be reduced  to take  account of any Tax  benefits
that would be realized by the Indemnified  Person arising from the incurrence or
payment of any such Loss  assuming  that the  incurrence  or payment of any such
Loss would give rise to a currently  utilizable Tax benefit calculated using the
maximum  applicable  tax rate then in effect.  Any indemnity  payment under this
Article XII or Section 7.4 of this  Agreement  shall be treated as an adjustment
to the Purchase  Price for Tax  purposes,  unless a final  determination  (which
shall include the execution of a Form 870 or successor form) with respect to the
Indemnified  Person or any of its  affiliates  causes any such payment not to be
treated as an adjustment to the Purchase  Price for United States federal income
Tax purposes.

         (d)  TERMINATION OF INDEMNIFICATION.  The obligations to indemnify  and
hold  harmless a  party hereto (i) pursuant to Sections 12.1(a)(i) or 12.1(b)(i)
(other than Tax liabilities), shall terminate when the applicable representation
or warranty terminates pursuant to  Section 8.1, (ii)  solely  with  respect  to
Taxes  pursuant  to  Section  7.4,  shall  terminate 90 days after the time  the
applicable  statutes  of  limitations  with  respect  to the Tax  liabilities in
question expire (giving effect to any  extension  thereof),  and (iii)  pursuant
to the other  clauses  of  Sections  12.1(a)  and  12.1(b)  shall not terminate;
PROVIDED, HOWEVER,  that  as to clauses (i) and (ii) above such  obligations  to
indemnify  and hold harmless  shall not terminate with respect to any item as to
which the person to  be  indemnified  or  the  related  party hereto shall have,
before the expiration of  the  applicable  period,  previously made  a  claim by
delivering a notice (stating  in  reasonable  detail the basis of such claim) to
the indemnifying party.

         (e) PROCEDURES RELATING TO INDEMNIFICATION. In order for an Indemnified
Person to be entitled to any indemnification provided  for under this  Agreement
in respect of, arising out of or  involving a claim or demand made by any Person
against the Indemnified Person (a "THIRD PARTY CLAIM"),  such Indemnified Person
must notify the Indemnifying Person in writing, and in reasonable detail, of the
Third Party Claim within ten  Business  Days after  receipt by such  Indemnified
Person of written  notice of the Third  Party  Claim;  PROVIDED,  HOWEVER,  that
failure to give such notification shall not affect the indemnification  provided
hereunder except to the extent the Indemnifying  Person shall have been actually
prejudiced  as a result of such  failure  (except that the  Indemnifying  Person
shall not be liable  for any  expenses  incurred  during the period in which the
Indemnified  Person failed to give such  notice).  Thereafter,  the  Indemnified
Person  shall  deliver  to  the  Indemnifying  Person, within five Business Days
after  the  Indemnified  Person's  receipt  thereof,  copies  of all notices and

                                      -40-
<PAGE>
documents (including court papers) received by the  Indemnified  Person relating
to the Third Party Claim.

         If a Third Party Claim is made against an Indemnified Person (except as
provided  in Section  12.1(f)),  the  Indemnifying  Person  will be  entitled to
participate in the defense thereof and, if it so chooses,  to assume the defense
thereof  with  counsel  selected  by  the  Indemnifying  Person  and  reasonably
satisfactory to the Indemnified Person.  Should the Indemnifying Person so elect
to assume the defense of a Third Party Claim, the  Indemnifying  Person will not
be liable to the  Indemnified  Person for legal and other  professional  adviser
expenses  subsequently incurred by the Indemnified Person in connection with the
defense  thereof.  If  the  Indemnifying   Person  assumes  such  defense,   the
Indemnified  Person shall have the right to participate  in the defense  thereof
and to employ counsel, at its own expense, separate from the counsel employed by
the Indemnifying  Person, it being understood that the Indemnifying Person shall
control such defense.  The Indemnifying  Person shall be liable for the fees and
expenses of counsel  employed by the  Indemnified  Person for any period  during
which the  Indemnifying  Person has not assumed the defense  thereof (other than
during  any period in which the  Indemnified  Person  shall have  failed to give
notice of the Third Party Claim as provided above).  If the Indemnifying  Person
chooses to defend or  prosecute  any Third Party Claim,  all the parties  hereto
shall cooperate in the defense or prosecution  thereof.  Such cooperation  shall
include the retention and (upon the Indemnifying Person's request) the provision
to the  Indemnifying  Person of records  and  information  which are  reasonably
relevant to such Third Party Claim, and making employees available on a mutually
convenient  basis to  provide  additional  information  and  explanation  of any
material provided  hereunder.  Whether or not the Indemnifying Person shall have
assumed the defense of a Third Party Claim, (i) the Indemnified Person shall not
admit any liability  with respect to, or settle,  compromise or discharge,  such
Third Party Claim without the Indemnifying Person's prior written consent (which
consent shall not be  unreasonably  withheld) and (ii) the  Indemnifying  Person
shall not,  without the  Indemnified  Party's  consent,  settle,  compromise  or
discharge (A) any Third Party Claim if such settlement,  compromise or discharge
imposes any  equitable  obligations  on the  Indemnified  Party or (B) any Third
Party Claim for an amount that together with all other amounts therefore paid by
the Indemnifying  Party under Section 12.1 (a) or (b), as the case may be, would
exceed $20,000,000 in the aggregate. All Tax Claims shall be governed by Section
7.4.

         (f)  PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS. If  a  claim
shall be  made by any Taxing authority, which, if successful, might result in an
indemnity payment to the Purchaser or one of its affiliates  pursuant to Section
7.4, the Purchaser shall  promptly  notify  the  Seller in writing of such claim
(a "TAX CLAIM").  If  notice of  a Tax Claim is not given to the Seller within a
sufficient  period  of time to allow the Seller to effectively  contest such Tax
Claim, or  in  reasonable  detail to apprise the Seller of the nature of the Tax
Claim, in each case taking into account the facts and circumstances with respect
to such Tax Claim, the Seller shall not be liable to the Purchaser or any of its
Affiliates to the extent that the Seller's position is  actually prejudiced as a
result thereof.

         With  respect  to  any  Tax  Claim  (other  than  a Tax Claim  relating
solely  to  Taxes  of  Gibraltar  for  any  taxable  period  that  includes (but
does  not  end  on)  the  Closing  Date),   the   Seller   shall   control   all
proceedings  taken  in  connection  with  such  Tax  Claim  (including,  without
limitation,   selection  of  counsel)  and,   without  limiting  the  foregoing,
may    in    its   sole   discretion    pursue   or   forego   any    and    all

                                      -41-
<PAGE>
administrative  appeals,  proceedings,  hearings and conferences with any Taxing
authority with respect thereto, and may, in its sole discretion,  either pay the
Tax claimed and sue for a refund where  applicable law permits such refund suits
or contest the Tax Claim in any permissible manner. The Seller and the Purchaser
shall jointly  control all  proceedings  taken in connection  with any Tax Claim
relating solely to Taxes of Gibraltar for a Straddle  Period.  The Purchaser and
the Seller and each of their  respective  Affiliates  shall fully cooperate with
one  another in  contesting  any Tax Claim,  which  cooperation  shall  include,
without  limitation,  the  retention  and (upon the other  party's  request) the
provision to such other party of records and  information  which are  reasonably
relevant  to such Tax  Claim,  and  making  employees  available  on a  mutually
convenient  basis  to  provide  additional  information  or  explanation  of any
material  provided  hereunder or to testify at proceedings  relating to such Tax
Claim.

         In  no  case  shall  the  Purchaser  settle or otherwise compromise any
Tax Claim without the Seller's prior written consent.  Nothing  contained herein
shall require the Purchaser to contest a Tax Claim if the Purchaser  shall waive
in writing  the  payment by the Seller of any  amount  that might  otherwise  be
payable by the Seller pursuant to this Agreement in respect of such Tax Claim.

                                  ARTICLE XIII
                       TERMINATION, AMENDMENT AND WAIVER

         13.1  TERMINATION.  This  Agreement may be terminated at any time prior
to the Closing as follows:

               (a)   By mutual written consent of the Purchaser and the Seller;

               (b)   By the Purchaser if there has been a material breach of any
         covenant  or  agreement  on  the  part  of the Seller set forth in this
         Agreement which has not been cured within 30 days after notice thereof;
         or

               (c)   By  the  Seller if there has been a material  breach of any
         covenant or  agreement  on  the part of the Purchaser set forth in this
         Agreement and such  material  breach has not been cured  within 30 days
         after notice thereof; or

               (d)   By either the Purchaser or the Seller if the Closing  shall
         not have  occurred  by June  30,  2000;  PROVIDED,  HOWEVER,  that  the
         right to  terminate this Agreement under this Section 13.1 shall not be
         available  to  the  party  whose  failure  to  fulfill  any  obligation
         under this Agreement has been the cause or shall result in the  failure
         of the Closing to occur prior to such date.

                                      -42-
<PAGE>
         13.2  EFFECT  OF  TERMINATION.    In  the  event  that  this  Agreement
terminates,  the  obligations  set  forth herein shall terminate except that the
obligations of each  party  under  Section  7.1  and  14.11  shall  survive  the
termination  of the  Agreement;  PROVIDED,  HOWEVER,  that termination shall not
defeat or impair the  right of any party to pursue such relief as may  otherwise
be available to it on  account of  any breach of this Agreement or of any of the
covenants or agreements contained herein.

                                   ARTICLE XIV
                                 MISCELLANEOUS

         14.1  AMENDMENT. This  Agreement  may  not  be  amended  except  by  an
instrument in writing signed on behalf of each of the parties hereto.

         14.2  EXTENSION; WAIVER.  At any time prior to the Closing, the parties
may, in the  manner  and to the  extent  legally  allowed,  (i)  extend the time
for the performance of any of the obligations or other acts of the other parties
hereto  and  (ii)  waive  compliance  with  any of the  agreements or conditions
contained  herein.  Any  agreement  on  the  part of a party  hereto to any such
extension or  waiver  shall  be  valid only if set forth in a written instrument
signed on behalf of such party.  The waiver by any party hereto at or before the
Closing  Date  of  any  condition  to  its  obligations  hereunder  which is not
fulfilled  shall not preclude such party from seeking  redress under Article XII
from  the  other  party  hereto  for  any  misrepresentation  or  breach  of any
warranty,  covenant or agreement  contained  in this  Agreement.  The  waiver by
any party  hereto  of  a  breach  of  this  Agreement  shall  not  operate or be
construed as a waiver of any subsequent breach.

         14.3  NOTICES.  All notices or other communications  hereunder shall be
in writing and shall be deemed given (i) upon delivery if delivered  personally,
(ii) upon  receipt if sent by  facsimile  transmission,  (iii) if mailed,  three
days after mailing by registered or certified  mail (return  receipt  requested)
or (iv) if sent by a  nationally  recognized  overnight  delivery  service,  one
day  after  sending  by such service to the parties at the  following  addresses
(or at such other address for a party as shall be specified by like notice):

         (a)   If to the Purchaser, to:

                           c/o Everest Reinsurance Company
                           477 Martinsville Road

                           P.O. Box 830
                           Liberty Corner, New Jersey  07938
                           Fax:  (908) 604-3450
                           Attention:  Janet J. Burak

                                      -43-
<PAGE>
               with copies to:

                           Mayer, Brown & Platt
                           190 South LaSalle Street
                           Chicago, Illinois  60603
                           Fax:  (312) 701-7711
                           Attention:  Richard W. Shepro

         (b)   If to the Seller to:

                           The Prudential Insurance Company of America
                           751 Broad Street
                           Newark, NJ  07102
                           Fax:  (973) 367-8105
                           Attention:  Douglas A. Gregory

               with a copy to:

                           Sidley & Austin
                           875 Third Avenue
                           New York, NY  10022
                           Fax:  (212) 906-2021
                           Attention:  Scott M. Freeman

         14.4  INTERPRETATION.  When a reference is made in this  Agreement to a
section, schedule or exhibit, such reference shall be to a section,  schedule or
exhibit of this Agreement unless otherwise indicated or unless the context shall
otherwise  require.  The  table  of  contents  and  headings  contained  in this
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or  interpretation  of this  Agreement.  Whenever  the words  "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words  "without  limitation."  The phrase "to the  knowledge  of
Gibraltar" shall refer to the actual knowledge of John Mottola, Andrew Corselli,
Doreen Faga,  Adam Kenney,  Christine  Knight,  Michael Rant,  Colleen Badum and
Joanne Poles. The terms "hereof," "herein" and similar terms shall refer to this
entire  Agreement and the date of this Agreement shall be the date first written
herein.

         14.5  GOVERNING LAW.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.

         14.6  ASSIGNMENT; BINDING EFFECT.  Except  as  otherwise  permitted  in
this Agreement,  neither  this  Agreement  nor  any  of  the  rights,  interests
or  obligations hereunder shall be assigned by any of the parties hereto without
the  prior  written  consent of the other parties, except that the Purchaser may
assign  this  Agreement  to  an  Affiliate  of  the  Purchaser  so long  as such
Affiliate  executes  this  Agreement and the Purchaser  continues as a signatory
hereto (in which case the term "the  Purchaser"  as used herein  shall be deemed
to  include  such  Affiliate).  This  Agreement  will  be  binding  upon,  inure

                                      -44-
<PAGE>
to the  benefit  of and be  enforceable  by the  parties  and  their  respective
successors and permitted assigns.

         14.7  COUNTERPARTS.  This  Agreement  may  be  executed  in two or more
counterparts, all of which shall be considered  one and the same agreement,  and
shall become  effective  when two or more  counterparts have been signed by each
of the parties  and  delivered to the other parties,  it being  understood  that
the parties need not sign the same counterpart.

         14.8  ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES.  The Confidentiality
Agreements together with this Agreement (including other  agreements,  documents
and instruments referred to herein) constitute the entire agreement  between the
parties relating to the subject matter hereof and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject  matter hereof and are not intended to confer upon any Person other than
the parties hereto any rights or remedies hereunder.

         14.9  NO WAIVER.  No  forbearance  to  enforce  any  provision or right
hereunder shall  be deemed a waiver thereof,  and no waiver of any breach of any
term or covenant  herein shall be  construed  as a waiver of any other breach of
the same, or any other term or covenant herein.

         14.10 CONSTRUCTION.   This  Agreement  is  the  result  of  arms-length
negotiations  between the parties  hereto and has been  prepared  jointly by the
parties.  In applying and  interpreting the provisions of this Agreement,  there
shall be no  presumption  that  the  Agreement  was  prepared  by any one  party
or that the Agreement shall be construed in favor of or against any one party.

         14.11 FEES AND EXPENSES. Each party  hereto shall bear its own fees and
expenses  with  respect to the  transactions  contemplated  hereby and Gibraltar
shall bear  none  of such expenses. The Seller and the Purchaser shall each bear
one-half the  cost of all sales, use, stamp,  transfer,  services  recording and
like transfer Taxes, if any, imposed by any governmental authority in connection
with the transfer and assignment of the Shares.

                                      -45-
<PAGE>
         IN WITNESS  WHEREOF,  the  Purchaser  and the Seller have executed this
Agreement on the date first above written.

                            THE PRUDENTIAL INSURANCE
                            COMPANY OF AMERICA

                            By: /S/ Douglas Gregory
                                ---------------------------------
                                Name:  Douglas Gregory
                                Title: Vice President

                            EVEREST REINSURANCE HOLDINGS, INC.

                            By: /S/ Stephen L. Limauro
                                ---------------------------------
                                Name:  Stephen L. Limauro
                                Title: Senior Vice President and
                                       Chief Fiancial Officer

<PAGE>
                                    Exhibit A

                    Form of Opinion of Counsel to the Seller
                    ----------------------------------------

                  1. The Seller is a mutual insurance  company  domiciled in the
State of New Jersey. The Seller has all necessary  corporate power and authority
to execute and deliver  the  Agreement,  the MUF  Agreement  and the  Additional
Stop-Loss Agreement, to perform its obligations thereunder and to consummate the
transactions contemplated thereby.

                  2. The execution and delivery by the Seller of the  Agreement,
the MUF Agreement and the Additional Stop-Loss Agreement, the performance by the
Seller of its obligations  thereunder and the  consummation by the Seller of the
transactions  contemplated  thereby have been duly and validly authorized by all
necessary  corporate  action on the part of the Seller.  The Agreement,  the MUF
Agreement  and the  Additional  Stop-Loss  Agreement  has been duly executed and
delivered by a duly  authorized  officer of the Seller and  constitutes a legal,
valid and binding  obligations of the Seller  enforceable  against the Seller in
accordance  with  its  terms  (subject  to  applicable  bankruptcy,  insolvency,
fraudulent  transfer,  reorganization,   moratorium  and  other  laws  affecting
creditors' rights generally from time to time in effect).  The enforceability of
the  Seller's  obligations  is also  subject  to  general  principles  of equity
(regardless  of whether such  enforceability  is  considered  in a proceeding in
equity or at law).

                  3.  All   necessary   filings   or   registrations   with  any
governmental or regulatory authority required for the consummation by the Seller
of the  transactions  contemplated  by the Agreement,  the MUF Agreement and the
Additional   Stop-Loss   Agreement   have  been  duly  made,  and  all  permits,
authorizations,   consents  or  approvals  of  any  governmental  or  regulatory
authority required in connection with such transactions have been duly obtained.

                  4.  The  Shares  constitute  all the  issued  and  outstanding
capital  stock of  Gibraltar,  all such  Shares  are,  to our  knowledge,  owned
directly  by the  Seller  free and clear of any  liens,  encumbrances  and other
charges and all such Shares have been duly and validly  authorized and issued by
Gibraltar and are fully paid and  nonassessable.  To our knowledge  there are no
agreements,  arrangements or understandings  restricting the right of the Seller
to sell, assign, transfer and deliver the Shares and, assuming the Purchaser has
the  requisite  power and  authority to be the lawful owner of the Shares,  upon
delivery  to the  Purchaser  at the  Closing of  certificates  representing  the
Shares,  duly  endorsed by the Seller for transfer to the Purchaser and upon the
Seller's receipt of the Purchase Price,  good and valid title to the Shares will
pass to the  Purchaser,  free and  clear of any  liens,  encumbrances  and other
charges (other than those arising from acts of the Purchaser or its Affiliates).

<PAGE>
                                    Exhibit B

                   Form of Opinion of Counsel to the Purchaser
                   -------------------------------------------

                  1. The  Purchaser is a  corporation  duly  organized,  validly
existing  and in good  standing  under the laws of the State of Delaware and has
all  necessary  corporate  power  and  authority  to  execute  and  deliver  the
Agreement,   to  perform  its  obligations  thereunder  and  to  consummate  the
transactions contemplated thereby.

                  2.  The  execution  and  delivery  by  the  Purchaser  of  the
Agreement,  the performance by the Purchaser of its  obligations  thereunder and
the consummation by the Purchaser of the transactions  contemplated thereby have
been duly and validly  authorized by all necessary  corporate action on the part
of the  Purchaser.  The Agreement has been duly executed and delivered by a duly
authorized  officer of the Purchaser and constitutes a legal,  valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms (subject to applicable  bankruptcy,  insolvency,  fraudulent transfer,
reorganization,  moratorium and other laws affecting creditors' rights generally
from time to time in effect). The enforceability of the Purchaser's  obligations
is also  subject to general  principles  of equity  (regardless  of whether such
enforceability is considered in a proceeding in equity or at law).

                  3.  All   necessary   filings   or   registrations   with  any
governmental  or  regulatory  authority  required  for the  consummation  by the
Purchaser of the transactions contemplated by the Agreement have been duly made,
and all permits,  authorizations,  consents or approvals of any  governmental or
regulatory  authority  required in connection with such  transactions  have been
duly obtained.

                  4. The  execution,  delivery and  performance of the Agreement
does not conflict with or result in a violation of the General  Corporation  Law
of the State of Delaware or the Certificate of  Incorporation  or By-Laws of the
Purchaser.

<PAGE>
                                    Exhibit C

                              Form of MUF Agreement
                              ---------------------

                             See Attached Agreement

<PAGE>
                         QUOTA SHARE INDEMNITY AGREEMENT

                                     between

               GIBRALTAR CASUALTY COMPANY, a Delaware Corporation
                   (hereinafter referred to as the "Company")

                                       and

        PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey Corporation
                  (hereinafter referred to as the "Indemnitor")

    (Both the Company and the Indemnitor collectively are referred to as the
                     "Parties" and individually as "Party")

WHEREAS,  the  Indemnitor  and Everest  Reinsurance  Holdings,  Inc., a Delaware
corporation  ("Holdings"),  have  executed  a  Stock  Purchase  Agreement  dated
________ ("Sale  Agreement")  wherein Holdings will purchase from the Indemnitor
all issued and outstanding  shares of the Company,  a wholly owned subsidiary of
the  Indemnitor,  effective  as of the  "Closing  Date"  set  forth  in the Sale
Agreement.

WHEREAS,  Holdings is the parent of Everest Reinsurance Company,  formerly known
as Prudential Reinsurance Company ("Everest Re").

WHEREAS, the Company has, and in the future may have, Uncollectible  Reinsurance
Recoverables, as defined herein, with regard to business reinsured by or through
the Management Underwriting Facility ("MUF"), as defined in the Sale Agreement.

WHEREAS, the Company desires to procure indemnity coverage for its Uncollectible
Reinsurance Recoverables.

NOW,   THEREFORE,   in  consideration  of  mutual  covenants,   representations,
warranties,  and  agreements  contained  herein and in the Sale  Agreement,  the
Parties agree as follows:

ARTICLE I - CLASSES OF BUSINESS COVERED

     A.  By this  Agreement  and subject to the terms and  conditions  set forth
         below, the Indemnitor agrees to indemnify the Company for the Company's
         Uncollectible Reinsurance Recoverables,  as defined herein, with regard
         to  business  reinsured  by or through  MUF  respecting  Direct  Excess
         Business and Gibraltar-Sourced Business, as defined herein.

<PAGE>
     B.  "Uncollectible  Reinsurance  Recoverables", with respect to Reinsurance
         Coverage,  is defined as including (i) Uncollected Reinsurance and (ii)
         Settlement Concessions.

     C.  "Reinsurance  Coverage"  is  defined  as any  amount of paid and unpaid
         losses  and  loss  adjustment  expenses  ceded  by  Everest  Re to  MUF
         reinsurers with respect to Direct Excess Business or  Gibraltar-Sourced
         Business,  whether  such amounts were ceded prior to or during the term
         of this Agreement.

     D.  "Uncollected  Reinsurance" is defined as Reinsurance  Coverage for paid
         loss and loss adjustment  cessions  relating to Direct Excess Business,
         with  respect to each  company on Schedule A hereto,  that is unpaid by
         the  reinsurer  after  one-hundred-and-eighty  (180) days from the date
         that such paid loss and loss adjustment cessions were due to be paid by
         the reinsurer.

     E.  "Settlement Concessions" is defined as the difference,  with respect to
         each company on Schedule A hereto, between the Reinsurance Coverage for
         Direct Excess Business or  Gibraltar-Sourced  Business reinsured by MUF
         and ceded to such company and the amount received from such company.

     F.  "Direct Excess Business" is defined as policies, contracts, and binders
         of insurance or reinsurance ("Policies") that were issued by Everest Re
         prior to January 1, 1986.

     G.  "Gibraltar-Sourced Business" is defined as Policies that were issued by
         the Company prior to January 1, 1986.

     H.  Although  Everest Re rather  than the  Company  has the  direct  ceding
         relationship  with MUF,  solely for purposes of this Agreement and only
         up to the amounts  scheduled in Schedule A hereto,  the Parties  hereby
         deem  any  Uncollectible  Reinsurance  Recoverables  to  belong  to the
         Company and not to Everest Re.

ARTICLE II - COMMENCEMENT AND TERMINATION

     A.  This  Agreement  shall  become  effective  on the  Closing  Date.  This
         Agreement will terminate,  with respect to the Indemnitor's Per-Company
         Sub-Limit of Liability under Article V, on the earlier of (i) two years
         following the  Indemnitor's  payment of the sub-limit or (ii) the tenth
         anniversary  of Closing Date.  This  Agreement  shall  terminate,  with
         respect to the Indemnitor's  Aggregate Limit of Liability under Article
         V, on the earlier of (i) two years following the  Indemnitor's  payment
         of the limit or (ii) the tenth anniversary of the Closing Date.

     B.  Neither Party may terminate this Agreement.

<PAGE>
ARTICLE III - TERRITORY

The  territorial  scope  of this  Agreement  shall be  identical  to that of the
Policies.

ARTICLE IV - CONSIDERATION

The consideration  for this indemnity  coverage is included in the consideration
for the Sale  Agreement  and is deemed paid as of the Closing  Date.  No further
consideration shall be due to the Indemnitor.

ARTICLE V -  SCHEDULE OF UNCOLLECTIBLE REINSURANCE RECOVERABLES AND INDEMNITOR'S
LIMIT OF LIABILITY

Pursuant to the Sale  Agreement,  on or before the first  Business Day following
the date on which all of the  conditions  set forth in Articles IX, X, and XI of
the Sale Agreement have been satisfied or waived, Holdings will cause Everest Re
to provide to the Indemnitor a schedule setting forth all expected Uncollectible
Reinsurance  Recoverables  ("Schedule A"), which shall be incorporated herein by
reference.  Schedule A shall  identify,  by  reinsurer  name,  (1) the  expected
amounts of Uncollected  Reinsurance  attributable to each reinsurer with respect
to Direct Excess Business and (2) the expected amounts of Settlement Concessions
with respect to Direct Excess Business and  Gibraltar-Sourced  Business.  If the
Company  identifies  a  given  reinsurer  on  Schedule  A with  respect  to both
Uncollected  Reinsurance  and  for  Settlement  Concessions,   then  the  amount
scheduled for  Uncollected  Reinsurance  shall represent only paid loss and loss
adjustment  expense amounts and the amount scheduled for Settlement  Concessions
shall include only unpaid loss and loss adjustment expense amounts.

The Indemnitor  shall pay to the Company one hundred  percent  (100.0%) of up to
the scheduled  amount of the Company's  Uncollectible  Reinsurance  Recoverables
with respect to each  company  listed on Schedule A ("Per  Company  Sub-Limit of
Liability"), provided that the Indemnitor's total liability under this Agreement
shall in no event be greater than $8,500,000 ("Aggregate Limit of Liability").

ARTICLE VI - PAYMENT OF ADVANCES BY INDEMNITOR AND REFUNDS BY COMPANY

Subject  to the  limits  set forth in  Article  V,  pursuant  to  Article IX the
Indemnitor shall make payments  ("Advances") to the Company in the amount of the
Uncollected  Reinsurance  and  Settlement  Concessions  shown  on the  Company's
statements.

If after receiving an Advance from the Indemnitor with respect to an Uncollected
Reinsurance amount, the Company actually collects all or a portion of the amount
due from the  reinsurer  identified on Schedule A, then the Company shall pay to
the  Indemnitor  a sum equal to the amount so  collected  ("Refund"),  up to the
amount of the  corresponding  Advance paid by the Indemnitor.  Refunds shall not
bear  interest  except as set forth in Article IX (G), and in no event shall the
Indemnitor be entitled to a Refund in an amount  greater than the  corresponding
Advance.  In  the  event  that  a  Refund  is  made  to the Indemnitor,  the Per
Company Sub-Limit  of  Liability  and the  Aggregate  Limit of  Liability  shall

<PAGE>
each be  replenished  by the amount of such Refund.  No Refunds shall be due for
Advances paid by the Indemnitor with respect to Settlement Concessions.

ARTICLE VII - OTHER REINSURANCE

On or after the Closing  Date,  the Company  shall be  permitted to obtain other
reinsurance,  recoveries  under which  shall inure  solely to the benefit of the
Company,  and all  recoveries  under such other  reinsurance  shall be  entirely
disregarded in applying all of the provisions of this Agreement.

ARTICLE VIII - ORIGINAL CONDITIONS

     A.  The  Indemnitor  shall follow the fortunes of the Company with  respect
         to  settlements  of  any  Reinsurance  Coverage  and  with  respect  to
         Uncollectible Reinsurance Recoverables.

     B.  The indemnity  coverage provided under this Agreement shall be  subject
         to all  interpretations,  modifications,  waivers,  and  alterations of
         the Policies and Reinsurance Coverage.

     C.  Nothing herein shall in any manner create any  obligations or establish
         any rights  against the  Indemnitor  in favor of any third party or any
         person not a Party to this Agreement.

ARTICLE IX - REPORTS AND REMITTANCES

     A.  The first  statement of account shall be due to the Indemnitor from the
         Company on the  anniversary  of the Closing Date.  The first  statement
         only  shall  include  a  charge  for  interest  on  any   Uncollectible
         Reinsurance  Recoverables  due from the  Indemnitor as of the statement
         date.  Such  interest  charge  shall be  equal to the rate of  interest
         announced  by  Citibank,  N.A.  as its  prime  or  base  rate as of the
         statement  date,  calculated  on the basis of the actual number of days
         elapsed since the Uncollectible Reinsurance Recoverables accrued or the
         Closing      Date,      whichever      is     less,      divided     by
         three-hundred-and-sixty-five  (365) days. Such interest charge shall be
         included  in the Per  Company  Sub-Limit  of  Liability  set  forth  on
         Schedule A.

     B.  Thereafter,  the Company shall submit  quarterly  statements of account
         ("quarterly reports") within forty-five (45) days after the end of each
         calendar quarter.

     C.  Such quarterly reports shall be sent by both facsimile transmission and
         United States Postal Service or any other delivery  service used by the
         Company.

     D.  Such quarterly reports shall include information showing, as applicable
         with  respect  to  each  company  listed  on  Schedule  A,  Uncollected
         Reinsurance,  Settlement Concessions,  Advances received, Advances due,
         Refunds due, and unpaid amounts outstanding.

     E.  Remittances shall be on a "Net Basis," defined as amounts owed  between
         the Parties under this Agreement.

<PAGE>
     F.  Remittances,  whether due to the Company from the  Indemnitor or to the
         Indemnitor from the Company,  shall be due within  forty-five (45) days
         from  the  date  of  receipt  of the  facsimile  transmission  of  each
         quarterly report.

     G.  Failure by the  Indemnitor  or the Company to pay amounts owed when due
         under this Agreement shall result in imposition of an interest  penalty
         equal to the rate of interest announced by Citibank,  N.A. as its prime
         or base rate as of the due date of any  remittance,  calculated  on the
         basis of the  actual  number of days  elapsed  past the due date of any
         remittance  divided  by  three-hundred-and-sixty-five  (365)  days  and
         payment of other losses, costs, and expenses accrued or incurred by the
         Company or Indemnitor as a result of the other Party's late payment.

ARTICLE X - OFFSET

The  Company  and the  Indemnitor  shall have the right to offset any balance or
amounts due from one party to the other under this Agreement.

ARTICLE XI - ACCESS TO RECORDS

     A.  The  Company  shall  place at the  disposal  of the  Indemnitor  at all
         reasonable  times,  and the Indemnitor  will have the right to inspect,
         all books,  records,  and papers of the Company in connection  with any
         indemnity coverage hereunder or any claims in connection herewith.

     B.  All  records  reviewed by the  Indemnitor  are deemed  proprietary  and
         confidential property of the Company.  Further,  unless pursuant to the
         express,  written  permission of the Company,  the Indemnitor shall not
         disclose the contents of such information to any other person, persons,
         entity,  or entities;  provided,  that the Indemnitor may disclose such
         information  or portions  thereof in  connection  with any  arbitration
         hereunder  or any legal or  regulatory  process,  or to its  directors,
         officers and employees and the directors, officers and employees of its
         affiliates and to its agents, representative,  attorneys,  accountants,
         auditors,      reinsurers     (collectively,      "the     Indemnitor's
         Representatives"),  in each case,  who have a  legitimate  need to know
         such information (which would include,  but not be limited to the right
         to dispute  and/or  assess in  furtherance  of a  dispute)  and who are
         informed of and agree to be bound by the confidentiality  terms of this
         Agreement. The Indemnitor shall indemnify and hold harmless the Company
         for all  damages  resulting  from any  unauthorized  disclosure  by the
         Indemnitor  or the  Indemnitor's  Representatives  of records  obtained
         pursuant to this Article.

ARTICLE XII - ERRORS AND OMISSIONS

Inadvertent delays, errors or omissions in connection with this Agreement or any
transaction  hereunder  shall not relieve  either Party of any  liability  which
would have  attached had such delay,  error or omission not  occurred,  provided
always  that such error or  omission  is  rectified  as soon as  possible  after
discovery.

<PAGE>
ARTICLE XIII - INSOLVENCY

In the event of the insolvency of the Company,  the indemnity coverage hereunder
shall  be  payable  directly  to the  Company  or to its  liquidator,  receiver,
conservator  or statutory  successor on the basis of the amount of claim allowed
in the insolvency  proceeding  without  diminution by reason of the inability of
the Company to pay all or any part of the claim. It is agreed, however, that the
liquidator,  receiver,  conservator or statutory  successor of the Company shall
give written  notice to the  Indemnitor  of the pendency of a claim  against the
Company,  indicating  the Policy or bond  covered  hereunder  which  claim would
involve a possible liability on the part of the Indemnitor,  within a reasonable
time after such claim is filed in the conservation or liquidation  proceeding or
in the receivership,  and that during the pendency of such claim, the Indemnitor
may investigate such claim and interpose,  at its own expense, in the proceeding
where such claim is to be adjudicated,  any defense or defenses that it may deem
available to the Company or its liquidator,  receiver,  conservator or statutory
successor.  The expense thus  incurred by the  Indemnitor  shall be  chargeable,
subject to the approval of the Court, against the Company as part of the expense
of  conservation or liquidation to the extent of a pro rata share of the benefit
which may accrue to the Company solely as a result of the defense  undertaken by
the Indemnitor.

ARTICLE XIV - ARBITRATION

     A.  Except with respect to disputes  arising out of or in  connection  with
         Article XI above (Access to Records),  as a condition  precedent to any
         right of action hereunder, in the event of any dispute or difference of
         opinion hereafter arising with respect to this Agreement, including its
         formation and validity,  it is hereby mutually agreed that such dispute
         or difference of opinion shall be submitted to arbitration.

     B.  Except as provided  in  subsections  A. and D. of this  Article or with
         respect to judicial proceedings instituted in aid of arbitration,  this
         Article shall constitute a waiver of the Parties' rights to commence an
         action in any court of competent  jurisdiction in the United States, to
         remove  an  action  to a United  States  District  Court,  or to seek a
         transfer of a case to another court as might  otherwise be permitted by
         the laws of the United States or of any State or other  jurisdiction in
         the United States.

     C.  One  Arbiter  shall  be  chosen  by  the  Company,  the  other  by  the
         Indemnitor,  and an Umpire shall be chosen by the two  Arbiters  before
         they  enter  upon  arbitration,  all of whom shall be active or retired
         disinterested  executive officers of United States domiciled  insurance
         or reinsurance companies. In the event that either Party should fail to
         choose an Arbiter  within 30 days  following  a written  request by the
         other Party to do so, the requesting  Party may choose two Arbiters who
         shall in turn choose an Umpire before entering upon arbitration. If the
         two Arbiters  fail to agree upon the  selection of an Umpire  within 30
         days  following  their  appointment,  each Arbiter shall nominate three
         candidates  within  10 days  thereafter,  two of whom the  other  shall
         decline, and the decision shall be made by drawing lots.

<PAGE>
     D.  The Arbiters and the Umpire ("the  Arbitration  Panel") shall  consider
         this Agreement as an honorable engagement rather than merely as a legal
         obligation,  and they are relieved of all judicial  formalities and may
         abstain from  following the strict rules of law. The majority  decision
         of the  Arbitration  Panel shall be final and binding on both  Parties.
         Judgment  upon the  final  decision  of the  Arbitration  Panel  may be
         entered in any court of competent jurisdiction.

     E.  Except as provided in sub-section G. of this Article,  each Party shall
         bear the expense of its own Arbiter, and shall jointly and equally bear
         with the other the expense of the Umpire and of the arbitration. In the
         event that the two Arbiters are chosen by one Party, as above provided,
         the expense of the Arbiters,  the Umpire and the  arbitration  shall be
         equally divided between the two Parties.

     F.  Any arbitration proceedings shall take place in New York, New York.

     G.  The Arbitration Panel shall have  the power to  award  costs, expenses,
         and interest to the prevailing Party in an arbitration.

ARTICLE XV - ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between  the  Parties  regarding
the   subject   matter   hereof   and   supercedes  all  prior  agreements   and
understandings, both written and oral and does not confer any rights or remedies
to any other party or any other person.

ARTICLE XVI - AMENDMENTS AND ALTERATIONS

This Agreement shall not be changed,  supplemented,  modified, or amended except
by an endorsement/addendum signed by the Parties and attached hereto.

ARTICLE XVII - NO WAIVER

No forbearance to  enforce  any  provision  or right hereunder shall be deemed a
waiver  thereof,  and  no  waiver  of any breach of any terms or covenant herein
shall be construed as  a  waiver  of  any other breach of the same, or any other
term or covenant herein.

<PAGE>
ARTICLE XVIII - CONSTRUCTION

This Agreement is the result of arms-length negotiations between the Parties and
has  been  prepared  jointly  by the Parties.   In applying and interpreting the
provisions of the Agreement, there shall  be  no  presumption  that  either  the
Company or the Indemnitor prepared this Agreement, or that this Agreement  shall
be construed in favor of or against either the Company or the Indemnitor.

ARTICLE XIX - NOTICES

Any notice or other  communication  required or permitted  hereunder shall be in
writing  and  shall  be  delivered  personally,  telegraphed,  telexed,  sent by
facsimile  transmission,  or sent by  certified,  registered  or  express  mail,
postage prepaid, to:

         If to the Indemnitor, to:

         Doreen Faga
         President, Gibraltar Operations
         Prudential Insurance Company of America
         Eisenhower Corporate Center, Building 3
         290 West Mt. Pleasant Avenue
         Livingston, NJ  07039
         Phone: 973-548-5980
         Fax:     973-548-5950

         If to the Company, to:

         Janet J. Burak

         Senior Vice President and General Counsel
         Everest Reinsurance Holdings
         477 Martinsville Road

         P.O. Box 830
         Liberty Corner, NJ  07938
         Phone: 908-604-3170
         Fax:     908-604-3450

ARTICLE XX - GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.

<PAGE>
IN WITNESS  WHEREOF,  the Company,  by its duly authorized  representative,  has
executed this Agreement as of the date undermentioned at:

____________, ____________, this ____________ day of _____________________ 2000.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Indemnitor, by its duly authorized  representative,  has
executed this Agreement as of the date undermentioned at:

____________, ____________, this ____________ day of _____________________ 2000.

-------------------------------------------------------

<PAGE>
                                    Exhibit D

                     Form of Additional Stop-Loss Agreement
                     --------------------------------------

                             See Attached Agreement

<PAGE>
                               INDEMNITY AGREEMENT

                                     between

               GIBRALTAR CASUALTY COMPANY, a Delaware Corporation
                   (hereinafter referred to as the "Company")

                                       and

        PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey Corporation
                  (hereinafter referred to as the "Indemnitor")

    (Both the Company and the Indemnitor collectively are referred to as the
                     "Parties" and individually as "Party")

WHEREAS,  the  Indemnitor  and Everest  Reinsurance  Holdings,  Inc., a Delaware
corporation  ("Holdings"),  have  executed  a  Stock  Purchase  Agreement  dated
________ ("Sale  Agreement")  wherein Holdings will purchase from the Indemnitor
all issued and outstanding shares of the Company,  a wholly-owned  subsidiary of
the Indemnitor.

WHEREAS,  as of the  "Closing  Date,"  as  this  term  is  defined  in the  Sale
Agreement,  the Company has outstanding  "Loss Reserves," as defined in the Sale
Agreement,  relating to all Policies, as defined herein, in the amount stated in
the "Closing Date Financial Statement," as defined in the Sale Agreement.

WHEREAS,  the Company  also has  potential  adverse  Loss  Reserves  development
("Adverse  Loss  Development"),  as  defined  herein,  and the  Company  desires
indemnity coverage for such Adverse Loss Development.

NOW,   THEREFORE,   in  consideration  of  mutual  covenants,   representations,
warranties,  and  agreements  contained  herein and in the Sale  Agreement,  the
Parties agree as follows:

ARTICLE I - CLASSES OF BUSINESS COVERED

     A.       By this  Agreement  and  subject to the terms and  conditions  set
              forth below,  the  Indemnitor  agrees to indemnify the Company for
              the Adverse Loss  Development that may accrue to the Company under
              all policies,  contracts,  and binders of insurance or reinsurance
              (hereinafter "Policies") issued or renewed by the Company prior to
              the Closing Date.

     B.       Adverse  Loss  Development  is  defined as the Company's  Ultimate
              Net  Loss  that  is  in   excess  of  the  Loss  Reserves  carried
              by   the   Company  at   the  Closing   Date.   Subject   to   the

<PAGE>
              Indemnitor's  Limit of  Liability  set forth in Article V  hereof,
              the  Indemnitor  shall  pay  the  Company  for  the  Adverse  Loss
              Development  paid  by the Company,  provided  that the Company has
              paid an amount equal to the Loss  Reserves  carried by the Company
              at the Closing Date. Provided, however, that this Agreement  shall
              not apply  to  the  first  four  million  dollars  ($4,000,000) of
              any Settlement Concessions on Gibraltar-Sourced Business, as those
              terms  are  defined  in the Quota Share Indemnification  Agreement
              between the Parties ("Quota Share Indemnification  Agreement"), in
              excess of Settlement Concessions listed on Schedule A to the Quota
              Share Indemnification Agreement.

     C.       "Ultimate Net Loss" is defined as the Company's  determination  of
              the sum or sums (including Loss  Adjustment  Expenses,  as defined
              herein)  incurred  by the Company in  settlement  of claims and in
              satisfaction of judgments rendered on account of such claims under
              all Policies,  after  deduction of all  reinsurance  and insurance
              recoveries and  subrogation and salvage  recoveries  collected and
              received by the Company and losses paid prior to the Closing Date.
              Nothing  herein  shall be construed to mean that losses under this
              Agreement are not  recoverable  until the  Company's  Ultimate Net
              Loss has been  ascertained.  Ultimate  Net Loss shall not  include
              Loss in Excess of Policy Limits or Extra  Contractual  Obligations
              (as defined herein) incurred by the Company.

ARTICLE II - COMMENCEMENT AND TERMINATION

     A.  This  Agreement  shall  become  effective on the Closing Date and shall
         continue in force  thereafter  until two (2) years after the earlier of
         when (i) the Company settles all claims under all Policies, or (ii) the
         Indemnitor exhausts its Limits of Liability as set forth in Article V.

     B.  Neither Party may terminate this Agreement.

ARTICLE III - TERRITORY

The  territorial  scope  of this  Agreement  shall be  identical  to that of the
Policies covered hereunder.

ARTICLE IV - CONSIDERATION

The  consideration  for the indemnity  coverage is included in the consideration
for the Sale  Agreement  and is deemed paid as of the Closing  Date.  No further
consideration shall be due to the Indemnitor.

<PAGE>
ARTICLE V - INDEMNITOR'S LIMIT OF LIABILITY AND COMPANY'S RETENTION

The Indemnitor shall pay to the Company an 80% quota share interest of the first
two hundred million dollars  ($200,000,000)  of Adverse Loss Development paid by
the  Company,  with the  Indemnitor's  maximum  liability  under this  Agreement
limited to one hundred and sixty million dollars ($160,000,000). The Company may
reinsure its 20% quota share  retention in the first two hundred million dollars
($200,000,000)  of Adverse Loss  Development  only with an affiliate  within its
insurance  holding  company  system,  with  `affiliate'  and `insurance  holding
company system' having the meanings set forth under Section 5001 of the Delaware
Insurance  Code.  Such  reinsurance by the Company of any share of its 20% quota
share retention with an affiliate is permissible only if the assuming  affiliate
fully retains and does not further cede or retrocede any share of its assumption
of the 20% quota share  retention,  except to another  affiliate of the Company;
and any  affiliate of the Company  which assumes some share of the Company's 20%
quota  share  retention  under  this  provision  shall  be  subject  to the same
prohibition on ceding or retroceding  any share of the Company's 20% quota share
retention to any person or entity that is not an affiliate of the Company.

ARTICLE VI - LOSS IN EXCESS OF POLICY LIMITS/EXTRA CONTRACTUAL OBLIGATIONS

Ultimate Net Loss shall not include any amounts that the Company pays or is held
liable to pay in excess of its Policy limit,  but otherwise  within the terms of
its Policy  ("Loss in Excess of Policy  Limits"),  or any  punitive,  exemplary,
compensatory or consequential damages ("Extra Contractual Obligations"), because
of  alleged  or  actual  bad  faith or  negligence  on its part in  rejecting  a
settlement within Policy limits, or in discharging its duty to defend or prepare
the  defense  in  the  trial  of  an  action  against  its  policyholder,  or in
discharging  its duty to prepare or prosecute an appeal  consequent upon such an
action, or in otherwise handling a claim under a Policy.

ARTICLE VII - OTHER REINSURANCE

Subject  always to the retention  provision set forth in Article V above,  on or
after  the  Closing  Date,  the  Company  shall be  permitted  to  obtain  other
reinsurance,  recoveries  under which  shall inure  solely to the benefit of the
Company  and all  recoveries  under such  other  reinsurance  shall be  entirely
disregarded  in applying  all of the  provisions  of this  Agreement;  provided,
however,  that the Quota  Share  Indemnification  Agreement  shall  inure to the
benefit of this Agreement.

ARTICLE VIII - LOSS ADJUSTMENT EXPENSES

Loss  Adjustment  Expenses  shall include both  allocated and  unallocated  loss
expenses and shall be included in the Ultimate Net Loss,  and are defined as all
expenses of the Company,  including  expenses for declaratory  judgment actions,
monitoring of underlying  litigation or claims, and coverage opinions,  incurred
by the Company in the settlement,  investigation,  defense, or adjustment of all
claims under all Policies.

<PAGE>
ARTICLE IX - SUBROGATION AND SALVAGE

The  Indemnitor  shall be credited with  subrogation  and salvage  collected and
received by the Company,  less the actual cost,  excluding salaries and expenses
of  officials  and  employees  of the  Company  respecting  their  time spent on
subrogation and salvage  recoveries and also excluding sums paid to any attorney
as a retainer  in  obtaining  such  reimbursement  or making such  recovery,  on
account of claims and settlements  involving the indemnity  coverage  hereunder.
Enforcement of subrogation and salvage rights shall be determined  solely by the
Company.

ARTICLE X - ORIGINAL CONDITIONS

     A.  The Indemnitor shall follow the fortunes of the Company for it Ultimate
         Net Loss for all loss settlements and shall pay as paid by the Company.

     B.  The indemnity  coverage  provided under this Agreement shall be subject
         to all interpretations,  modifications, waivers, and alterations of the
         Policies; provided, however, that the agreements set forth on Exhibit A
         hereto that are in force as of the Closing  Date shall  remain in force
         during the term of this  Agreement and shall not be modified or altered
         during the term of this Agreement,  unless otherwise mutually agreed by
         the Parties.

     C.  Nothing herein shall in any manner create any  obligations or establish
         any rights  against the  Indemnitor  in favor of any third party or any
         person not a Party to this Agreement.

ARTICLE XI - REPORTS AND REMITTANCES

     A.  The first  statement of account shall be due to the Indemnitor from the
         Company  forty-five  (45) days  after  the  close of the  first  fiscal
         quarter that includes the Closing Date.

     B.  Thereafter,  the Company shall submit  quarterly  statements of account
         ("quarterly reports") within forty-five (45) days after the end of each
         calendar quarter.

     C.  Such quarterly reports shall be sent by both facsimile transmission and
         United States Postal Service or any other delivery  service used by the
         Company.

     D.  Such  quarterly  reports  shall  be  in  the form  attached  hereto  as
         Exhibit A, or in any other form mutually agreed by the Parties.

     E.  Remittances shall be on a "Net Basis," defined as  amounts owed between
         the Parties under this Agreement.

     F.  Remittances  shall be due to the  Company  from the  Indemnitor  within
         forty-five  (45)  days  from  the  date  of  receipt  of the  facsimile
         transmission of each quarterly report.

<PAGE>
     G.  Failure of a Party to pay  amounts  owed when due under this  Agreement
         shall result in imposition  on that Party of an interest  penalty equal
         to the rate of interest  announced  by  Citibank,  N.A. as its prime or
         base rate as of the due date of any remittance, calculated on the basis
         of the  actual  number  of  days  elapsed  past  the  due  date  of any
         remittance  divided  by  three-hundred-and-sixty-five  (365)  days  and
         payment of other losses, costs, and expenses accrued or incurred by the
         other Party as a result of the late payment.

ARTICLE XII - OFFSET

The  Company  and the  Indemnitor  shall have the right to offset any balance or
amounts due from one Party to the other under this Agreement.

ARTICLE XIII - ACCESS TO RECORDS

     A.  The  Company  shall  place at the  disposal  of the  Indemnitor  at all
         reasonable  times,  and the Indemnitor  will have the right to inspect,
         all books,  records,  and papers of the Company in connection  with any
         indemnity coverage hereunder or any claims in connection herewith.

     B.  All  records  reviewed by the  Indemnitor  are deemed  proprietary  and
         confidential property of the Company.  Further,  unless pursuant to the
         express,  written  permission of the Company,  the Indemnitor shall not
         disclose the contents of such information to any other person, persons,
         entity,  or entities;  provided,  that the Indemnitor may disclose such
         information  or portions  thereof in  connection  with any  arbitration
         hereunder  or any legal or  regulatory  process,  or to its  directors,
         officers and employees and the directors, officers and employees of its
         affiliates and to its agents, representative,  attorneys,  accountants,
         auditors,      reinsurers     (collectively,      "the     Indemnitor's
         Representatives"),  in each case,  who have a  legitimate  need to know
         such information (which would include,  but not be limited to the right
         to dispute  and/or  assess in  furtherance  of a  dispute)  and who are
         informed of and agree to be bound by the confidentiality  terms of this
         Agreement. The Indemnitor shall indemnify and hold harmless the Company
         for all  damages  resulting  from any  unauthorized  disclosure  by the
         Indemnitor  or the  Indemnitor's  Representatives  of records  obtained
         pursuant to this Article.

ARTICLE XIV - ERRORS AND OMISSIONS

Inadvertent delays, errors or omissions in connection with this Agreement or any
transaction  hereunder  shall not relieve  either Party of any  liability  which
would have  attached had such delay,  error or omission not  occurred,  provided
always  that such error or  omission  is  rectified  as soon as  possible  after
discovery.

<PAGE>
ARTICLE XV - SECURITY

     A.  If the  Company  determines  that it is  unable  to take  credit in any
         financial statement filed with its domiciliary  insurance regulator for
         the  indemnity  coverage  provided  hereunder,  or if the  Indemnitor's
         Financial  Strength  Rating  published  by A.M.  Best becomes less than
         "A-,"  the  Indemnitor  agrees  to  fund  its  share  of  Adverse  Loss
         Development  (and  to  replenish  such  funding  from  time  to time as
         necessary) by:

15.  Clean,   irrevocable  and  unconditional   letters  of  credit  issued  and
     confirmed,   if  confirmation  is  required  by  the  insurance  regulatory
     authorities involved, by a qualified United States financial institution as
     provided  in  Delaware  Insurance  Code  Title 18,  Chapter 9 and  Delaware
     Department  of Insurance  Regulation 79 and  acceptable  to said  insurance
     regulatory authorities;

16.  cash; and/or

17.  a Trust in compliance with Delaware Insurance Code Title 18, Chapter  9 and
     Delaware Department of Insurance Regulation 79.

     B.  With regard to funding in whole or in part by letters of credit,  it is
         agreed  that  each  letter of  credit  will be in a form that  would be
         acceptable to the Company's domiciliary insurance regulatory authority,
         will be  issued  for a term of at least  one year and will  include  an
         "evergreen  clause," that  automatically  extends the term for at least
         one additional  year at each  expiration  date unless written notice of
         non-renewal is given to the Company not less than 30 days prior to said
         expiration date. The Company and the Indemnitor further agree that said
         letters of credit may be drawn upon by the Company or its successors in
         interest at any time,  without  diminution because of the insolvency of
         the  Company  or the  Indemnitor,  but  only  for  one or  more  of the
         following purposes:

1.   To  reimburse  itself  for  the  Indemnitor's  share  of  paid Adverse Loss
     Development, unless paid in cash by the Indemnitor;

2.   To reimburse itself for the Indemnitor's share of any other amounts claimed
     to be due hereunder, unless paid in cash by the Indemnitor;

3.   To fund a cash  account  in an amount  equal to the  Indemnitor's  share of
     Adverse  Loss  Development  funded by means of a letter  of credit  that is
     under non-renewal  notice, if said letter of credit has not been renewed or
     replaced by the Indemnitor 10 days prior to its expiration date;

4.   To refund to the Indemnitor any sum in excess of the actual amount required
     to fund  the  Indemnitor's  share of Adverse  Loss  Development  and  other
     amounts claimed to be due hereunder, if so requested by the Indemnitor.

     C.  In  the  event  the  amount  drawn  by  the  Company  on  any letter of
         credit  is  in   excess  of  the   actual  amount  required  for  B(1),
         B(3)  or   B(4),  or  in  the  case  of   B(2),   the   actual   amount

<PAGE>
         determined  to  be  due,  the  Company  shall  promptly  return to  the
         Indemnitor the excess amount so drawn.

     D.  In the event of funding through a Trust:

                               1.   The  Indemnitor   shall  establish  a  Trust
                                    Account  for the  benefit of the  Company to
                                    fund  the  amounts   receivable   under  the
                                    Agreement.

                               2.   The assets  deposited into the Trust Account
                                    shall be valued  according to their  current
                                    fair market value and shall  consist only of
                                    cash   (United    States   legal    tender),
                                    certificates  of deposit (issued by a United
                                    States  bank and  payable  in United  States
                                    legal  tender) and  investments  of the type
                                    permitted by the Delaware  Insurance Code or
                                    any combination of the above,  provided that
                                    such    investments   are   issued   by   an
                                    institution   that   is  not   the   parent,
                                    subsidiary   or   affiliate  of  either  the
                                    Indemnitor or the Company;

                               3.   The Indemnitor,  prior to depositing  assets
                                    with the trustee, shall execute assignments,
                                    endorsements  in blank,  or  transfer  legal
                                    title  to  the   trustee   of  all   shares,
                                    obligations  or any other  assets  requiring
                                    assignments,  in order that the Company,  or
                                    the trustee  upon the  Company's  direction,
                                    may whenever  necessary  negotiate  any such
                                    assets without consent or signature from the
                                    Indemnitor or any other entity;

                               4.   All  settlements  of  account  between   the
                                    Indemnitor and the Company shall  be in cash
                                    or its equivalent;

                               5.   The  assets  in  the  trust  account  may be
                                    withdrawn   by  the  Company  at  any  time,
                                    notwithstanding any other provisions in this
                                    Agreement,  and  shall  be  utilized  by the
                                    Company or any  successor  by  operation  of
                                    law,   including   without   limitation  any
                                    liquidator,   rehabilitator,   receiver   or
                                    conservator of the Company, for the purposes
                                    set forth in paragraphs B(1) -B(4) above.

<PAGE>
ARTICLE XVI - INSOLVENCY

In the event of the insolvency of the Company,  the indemnity coverage hereunder
shall  be  payable  directly  to the  Company  or to its  liquidator,  receiver,
conservator  or statutory  successor on the basis of the amount of claim allowed
in the insolvency  proceeding  without  diminution by reason of the inability of
the Company to pay all or any part of the claim. It is agreed, however, that the
liquidator,  receiver,  conservator or statutory  successor of the Company shall
give written  notice to the  Indemnitor  of the pendency of a claim  against the
Company,  indicating  the Policy or bond  covered  hereunder  which  claim would
involve a possible liability on the part of the Indemnitor,  within a reasonable
time after such claim is filed in the conservation or liquidation  proceeding or
in the receivership,  and that during the pendency of such claim, the Indemnitor
may investigate such claim and interpose,  at its own expense, in the proceeding
where such claim is to be adjudicated,  any defense or defenses that it may deem
available to the Company or its liquidator,  receiver,  conservator or statutory
successor.  The expense thus  incurred by the  Indemnitor  shall be  chargeable,
subject to the approval of the Court, against the Company as part of the expense
of  conservation or liquidation to the extent of a pro rata share of the benefit
which may accrue to the Company solely as a result of the defense  undertaken by
the Indemnitor.

ARTICLE XVII - ARBITRATION

     A.  Except with respect to disputes  arising out of or in  connection  with
         Article XIII above (Access to Records), as a condition precedent to any
         right of action hereunder, in the event of any dispute or difference of
         opinion hereafter arising with respect to this Agreement, including its
         formation and validity,  it is hereby mutually agreed that such dispute
         or difference of opinion shall be submitted to arbitration.

     B.  Except as provided  in  subsections  A. and D. of this  Article or with
         respect to judicial proceedings instituted in aid of arbitration,  this
         Article shall constitute a waiver of the Parties' rights to commence an
         action in any court of competent  jurisdiction in the United States, to
         remove  an  action  to a United  States  District  Court,  or to seek a
         transfer of a case to another court as might  otherwise be permitted by
         the laws of the United States or of any State or other  jurisdiction in
         the United States.

     C.  One  Arbiter  shall  be  chosen  by  the  Company,  the  other  by  the
         Indemnitor,  and an Umpire shall be chosen by the two  Arbiters  before
         they  enter  upon  arbitration,  all of whom shall be active or retired
         disinterested  executive officers of United States domiciled  insurance
         or reinsurance companies. In the event that either Party should fail to
         choose an Arbiter  within 30 days  following  a written  request by the
         other Party to do so, the requesting  Party may choose two Arbiters who
         shall in turn choose an Umpire before entering upon arbitration. If the
         two Arbiters  fail to agree upon the  selection of an Umpire  within 30
         days  following  their  appointment,  each Arbiter shall nominate three
         candidates  within  10 days  thereafter,  two of whom the  other  shall
         decline, and the decision shall be made by drawing lots.

<PAGE>
     D.  The Arbiters and the Umpire ("the  Arbitration  Panel") shall  consider
         this Agreement as an honorable engagement rather than merely as a legal
         obligation,  and they are relieved of all judicial  formalities and may
         abstain from  following the strict rules of law. The majority  decision
         of the  Arbitration  Panel shall be final and binding on both  Parties.
         Judgment  upon the  final  decision  of the  Arbitration  Panel  may be
         entered in any court of competent jurisdiction.

     E.  Except as provided in sub-section G. of this Article,  each Party shall
         bear the expense of its own Arbiter, and shall jointly and equally bear
         with the other the expense of the Umpire and of the arbitration. In the
         event that the two Arbiters are chosen by one Party, as above provided,
         the expense of the Arbiters,  the Umpire and the  arbitration  shall be
         equally divided between the two Parties.

     F.  Any arbitration proceedings shall take place in New York, New York.

     G.  The Arbitration Panel shall have the  power  to  award costs, expenses,
         and interest to the prevailing Party in an arbitration.

ARTICLE XVIII - ENTIRE AGREEMENT

This Agreement constitutes  the  entire  agreement between the Parties regarding
the   subject   matter   hereof  and  supercedes   all  prior   agreements   and
understandings, both written and oral and does not confer any rights or remedies
to any other party or any other person.

ARTICLE XIX - AMENDMENTS AND ALTERATIONS

This Agreement shall not be changed,  supplemented,  modified, or amended except
by an endorsement/addendum signed by the Parties and attached hereto.

ARTICLE XX - NO WAIVER

No forebearance to enforce any provision or right  hereunder shall  be deemed  a
waiver thereof, and no waiver of any breach of any term or covenant herein shall
be construed as a waiver of any other breach of the same, or any other  covenant
herein.

<PAGE>
ARTICLE XXI - CONSTRUCTION

This Agreement is the result of arms-length negotiations between the Parties and
has  been  prepared  jointly  by  the Parties.  In applying and interpreting the
provisions of this Agreement, there  shall  be  no  presumption  that either the
Company or the Indemnitor prepared this Agreement, or that this Agreement  shall
be construed in favor of or against either the Company or the Indemnitor.

ARTICLE XXII - NOTICES

Any notice or other  communication  required or permitted  hereunder shall be in
writing  and  shall  be  delivered  personally,  telegraphed,  telexed,  sent by
facsimile  transmission,  or sent by  certified,  registered  or  express  mail,
postage prepaid, to :

         If to the Indemnitor, to:

         Doreen Faga
         President, Gibraltar Operations
         Prudential Insurance Company of America
         Eisenhower Corporate Center, Building 3
         290 West Mt. Pleasant Avenue
         Livingston, NJ  07039
         Phone: 973-548-5980
         Fax:     973-548-5950

         If to the Company, to:

         Janet J. Burak

         Senior Vice President and General Counsel
         Everest Reinsurance Holdings
         477 Martinsville Road

         P.O. Box 830
         Liberty Corner, NJ  07938
         Phone: 908-604-3170
         Fax:     908-604-3450

ARTICLE XXIII - GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York.

<PAGE>
IN WITNESS  WHEREOF,  the Company,  by its duly authorized  representative,  has
executed this Agreement as of the date undermentioned at:

____________, ____________, this ____________ day of __________________ 2000.

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Indemnitor, by its duly authorized  representative,  has
executed this Agreement as of the date undermentioned at:

____________, ____________, this ____________ day of ___________________ 2000.

-------------------------------------------------------

<PAGE>
                  The following  constitutes  the Disclosure  Schedule as called
for and referred to in the Stock Purchase  Agreement (the "AGREEMENT")  dated as
of February 24, 2000 between The  Prudential  Insurance  Company of America (the
"SELLER")  and  Everest  Reinsurance  Holdings,  Inc.  (the  "PURCHASER").  This
Disclosure Schedule constitutes a part of the Agreement.

                  Capitalized terms used in this Disclosure  Schedule shall have
the same meanings as in the Agreement.

                  Inclusion of any item under any paragraph  hereof shall not be
deemed to be an  admission  that  disclosure  of such  item is in fact  required
pursuant to the Agreement or that the Seller or Gibraltar  failed to perform any
obligation in fact required to be performed by either of them.

                  Headings  included herein are for reference  purposes only and
shall not affect in any way the  meaning or  interpretation  of this  Disclosure
Schedule.

<PAGE>
                                 Schedule 3.5

                                    Consents
                                    --------

         1.  Service  Contract  dated  May  1,  1997 between Gibraltar  Casualty
Company and Prudential Property and Casualty Company, as amended.

         2.  Service  Agreement between IRISC, Inc. (n/k/a Cambridge  Integrated
Services Group) and Gibraltar Casualty Company, as amended.

         3.  Technology  Service Agreement between IRISC, Inc. (n/k/a  Cambridge
Integrated Services Group) and Gibraltar Casualty Company.

         4.  Letter  Agreement  between  Datasure  International Limited, IRISC,
Inc. (n/k/a Cambridge Integrated Services Group), and Gibraltar Casualty Company
relating  to the Program License and Support Services Agreement between Datasure
International Limited and RHH Group.

         5.  Software License Agreement dated April 19, 1995 between The Freedom
Group, Inc. ("TFG") and Gibraltar Casualty Company as amended.

         6.  Software  License  Agreement  between  Datalight  Software  and The
Prudential  Insurance  Company  of  America  for  the  Use  of  the  Concordance
Information Retrieval System by Gibraltar Casualty Company.

<PAGE>
                                  Schedule 3.7

                              Statutory Statements
                              --------------------

                                      NONE

<PAGE>
                                  Schedule 3.9

                      Liens on the Investments of Gibraltar
                      -------------------------------------

                                      NONE

<PAGE>
                                  Schedule 3.10

                   Changes and Events since December 31, 1999
                   ------------------------------------------

1        Adjustments to Loss Reserves required pursuant to Section 5.10.

2        Retirement  and  removal  of  Andrew  Corselli  as  General  Counsel of
Gibraltar   Casualty  Company  and  Assistant  General Counsel of The Prudential
Insurance Company of America.

3        In connection with the retirement and removal  of Andrew  Corselli, the
following  changes to the directors and officers of Gibraltar  Casualty  Company
are effective as of February 16, 2000:

         o Appointment of Doreen Faga to the Board of Directors;
         o Appointment of Doreen Faga as Senior Vice President;
         o Appointment of Joanne Poles as General Counsel;
         o Resignation of Joanne Poles as Corporate Secretary;
         o Appointment of Michael Rant as Corporate Secretary;
         o Resignation of Michael Rant as Assistant Corporate Secretary; and
         o Appointment of Erika Kill as Assistant Corporate Secretary.

4        Retirement  of John Mottola, President of Gibraltar Casualty Company on
February 28, 2000.

5        In  connection  with  the  retirement  of  John  Mottola, the following
changes will occur to the directors and officers of Gibraltar  Casualty Company,
effective as of February 28, 2000.

         o Resignation  of  John  Mottola  from  the  Board of Directors and  as
           President;
         o Resignation of Doreen Faga as Senior Vice President; and
         o Appointment of Doreen Faga as President.

<PAGE>
                                  Schedule 3.11

     Liabilities of Gibraltar which under GAAP are required to be disclosed
     ----------------------------------------------------------------------

                                      NONE

<PAGE>
                                  Schedule 3.12

              Pending or Threatened Insurance Claims or Assessments
              -----------------------------------------------------

                                      NONE

<PAGE>
                                  Schedule 3.13

             Judgments, Decrees and Orders in Restraint of Business
             ------------------------------------------------------

1.       Order by Judge Alfred M. Wolin, U.S.D.J., dated September 15, 1995.

2.       Order by Judge Alfred M. Wolin, U.S.D.J., dated February 11, 1997.

3.       Order by Judge Alfred M. Wolin, U.S.D.J., dated March 23, 1999.

<PAGE>
                                  Schedule 3.14

                 Material Actions, Suits, Arbitrations or Legal,
                 -----------------------------------------------
                       Administrative or Other Proceedings
                       -----------------------------------

--------------------------------------------------------------------------------
            CAPTION                       POLICYHOLDER             COURT
--------------------------------------------------------------------------------
Aerojet General Corp. v. Certain       Aerojet General Corp.  CA Appellate Court
Underwriters of Lloyds, et al.,
CA State Ct. Case No. 98A 500358
--------------------------------------------------------------------------------
Certain Underwriters at Lloyd's v.     Amax Minerals          NM Judicial Court
Cypress Amax, Second, Judicial
District, N.M., Docket No. CV
98-11897
--------------------------------------------------------------------------------
Cyprus Amax Minerals Co., et al. v.    Amax Minerals          CA Superior Court
Allianz Insurance Co., et al, CA
State Ct., Docket No. BC 198946
--------------------------------------------------------------------------------
MRC Holdings, Inc. v. Employers        American Can           NJ Superior Court
Insurance of Wausau, NJ Superior
Ct., Docket No L-12342-90
--------------------------------------------------------------------------------
INA v. Asarco, NJ Superior Court,      Asarco, Inc.           NJ Superior Court
Docket No. L-6164-93
--------------------------------------------------------------------------------
Newmont Mining Corp., et al. v.        Asarco, Inc.           CO State Court
Casualty & Surety Co., Colorado
State Ct., Docket No 93-CV-4774
--------------------------------------------------------------------------------
Asarco, Inc. v. American Home          Asarco, Inc.           CO District Court,
Assurance Co., et al, District                                Denver
Court, City and County of Denver,
CO
--------------------------------------------------------------------------------
Zurick Ins. Co. v. Baxter              Baxter (HIV)           IL Circuit Court
International, Inc., et al. Cir.
Ct. IL, Docket No. 94MR46
--------------------------------------------------------------------------------
Beckton Dickinson and Company v.       Becton Dickinson       NJ Superior Court
Adriatic Ins. Co. et al., NJ
Superior Ct., Docket No. C 35-99
--------------------------------------------------------------------------------
Smithkline Beecham Corp. v. Aetna      Beecham, Inc.          NJ Superior Court
et al., NJ Superior Ct., Docket
No. L-007799-94
--------------------------------------------------------------------------------
Nosroc Corporation v. Allianz          CCR Member;            U.S. District
Underwriters Ins. Co., et al.,         IU International       Court, E.D. PA
US District Court, E.D. PA Civil
Action No. 93-CV-0215
--------------------------------------------------------------------------------

                                      -79-
<PAGE>
--------------------------------------------------------------------------------
           CAPTION                       POLICYHOLDER             COURT
--------------------------------------------------------------------------------
Commercial Union Ins. Co. and          CCR Member:            NY Supreme Court
Continental Casualty Co. v.            Pfizer, Inc.
Pfizer, Inc., et al., NY State
Sup. Ct., Index No. 28936/91
--------------------------------------------------------------------------------
Pfizer, Inc. and Quigley               CCR Member:            U.S. District Ct.,
Company, Inc. v. Affiliated FM         Pfizer, Inc.           E.D. PA
Insurance Co., et al., U.S.
District Court, E.D. PA, Case
No. 93-CV-0215
--------------------------------------------------------------------------------
Continental Casualty Company v.        CCR Member:            IL Circuit Court
Maremont Corp; Ferodo America          Maremont Corp.
Inc., as successor to Nuturn
Corp., Cir. Ct. IL Docket No.
97 CH 8476
--------------------------------------------------------------------------------
American Motorist et al v.             Celanese Corporation   Court of Common
Hoechst Celanese Corp.,                                       Pleas, SC
SC State Ct., Docket No.,
97-CP-23
--------------------------------------------------------------------------------
American Motorist et al v.             Celanese Corporation   TX District Court
Hoechst Celanese Corp., Dist.
Ct. of Dallas, Texas, Cause
No. 9700133-1
--------------------------------------------------------------------------------
The Coastal Corp., et al v.            Coastal Corp.          CA Superior Court
The Aetna Casualty and Surety
Co., CA State Ct., Case No.
BC154152
--------------------------------------------------------------------------------
Commonwealth Oil Refining Co. v.       Commonwealth Oil       NJ Superior Court
Commercial Ins. Co., et al., NJ        Refining Company
Superior Court MID-L8792-94
--------------------------------------------------------------------------------
Consolidated Rail Corporation v.       Consolidated Rail      Court of Common
Certain Domestic Insurance             Corp.                  Pleas, PA
Companies, Pennsylvania Court of
Common Pleas, Philadelphia County,
Civil Action No. July, 1998,
001370
--------------------------------------------------------------------------------
Eljer Industries, Inc., et al, v.      Dyson-Kissner Corp.    U.S. District
Aetna Casualty & Surety Co., U.S.                             Court, IL, E.D.
D.C. Northern District of Illinois,
Eastern Division, Docket No.
93 C 4320
--------------------------------------------------------------------------------
New England Ins. v. Dyson-Kissner      Dyson-Kissner Corp.    NY Supreme Court
Moran, et al., NY Sup. Ct., Docket
No. 97-119830
--------------------------------------------------------------------------------
E.I. du Pont de Nemours & Company v.   E.I. du Pont           DE Superior Court
Allstate Insurance Company, et al.,
DE Superior Court, New Castle Cty.,
Docket No. 99C-12-253 HLA
--------------------------------------------------------------------------------

                                      -80-
<PAGE>
--------------------------------------------------------------------------------
           CAPTION                       POLICYHOLDER             COURT
--------------------------------------------------------------------------------
Eli Lilly & Co. v. The Aetna           Eli Lilly & Company    IN State Court
Casualty & Surety Co. et al.,
State Court of Indiana, Marion
County, Cause No. 49D059703CP0422
--------------------------------------------------------------------------------
Home Insurance Co. v. Cornell          Federal Pacific        NJ Superior Court
Dubilier, et al., NJ Superior Ct.,     Electric Co &
Docket No. MER-L-5192-96
--------------------------------------------------------------------------------
GenCorp Inc., v. AIU Insurance         Gencorp, Inc.          U.S. District
Company, et al., U.S. District                                Court, OH, N.D.
Northern District of Ohio, Docket
5:95-CV-2464
--------------------------------------------------------------------------------
Allstate Ins. Co., et al. v.           General Electric       NY Supreme Court
General Electric, et al., NY
State Sup. Ct., Docket
601883-97
--------------------------------------------------------------------------------
General Electric Company v.            General Electric       TX State Court
Adriatic Ins. Co. et al., 136th
District Ct. of Jefferson
County, TX
--------------------------------------------------------------------------------
Aetna v. Goodyear Tire & Rubber        Goodyear Tire &        Court of Common
Company, Ohio Court of Common          Rubber Co.             Pleas, OH
Pleas, Summit County, Ohio Case
No. CV93-093226
--------------------------------------------------------------------------------
Viacom International Inc. v.           Gulf & Western         NJ Superior Court
Admiral Insurance Company, et al.,
NJ Superior Court, Docket No.
SOM L-1739-99
--------------------------------------------------------------------------------
Hercules, Inc. v. Aetna et al.,        Hercules, Inc.         DE Superior Court
Superior Courr of the State of
Delaware, New Castle County,
Docket No. CA Nos. 92C-10-105
and 90C-FE-195-1-CV
--------------------------------------------------------------------------------
Lonza, Inc. v. Hartford Accident       Lonza, Inc.            NJ Superior Court
and Indemnity Co., et al., NJ
Superior Ct., Docket No. BER-
11037-97
--------------------------------------------------------------------------------
The Mead Corporation v. Aetna          Mead Corp.             AL Circuit Court
Casualty and Surety Company,
Circuit Court of Jefferson
County, Alabama, Civil Action
No. CV-97-5117
--------------------------------------------------------------------------------
Merck & Co., Inc. v. Federal           Merck & Co., Inc.      NJ Superior Court
Ins. Co., et al., NJ Superior
Court, Docket No. C-340-96
--------------------------------------------------------------------------------
First State Ins. Co. v. Minnesota      Minnesota Mining &     MN State Court
Mining & Minerals, Minn. State,        Minerals Corp.
County of Ramsey, No. C3 94-12780
--------------------------------------------------------------------------------

                                      -81-
<PAGE>
--------------------------------------------------------------------------------
           CAPTION                       POLICYHOLDER             COURT
--------------------------------------------------------------------------------
Minnesota Mining and Manufacturing     Minnesota Mining &     US District Court,
Co. v. Abeille Reassurances, et al.,   Minerals Corp.         Eastern District,
Eastern District Court of Eastern                             TX
TX, Docket No. 29SCV0005
--------------------------------------------------------------------------------
Exxon Mobil Corporation, et al. v.     Mobile Oil/Bluefield   TX State Court
Certain Underwriters at Lloyd's        Oil/Superior Oil
London, et al., Harris, County, TX,
Docket No. 2000-02117
--------------------------------------------------------------------------------
Certain Underwriters at Lloyd's,       Mobile Oil/Bluefield   NY Supreme Court
London, v. Mobil Corporation, The      Oil/Superior Oil
Superior Oil Company, Certain
London Market Insurance Companies,
et al., NY Supreme Court, Index No.
600006/00 (Justice Gammerman)
--------------------------------------------------------------------------------
Murphy Oil USA, Inc. v. United         Murphy Oil, USA Inc.   AK Circuit Court
States Fidelity Guaranty Company,
et al., Circuit Court of Union
County, Arkansas, Docket No.
91-439-2
--------------------------------------------------------------------------------
American Premier Underwriters,         Penn Central Marathan  Court of Common
Inc. v. Certain Underwriters at        Manufacturing Co.      Pleas, OH
Lloyd's , et al., Ct. of Common
Pleas, Hamilton Cty., Ohio State
Court, Docket No. A97703088
--------------------------------------------------------------------------------
Elf Atochem NA, Inc. v. The Aetna      Pennwalt Corp.         TX District Court
Casualty & Surety Co., et al.,
Harrison County, TX Docket No.
94-1018
--------------------------------------------------------------------------------
American Employer's Insurance          Pennwalt Corp.         NJ Superior Court
Company, et al., v. Elf Atochem NA,
Inc. et al., NJ Superior Court
Docket No. L-533394
--------------------------------------------------------------------------------
Pfizer Inc. v. Employers Inc.          Pfizer, Inc.           NJ Superior Court
Company of Wausau et al., NJ
Superior Court Docket No.
C108-92
--------------------------------------------------------------------------------
PPG Industries, Inc. v. Accident       PPG Industries, Inc.   NJ Superior Court
and Casualty Insurance Company of
Winterhur, et al., NJ Superior
Ct. Docket No. HUD-L-1845-95
--------------------------------------------------------------------------------
Rohm & Haas v. United States           Rohm & Haas Company    NJ Superior Court
Liability Insurance Company,
et al., NJ Superior Ct.,
Docket No. MERL-004664-95
--------------------------------------------------------------------------------
Rohm & Haas Texas Inc. v. AIU          Rohm & Haas Company    TX State Court
Ins. Co. et al., Texas St. Ct.,
Jefferson TX, Docket No.
A157626
--------------------------------------------------------------------------------

                                      -82-
<PAGE>
--------------------------------------------------------------------------------
           CAPTION                       POLICYHOLDER             COURT
--------------------------------------------------------------------------------
RSR Corp et al., v. AIU Ins.           RSR Corp.              TX District Court
Co., et al., Harrison County
Texas, Case No. 930127
--------------------------------------------------------------------------------
The Sherwin-Williams Company v.        Sherwin Williams       Court of Common
Travelers Casualty and Surety                                 Pleas, OH
Company et al., Docket No. 99-
399320-CV D13 CM, Ohio Court of
Common Pleas, Cuyahoga County
--------------------------------------------------------------------------------
Inland Paperboard and Packaging,       Temple-Inland, Inc.    IN Superior Court
Inc. v. Affiliated FM Insurance        Time Inc.
Company, Indiana, Marion Superior
Court, Cause 49D05-9708-CP-1142
--------------------------------------------------------------------------------
Fidelity & Casualty Co. of NY v.       Texas Eastern          PA District Court
Texas Eastern Transmission             Transmission Corp.
Corporation v. Associated Electric
Gas Insurance Services, Ltd., et
al., Docket No. 92-4804,
Pennsylvania District Court,
Eastern District
--------------------------------------------------------------------------------
Texas Eastern Transmission Corp. v.    Texas Eastern          TX District Court
Fidelity & Casualty Co., TX District   Transmission Corp.
Court, Harris County, 133rd District
Ct., Docket No. 92-31827
--------------------------------------------------------------------------------
The Boeing Company v. Certain          Boeing Company         WA Superior Court
Underwriters at Lloyds, Washington
Superior Court
--------------------------------------------------------------------------------
Certain Underwriters of Lloyds v.      Boeing Company         Oregon Circuit
The Boeing Company Docket No.                                 Court
9902-01729, Oregon Circuit Court
--------------------------------------------------------------------------------
Crown Cork & Seal Co. Inc. v.          Continental Group,     NJ Superior Court
Travelers, et al., NJ Superior         Inc.
Ct. MID-L-5965-95
--------------------------------------------------------------------------------
Continental Holdings, Inc. v.          Continental Group,     NJ Superior Court
AIU Ins. co., NJ Superior Ct.          Inc.
MID-L-12453-91
--------------------------------------------------------------------------------
Sonoco Products v. American            Continental Group,     NJ Superior Court
Motorist Ins. Co., et al., NJ          Inc.
Superior Court, Docket No.
MID-L601795
--------------------------------------------------------------------------------
Uniroyal Inc. v. American              Uniroyal Inc.          NJ Superior Court
Reinsurance Company, et al.,
NJ Superior Ct., Docket No.
L-8172-94
--------------------------------------------------------------------------------
Warner Lambert Co. et al. v.           Warner Lambert         NJ Superior Court
The Admiral Ins. Co., et al.,          Company
NJ Superior Ct. Docket No.
3307-92
--------------------------------------------------------------------------------

                                      -83-
<PAGE>
--------------------------------------------------------------------------------
           CAPTION                       POLICYHOLDER             COURT
--------------------------------------------------------------------------------
Nepera, Inc. (plaintiff-               Warner Lambert         NJ Superior Court
intervenor) v. Admiral Insurance       Company
Company, et al., NJ Superior
Court, Docket No. MIDLX-L-
10456-94
--------------------------------------------------------------------------------
Wheeling Pittsburgh Corp. and          Wheeling Pittsburgh    W VA Circuit Court
Wheeling Pittsburgh Steel              Steel Corp.
Corporation v. American Insurance
Company, Virginia St. Ct. Civil
Action No. 93C-340
--------------------------------------------------------------------------------
Witco Corporation v. Adriatic          Witco Corporation      DE Superior Court
Insurance Company, et al.,
Docket No. 95C-06-30, Delaware
Superior Court, New Castle County
--------------------------------------------------------------------------------
BHP Copper Inc. (f/k/a Magma Copper    City Services          Arizona St. Ct.
Co.) v. Aetna Casualty  & Surety
Co., et al. Docket No. cv.
2000-000808
--------------------------------------------------------------------------------

ARBITRATIONS OR LEGAL, ADMINISTRATIVE OR OTHER PROCEEDINGS
----------------------------------------------------------

1. Request for Information  dated September 3, 1998 from the Attorney General of
the State of Minnesota to Gibraltar  Casualty  Company  pursuant to the Landfill
Cleanup Act and letter dated January 19, 1999 from Gibraltar Casualty Company to
the Attorney General of the State of Minnesota.

2. Arbitration  pending  between  Gibraltar Casualty Company and QBE Insurance &
Reinsurance (Europe) Limited pursuant to the  Casualty  Quota  Share Reinsurance
Agreement.

                                      -84-
<PAGE>
                                  Schedule 3.15

                        Jurisdiction of Incorporation and
                        ---------------------------------
                   Jurisdictions of Qualification of Gibraltar
                   -------------------------------------------

        JURISDICTION OF INCORPORATION

              Delaware

        LICENSED IN

              Delaware
              California

        JURISDICTIONS OF QUALIFICATION

              Alabama
              Arkansas
              California
              Connecticut
              District of Columbia
              Georgia
              Hawaii
              Idaho
              Illinois
              Indiana
              Iowa
              Kansas
              Kentucky
              Maine
              Maryland
              Massachusetts
              Minnesota
              Missouri
              Montana
              Nebraska
              Nevada
              New Jersey
              North Dakota
              Oregon
              South Dakota
              Tennessee
              Vermont
              Washington
              West Virginia
              Wisconsin

                                      -85-
<PAGE>

              Wyoming

                                      -86-
<PAGE>
                                  Schedule 3.16

 Material Contracts with Affiliates, Officers, Directors and Interested Parties
 ------------------------------------------------------------------------------

     1.   Tax Allocation Agreement dated January 17, 1995 between The Prudential
Insurance Company of America and its  Affiliates,  including  Gibraltar Casualty
Company.

     2.   Service  Agreement dated May 10, 1990 between The Prudential Insurance
Company of America and Gibraltar Casualty Company.

     3.   Separation  Agreement  dated  October  6,  1995  among  The Prudential
Insurance  Company  of  America,  PRUCO,   Inc.,   Gibraltar  Casualty  Company,
Prudential Reinsurance Holdings, Inc. and Prudential Reinsurance Company.

     4.   Surplus  Maintenance  Agreement dated December 18, 1991 between PRUCO,
Inc. and Gibraltar Casualty Company.

     5.   Investment  Advisory  Contract effective as of 1984 between Prudential
Investment Company and Gibraltar Casualty Company.

     6.   Loan  Agreement  dated  November  21,  1996 between Gibraltar Casualty
Company and Prudential Funding Corporation.

     7.   Service  Contract dated May 1, 1997 between Gibraltar Casualty Company
and Prudential Property and Casualty Company.

     8.   Occupancy  Agreement  dated  July  1,  1995 between Gibraltar Casualty
Company and The Prudential Service Company.

                                      -87-
<PAGE>
                                  Schedule 3.17

                         Compliance with Applicable Law
                         ------------------------------

1.       Notification dated May 7, 1999 from North Carolina Insurance Department
         to Gibraltar Casualty Company advising that the Department is unable to
         approve Gibraltar Casualty Company as an authorized reinsurer.

                                      -88-
<PAGE>
                                  Schedule 3.20

                              Governmental Consents
                              ---------------------

                                      NONE

                                      -89
<PAGE>
                                  Schedule 3.21

                      Contracts, Agreements or Arrangements
                      -------------------------------------
                    to which Gibraltar is a Party or by which
                    -----------------------------------------
                    Gibraltar's Assets or Property are bound
                    ----------------------------------------

      1.   Separation  Agreement  dated  October  6,  1995  among The Prudential
Insurance  Company   of  America,  PRUCO,  Inc.,   Gibraltar  Casualty  Company,
Prudential Reinsurance Holdings, Inc. and Prudential Reinsurance Company.

      2.   Guarantee  dated  October 6, 1995 of The Prudential Insurance Company
of  America  in  favor  of  Prudential Reinsurance Holdings, Inc. (n/k/a Everest
Reinsurance Holdings, Inc.).

      3.   Guarantee  dated  October 6, 1995 of The Prudential Insurance Company
of America in favor of Prudential Reinsurance Company (n/k/a Everest Reinsurance
Company).

      4.   Indemnification  Agreement  dated October 6, 1995 between PRUCO, Inc.
and Prudential Reinsurance Holdings, Inc. (n/k/a  Everest  Reinsurance Holdings,
Inc.).

      5.   Surplus  Maintenance Agreement dated December 18, 1991 between PRUCO,
Inc. and Gibraltar Casualty Company.

      6.   Aggregate  Stop  Loss  Retrocession  Agreement  dated October 6, 1995
between Gibraltar Casualty Company and Prudential Reinsurance Company.

      7.   Reinsurance  Trust  Agreement  dated  March  11, 1999 among Gibraltar
Casualty Company, Everest Reinsurance Company, and The Bank of New York.

      8.   Trust  Agreement  dated  April  23,  1999  among  Everest Reinsurance
Company, Gibraltar Casualty Company, and Bankers Trust Company.

      9.   Engagement  Letter  Agreement  dated  May  3, 1999  among  Deloitte &
Touche  LLP,  Gibraltar  Casualty  Company and  Everest  Reinsurance  Company as
suspended by Notice letter dated May 26, 1999 from  Gibraltar  Casualty  Company
and  Everest  Reinsurance  Company  to  Deloitte  & Touche  LLP  suspending  the
Engagement Letter Agreement.

      10.  Service  Contract  dated  January  1, 1995 between Gibraltar Casualty
Company and Prudential Reinsurance Company.

      11.  Service  Agreement  dated  May  10,  1990  between Gibraltar Casualty
Company and The Prudential Insurance Company of America.

      12.  Service Contract dated May 1, 1997 between Gibraltar Casualty Company
and Prudential Property and Casualty Company, as amended.

                                      -90-
<PAGE>
      13.  Service  Agreement  between  IRISC,  Inc. (n/k/a Cambridge Integrated
Services Group) and Gibraltar Casualty Company, as amended.

      14.  Technology  Service  Agreement  between  IRISC, Inc. (n/k/a Cambridge
Integrated Services Group) and Gibraltar Casualty Company.

      15.  Letter  Agreement between Datasure International Limited, IRISC, Inc.
(n/k/a Cambridge  Integrated  Services  Group) and  Gibraltar  Casualty  Company
relating  to the Program License and Support Services Agreement between Datasure
International Limited and RHH Group.

      16.  Software  License  Agreement  dated  April 14, 1995 between Gibraltar
Casualty Company and The Freedom Group, Inc.

      17.  Software  License  Agreement  between  Gibraltar Casualty Company and
Prudential Reinsurance Company.

      18.  Software  License  Agreement  between  Datalight  Software  and   The
Prudential  Insurance  Company  of  America  for  the  Use  of  the  Concordance
Information Retrieval System by Gibraltar Casualty Company.

      19.  Investment  Advisory Contract effective as of 1984 between Prudential
Investment Company and Gibraltar Casualty Company.

      20.  Tax  Allocation  Agreement  executed  on January 17, 1995 between The
Prudential Insurance Company of America and its  Affiliates, including Gibraltar
Casualty Company, as amended.

      21.  Loan  Agreement  dated  November  21, 1996 between Gibraltar Casualty
Company and Prudential Funding Corporation.

      22.  Letter  Agreement dated May 26, 1999 between The Prudential Insurance
Company of America and Everest Reinsurance Company.

      23.  Confidentiality  and  Non-Disclosure  Agreement  dated  May  6,  1998
between Everest Reinsurance Company, Gibraltar Casualty Company and Tillinghast-
Towers Perrin.

      24.  Letter  Agreement dated September 16, 1998 between Tillinghast-Towers
Perrin and Everest Reinsurance Company.

      25.  Letter  Agreement  dated   February  24,  1999  between   Milliman  &
Robertson, Inc. and The Prudential Insurance Company of America.

                                      -91-
<PAGE>
      26.  Letter  Agreement  dated  April  8,  1999  between Tillinghast-Towers
Perrin and The Prudential Insurance Company of America.

      27.  Letter  Agreement  dated  July  14,  1999  between Tillinghast-Towers
Perrin and Gibraltar Casualty Company.

      28.  Occupancy  Agreement  dated  July  1, 1995 between Gibraltar Casualty
Company and The Prudential Service Company.

      29.  Assignment  Agreement  dated  September  17,  1998  among  Prudential
Reinsurance Company (n/k/a  Everest  Reinsurance  Company),  Gibraltar  Casualty
Company, and NationBank N.A.

      30.  Uniform  Qualified  Assignment  Agreement  effective May 1996 between
Gibraltar Casualty Company and Transamerica Annuity Service Corporation.

      31.  Tolling  Agreement  dated January 3, 2000, between Gibraltar Casualty
Company and Everest Reinsurance Company.

      32.  Letter  Agreement  dated  January  4, 2000 between Gibraltar Casualty
Company and Everest Reinsurance Company.

Claim Agreements With Guaranteed Scheduled Payments
---------------------------------------------------

1.    Settlement  Agreement  dated  February  1997  with  Bristol  Myers  Squibb
      (Includes Medical Engineering).

2.    Settlement Agreement dated January 1996 with Revlon.

3.    Agreement dated January 2000 with Pfizer.

Claim Handling Agreements
-------------------------

Gibraltar has claim handling agreements with the following policyholders:

Pfizer                                  CBS/Westinghouse

Union Carbide                           Colt Industries

Flintkote                               Revlon/Rhone Poulenc

Jim Walter/Celotex                      Pittsburgh Corning Corp.

RPM/Proko/Bondex                        Baxter Travenol International

Hoechst Celanese

                                      -92-
<PAGE>
Bayer/Rhinechem

American Hospital Supply Co.

                                  Schedule 3.22

          Contractual Reinsurance, Insurance and Commutation Agreements
          -------------------------------------------------------------

       1.   Settlement and Commutation Agreement effective February 22, 1999 and
Release  by  and between Gibraltar Casualty Company and Hamburger Internationale
Ruckversicherung Aktiengesellschaft.

       2.   Reinsurance  Settlement  and   Commutation  Agreement   and  Release
effective   April  14,  1999  between  Gibraltar   Casualty  Company  and   U.S.
International  Reinsurance  Company  and  The  Home  Insurance  Company  and its
subsidiaries.

       3.   Commutation  and Settlement Agreement effective May 30, 1997 between
Gibraltar Casualty Company and Imperial Casualty and Indemnity Company.

       4.   Settlement  Agreement  and  Mutual  Release  effective  May 15, 1997
between Underwriters Reinsurance Company, formerly  known as Buffalo Reinsurance
Company, and Gibraltar Casualty Company.

       5.   Commutation  Agreement  effective  June  20,  1996 between Gibraltar
Casualty Company and The Central National Insurance Company of Omaha.

       6.   Settlement  Agreement  and  Release  between  Midstates  Reinsurance
Corporation  (f/k/a  Mead  Reinsurance  Corporation),   and  Gibraltar  Casualty
Company.

       7.   Settlement  Agreement  and  Release  dated  July  1997 between CIGNA
Reinsurance  Company,  for  and on behalf of Century  Reinsurance  Company,  and
Gibraltar Casualty Company.

       8.   Commutation  of  two Aggregate Excess of Loss Reinsurance Agreements
effective   May  27,  1998  between  Gibraltar  Casualty  Company  and   Citadel
Reinsurance Company Limited.

       9.   Aggregate  Stop  Loss  Retrocession  Agreement dated October 6, 1995
between Gibraltar Casualty Company and Prudential Reinsurance Company.

       10.  Commutation  Agreement  between  Gibraltar  Casualty Company and ICA
(formerly Ormond Reinsurance Co.).

                                      -93-
<PAGE>
       11.  Certificate of Liability Insurance dated July 30, 1999 for Gibraltar
Casualty Company by Aon.

       12.  Settlement  and Commutation Agreement and Release dated August, 1999
by  and  between  Gibraltar  Casualty  Company  and  Unione Italiana Reinsurance
Company of America, Inc.

<PAGE>
                                  Schedule 3.23

             Liability, Property and Casualty, Workers Compensation,
             -------------------------------------------------------
          Directors and Officers Liability, Surety Bonds, Key Man Life
          ------------------------------------------------------------
              Insurance and Other Insurance Contracts of Gibraltar
              ----------------------------------------------------

1.       See Attached Insurance Summary.

2.       There are no Key Man Life Insurance policies.

                                      -95-
<PAGE>
                          GIBRALTAR INSURANCE COVERAGES
                          -----------------------------

                                TABLE OF CONTENTS
                                -----------------

COVERAGE                                                             PAGE NUMBER
--------                                                             -----------

INTRODUCTION                                                                 2

MASTER PROPERTY PROGRAM                                                      3

BOILER AND MACHINERY INSURANCE                                               7

CORPORATE PUBLIC LIABILITY PROGRAM                                           9

UMBRELLA & EXCESS LIABILITY POLICIES                                        11

WORKERS COMPENSATION & EMPLOYERS LIABILITY                                  12

MASTER HOME OFFICE GARAGE KEEPER'S LIABILITY                                13

MASTER HOME OFFICE AUTOMOBILE LIABILITY                                     14

DIRECTORS & OFFICERS LIABILITY INSURANCE                                    16

COMPREHENSIVE CRIME PROGRAM                                                 18

FIDUCIARY LIABILITY INSURANCE                                               20

ERRORS & OMISSIONS - PROFESSIONAL LIABILITY INSURANCE                       21

EMPLOYMENT PRACTICES LIABILITY INSURANCE                                    22

SURETY BONDS                                                                23

ENTERPRISE RISK MANAGEMENT:  FEBRUARY 16, 2000

                                      -96-
<PAGE>
                           ENTERPRISE RISK MANAGEMENT
                           --------------------------
                          CORPORATE INSURANCE PROGRAMS
                          ----------------------------

                                  INTRODUCTION
                                  ------------

                            ISSUED: FEBRUARY 16, 2000
                            -------------------------

                                INTERNAL USE ONLY
                                -----------------

This package  summarizes the major insurance  programs  maintained by Enterprise
Risk  Management to protect the interests of  Prudential.  Coverage  under these
programs is extended (except where specifically noted) to The Prudential and any
subsidiary or associated companies. If you require a CERTIFICATE OF INSURANCE to
provide evidence of coverage,  please click on the certificate  request for icon
located  on the  main  page  of the  database.  Questions  regarding  terms  and
conditions,   coverage  limits,  etc.  should  be  referred  to  Corporate  Risk
Management at 973-802-5751.

NOTE: This Insurance  Program Summary Manual is prepared for the information and
convince of  Prudential's  business groups and  subsidiaries.  It SUMMARIZES the
listed  programs  and it is not  intended  to  document  ALL  of the  terms  and
conditions or  exclusions of such  programs.  The  information  contained in the
summary  reflects  coverage  as of the  effective  date  noted  in  the  manual.
Subsequent changes and programs  modifications are not included.  This Insurance
Summary Manual is not an insurance policy.  The insurance programs listed in the
summary  are  subject to the terms,  exclusions,  and  conditions  of the actual
policies.  For more detailed  information  please  consult the  Enterprise  Risk
Management at 973-802-5751.

                    COPIES OF INSURANCE CONTRACTS (POLICIES):

Many of our insurance policies are customized  manuscript contracts that contain
proprietary  information.  Therefore,  The Prudential DOES NOT provide copies of
its insurance policies to third parties.  In addition,  many of our programs are
the blanket type which means that, in most instances,  individual  locations are
not listed in the policy.  Like most large  programs,  we maintain and file with
the underwriters separate rosters of covered entities.

Under our program we provide  our  business  associates  with a  certificate  of
insurance as evidence of adequate coverage.  The issuance of a certificate is an
accepted  practice  within  the  industry  for  programs  that  are the  size of
Prudential's.

In some  instances,  additional  clarification  or evidence  of coverage  may be
requested.  For these cases the appropriate  Insurance Broker and/or  Enterprise
Risk  Management  will provide a letter that  confirms  coverage and responds to
specific coverage questions.

                      ENTERPRISE RISK MANAGEMENT LOCATION:

                           Enterprise Risk Management
                        213 Washington Street, 7th Floor
                              Newark, NJ 07102-2992

                                      -97-
<PAGE>
                   Phone # (973) 802-5751 Fax # (973) 802-5846

                                      -98-

<PAGE>
                            MASTER PROPERTY PROGRAM
                            -----------------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------

The Prudential Insurance Company of America including all divisions, affiliated,
associated and subsidiary  companies and/or  corporations  and/or Joint Ventures
that are specifically enrolled for this insurance.

INSURANCE CARRIERS
------------------

Primary Layer $20,000,000

COMPANY                          PARTICIPATION              POLICY NUMBER
-------                          -------------              -------------
AIG-NATIONAL UNION               $  16,500,000              4547857
CNA-CONTINENTAL CASUALTY         $   3,500,000              RMP189472013

Excess Program-Various Carriers

POLICY TERM
-----------

December 31, 2001

TERRITORY
---------

The United States of America,  its territories and possessions,  The District of
Columbia,  Canada,  Puerto Rico, and the U.S. Virgin Islands  including  coastal
waterways.

COVERAGES
---------

All real and personal property,  owned, used, leased (or otherwise  acquired) by
the assured or in its care, custody and control including but not limited to:

I.  PROPERTY COVERAGE
    -----------------

- Improvements and Betterments                    - Fine Arts
- Accounts Receivable                             - Valuable Papers & Records
- EDP Equipment, Media & Extra Expense            - Builders Risk and
                                                     Installation
- Demolition & Increased Cost of
   Construction                                   - Consequential Damage
- Contractors & Subcontractors Interest           - Property in Transit
- Unnamed Locations                               - Newly Acquired Locations
- Contingent Property Coverage                    - Fiduciary Capacity &
                                                     Foreclosure

                                      -99-
<PAGE>
- Professional Fees

II.  TIME ELEMENT COVERAGE
     ---------------------

- Business Interruption                           - Extra Expense
- Contingent Bus. Interruption & Extra Expense    - Rental Income & Expense
- Off Premises Service Interruption               - Contingent Liability from
                                                     Building Laws
- Demolition & Increased Time to Rebuild          - Rental Value
- Ingress/Egress                                  - Civil/Military Authority

PERILS INSURED
--------------

"All Risk" of physical loss or damage including flood and earthquake  subject to
policy exclusions.

EXCLUSIONS
----------

Loss of market,  inherent vice,  gradual  deterioration,  suspension of lapse of
lease,  wear and tear, war,  nuclear  reaction,  employee  infidelity,  asbestos
removal, faulty workmanship, pollution or contamination as defined in the policy
terms and conditions.

PROGRAM LIMITS
--------------

$5,200,000,000  All-Risk, Total Insurable Value (TIV) per occurrence limit  with
the following Program Sub-limits:

PROGRAM SUB-LIMITS
------------------

$ 650,000,000            per occurrence for Flood and Non-California Earthquake,
                         Annual aggregate applies separately for each peril.

$ 100,000,000            any  one  occurrence  and  in  the  annual aggregate in
                         respect of California Earthquake.

$   5,000,000            any  one  occurrence as respects pollution clean-up and
                         removal from land and water.

MASTER PROGRAM DEDUCTIBLE
-------------------------

CORPORATE
---------

$250,000                  per occurrence

                                     -100-
<PAGE>
OTHER PROGRAM DEDUCTIBLES
-------------------------

o        5% at time of  loss  applied  separately  to  real  property,  personal
         property and time element,  for  earthquake in the state of California,
         subject to a minimum of $100,000 in any one  occurrence,  and a maximum
         of $ 10,000,000 per occurrence.

o        2% of value at time of loss for Named Storms  (greater than 74 mph) for
         locations  involved  in loss,  subject to a minimum of  $100,000  and a
         maximum of $10,000,000  per  occurrence,  as respects  windstorm in the
         states of Florida and Texas.

o        $  5,000  per occurrence as respects to Fine Arts

In the event of an occurrence  involving more than one of the above deductibles,
only the highest single deductible shall apply.

Earthquake  means loss or damage  caused by,  resulting  from,  or aggravated by
earth movement  including but not limited to landslide,  mud flow, earth sinking
or shifting.

VALUATION
---------

o        On finished  goods,  the regular cash selling  price less  discounts;

o        As respects all other real and personal property, the replacement cost;

o        On valuable  papers and records and  EDP  Media,  the  actual  cost  of
         reconstruction;

o        As respects EDP equipment, the upgrade value or functional  replacement
         cost whichever is greater;

o        As respects fine arts, the  appraised  valued  or  in  absence  of such
         appraisal,  market  value at time of loss  plus Insured's costs;

o        As respects  mortgage  impairment  and  time  element,  the actual loss
         sustained by the insured as defined in the policy form;

o        As respects leased equipment, as per lease conditions;

o        Landmark properties, tailored valuation.

BROKER:
-------

Aon Risk Services, Inc

Two World Trade Center

New York, NY  10048

                                     -101-
<PAGE>
                          BOILER & MACHINERY INSURANCE
                          ----------------------------

INTERNAL USE ONLY
-----------------

INSURED
-------

Prudential and/or its affiliated,  subsidiary,  and associated  companies and/or
corporations  and/or joint  ventures  and/or any owned  (wholly or partially) or
controlled  company(ies)  where the Insured maintains an interest or is required
to provide  insurance as now exists or may hereafter be  constituted or acquired
including their interests as may appear in partnerships or joint ventures

POLICY TERM
-----------

December 31, 2001

COVERAGE
--------

o    Broad  comprehensive   form,(  including   production  machines)  covering:
     property damage, business interruption (direct & contingent), extra expense
     (direct  &  contingent),   consequential   damage,   service  interruption,
     mechanical breakdown, and explosion.

LIMITS OF LIABILITY
-------------------

$75,000,000        per each accident subject to the following sublimits:

$10,000,000        each for water damage, ammonia contamination

$ 1,000,000        for Hazardous Substance

VALUATION
---------

Property:  Repair or Replacement

Time Element:  Actual loss sustained

DEDUCTIBLES
-----------

As per property program deductibles

                                     -102-
<PAGE>
TERRITORY
---------

As per property

INSURER
-------

Chubb Insurance Company  as reinsurance of AIG/National Union

ADDITIONAL CONDITIONS
---------------------

Joint Loss Agreement clause

Ninety (90) day notice of cancellation

Blanket waiver of subrogation

Omnibus Location Wording

Automatic coverage for newly acquired locations is 365 days.

Demolition, Increased Cost of Construction and Additional Time to Rebuild due to
the operation Building Laws.

Notice of Loss -  Notification  by  Assured  as soon as  practicable  after Risk
Management Dept. of Prudential becomes aware of a reported accident.

Commencement  of Liability as respects Time Element losses starts at the time of
the accident.

BROKER
------

Aon Risk Services, Inc
Two World Trade Center
New York, NY  10048

                                     -103-
<PAGE>
                       CORPORATE PUBLIC LIABILITY PROGRAM
                       ----------------------------------

                                GENERAL LIABILITY
                                -----------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------

The Prudential and all of its subsidiaries, excluding Joint Ventures, Prudential
Real Estate Investors and Prudential Realty Group.

INSURANCE CARRIER
-----------------

The Travelers Insurance Company    $ 3,000,000 general aggregate
                                   $ 1,000,000 Combined Single Limit for
                                               Bodily Injury and Property Damage

Policy Number                       TC2JGLSA-120D399-3-TIL-00

POLICY TERM
-----------

January 1, 2000 - January 1, 2001

TERRITORY
---------

United States., Canada, Puerto Rico and the Virgin Islands.

ADDITIONAL INSUREDS
-------------------

Directors,  officers and  employees  (only at our option before or after a loss)
while  acting  within the scope of their  duties as such and,  other  persons or
organizations  to whom we are obligated under written  contract prior to loss to
include as additional insureds.

COVERAGE
--------

All operations,  properties (owned and leased), products, etc. However, coverage
does not apply to certain  exposures  which are the  subject  of other  specific
insurance,  such as motor vehicles,  aircraft,  etc.  Separate primary liability
coverage is  maintained on properties  with outside  ownership  interests and on
certain small subsidiaries, and on foreign-based subsidiaries.

                                     -104-
<PAGE>

The carrier will  investigate and defend all claims that occur within the policy
territory,  even if they are  groundless,  and will  settle all  claims  that we
become legally obligated to pay as damages because of:

         A.       Bodily Injury and Property Damage Liability
                  -------------------------------------------

                  Including such tort liability  assumed under contract prior to
                  loss.

         B.       Personal Injury and Advertising Injury Liability
                  ------------------------------------------------

                  Including libel, slander, false arrest,  invasion of  privacy,
                  infringement of copyright, title, or slogan

The  actual  policy  contains  certain  other  coverage   extensions,   such  as
professional   liability  coverage  on  (only)  GIB  Labs,   Incidental  Medical
Malpractice (Company Doctors and Nurses only), etc.

EXCLUSIONS
----------

Nuclear reaction or nuclear radiation or radioactive contamination.

Pollution and environmental contamination.

Hostile or warlike action in the time of peace or war.

Property losses covered by the property policy.

Any obligation of the insured under a workers' compensation, disability benefits
or unemployment compensation law or any similar law.

Bodily injury or property  damage  arising out or caused by asbestos or asbestos
fibers,  including any  supervision  instructions,  recommendations  warnings or
advice given or which should have been given in connection.

Incidental medical malpractice for HMOs and medical cost containment operations.

Errors and omissions arising from insurance company operations.

Employment Related Practices

                      UMBRELLA & EXCESS LIABILITY POLICIES
                      ------------------------------------

COVERAGE
--------

This     insurance      provides     coverage      in      excess     of     the
primary      (underlying)      insurance      (i.e.,      Commercial     General
Liability,    Auto   Liability,    Foreign      General       and     Automobile

                                     -105-
<PAGE>

Liability,  Employer's Liability,  Aircraft Liability, and Prudential Securities
Auto Liability).

The  Umbrella  insurance  is the  first  layer of  coverage  above  our  primary
insurance.  It will follow the terms and conditions of the Primary  policies and
will sometimes fill coverage gaps which may exist under the Primary policies.

CARRIER                             LIMITS*
-------                             ------

Primary
-------
Travelers                           $ 1,000,000

First Layer
-----------
American Alternative Insurance Co.  $49,000,000 excess Primary per occurrence
                                    $49,000,000 excess Primary general aggregate

Policy Number                       01A2UM0000147-02

Second Layer
------------
National Union                    $50,000,000 quota share excess of  $50,000,000

Policy Number                     346-39-21

American Zurich Insurance Co.     $50,000,000 quota share excess of $50,000,000

Policy Number                     EU08356048-05

*Call  Enterprise  Risk  Management,  973-802-5751  if there  are any  questions
regarding coverage or limits of insurance.

BROKER
------

Marsh, Inc
44 Whippany Road
Morristown, NJ  07960

                   WORKERS' COMPENSATION & EMPLOYERS LIABILITY
                   -------------------------------------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------

The Prudential and all of its subsidiaries.

INSURANCE CARRIER
-----------------

                                     -106-
<PAGE>
THE TRAVELERS         TC2JUB203T102-2-00  (All other than Prudential Foundation)
                      TC2JUB229T425-2-00  (Prudential Foundation)

Limit*                Statutory

POLICY ANNIVERSARY
------------------

July 1, 1997 to July 1, 1998

TERRITORY
---------

United States., Canada, Puerto Rico and Virgin Islands

COVERAGE
--------

All Employees of the Named Insured.  The Prudential considers special agents who
are working under the Training  Allowance  Plan and the  Incentive  Compensation
Program as  "employees".  All other special agents are  considered  "independent
contractors" and are not covered.

Workers' Compensation insurance protects the Named Insured against claims of its
employees for losses due to accidents or  occupational  diseases  arising out of
and in the course of their employment.

As most states have their own Workers'  Compensation  and  Occupational  Disease
Laws, The Travelers, in protecting the Named Insured, is governed by such laws.

The Named Insured does not carry Workers' Compensation insurance in Canada. CDNO
will authorize payment,  over and above any payments due under our regular group
coverage insurance,  as though the Canadian employees were covered in accordance
with Provincial Workers' Compensation.  Approval of such disbursements should be
made by the Vice President,  Administration,  in CDNO or by an individual he/she
specifically designates. b

*Call  Integrated  Disability  Management,  (800)  778-3279  if  there  are  any
questions regarding coverage or limits of insurance.

                                     -107-
<PAGE>
                  MASTER HOME OFFICE GARAGE KEEPER'S LIABILITY
                  --------------------------------------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------
The Prudential and its subsidiaries.

INSURANCE CARRIER
-----------------

The Travelers Insurance Company

Policy Number              TC2JGAR-120D397-A-TIL - 00 (All States Garage)
                           TC2E-GAR-120D398-1-TCT- 00 (TX Garage)

Limit*                     $5,000,000 per occurrence Combined Single Limit (CSL)
                           subject to a $250,000 deductible

Excess Carriers   See General Liability & Umbrella/Excess Liability Program

POLICY TERM
-----------

January 1, 2000 - January 1, 2001

TERRITORY
---------

United States, Canada, Puerto Rico and the Virgin Islands

COVERAGE
--------

Parking  garages  or lots in (or at)  wholly-owned  investment  and home  office
properties.

"Bailee"  liability coverage is provided for loss to any non-owned auto which is
left in the care or custody of The Prudential or its parking garage operator for
the purpose of attending, servicing, repairing, parking or storing it in (or at)
our garage facilities.

Coverage is also  provided  for damages  because of bodily  injury,  or property
damage caused by an accident and resulting from garage operations.

*Call Enterprise Management,  973-802-5751, if there are any questions regarding
coverage or limits of insurance.

BROKER
------

Marsh, Inc
44 Whippany Road
Morristown, NJ  07960

                                     -108-
<PAGE>
                     MASTER HOME OFFICE AUTOMOBILE LIABILITY
                     ---------------------------------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------

The Prudential and all of its subsidiaries.

INSURANCE CARRIER
-----------------

THE TRAVELERS INSURANCE COMPANY

Policy Number             TC2JCAP-120D394-4-TIL-00 (All states)
                          TC2E-CAP-120D395-6-TCT-00 (Texas)
                          TJEAP-120D396-8-TIL-00 (Mass.)

Limit                     $5,000,000 per occurrence Combined Single Limit (CSL),
                          subject to a $250,000 deductible

Excess Carriers           See  General  Liability  Coverage  /  Excess  Umbrella
                          Liability Policy

POLICY TERM
-----------

January 1, 2000 - January 1, 2001

TERRITORY
---------

United States,  its territories and possessions.  (Foreign exposures are insured
separately).

COVERAGE
--------

All Company-owned or leased motor vehicles.

The  carrier  will  investigate  and defend all claims  relating  to  automobile
accidents that occur within the policy  territory,  even if they are groundless,
and will settle all claims that we become  legally  obligated  to pay as damages
because of:

BODILY INJURY AND/OR PROPERTY DAMAGE LIABILITY to others ("third parties").

Coverage is also provided for "No-Fault" benefits required in various states.

For rental vehicles,  primary liability coverage of $100,000 per person/$300,000
per occurrence is afforded through the Corporate Travel agreement with both Avis
and Alamo.

                                     -109-
<PAGE>
EXCLUSIONS
----------

No coverage is provided for physical damage (i.e.,  collision or  comprehensive)
to Company vehicles, rental cars or personal cars used on Company business.

*Call  Enterprise  Risk  Management  973-802-5751,  if there  are any  questions
regarding coverage or limits of insurance.

BROKER
------

Marsh, Inc
44 Whippany Road
Morristown, NJ  07960

                                     -110-
<PAGE>
                           DIRECTORS & OFFICERS (D&O)
                           --------------------------
                               LIABILITY INSURANCE
                               -------------------

INTERNAL USE ONLY
-----------------

Our D&O insurance program* has two components:

A.       The Broad Form Directors & Officers Liability Insurance Policy provides
coverage  to   Insured  Persons  (subject  to  policy   terms,   conditions  and
limitations)  for   loss   from  claims  not  paid  by  other  insurance  or  as
indemnification.

B.  The  Executive  Indemnification  Policy  provides  coverage  to the  Company
(subject to policy terms,  conditions and  limitations) for loss from claims for
which indemnification is provided to Insured Persons.

PARENT ORGANIZATION
-------------------

The Prudential  Insurance Company of America and all subsidiaries which are more
than 50 percent owned.

POLICY ANNIVERSARY
------------------

August 31, 2002

INSURED PERSONS
---------------

A.   BROAD  FORM  DIRECTORS  LIABILITY  POLICY:  Any  past,  present  or  future
     independent  director who is not otherwise  employed by the Company.

B.   Executive  Liability  Indemnification:  Any past,  present  or future  duly
     elected  or  appointed  Directors  or  Officers  of  the  Prudential.  This
     definition  is  further  amended  to  include  the  positions  of  Managing
     Director,  Trustee,  Committee  Member  and  employees  at  level 78 or its
     investment  equivalent,  level 54 and  those  employees  with  functionally
     equivalent responsibilities. Coverage is also extended (on an excess basis)
     for certain individuals serving as directors of an outside  organization at
     Prudential's  request.  Contact  Risk  Management  for  details  concerning
     coverage applicability for outside directorships.

                                     -111-
<PAGE>
TERRITORY
---------

Worldwide

COVERAGE DESCRIPTION
--------------------

Covers insureds against claims arising from actual or alleged  "Wrongful Acts" -
(i.e.,  any act,  error,  misstatement,  misleading  statement,  breach of duty,
neglect,  etc.)  committed or attempted by an Insured Person while acting in his
or her Insured Capacity. D&O Insurance is written on a "claims made" policy form
with aggregate limits for the policy period.

                                     -112-
<PAGE>
INSURANCE CARRIERS*
-------------------

A.    BROAD FORM DIRECTORS  LIABILITY INSURANCE POLICY

Primary Layer      Insurers          Participation        Policy No.
-------------      --------          -------------        ---------
$50,000,000        a)  ERMA          $25 million          75207739897
                   b)  Reliance      $25 million          ND0117757-97

Excess Layers      Various

Program Deductible:  $0 for non-indemnifiable actions

B.    EXECUTIVE LIABILITY INDEMNIFICATION POLICY

Primary Layer   Insurers                          Participation    Policy No.
-------------   --------                          -------------    ----------
$50,000,000      a)  Federal Insurance Company    $12.5 million    70229415
                 b)  Lloyds of London             $10 million      FB9700243
                 c)  ERMA                         $10 million      75107741597
                 d)  Reliance                     $10 million      NDA0117756-97
                 e)  ACE                          $7.5 million     PRUA-8601D

Excess Layers    Various

Program Deductible:  $25,000,000 per loss Corporate Reimbursement and Entity

NOTE:   Questions regarding the D&O  insurance  program  should  be  referred to
Enterprise Risk Management at (973)802-5751.

BROKER
------

Aon Risk Services, Inc
Two World Trade Center
New York, NY  10048

                                     -113-
<PAGE>
                           COMPREHENSIVE CRIME PROGRAM
                           ---------------------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------

The  Prudential  Insurance  Company  of  America and all subsidiaries, including
Prudential Securities.

INSURANCE CARRIERS
------------------

Primary        Carrier                        Participation      Policy No.
-------        -------                        -------------      ----------
$50,000,000    a) Federal Insurance Company   $12.5 million      70229415
               b) Lloyds of London            $10 million        FB9700243
               c) Executive Risk              $10 million        75107741597
               d) Reliance                    $10 million        NDA0117756-97
               e) ACE                         $7.5 million       PRUA-8601D

Excess Layers                                 Various

Program Deductible: $25,000,000

POLICY ANNIVERSARY
------------------

August 31, 2002

PERSONS/PROPERTY COVERED
------------------------

All   employees  of  the  named   insured.   Money,   Certificated   Securities,
Uncertificated  Securities  of any Federal  Reserve  Bank of the United  States,
Negotiable   Instruments,  Certificates  of  Deposit,  Acceptance,  Evidence  of
Debt,  Security  Agreements,  Withdrawal  Orders,  Letter  of  Credit,  Abstract
of  Title,  Deeds  and  Mortgages on  real  estate,  Revenue  and  other stamps,
Tokens,  Unsold   State   Lottery   tickets,   Bonds   of   Account   and  other
records    whether    recorded    in    writing    or    electronically,   Gems,

                                     -114-
<PAGE>
Jewelry,  Precious  metals  in bars or ingots  and  Tangible  Items of  personal
property not enumerated.

AGENTS:  PIFS and PPFS, mortgage servicing agents and agents in the sale of Real
         Estate products.

COVERAGE
--------

EMPLOYEE AND AGENT DISHONESTY (FIDELITY)
----------------------------------------

 LOSS RESULTING  FROM  DISHONEST OR FRAUDULENT  ACTS COMMITTED BY AN EMPLOYEE OR
AGENT ACTING ALONE OR IN COLLUSION WITH OTHERS.

ON PREMISES
-----------

LOSS OF PROPERTY  RESULTING  DIRECTLY  FROM  ROBBERY,  BURGLARY,  COMMON-LAW  OR
STATUTORY  LARCENY  (COMMITTED  BY A  PERSON  AT ONE OF  PRUDENTIAL'S  OFFICER),
MISPLACEMENT, MYSTERIOUS, UNEXPLAINABLE DISAPPEARANCE OR DESTRUCTION.

PREMISES COVERED ARE ALL OF THE NAMED INSURED'S OFFICES AND OFFICES OF FINANCIAL
INSTITUTIONS AND CLEARING HOUSES.

IN TRANSIT
----------

LOSS OF PROPERTY RESULTING FROM ROBBERY, COMMON-LAW OR STATUTORY LARCENY, THEFT,
MISPLACEMENT,  MYSTERIOUS, UNEXPLAINABLE DISAPPEARANCE OR DESTRUCTION WHILE SUCH
PROPERTY IS IN TRANSIT IN THE CARE OF A NATURAL PERSON ACTING AS A MESSENGER.

FORGERY OR ALTERATION
---------------------

LOSS RESULTING FROM FORGERY OR ALTERATION OF, ON OR IN ANY CHANGE OF BENEFICIARY
REQUEST,  POLICY LOAN AGREEMENT,  ASSIGNMENT OF A POLICY,  NEGOTIABLE INSTRUMENT
OTHER  THAN  SECURITIES  MADE OR DRAWN BY OR ON NAMED  INSURED.  DOES NOT  COVER
PROPERTY   BY  THE  MAIL  OR  EXPRESS   CARRIERS.   COVERAGE   FOR  ARMORED  CAR
TRANSPORTATION IS IN EXCESS OF INSURANCE CARRIED BY THE VENDOR.

SECURITIES
----------

LOSS RESULTING DIRECTLY FROM HAVING IN GOOD FAITH ACQUIRED SOLD OR DELIVERED, OR
GIVEN VALUE,  EXTENDED CREDIT OR ASSUMED LIABILITY ON THE FAITH OF, ANY ORIGINAL
SECURITY,  DEED, EVIDENCE OF DEBT,  SECURITY  AGREEMENT,  LETTER OF CREDIT WHICH
BEARS A SIGNATURE WHICH IS FORGERY OR IS ALTERED LOST OR STOLEN.

                                     -115-
<PAGE>
COMPUTER FRAUD
--------------

LOSS RESULTING  DIRECTLY FROM A FRAUDULENT ENTRY OF DATA INTO, OR CHANGE OF DATA
ELEMENTS OR PROGRAMS  WITHIN YOUR  PROPRIETARY  OR  PURCHASED  COMPUTER  SYSTEM,
PROVIDED THE FRAUDULENT ENTRY OR CHANGE CAUSES:  (A) PROPERTY TO BE TRANSFERRED,
PAID OR DELIVERED,  (B) AN ACCOUNT OF THE NAMED INSURED OR ONE OF ITS CUSTOMERS,
TO BE  ADDED,  DELETED,  DEBITED,  OR  CREDITED,  OR  (C) AN  UNAUTHORIZED  OR A
FICTITIOUS ACCOUNT TO BE DEBITED OR CREDITED.

NOTE:    QUESTION  REGARDING POLICY TERMS AND COVERAGE FOR SPECIFIC  INDIVIDUALS
         SHOULD BE  REFERRED  DIRECTLY TO  ENTERPRISE  RISK  MANAGEMENT  GENERAL
         INFORMATION AT (973) 802-5751.

BROKER
------
Aon Risk Services, Inc
Two World Trade Center
New York, NY  10048

                                     -116-
<PAGE>
                         FIDUCIARY LIABILITY INSURANCE
                         -----------------------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------

The Prudential Insurance Company of America and all subsidiaries, as well as the
individual employee benefit plans sponsored by those entities.

INSURANCE CARRIERS
------------------

Executive Liability and Indemnification Policy:

Primary         Carrier                        Participation     Policy No.
-------         -------                        -------------     ----------

$50,000,000     a) Federal Insurance Company   $12.5 million     70229415
                b) Lloyds of London            $10 million       FB9700243
                c) Executive Risk              $10 million       75107741597
                d) Reliance                    $10 million       NDA0117756-97
                e) ACE                         $7.5 million      PRUA-8601D

Excess Layers                                  Various

Program Deductible:                            $25,000,000

POLICY ANNIVERSARY
------------------

August 31, 2002

PERSONS COVERED
---------------

Any natural  persons  serving as a past,  present or future  trustee,  director,
officer or employee of Prudential or of any of its  sponsored  employee  benefit
plans.

                                     -117-
<PAGE>
COVERAGE
--------

This policy covers claims against  Prudential and the fiduciaries of its company
sponsored  employee  benefit  plans  against  suits  arising  from any actual or
alleged breaches of the Employee  Retirement  Income Security Act (ERISA) or any
other  similar  law  as  well  as  negligent  act,  error  or  omission  in  the
administration of these plans.

NOTE:  QUESTION  REGARDING  POLICY TERMS AND  COVERAGE FOR SPECIFIC  INDIVIDUALS
SHOULD BE REFERRED DIRECTLY TO CORPORATE RISK MANAGEMENT GENERAL  INFORMATION AT
(973) 802-5751.

BROKER
------

Aon Risk Services, Inc
Two World Trade Center
New York, NY  10048

              ERRORS & OMISSIONS (PROFESSIONAL LIABILITY) INSURANCE
              -----------------------------------------------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------

The Prudential Insurance Company of America and all subsidiaries.

INSURANCE CARRIERS
------------------

Primary         Carrier                        Participation     Policy No.
-------         -------                        -------------     ----------

$50,000,000     a) Federal Insurance Company   $12.5 million     70229415
                b) Lloyds of London            $10 million       FB9700243
                c) Executive Risk              $10 million       75107741597
                d) Reliance                    $10 million       NDA0117756-97
                e) ACE                         $7.5 million      PRUA-8601D

Excess Layers                                  Various

                                     -118-
<PAGE>
Program Deductible:                            $25,000,000

POLICY ANNIVERSARY
------------------

August 31,2002

PERSONS/PROPERTY COVERED
------------------------

The Prudential  Insurance  Company of America and all subsidiaries and any past,
present  or future  director,  officer  or  employee  of  Prudential  in his/her
capacity as a director, officer or employee of Prudential.

COVERAGE
--------

Covers Prudential and its employees for loss which they become legally obligated
to pay as a  result  of a Claim  against  them  arising  out of a  Wrongful  Act
committed,  attempted  or  allegedly  committed  or attempted by the Insureds or
someone for whose acts the Insureds are legally responsible, while performing or
while allegedly failing to perform professional services.

NOTE:  QUESTION  REGARDING  POLICY TERMS AND  COVERAGE FOR SPECIFIC  INDIVIDUALS
SHOULD BE REFERRED DIRECTLY TO CORPORATE RISK MANAGEMENT GENERAL  INFORMATION AT
(973) 802-5751.

BROKER
------

Aon Risk Services, Inc
Two World Trade Center
New York, NY  10048

                                     -119-
<PAGE>
                    EMPLOYMENT PRACTICES LIABILITY INSURANCE
                    ----------------------------------------

INTERNAL USE ONLY
-----------------

NAMED INSURED
-------------

The  Prudential  Insurance  Company  of  America and all subsidiaries, including
Prudential Securities

INSURANCE CARRIERS
------------------

Primary         Carrier                       Participation    Policy No.
-------         -------                       -------------    ----------

$50,000,000     a) Federal Insurance Company  $12.5 million    70229415
                b) Lloyds of London           $10 million      FB9700243
                c) Executive Risk             $10 million      75107741597
                d) Reliance                   $10 million      NDA0117756-97
                e) ACE                        $7.5 million     PRUA-8601D

Excess Layers                                 Various

Program Deductible:                           $25,000,000

POLICY ANNIVERSARY
------------------

August 31

PERSONS COVERED
---------------

Any past, present or future directors, officers or employee of Prudential.

COVERAGE DESCRIPTION
--------------------

Covers insureds against suits brought by past, present or prospective Prudential
employees with respect to employment practices related matters.

NOTE:  QUESTION  REGARDING  POLICY TERMS AND  COVERAGE FOR SPECIFIC  INDIVIDUALS
SHOULD BE REFERRED DIRECTLY TO CORPORATE RISK MANAGEMENT GENERAL  INFORMATION AT
(973) 802-5751.

                                     -120-
<PAGE>
BROKER
------

Aon Risk Services, Inc
Two World Trade Center
New York, NY  10048

                                  SURETY BONDS
                                  ------------

INTERNAL USE ONLY
-----------------

Surety Bonds are often required by governmental agencies on the Federal,  State,
and Municipal levels, Courts, Corporations and private individuals. This type of
bond  guarantees  that  the  Principal,   such  as  Prudential  or  one  of  its
subsidiaries,  will  complete  a service  or other  obligation  prescribed  by a
contract.  Also  included  under the surety ship are license  bonds  required to
perform a certain job or profession.  It must be emphasized  that surety ship is
not insurance.  Surety Companies  writing these types of bonds do not anticipate
paying any claims,  therefore,  the cost of these bonds is a service  charge and
not a premium. When a Surety Bond is issued, the principal indemnifies and holds
the Surety Company writing the bond harmless  against any and all loss presented
in connection with the bond.

1.   COMMON TYPES OF SURETY BONDS ISSUED FOR COMPANY OPERATIONS
     ----------------------------------------------------------

     A.  BROKER/DEALER Bonds required  by  certain States in order for a firm to
         sell securities.

     B.  COURT BONDS consist  of  appeal  bonds, release of mechanic lien bonds,
         injunction bonds, receiver bonds and attachment bonds.

     C.  LICENSE  AND PERMIT BONDS -  consist  of  bonds  required  to obtain  a
         license for  a  mortgage  lender,  insurance adjuster,  notary  public,
         surplus lines broker, surplus lines agent, and the selling  of  liquor.
         We  have   procured  for   certain   Municipalities  permit  bonds  for
         canopies, dumpsters, and signs.

     D.  CONTRACT  BONDS,  for  our  purpose,  have  consisted  of  performance,
         subdivision, and bid bonds.

     E.  FINANCIAL  GUARANTEE   BONDS  have   been   written  for   us  or   our
         subsidiaries running to States and others providing that the obligee on

                                     -121-
<PAGE>
         the bond will receive a specified amount of money if we fail to fulfill
         our obligations under a contract.

     F.  MISCELLANEOUS BONDS - Consist of various types of instruments including
         toll  tax,  cigarette  tax,  workers  compensation,  lost  security and
         general term (custom) bonds.

2.       COVERAGE AND LIMITS
         -------------------

         Numerous  Bonds are maintained  for  Prudential  operations.  Questions
         regarding  Surety Bonds  coverage,  limits and request  forms should be
         referred to Corporate Risk Management at (973) 802-5751.

BROKER
------

Aon Risk Services, Inc
Two World Trade Center
New York, NY  10048

                                     -122-
<PAGE>
                                  Schedule 3.24

                                      Taxes
                                      -----

         (1) Gibraltar is a member of Seller's  consolidated  federal income tax
group.  Seller has  extended  until  June 30,  2000 the  statute of  limitations
applicable to its consolidated federal income tax returns for the tax years 1990
through 1996.

         (2) Gibraltar is a party to an Illinois unitary tax audit for tax years
1993  through  1995 that is  focused  primarily  on  certain  other of  Seller's
property and casualty insurance affiliates. The statute of limitations for these
tax years has been extended until April 15, 2000- however,  the Illinois auditor
has orally indicated that he intends to drop the audit entirely.

         (3) Seller has granted a power of attorney to  McDermott,  Will & Emery
in connection with the audit of Seller's consolidated federal income tax returns
for tax years 1990 through 1996.

         (4) See copy of Tax Sharing Agreement attached hereto.

                                     -123-
<PAGE>
                                  Schedule 3.25

                        Safe Deposit Boxes, Bank Accounts
                        ---------------------------------
                         and Other Deposits of Gibraltar
                         -------------------------------

   See Attached List of Safe Deposit Boxes, Bank Accounts and Other Deposits.

                                     -124-
<PAGE>
                                  Schedule 3.27

                 Employee Titles; Aggregate Annual Compensation
                 ----------------------------------------------
                                   and Bonuses
                                   -----------

EMPLOYEE                                    TITLE

Abdelsayed, Marco                           Level 11

Badum, Colleen                              Director

Bontempo, Lori                              Associate Manager

DiBenedetto, Robert                         Director

Faga, Doreen                                Departmental Vice President

Kenney, Adam                                Functional Vice President

Knight, Christine                           Functional Vice President

Mottola, John  1                            Departmental Vice President

Pinto, Cecilia                              Executive Assistant

Pittman, Felicia                            Executive Assistant

Stewart, Robin                              Level 08

Kill, Erika                                 Assistant General Counsel

Poles, Joanne                               Assistant General Counsel

Rant, Michael                               Assistant General Counsel

Weisshap, Rosemarie                         Executive Assistant

------------------------
1.  John Mottola is retiring on February 28, 2000.

ESTIMATED AGGREGATE COMPENSATION & BONUSES* $1,815,021

*  Does not include retention bonuses, outplacement services or ARB's

                                     -127-
<PAGE>
                                  Schedule 5.1

                 Exceptions to Operations in the Ordinary Course
                 -----------------------------------------------

                                      NONE

                                     -128-
<PAGE>
                                  Schedule 5.3

                            Restrictions on Gibraltar
                            -------------------------

1.      Termination of the Contracts listed on Schedule 7.6.

2.      Changes in accounting or investment practice as may be required pursuant
        to Section 5.10.

                                     -129-
<PAGE>
                                  Schedule 6.3

                    Indemnification and Guarantee Obligations
                    -----------------------------------------

         1.  Guarantee dated October 6, 1995 of The Prudential Insurance Company
of  America  in  favor  of  Prudential Reinsurance Holdings, Inc. (n/k/a Everest
Reinsurance Holdings, Inc.).

         2.  Guarantee dated October 6, 1995 of The Prudential Insurance Company
of America in favor of Prudential Reinsurance Company (n/k/a Everest Reinsurance
Company).

         3.  Indemnification Agreement dated October 6, 1995 between PRUCO, Inc.
and Prudential Reinsurance Holdings, Inc. (n/k/a  Everest  Reinsurance Holdings,
Inc.).

         4.  Surplus  Maintenance  Agreement  dated  December  18, 1991  between
PRUCO, Inc. and Gibraltar Casualty Company.

                                     -130-
<PAGE>
                                  Schedule 7.6

                  Agreements and Arrangements to be Terminated
                  --------------------------------------------

         1.  Surplus  Maintenance  Agreement  dated  December 18,  1991  between
PRUCO, Inc. and Gibraltar Casualty Company.

         2.  Guarantee  of  The  Prudential  Insurance  Company of America dated
October 6, 1995 in favor of Prudential Reinsurance Holdings, Inc.

         3.  Guarantee  of  The  Prudential  Insurance  Company of America dated
October 6, 1995 in favor of Prudential Reinsurance Company.

         4.  Indemnification Agreement dated October 6, 1995 between PRUCO, Inc.
and Prudential Reinsurance Company.

         5.  Investment Advisory Contract effective as of 1984 between Gibraltar
and The Prudential Insurance Company of America.

         6.  Occupancy  Agreement  dated  July 1, 1995 between Gibraltar and The
Prudential Service Company.

         7.  Letter of Credit with Chase Manhattan Bank.

         8.  Software  License  Agreement  between  Datalight  Software  and The
Prudential  Insurance  Company  of  America  for  the  Use  of  the  Concordance
Information Retrieval System by Gibraltar Casualty Company*.

         9.  Service   Agreement  dated  May  1,  1997   between  Gibraltar  and
Prudential Property and Casualty Insurance Company.

         10. Termination  of Tax Allocation Agreement dated January 17, 1995 for
The Prudential Insurance Company  of  America  and  its Affiliates, solely as it
relates to Gibraltar Casualty Company.

         11. Loan  Agreement  dated November 21, 1996 between Prudential Funding
Corporation and Gibraltar Casualty Company.

         12. License  from  The  Prudential  Insurance  Company  of  America  to
Gibraltar Casualty Company for the use of the Gibraltar Marks.

         13. Service  Agreement  dated  May  10,  1990  between  The  Prudential
Insurance Company of America and Gibraltar Casualty Company.

-------------------------------

* If the contract permits,  such contract will be assigned or transferred to the
Purchaser at Closing.

                                     -131-Exhibit 10.33

                                     FORM OF
                                 PARENT GUARANTY

         THIS  PARENT  GUARANTY,  dated  as  of  the  24th day of February, 2000
(this "Guaranty"), is made by EVEREST RE GROUP, LTD., a Bermuda corporation (the
"Guarantor"),  in favor of the  Guaranteed  Parties  (as  hereinafter  defined).
Capitalized  terms used herein without  definition shall have the meanings given
to them in the Credit Agreement referred to below.

                                    RECITALS

     A.  Everest  Reinsurance  Holdings,   Inc.,  a  Delaware  corporation  (the
"Borrower"),  certain banks and other financial institutions (collectively,  the
"Lenders"),  and First Union  National  Bank,  as  administrative  agent for the
Lenders (in such capacity, the "Administrative  Agent"), are parties to a Credit
Agreement,  dated as of December 21, 1999 (as amended,  modified or supplemented
from time to time, the "Credit  Agreement"),  providing for the  availability of
certain  credit  facilities  to the Borrower upon the terms and  conditions  set
forth  therein.  The Guarantor  owns all of the issued and  outstanding  capital
stock of the Borrower.  Unless otherwise defined herein,  capitalized terms used
herein  without  definition  shall have the meaning  given to them in the Credit
Agreement.

     B. It is a condition to the  approval by the Lenders of the  Restructuring,
and the application of certain exceptions to restrictive covenants applicable to
the Borrower and its  Subsidiaries set forth in the Credit  Agreement,  that the
Guarantor  shall have agreed,  by executing and  delivering  this  Guaranty,  to
guarantee  to the  Guaranteed  Parties  the  payment  in full of the  Guaranteed
Obligations (as hereinafter defined). The Guaranteed Parties are relying on this
Guaranty  in  their   decision  to  approve   the   Restructuring,   permit  the
aforementioned  exceptions,  and thereby continue the extension of credit to the
Borrower  under the terms of the Credit  Agreement,  and would not  continue and
maintain the credit  facility  under the terms of the Credit  Agreement upon the
terms as presented without this Guaranty.

     C. The  Guarantor  will  obtain  benefits as a result of the  extension  of
credit to the Borrower  under the Credit  Agreement,  which  benefits are hereby
acknowledged, and, accordingly, desires to execute and deliver this Guaranty.

                             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,      to     induce     the

<PAGE>
Guaranteed Parties to continue the extension of credit to the Borrower under the
terms of the Credit Agreement, the Guarantor hereby agrees as follows:

     1.  GUARANTY.  (a) The   Guarantor   hereby   irrevocably,  absolutely  and
     unconditionally:

         (i)  guarantees  (a)  to  the  Lenders  and  the  Administrative  Agent
     (collectively, the "Guaranteed Parties") the full  and  prompt  payment, at
     any  time  and  from  time  to  time as and when due (whether at the stated
     maturity, by acceleration or otherwise), of all Obligations of the Borrower
     under the Credit Agreement  and  the  other  Credit  Documents,  including,
     without limitation, all principal of and interest on the  Loans,  all fees,
     expenses,  indemnities  and other amounts payable by the Borrower under the
     Credit  Agreement or any other Credit Document (including interest accruing
     after the filing of a petition or commencement of a case by or with respect
     to the Borrower seeking relief under any applicable federal  and state laws
     pertaining   to  bankruptcy,   reorganization,   arrangement,   moratorium,
     readjustment of debts,  dissolution,  liquidation  or  other debtor relief,
     specifically  including,  without  limitation, the Bankruptcy  Code and any
     fraudulent  transfer  and   fraudulent   conveyance   laws   (collectively,
     "Insolvency Laws"),  whether or  not the claim for such interest is allowed
     in such proceeding), and all Obligations that, but for the operation of the
     automatic  stay  under Section 362(a) of the Bankruptcy Code, would  become
     due, and (b) to each applicable Lender in its capacity as a counterparty to
     any Hedge Agreement  with  the  Borrower  required  or  permitted under the
     Credit  Agreement,  all  obligations  of  the  Borrower  under  such  Hedge
     Agreement, in each case under (a) and (b) whether now existing or hereafter
     created or  arising and whether direct or indirect, absolute or contingent,
     due or to become due (all liabilities  and  obligations  described  in this
     clause (i), collectively, the "Guaranteed Obligations"); and

         (ii) agrees  to  pay  or  reimburse  upon  demand  all  reasonable  and
     documented costs and expenses (including,  without  limitation,  reasonable
     and  documented  attorneys' fees  and expenses) incurred or paid by (y) any
     Guaranteed  Party  in  connection  with  any  suit, action or proceeding to
     enforce or protect any rights of  the  Guaranteed Parties hereunder and (z)
     the Administrative Agent in connection with any amendment,  modification or
     waiver  hereof  or  consent pursuant hereto, and to indemnify and hold each
     Guaranteed  Party  and  its  directors,  officers,  employees,  agents  and
     Affiliates harmless from and against any and  all  claims, losses, damages,
     obligations, liabilities, penalties, costs and expenses (including, without
     limitation,  reasonable and documented attorneys' fees and expenses) of any
     kind or nature whatsoever,  whether direct, indirect or consequential, that
     may at  any  time  be  imposed on, incurred by or asserted against any such
     indemnified  party  as  a result of, arising from or in any way relating to
     this   Guaranty  or  the   collection  or  enforcement  of  the  Guaranteed
     Obligations; PROVIDED, HOWEVER, that no indemnified  party  shall  have the
     right  to  be  indemnified hereunder for any such claims, losses, costs and
     expenses  to  the  extent  resulting from  the  gross negligence or willful
     misconduct  of  such  indemnified  party  (all  liabilities and obligations
     described  in  this clause (ii), collectively, the "Other Obligations"; and
     the Other Obligations, together with the Guaranteed Obligations, the "Total
     Obligations").

                                       2
<PAGE>
     (b) The guaranty of the  Guarantor  set forth in this Section is a guaranty
of payment as a primary obligor, and not a guaranty of collection.

     2. GUARANTY ABSOLUTE.  The Guarantor agrees that its obligations  hereunder
are irrevocable,  absolute and unconditional,  are independent of the Guaranteed
Obligations  and other  security  therefor  or other  guaranty or  liability  in
respect thereof,  whether given by the Guarantor or any other Person,  and shall
not be  discharged,  limited  or  otherwise  affected  by  reason  of any of the
following, whether or not the Guarantor has notice or knowledge thereof:

         (i)  any  change in the time,  manner or place of payment of, or in any
     other  term  of,  any  Guaranteed  Obligations  or  any  guaranty  or other
     liability in respect thereof, or any amendment,  modification or supplement
     to, restatement  of, or consent to any rescission or waiver of or departure
     from,  any  provisions  of  the Credit Agreement, any other Credit Document
     or  any   agreement  or  instrument  delivered   pursuant  to  any  of  the
     foregoing;

         (ii) the invalidity or unenforceability of any Guaranteed  Obligations,
     any guaranty or other liability in respect thereof or any provisions of the
     Credit   Agreement,   any  other   Credit  Document  or  any  agreement  or
     instrument delivered pursuant to any of the foregoing;

         (iii) the  taking,  acceptance  or  release  of other guarantees of any
     Guaranteed  Obligations or other security for any Guaranteed Obligations or
     for any guaranty or other liability in respect thereof;

         (iv) any  discharge,  modification,  settlement,  compromise  or  other
     action in  respect  of  any  Guaranteed  Obligations  or  any  guaranty  or
     other  liability in respect  thereof,  including any  acceptance or refusal
     of any  offer or performance with respect to the same or the  subordination
     of the same to the payment of any other obligations;

         (v)  any agreement not to pursue or  enforce  or any  failure to pursue
     or  enforce (whether  voluntarily or involuntarily as a result of operation
     of  law,  court  order  or otherwise) any right or remedy in respect of any
     Guaranteed  Obligations,  any  guaranty  or  other  liability  in   respect
     thereof  or  any  other  security  for any of the  foregoing;  or any sale,
     exchange, release, substitution,  compromise or other action in respect  of
     any other security;

         (vi) any    bankruptcy,   reorganization,   arrangement,   liquidation,
     insolvency,  dissolution,   termination,   reorganization  or  like  change
     in  the  corporate  structure  or  existence of  the  Borrower or any other
     Person directly or indirectly liable for any Guaranteed Obligations;

          vii) any  manner  of  application  of  any   payments  by  or  amounts
     received   or  collected  from  any   Person,  by   whomsoever   paid   and
     howsoever   realized,    whether   in   reduction    of   any    Guaranteed
     Obligations   or   any   other   obligations   of   the   Borrower  or  any

                                       3
<PAGE>
     other Person  directly or indirectly liable for any Guaranteed Obligations,
     regardless of what  Guaranteed Obligations may remain unpaid after any such
     application; or

         (viii) any other circumstance that might otherwise  constitute  a legal
     or equitable  discharge of, or a defense, set-off or counterclaim available
     to,  the  Borrower,  the  Guarantor or  a  surety or  guarantor  generally,
     other  than  the  occurrence  of all of the  following:  (x) the payment in
     full  of  the  Total  Obligations,  (y) the termination of the  Commitments
     under  the  Credit  Agreement,  and (z) the termination  of, and settlement
     of  all  obligations  of  the Borrower under, each Hedge Agreement to which
     the  Borrower  and  any  Lender are parties (the events in clauses (x), (y)
     and (z) above, collectively, the "Termination Requirements").

     3.  CERTAIN  WAIVERS.  The  Guarantor  hereby  knowingly,  voluntarily  and
expressly waives:

         (i)  presentment, demand for payment,  demand for performance,  protest
     and notice of any other  kind,  including,  without  limitation,  notice of
     nonpayment  or  other  nonperformance  (including  notice of  default under
     any   Credit  Document   with   respect  to  any  Guaranteed  Obligations),
     protest,  dishonor,  acceptance  hereof,  extension of additional credit to
     the  Borrower  and  of  any of the matters  referred to in Section 2 and of
     any rights to consent thereto;

         (ii) any  right to require the Guaranteed Parties or any of them, as  a
     condition of payment or performance by  the Guarantor hereunder, to proceed
     against, or to exhaust or have resort to any security from or  any  deposit
     balance  or  other  credit  in  favor  of, the Borrower or any other Person
     directly or indirectly  liable for any Guaranteed Obligations, or to pursue
     any other remedy or enforce any other right; and any other defense based on
     an  election  of  remedies with  respect to any security for any Guaranteed
     Obligations  or  for  any  guaranty  or other liability in respect thereof,
     notwithstanding that any such  election (including any failure to pursue or
     enforce  any  rights  or  remedies)  may  impair or extinguish any right of
     indemnification,  contribution, reimbursement or subrogation or other right
     or remedy of the  Guarantor  against  the  Borrower  or  any  other  Person
     directly or indirectly liable for any Guaranteed  Obligations  or  any such
     Collateral  or  other security; and, without limiting the generality of the
     foregoing,  the  Guarantor  hereby  specifically  waives  the  benefits  of
     Sections 26-7 through 26-9,  inclusive,  of  the  General Statutes of North
     Carolina, as amended from time to time, and any similar  statute  or law of
     any other jurisdiction, as the same may be amended from time to time;

         (iii) any right or defense  based on or  arising by reason of any right
     or  defense  of  the  Borrower  or any  other  Person,  including,  without
     limitation,  any  defense  based  on or arising from a lack of authority or
     other  disability  of  the  Borrower or any other Person, the invalidity or
     unenforceability  of  any  Guaranteed  Obligations,  or any Credit Document
     or  other  agreement  or  instrument  delivered  pursuant  thereto,  or the
     cessation   of  the  liability  of  the  Borrower for any reason other than
     the satisfaction of the Termination Requirements;

                                       4
<PAGE>
         (iv) any defense based on any  Guaranteed  Party's acts or omissions in
     the administration of the Guaranteed Obligations, and any guaranty or other
     liability in respect thereof;

         (v)  any right to assert against any Guaranteed  Party,  as a  defense,
     counterclaim,  crossclaim  or  set-off,  any  defense, counterclaim, claim,
     right  of  recoupment  or  set-off that it may at any time have against any
     Guaranteed Party (including, without limitation, failure of  consideration,
     statute of limitations, payment, accord and satisfaction  and usury), other
     than compulsory counterclaims; and

         (vi) any defense based on or afforded by any applicable law that limits
     the liability of or  exonerates  guarantors  or sureties or that may in any
     other way conflict with the terms of this Guaranty.

     4. STANDSTILL ON SUBROGATION; SUBORDINATION. Notwithstanding any payment or
payments made by the Guarantor hereunder, or any set-off or application of funds
of the Guarantor by the Administrative  Agent or any Lender, the Guarantor shall
not be  entitled  to be  subrogated  to any of the rights of the  Administrative
Agent or any Lender  against the  Borrower or against  any  collateral  or other
security or guarantee or right of offset held by the Administrative Agent or any
Lender for the payment of the  Guaranteed  Obligations,  nor shall the Guarantor
seek or be entitled to seek any contribution or reimbursement  from the Borrower
in respect of payments made by the Guarantor hereunder,  until all amounts owing
to the  Administrative  Agent and the Lenders by the  Borrower on account of the
Guaranteed   Obligations  are  paid  in  full  and  the  Commitments  have  been
terminated.  The Guarantor agrees that all  indebtedness and other  obligations,
whether now or  hereafter  existing,  of the Borrower or any  Subsidiary  of the
Borrower to the Guarantor,  including, without limitation, any such indebtedness
in any proceeding  under the Bankruptcy Code and any  intercompany  receivables,
together with any interest thereon,  shall be, and hereby are,  subordinated and
made junior in right of payment to the Total Obligations.  The Guarantor further
agrees that if any amount shall be paid to or any  distribution  received by the
Guarantor  (i) on  account  of any  such  indebtedness  at any  time  after  the
occurrence and during the continuance of an Event of Default, or (ii) on account
of any such rights of subrogation,  indemnity,  contribution or reimbursement at
any time prior to the satisfaction of the Termination Requirements,  such amount
or  distribution  shall be deemed to have been  received and to be held in trust
for the benefit of the Guaranteed  Parties,  and shall forthwith be delivered to
the Administrative  Agent in the form received (with any necessary  endorsements
in the case of  written  instruments),  to be  applied  against  the  Guaranteed
Obligations,  whether  or not  matured,  in  accordance  with  the  terms of the
applicable  Credit  Documents  and without in any way  discharging,  limiting or
otherwise  affecting the liability of the Guarantor under any other provision of
this Guaranty.

     5.  COVENANTS.   The  Guarantor   covenants  and  agrees  that,  until  the
termination  of the  Commitments,  and the payment in full of all  principal and
interest with respect to the Loans  together with all other amounts then due and
owing under the Credit Agreement:

     (a) The  Guarantor  will  deliver (or will cause to be  delivered)  to each
Lender:

                                       5
<PAGE>
         (i)  As  soon as available and in any event within fifty-five (55) days
     after the end of each of the first  three  fiscal  quarters  of each fiscal
     year, beginning with the fiscal quarter  ending  March 31, 2000,  unaudited
     consolidated  and,  to  the  extent   otherwise   prepared   for   external
     distribution,  consolidating  balance  sheets  of  the  Guarantor  and  its
     Subsidiaries  as  of  the  end  of  such  fiscal  quarter   and   unaudited
     consolidated   and,   to  the  extent  otherwise   prepared  for   external
     distribution, consolidating statements  of income, stockholders' equity and
     cash flows for the Guarantor and its Subsidiaries for  the  fiscal  quarter
     then ended and for that portion of the fiscal year then ended, in each case
     setting forth  comparative  consolidated or consolidating figures as of the
     end of and for the corresponding period in  the  preceding fiscal year, all
     prepared  in  accordance  with  GAAP  (subject  to  the  absence  of  notes
     required  by GAAP and subject to normal year-end audit adjustments) applied
     on a basis consistent with  that  of  the  preceding  quarter or containing
     disclosure  of  the  effect  on  the  financial  condition  or  results  of
     operations  of  any  change in the application of accounting principles and
     practices during such quarter;

         (ii) As  soon  as  available and in any event within 120 days after the
     end of each fiscal year, beginning with the fiscal year ending December 31,
     2000, (i) an audited consolidated balance sheet of  the  Guarantor and  its
     Subsidiaries  as  of  the  end of such fiscal year and audited consolidated
     statements of income, stockholders' equity and cash flows for the Guarantor
     and  its  Subsidiaries  for  the  fiscal  year  then  ended,  including the
     applicable  notes, in each case setting forth comparative figures as of the
     end  of  and  for  the  preceding fiscal year, certified by the independent
     certified public accounting firm  regularly  retained  by  the Guarantor or
     another independent certified public accounting firm of recognized national
     standing,  together  with  (y) a report thereon by such accountants that is
     not  qualified as to going concern or scope of audit and to the effect that
     such  financial  statements  present  fairly  the  consolidated   financial
     condition and results of operations of the Guarantor and  its  Subsidiaries
     as  of  the  dates  and  for  the periods indicated in accordance with GAAP
     applied on a basis consistent with that of the preceding year or containing
     disclosure  of  the  effect  on  the  financial  condition  or  results  of
     operations  of  any  change in the application of accounting principles and
     practices  during  such  year,  and (z) a report by such accountants to the
     effect  that,  based  on  and  in  connection with their examination of the
     financial statements of the Guarantor and its Subsidiaries,  they  obtained
     no knowledge  of  the  occurrence  or  existence of any Default or Event of
     Default relating to  accounting  or  financial  reporting  matters,  or   a
     statement specifying the nature and period of existence of any such Default
     or  Event of Default disclosed by their audit; provided, however, that such
     accountants  shall  not  be  liable  by  reason  of  the  failure to obtain
     knowledge of any Default or Event of Default that would not be disclosed or
     revealed in the course of their audit examination, and (ii) to  the  extent
     otherwise  prepared,  an  unaudited  consolidating  balance  sheet  of  the
     Guarantor and its  Subsidiaries  as  of  the  end  of  such fiscal year and
     unaudited consolidating statements of income, stockholders' equity and cash
     flows for  the  Guarantor  and  its  Subsidiaries  for the fiscal year then
     ended, all in reasonable detail;

         (iii) As   soon   as   available   and   in   any   event within fifty-
     five   (55)   days   after   the   end   of   each   of   the   first three
     fiscal   quarters  of   each  fiscal   year  (or,  in  the  case of Everest

                                       6
<PAGE>
     Insurance Company of Canada and  Everest  Bermuda, within fifteen (15) days
     after the required filing date), beginning with the fiscal  quarter  ending
     March 31, 2000, a Quarterly Statement of each of its Insurance Subsidiaries
     as of the end  of  such  fiscal  quarter and for that portion of the fiscal
     year then ended, in the form filed with the  relevant  Insurance Regulatory
     Authority,  prepared  in  accordance with SAP applied on a basis consistent
     with  that  of the preceding quarter or containing disclosure of the effect
     on the financial condition or  results  of  operations of any change in the
     application of accounting principles and practices during such quarter;

         (iv) As soon as available  and  in  any  event within seventy-five (75)
     days  after  the  end  of  each  fiscal  year  (or,  in the case of Everest
     Insurance  Company  of Canada and Everest Bermuda, within fifteen (15) days
     after  the  required  filing  date),  beginning with the fiscal year ending
     December  31,  2000,  an  Annual  Statement  of  each  of   its   Insurance
     Subsidiaries as of the end of such fiscal year and for the fiscal year then
     ended,  in the form filed with the relevant Insurance Regulatory Authority,
     prepared in  accordance with SAP applied on a basis consistent with that of
     the preceding year or containing  disclosure of the effect on the financial
     condition or  results  of  operations  of  any change in the application of
     accounting principles and practices during such year;

         (v)  As  soon  as  available and in any event within 135 days after the
     end of each fiscal year, beginning with the fiscal year ending December 31,
     2000, an  unaudited  consolidated  balance  sheet  of the Guarantor and its
     Insurance  Subsidiaries  (excluding Everest Insurance Company of Canada and
     Everest  Bermuda)  as  of  the  end  of  such  fiscal  year  and  unaudited
     consolidated statements of income, stockholders' equity and cash  flows for
     the  Guarantor  and  its  Insurance  Subsidiaries  for the fiscal year then
     ended, in each case  setting  forth  comparative consolidated figures as of
     the end of and for the preceding  fiscal  year, all prepared in  accordance
     with  SAP  applied on a basis consistent with that of the preceding year or
     containing  disclosure  of the effect on the financial condition or results
     of operations of any change in the application of accounting principles and
     practices during such year;

         (vi) As  soon  as  available and in any event within 165 days after the
     end of each fiscal year, beginning with the fiscal year ending December 31,
     2000 (but only if and to the extent required by  the  applicable  Insurance
     Regulatory   Authority  with  regard  to   any  Insurance   Subsidiary),  a
     certification by the  independent certified public accounting firm referred
     to  in  clause  (ii)  as  to  the  Annual  Statement of each such Insurance
     Subsidiary  as  of the end of such fiscal year and for the fiscal year then
     ended,  together  with  a  report  thereon  by such accountants that is not
     qualified as to going concern or scope of audit and to the effect that such
     financial statements  present  fairly  the consolidated financial condition
     and  results  of operations of such Insurance Subsidiary as of the date and
     for the period  indicated  in  accordance  with  SAP  applied  on  a  basis
     consistent with that of the preceding year or  containing disclosure of the
     effect  on the financial position or results of operations of any change in
     the application of accounting principles and practices during such year;

                                       7
<PAGE>
         (vii) Concurrently  with  each  delivery  of  the financial  statements
     described  in  clauses (i) through  (iv), a Compliance  Certificate  in the
     form of  Exhibit C-1  to  the  Credit  Agreement with respect to the period
     covered  by  the financial statements then being delivered, executed by the
     chief  financial  officer,  comptroller  or  treasurer  of  the  Guarantor,
     together  with  a Covenant Compliance  Worksheet reflecting the computation
     of the financial covenants set forth in such Covenant Compliance  Worksheet
     as of the last day of the period covered by such financial statements;

         (viii) As soon as  available  and in any event prior to the end of each
     fiscal year, beginning with the fiscal year ending  December  31,  2000,  a
     complete  set  of  projections  for Guarantor and its Subsidiaries for each
     of  the  succeeding  fiscal  years  remaining  through  the  Maturity Date,
     consisting   of   consolidated   balance   sheets  and   income  statements
     prepared based on GAAP principles, and

         (ix) Promptly  upon  the  sending, filing or receipt thereof, copies of
     (i) all financial statements, reports,  notices  and  proxy statements that
     the  Guarantor  or  any  of  its  Subsidiaries shall send or make available
     generally  to its shareholders, (ii) all reports (other than earnings press
     releases) on Form 10-Q, Form 10-K or Form 8-K (or their successor forms) or
     registration statements and prospectuses (other than on  Form  S-8  or  its
     successor  form) that the Guarantor or any of its Subsidiaries shall render
     to  or  file  with  the  Securities  and  Exchange Commission, the National
     Association  of  Securities  Dealers,  Inc.  or  any  national   securities
     exchange,  (iii)  all  reports  on  Form A (or any successor form) that any
     Insurance  Subsidiary  shall  file with any Insurance Regulatory Authority,
     (iv)  all  material  reports  on  examination  or similar material reports,
     financial  examination reports or market conduct examination reports by the
     NAIC  or any Insurance Regulatory Authority or other Governmental Authority
     with respect to any Insurance  Subsidiary's insurance business, and (v) all
     material filings made under applicable state insurance holding company acts
     by the Guarantor or any of its Subsidiaries, including, without limitation,
     filings seeking approval of transactions with Affiliates.

     (b) The  Guarantor  will (i) maintain and preserve in full force and effect
its corporate existence and (ii) obtain, maintain and preserve in full force and
effect  all  other  rights,  franchises,   licenses,  permits,   certifications,
approvals and authorizations required by Governmental  Authorities and necessary
to the  ownership,  occupation  or use of its  properties  or the conduct of its
business,  except to the  extent the  failure  to do so would not be  reasonably
likely to have a Material Adverse Effect.

     (c) The Guarantor will comply in all respects with all  Requirements of Law
applicable  in respect of the  conduct of its  business  and the  ownership  and
operation of its properties, except to the extent the failure so to comply would
not have, or be reasonably likely to have, a Material Adverse Effect.

     (d) The  Guarantor  will  pay and  discharge  all  taxes,  assessments  and
governmental  charges  or  levies  imposed  upon  it, upon its income or profits
or  upon  any  of  its  properties,  prior  to  the  date  on  which   penalties
would   attach   thereto,  and   all   lawful  claims  that,  if  unpaid,  might

                                       8
<PAGE>
become a Lien upon any of the  properties of the Guarantor;  provided,  however,
that the  Guarantor  shall  not be  required  to pay any such  tax,  assessment,
charge,  levy or claim  that is being  contested  in good  faith  and by  proper
proceedings and as to which the Guarantor is maintaining  adequate reserves with
respect thereto in accordance with GAAP.

     (e) The Guarantor will (i) maintain  adequate books,  accounts and records,
in  which  full,  true  and  correct  entries  shall  be made  of all  financial
transactions  in  relation  to its  business  and  properties,  and  prepare all
financial  statements  required under this Guaranty,  in each case in accordance
with GAAP or SAP, as applicable,  and in compliance with the requirements of any
Governmental Authority having jurisdiction over it, and (ii) permit employees or
agents of the  Administrative  Agent or any Lender to inspect its properties and
examine or audit its books, records, working papers and accounts and make copies
and  memoranda of them,  and to discuss its affairs,  finances and accounts with
its officers and employees  and, upon notice to the Guarantor,  the  independent
public  accountants  of the  Guarantor  (and by  this  provision  the  Guarantor
authorizes such accountants to discuss the finances and affairs of the Guarantor
and its Subsidiaries),  all at such times and from time to time, upon reasonable
notice and during business hours, as may be reasonably requested.

     (f) The Guarantor  will not liquidate,  wind up or dissolve,  or enter into
any  consolidation,  merger  or  other  combination,  or  agree to do any of the
foregoing (other than the Restructuring  provided that the conditions of Section
3.3.  of the  Credit  Agreement  are  satisfied);  provided,  however,  that the
Guarantor may merge into or consolidate with any other Person so long as (y) the
surviving  corporation  shall be the Guarantor unless the surviving  corporation
expressly  assumes the obligations of this Guaranty,  and (z) immediately  after
giving effect thereto, no Default or Event of Default would exist.

     (g) The  Guarantor  will not create,  incur,  assume or suffer to exist any
Indebtedness other than:

         (i)  Indebtedness incurred by the Guarantor,  provided  that  any  such
     Indebtedness  shall  rank  either  pari passu  in  right of  payment to the
     Guaranteed  Obligations  or  be  subordinated  in right and time of payment
     to the Guaranteed Obligations;

         (ii) indorsements  of  negotiable instruments in the ordinary course of
     business;

         (iii) accrued  expenses  (including   salaries,  accrued  vacation  and
     other compensation), current trade  or other  accounts  payable  and  other
     current  liabilities  arising  in  the  ordinary course of business and not
     incurred  through  the  borrowing of  money,  provided  that the same shall
     be  paid  when  due  except to the extent being contested in good faith and
     by appropriate proceedings;

         (iv) loans  and  advances  by  the  Guarantor  to any Subsidiary of the
     Guarantor; and

         (v)  Indebtedness in connection with Permitted Liens.

                                       9
<PAGE>
     (h) The Guarantor will not directly or  indirectly,  make,  create,  incur,
assume or suffer to exist, or enter into or suffer to exist any agreement (other
than the Credit  Documents) or  restriction  that  prohibits or  conditions  the
creation, incurrence or assumption of, any Lien upon or with respect to any part
of its property or assets,  whether now owned or hereafter acquired, or agree to
do any of the foregoing, other than the following:

         (i)  Liens imposed by law, such as  Liens  of  carriers,  warehousemen,
     mechanics,  materialmen  and  landlords,  and  other similar Liens incurred
     in  the  ordinary  course  of business for sums not  constituting  borrowed
     money  that  are  not  overdue  for a period of more than  thirty (30) days
     or  that  are  being  contested  in good faith by  appropriate  proceedings
     and  for  which  adequate  reserves  have  been  established  in accordance
     with GAAP;

         (ii) Liens  (other  than  any  Lien  imposed  by ERISA, the creation or
     incurrence  of  which  would  result  in an  Event  of  Default  under  the
     Credit Agreement) incurred in the ordinary course of business in connection
     with  workers'  compensation,  unemployment  insurance  or  other  forms of
     governmental  insurance  or  benefits,  or  to secure  the  performance  of
     letters  of  credit,  bids,  tenders,  statutory  obligations,  surety  and
     appeal    bonds,   leases,   government   contracts   and   other   similar
     obligations  (other  than  obligations  for borrowed money) entered into in
     the ordinary course of business;

         (iii) Liens  for  taxes,  assessments  or other governmental charges or
     statutory obligations that are not  delinquent  or remain  payable  without
     any penalty  or that are  being  contested  in good  faith  by  appropriate
     proceedings  and  for  which  adequate  reserves  have been  established in
     accordance with GAAP;

         (iv) Liens in connection with pledges and  deposits  made  pursuant  to
     statutory and regulatory requirements of Insurance  Regulatory  Authorities
     by an Insurance  Subsidiary in the ordinary course of its business, for the
     purpose  of  securing  regulatory  capital  or  satisfying  other financial
     responsibility requirements;

         (v)  Liens upon cash and United States government and agency securities
     of  the Guarantor and its Subsidiaries,  securing  obligations  incurred in
     connection   with  reverse   repurchase   transactions  and  other  similar
     investment  management  transactions  of  such types and in such amounts as
     are  customary  for  companies  similar  to the Guarantor in size and lines
     of  business  and   that  are  entered   into  by  the  Guarantor  and  its
     Subsidiaries in the ordinary course of business;

         (vi) Purchase  money  Liens  upon real or personal property used by the
     Guarantor  in  the  ordinary  course of its business, securing Indebtedness
     incurred  solely  to  pay  all  or  a portion of the purchase price thereof
     (including  in  connection  with capital leases, and including mortgages or
     deeds of trust upon real  property and improvements thereon), PROVIDED that
     the aggregate principal amount at any time outstanding  of all indebtedness
     secured  by  such  Liens  does  not  exceed  an  amount  equal to 5% of the
     value  of  the  total  assets  of  the  Guarantor  and  its Subsidiaries at
     such  time, determined  on  a  consolidated   basis  in   accordance   with
     GAAP  as    of    the    date    of    the    financial    statements    of

                                       10
<PAGE>
     the Guarantor and its Subsidiaries  most  recently  delivered under SECTION
     5(A)(I) or (II) prior to such time, and PROVIDED FURTHER that any such Lien
     (i) shall attach to such property concurrently with or within ten (10) days
     after the  acquisition  thereof by the Guarantor, (ii) shall not exceed the
     lesser of (y) the  fair market value of  such  property  or  (z)  the  cost
     thereof  to  the Guarantor, and (iii) shall not encumber any other property
     of the Guarantor;

         (vii) Any  attachment  or  judgment Lien not  constituting  an Event of
     Default under the Credit Agreement that is being contested in good faith by
     appropriate   proceedings  and  for  which  adequate   reserves  have  been
     established in accordance with GAAP;

         (viii) With respect to any real  property  occupied by the Guarantor or
     any  of  its  Subsidiaries,  all  easements,  rights  of  way, licenses and
     similar  encumbrances  on title  that do not  materially  impair the use of
     such property for its intended purposes;

         (ix) Liens  on  Borrower  Margin  Stock,  to the extent the fair market
     value thereof  exceeds  25% of the fair  market value of the  assets of the
     Borrower and its Subsidiaries (including Borrower Margin Stock); and

         (x)  Liens  in  favor  of  the  trustee or agent under any agreement or
     indenture relating to Indebtedness of the Guarantor  and  its  Subsidiaries
     permitted  under  this  Agreement,  covering  sums required to be deposited
     with such trustee or agent thereunder.

     (i) The  Guarantor  will  not,  and will  not  permit  or cause  any of its
Subsidiaries  to, make or permit any material change in its accounting  policies
or reporting  practices,  except as may be required or permitted by GAAP or SAP,
as applicable;

     (j) The  Guarantor  will not cease to own  directly  100% of the issued and
outstanding capital stock of the Borrower.

     6. PAYMENTS; APPLICATION; SET-OFF.

     (a) The Guarantor  agrees that, upon the failure of the Borrower to pay any
Guaranteed  Obligations  when and as the same shall  become due  (whether at the
stated maturity,  by acceleration or otherwise),  and without  limitation of any
other  right or remedy that any  Guaranteed  Party may have at law, in equity or
otherwise against the Guarantor, the Guarantor will forthwith pay or cause to be
paid to the Administrative  Agent, for the benefit of the Guaranteed Parties, an
amount equal to the amount of the Guaranteed  Obligations  then due and owing as
aforesaid.

     (b) All payments made by the Guarantor hereunder will be made in Dollars to
the Administrative Agent, without set-off, counterclaim or other defense and, in
accordance  with  and to the  extent  provided  in  Section  2.16 of the  Credit
Agreement,  free  and  clear  of  and  without  deduction  for  any  Taxes,  the
Guarantor  hereby  agreeing  to  comply  with  and be bound by the provisions of
Section 2.16 of  the  Credit  Agreement  in respect of all payments  made by  it

                                       11
<PAGE>
hereunder and the provisions of which Section are hereby  incorporated  into and
made a part of this Guaranty by this reference as if set forth herein at length.

     (c) All payments made hereunder shall be applied upon receipt as follows:

         (i)  first,  to  the  payment  of  all  Other  Obligations owing to the
     Administrative Agent;

         (ii) second, after  payment in full of the amounts  specified in clause
     (i) above, to the ratable payment of all other Total  Obligations  owing to
     the Guaranteed Parties; and

         (iii) third, after payment in full of the amounts  specified in clauses
     (i) and (ii) above, and following the termination of this Guaranty,  to the
     Guarantor  or  any  other   Person  lawfully   entitled  to   receive  such
     surplus.

     (d) For purposes of applying  amounts in accordance with this Section,  the
Administrative  Agent shall be entitled to rely upon any  Guaranteed  Party that
has entered into a Hedge Agreement with the Borrower for a determination  (which
such Guaranteed  Party agrees to provide or cause to be provided upon request of
the Administrative Agent) of the outstanding Guaranteed Obligations owed to such
Guaranteed Party under any such Hedge Agreement.  Unless it has actual knowledge
(including  by way of  written  notice  from any such  Guaranteed  Party) to the
contrary,  the Administrative  Agent, in acting hereunder,  shall be entitled to
assume  that no Hedge  Agreements  or  Obligations  in  respect  thereof  are in
existence between any Guaranteed Party and the Borrower.

     (e) The  Guarantor  shall  remain  liable to the  extent of any  deficiency
between the amount of all payments made  hereunder  and the aggregate  amount of
the sums referred to in clauses (i) and (ii) of subsection (c) above.

     (f) In addition to all other rights and remedies available under the Credit
Documents  or  applicable  law or  otherwise,  upon  and at any time  after  the
occurrence and during the  continuance of any Event of Default,  each Guaranteed
Party may, and is hereby authorized by the Guarantor,  at any such time and from
time to time,  to the  fullest  extent  permitted  by  applicable  law,  without
presentment,  demand,  protest  or other  notice of any  kind,  all of which are
hereby knowingly and expressly waived by the Guarantor,  to set off and to apply
any and all deposits (general or special, time or demand,  provisional or final)
and any other property at any time held  (including at any branches or agencies,
wherever  located),  and any  other  indebtedness  at any  time  owing,  by such
Guaranteed  Party to or for the credit or the account of the  Guarantor  against
any or all  of  the  obligations  of the  Guarantor  to  such  Guaranteed  Party
hereunder  now or hereafter  existing,  whether or not such  obligations  may be
contingent or unmatured,  the Guarantor hereby granting to each Guaranteed Party
a  continuing  security  interest in and Lien upon all such  deposits  and other
property as security  for such  obligations.  Each  Guaranteed  Party  agrees to
notify the Guarantor promptly after any such set-off and application;  provided,
HOWEVER,  that the failure to give such notice  shall not affect the validity of
such set-off and application.

                                       12
<PAGE>
     7. NO WAIVER.  The rights and remedies of the Guaranteed  Parties expressly
set forth in this Guaranty and the other Credit  Documents are cumulative and in
addition to, and not  exclusive  of, all other rights and remedies  available at
law, in equity or otherwise.  No failure or delay on the part of any  Guaranteed
Party in  exercising  any right,  power or privilege  shall  operate as a waiver
thereof,  nor shall any single or partial  exercise of any such right,  power or
privilege  preclude any other or further exercise thereof or the exercise of any
other right, power or privilege or be construed to be a waiver of any Default or
Event of  Default.  No course of dealing  between any of the  Guarantor  and the
Guaranteed  Parties or their  agents or  employees  shall be effective to amend,
modify or discharge any provision of this Guaranty or any other Credit  Document
or to  constitute  a waiver of any Default or Event of Default.  No notice to or
demand upon the  Guarantor in any case shall  entitle the Guarantor to any other
or further  notice or demand in similar or other  circumstances  or constitute a
waiver of the right of any  Guaranteed  Party to exercise any right or remedy or
take any other or further action in any circumstances without notice or demand.

     8.  ENFORCEMENT.  The Guaranteed  Parties agree that, except as provided in
SECTION 6(F),  this Guaranty may be enforced only by the  Administrative  Agent,
acting  upon the  instructions  or with the consent of the  Required  Lenders as
provided for in the Credit  Agreement,  and that no Guaranteed  Party shall have
any right individually to enforce or seek to enforce this Guaranty or to realize
upon  any  collateral  or  other  security  given  to  secure  the  payment  and
performance of the  Guarantor's  obligations  hereunder.  The obligations of the
Guarantor  hereunder  are  independent  of  the  Guaranteed  Obligations,  and a
separate action or actions may be brought  against the Guarantor  whether or not
action is brought against the Borrower and whether or not the Borrower is joined
in any such action.  The Guarantor  agrees that to the extent all or part of any
payment  of the  Guaranteed  Obligations  made  by any  Person  is  subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid by or on behalf of any Guaranteed Party to a trustee,  receiver or any
other  party  under any  Insolvency  Laws (the  amount  of any such  payment,  a
"Reclaimed Amount"), then, to the extent of such Reclaimed Amount, this Guaranty
shall  continue  in full force and effect or be revived and  reinstated,  as the
case may be, as to the  Guaranteed  Obligations  intended to be  satisfied as if
such payment had not been received; and the Guarantor acknowledges that the term
"Guaranteed Obligations" includes all Reclaimed Amounts that may arise from time
to time.

     9. AMENDMENTS, WAIVERS, ETC. No amendment,  modification, waiver, discharge
or  termination  of, or consent to any  departure  by the  Guarantor  from,  any
provision of this Guaranty, shall be effective unless in a writing signed by the
Administrative  Agent  and such of the  Lenders  as may be  required  under  the
provisions of the Credit Agreement to concur in the action then being taken, and
then the same  shall be  effective  only in the  specific  instance  and for the
specific purpose for which given.

     10.  CONTINUING  GUARANTY;   TERM;  SUCCESSORS  AND  ASSIGNS;   ASSIGNMENT;
SURVIVAL.  This  Guaranty  is a  continuing  guaranty  and  covers  all  of  the
Guaranteed  Obligations  as  the  same  may  arise  and  be  outstanding  at any
time  and  from  time  to  time  from  and  after  the  date  hereof,  and shall
(i)  remain  in  full  force  and  effect  until  satisfaction  of  all  of  the
Termination   Requirements  (provided  that  the   provisions  of   clause  (ii)
of     SECTION    1(A)    shall     survive    any     termination    of    this

                                       13
<PAGE>
Guaranty),  (ii) be binding upon and  enforceable  against the Guarantor and its
successors  and assigns  (provided,  however,  that the  Guarantor may not sell,
assign or transfer any of its rights, interests, duties or obligations hereunder
without the prior written consent of the Lenders) and (iii) inure to the benefit
of and be  enforceable  to the extent  provided in SECTION 8 by each  Guaranteed
Party and its successors and assigns.  Without limiting the generality of clause
(iii) above,  any Guaranteed Party may, in accordance with the provisions of the
Credit Agreement,  assign all or a portion of the Guaranteed Obligations held by
it (including by the sale of participations), whereupon each Person that becomes
the holder of any such Guaranteed  Obligations shall (except as may be otherwise
agreed between such Guaranteed  Party and such Person) have and may exercise all
of the rights and benefits in respect thereof  granted to such Guaranteed  Party
under this Guaranty or otherwise. The Guarantor hereby irrevocably waives notice
of and consents in advance to the assignment as provided above from time to time
by any Guaranteed Party of all or any portion of the Guaranteed Obligations held
by it and of the  corresponding  rights and interests of such  Guaranteed  Party
hereunder in connection therewith.  All representations,  warranties,  covenants
and agreements herein shall survive the execution and delivery of this Guaranty.

     11. GOVERNING LAW; CONSENT TO JURISDICTION. THIS GUARANTY SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,  WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS (EXCLUDING NEW YORK GENERAL OBLIGATIONS
LAW  SS.5-1401).  THE PARTIES HERETO HEREBY  DECLARE THAT IT IS THEIR  INTENTION
THAT THIS GUARANTY  SHALL BE REGARDED AS MADE UNDER THE LAWS OF THE STATE OF NEW
YORK AND THAT THE LAWS OF SAID  STATE  SHALL  BE  APPLIED  IN  INTERPRETING  ITS
PROVISIONS IN ALL CASES WHERE LEGAL  INTERPRETATION  SHALL BE REQUIRED.  EACH OF
THE PARTIES HERETO AGREES (A) THAT THIS GUARANTY INVOLVES AT LEAST $250,000; AND
(B) THAT THIS  GUARANTY HAS BEEN  ENTERED INTO BY THE PARTIES  HERETO IN EXPRESS
RELIANCE UPON NEW YORK GENERAL  OBLIGATIONS LAW SS. 5-1401.  NOTWITHSTANDING THE
FOREGOING  CHOICE OF LAW,  THE  GUARANTOR  HEREBY  CONSENTS TO THE  NONEXCLUSIVE
JURISDICTION OF ANY STATE COURT WITHIN NEW YORK COUNTY,  NEW YORK OR MECKLENBURG
COUNTY,  NORTH CAROLINA OR ANY FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT
OF THE STATE OF NORTH CAROLINA OR THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK
FOR ANY  PROCEEDING  INSTITUTED  HEREUNDER  OR  UNDER  ANY OF THE  OTHER  CREDIT
DOCUMENTS,  INCLUDING ANY ACTIONS  BASED UPON,  ARISING OUT OF, OR IN CONNECTION
WITH ANY  COURSE OF  CONDUCT,  COURSE OF  DEALING,  STATEMENT  (WHETHER  ORAL OR
WRITTEN) OR ACTIONS OF ANY  GUARANTEED  PARTY OR THE  GUARANTOR.  THE  GUARANTOR
IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY
JUDGMENT  RENDERED OR RELIEF  GRANTED  THEREBY AND FURTHER  WAIVES ANY OBJECTION
THAT IT MAY HAVE BASED ON LACK OF  JURISDICTION  OR IMPROPER  VENUE OR FORUM NON
CONVENIENS  TO  THE  CONDUCT  OF  ANY  SUCH PROCEEDING.  NOTHING IN THIS SECTION

                                       14
<PAGE>
SHALL AFFECT THE RIGHT TO SERVE LEGAL  PROCESS IN ANY OTHER MANNER  PERMITTED BY
LAW OR  AFFECT  THE  RIGHT  OF ANY  GUARANTEED  PARTY  TO BRING  ANY  ACTION  OR
PROCEEDING AGAINST THE GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.

     12.  WAIVER OF JURY TRIAL.  THE  GUARANTOR  AND, BY ITS  ACCEPTANCE  OF THE
BENEFITS HEREOF,  EACH GUARANTEED PARTY,  HEREBY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ITS RESPECTIVE  RIGHTS TO TRIAL BY JURY OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER
CREDIT DOCUMENTS, OR ANY RELATED PROCEEDING TO WHICH ANY GUARANTEED PARTY OR THE
GUARANTOR IS A PARTY,  INCLUDING ANY ACTIONS  BASED UPON,  ARISING OUT OF, OR IN
CONNECTION  WITH ANY  RELATED  COURSE OF CONDUCT,  COURSE OF DEALING,  STATEMENT
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY  GUARANTEED  PARTY OR THE GUARANTOR.
The  scope of this  waiver is  intended  to be  all-encompassing  of any and all
disputes that may be filed in any court and that relate to the subject matter of
this transaction,  including, without limitation,  contract claims, tort claims,
breach of duty  claims  and all  other  common  law and  statutory  claims.  The
Guarantor and, by its acceptance of the benefits hereof,  each Guaranteed Party,
(i)  acknowledges  that this  waiver is a  material  inducement  to enter into a
business  relationship,  that it has relied on this waiver in entering into this
Guaranty or accepting the benefits hereof,  as the case may be, and that it will
continue to rely on this waiver in its related  future  dealings  with the other
parties  hereto,  and (ii) further  warrants and represents that it has reviewed
this  waiver  with its legal  counsel  and that,  based  upon  such  review,  it
knowingly and voluntarily  waives its jury trial rights to the extent  permitted
by  applicable  law.  THIS  WAIVER IS  IRREVOCABLE,  MEANING  THAT IT MAY NOT BE
MODIFIED  EITHER  ORALLY  OR IN  WRITING,  AND THIS  WAIVER  SHALL  APPLY TO ANY
SUBSEQUENT  AMENDMENTS,  MODIFICATIONS OR SUPPLEMENTS TO OR RESTATEMENTS OF THIS
GUARANTY OR ANY OF THE OTHER CREDIT DOCUMENTS. IN THE EVENT OF LITIGATION,  THIS
GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     13. NOTICES.  All notices and other  communications  provided for hereunder
shall be in writing (including  telegraphic,  telex,  facsimile  transmission or
cable communication) and mailed,  telegraphed,  telexed,  telecopied,  cabled or
delivered (a) if to the Guarantor,  at c/o ABG Financial and Management Services
Inc., Parker House, Wildey Road, St. Michael, Barbados,  Attention: [NEED NAME],
Telecopy No. [NEED NUMBER],  and (b) if to any Guaranteed  Party, at its address
for notices set forth in the Credit  Agreement;  or to such other address as any
of the Persons listed above may designate for itself by like notice to the other
Persons listed above; and in each case, with copies to such other Persons as may
be specified under the provisions of the Credit Agreement.  All such notices and
communications  shall be  deemed to have  been  given (i) if mailed as  provided
above  by  any  method  other  than  overnight  delivery  service,  on the third
Business  Day  after  deposit  in  the  mails,  (ii)  if  mailed  by   overnight
delivery service, telegraphed, telexed, telecopied  or  cabled,  when  delivered
for  overnight  delivery,  delivered  to  the  telegraph  company,  confirmed by
telex  answerback,  transmitted  by   telecopier  or  delivered  to  the   cable

                                       15
<PAGE>
company,  respectively,  or (iii) if delivered by hand, upon delivery;  provided
that  notices  and  communications  to the  Administrative  Agent  shall  not be
effective until received by the Administrative Agent.

     14.  SEVERABILITY.  To  the  extent  any  provision  of  this  Guaranty  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 such  jurisdiction,  without  prohibiting or invalidating
such  provision in any other  jurisdiction  or the remaining  provisions of this
Guaranty in any jurisdiction.

     15.  CONSTRUCTION.  The headings of the various sections and subsections of
this Guaranty have been inserted for  convenience  only and shall not in any way
affect the meaning or construction of any of the provisions  hereof.  Unless the
context otherwise  requires,  words in the singular include the plural and words
in the plural include the singular.

     16.  COUNTERPARTS;  EFFECTIVENESS.  This  Guaranty  may be  executed in any
number of counterparts and by different parties hereto on separate counterparts,
each of which when so executed and  delivered  shall be an original,  but all of
which shall together constitute one and the same instrument.

                                       16
<PAGE>
     IN  WITNESS  WHEREOF,  the  Guarantor  has  caused   this  Guaranty  to  be
executed by its duly authorized officers as of the date first above written.

                                   EVEREST RE GROUP, LTD.

                                   By:      /S/ Stephen L. Limauro
                                            --------------------------
                                   Title:   Chief Financial Officer, Senior
                                            Vice President and Comptroller

Accepted and agreed to:

FIRST UNION NATIONAL BANK, as
 Administrative Agent

By:      /S/ Thomas L. Stichberry
         ---------------------------
Title:   Senior Vice President

                                       17

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