Document:

EX-10.(tt)

	

Exhibit 10(tt) 

MASTER
INTERESTS AND
LIABILITIES AGREEMENT 

attaching to and
forming a part of 

MEDICAL MALPRACTICE
LIABILITY EXCESS OF LOSS REINSURANCE AGREEMENT 

between 

MEMBER COMPANIES OF
FPIC INSURANCE GROUP, INC.
including 
FIRST PROFESSIONALS INSURANCE
COMPANY, INC. 
and 
ANESTHESIOLOGISTS’
PROFESSIONAL ASSURANCE COMPANY 
and
INTERMED INSURANCE
COMPANY 
and 
any company hereafter
affiliated with 
FPIC INSURANCE GROUP, INC., 
provided the Company
gives written notice to the Reinsurers and the Reinsurers agree in writing 
prior to the
inclusion of any such newly-affiliated company 
(hereinafter called the
“Company”)  

and 

THE SUBSCRIBING
REINSURERS 
as detailed on the
attached Schedule 

        It
is hereby mutually understood and agreed by and between the Company and the Subscribing
Reinsurers that effective from 12:01 a.m. standard time, January 1, 2003, to
12:01 a.m. standard time, January 1, 2004, the Subscribing Reinsurers’
share in the interests and liabilities of the Reinsurers on the attached Agreement will
be: 

	 	              100.00%,  	as
respects the liability and premium set forth in EXHIBIT A, FIRST
                            LAYER. 

	 	              100.00%,  	as
respects the liability and premium set forth in EXHIBIT B,
                            SECOND LAYER. 

	

        The
share of each of the Subscribing Reinsurers will be separate and apart from the shares of
the other Subscribing Reinsurers and will not be joint with those of the other Subscribing
Reinsurers, and each of the Subscribing Reinsurers will in no event participate in the
interests and liabilities of the other Subscribing Reinsurers. 

        If
a Subscribing Reinsurer wishes to designate an alternate party to that named in the
Service of Suit Article contained in the attached Agreement, then service of process will
be made upon the party named in that Subscribing Reinsurer’s individual Interests and
Liabilities Agreement. 

        The
Company hereby authorizes Aon Re Inc. to replicate its signature hereon by electronic
means on Interests and Liabilities Agreements for each of the Subscribing Reinsurers and
their respective participations as detailed on the attached Schedule. 

93 

	

Signed at JACKSONVILLE, FLORIDA 

FIRST PROFESSIONALS
INSURANCE COMPANY, INC.
ANESTHESIOLOGISTS’
PROFESSIONAL ASSURANCE COMPANY
INTERMED
INSURANCE COMPANY 

	Signature: /s/ Robert E. White, Jr.

Attest: /s/ Carole E. Wilson	Title: President

Date: March 24, 2003

	Domestic Companies  	 	Layer 1  		Layer 2  	
	Continental Casualty Company	 	5.00	%	5.00	%
	Partner Reinsurance Company of the U.S.	 	15.00	%	15.00	%
	Transatlantic Reinsurance Company	 	20.50	%	20.50	%
		
		
	
	Total Domestic Companies	 	40.50	%	40.50	%
	Non-Domestic Companies  	 
	Hannover Ruckversicherungs-Aktiengesellschaft	 	30.00	%	30.00	%
		
		
	
	Total Non-Domestic Companies 	 	30.00	%	30.00	%
	Through Aon Limited  	 
	London Companies  	 
	Alea London Limited	 	2.50	%	2.50	%
	Converium Ltd.	 	10.00	%	10.00	%
	Wellington Reinsurance Limited	 	5.00	%	5.00	%
		
		
	
	Total London Companies 	 	17.50	%	17.50	%
	Underwriters At Lloyd’s  	 
	Lloyd’s Syndicate FDY #0435	 	7.00	%	7.00	%
	Lloyd’s Syndicate AGM #2488	 	5.00	%	5.00	%
		
		
	
	Total Underwriters At Lloyd’s 	 	12.00	%	12.00	%
	Total Aon Limited 	 	29.50	%	29.50	%
	Total All Participants 	 	100.00	%	100.00	%

	

94 

	

FPIC INSURANCE GROUP,
INC.
MEDICAL MALPRACTICE
LIABILITY EXCESS OF LOSS 
REINSURANCE AGREEMENT 

2003 FINAL REINSURANCE
PLACEMENT SLIP 

	COMPANY: 	Member companies of FPIC Insurance Group, Inc. (“FIG),

                               a Florida corporation, including:

                               First Professionals Insurance Company, Inc.

                               (“FPIC”), a Florida corporation;

                               Formerly known as Florida Physicians Insurance Company;

                               Intermed Insurance Company

                               (“Intermed”), a Missouri corporation;

                               Anesthesiologists’ Professional Assurance Company

                               (“APAC”), a Florida corporation;

	 	any
company hereafter affiliated with FPIC Insurance group, Inc., provided the Company gives
written notice to the Reinsurers and the Reinsurers agree in writing prior to the
inclusion of any such newly-affiliated company, (hereinafter called the
“Company”).

	EFFECTIVE:  	1.	As respects  policies  written by all  companies  within the  definition  of
“Company,”
except for those policies included in either 2. or 3. below: 

	 	
Claims
made and losses occurring on and after 12:01 a.m., standard time, January 1, 2003, on
policies written and policies renewed from 12:01 a.m., standard time, January 1,
2003, to 12:01 a.m., standard time, January 1, 2004.

          	 	2. 	
               As respects those policies issued by Intermed prior to January 1, 2000, for the
               first $1,000,000 of limits: 

               

	 	
Losses
occurring prior to 12:01 a.m., standard time, January 1, 2000, on occurrence-basis
policies whether expired prior to, or in force at, 12:01 a.m. standard time, January 1,
2000, but where a claim is first made to the Company as respects the loss occurrence
during the period from 12:01 a.m., standard time, January 1, 2003, to 12:01 a.m., standard
time, January 1, 2004. As respects this paragraph 2, no loss occurrence will be covered
both hereunder and under any prior Agreement, nor will any loss occurrence be covered
hereunder if the loss occurrence was reported to the Company by the insured prior to 12:01
a.m., standard time, January 1, 2000.

	 	3.  	
           As respects Extended Reporting Endorsements issued by Intermed prior to
          January 1, 2000, on policies written for the first $1,000,000 of limits: 

          

	 	
Claims
made during the period from 12:01 a.m. standard time, January 1, 2003, to 12:01 a.m.,
standard time, January 1, 2004.

	

95 

	EXPIRATION AND
CANCELLATION
OPTIONS:	 	
At expiration or in the event of cancellation, the Reinsurers’ liability for each
policy in force at the Agreement expiration or cancellation date will be run off until the
policy’s cancellation, natural expiration, or next anniversary date, whichever first
occurs, but in no event for longer than 12 months plus odd time. Alternatively, the
Company may elect to have the Reinsurers’ liability terminate on a cut-off basis as
of the date of Agreement expiration or cancellation, and the Reinsurers will not be liable
for any losses occurring and claims made on and after the expiration or cancellation date. 

	 	
Regardless
of the option chosen by the Company at expiration or cancellation, Reinsurers’
liability will continue:

          	 	 	1. 	
               In respect of claims made during an extended reporting period in force at the
               date of expiration or cancellation; 

               

          	 	 	2. 	
               In the event the Company is bound by statute or regulation to continue coverage;
               and 

               

          	 	 	3. 	
               As respects the coverage granted in parts 2 & 3 of the Effective Section of
               this Agreement. 

               

	 	
Additionally,
1) if the Company (or any Reinsurer) ceases underwriting operations, loses the whole or
part of its paid up capital, or reinsures its entire business with any other company or
corporation, any Reinsurer will have the right to cancel its participation under this
Agreement (or the Company, the right to cancel the Reinsurer’s participation) by
giving 30 days prior written notice; and 2) If any Reinsurer becomes insolvent, or is
placed in conservation, rehabilitation, or liquidation, or has a receiver appointed, the
Company will have the right to cancel said Reinsurer’s participation by giving 30
days prior written notice.

	BUSINESS COVERED: 	 	
All business written and classified by the Company as: 

     	 	A.
           Medical Professional Liability (including Loss of Privileges coverage),
          Comprehensive General Liability (including Non-Owned Auto and Owners, Landlords,
          and Tenants coverage), and ancillary coverages, covering Physicians, Dentists,
          Chiropractors, Podiatrists, and other Allied Medical Practitioners and their
          Professional Associations. 

          

     	 	B.
           Health Care Facilities Liability, (including but not limited to Outpatient
          Surgical Centers, Clinics, and Medical Laboratories, but excluding hospitals),
          Comprehensive General Liability (including Non-owned Auto and Owners, Landlords
          and Tenants coverage), and ancillary coverages, including employed medical
          technicians, partnerships, corporations, and limited liability companies as
          covered under the Company’s policies. 

          

	EXCLUSIONS: 	 	
As attached. 

	TERRITORY: 	 	
To follow the Company’s policies. 

	

96 

	RETENTION AND LIMIT: 	 	
FIRST LAYER
– PART I  

	 	
As
respects all companies within the definition of “Company” for all Sections under
Business Covered, except for business included in Part II below:

	 	
$2,500,000
ultimate net loss any one claim made or occurrence, any one insured, excess of $500,000
ultimate net loss any one claim made or occurrence, any one insured.

	 	
FIRST
LAYER – PART II  

	 	
Only
as respects Anesthesiologists and Pain Management Physicians written by APAC or FPIC:

     	 	
1. 	
           75% of $500,000 (being $375,000) ultimate net loss any one claim made or
          occurrence, any one insured, excess of

                                    75% of $500,000 (being $375,000) ultimate net loss any one claim made or
                                        occurrence, any one insured;
                                                                       and

          

     		2. 	           100% of $2,000,000 ultimate net loss any one claim made or occurrence, any one
          insured, excess of 100%
of $1,000,000 ultimate net loss any one claim made or occurrence, any one insured.

          

	 	
SECOND LAYER  

	 	
The maximum cession will be the following amounts in excess of a retention by
the Company of $1,000,000 ultimate net loss any one claim made or occurrence, any one
insured:

          	 	 	1. 	
               $4,000,000 ultimate net loss any one claim made or occurrence, any one insured,
               for: all Health Care Facilities, all Clinics and Corporations, all individual
               Dentists, and all individual Doctors in Alabama and Arkansas. 

               

          	 	 	2. 	
               $1,000,000 ultimate net loss any one claim made or occurrence, any one insured
               for individual insureds, not included in 1. above. 

               

	

As respects business written in
Kansas, the retention by the Company of $1,000,000 ultimate net loss any one claim made
or occurrence, any one insured is deemed to include limits written by the Health Care
Stabilization Fund.  

Provided always that a cession has
been made to this Layer as respects the policy under which such loss arises, 90% of any
claims-related extra contractual obligations and 90% of any claims-related excess limits
liability will be subject to a separate limit (without a separate retention by the
Company other than its 10% co-participation) payable by the Reinsurers in addition to
their responsibility for ultimate net loss, but not to exceed an amount equal to the
limit ceded under this Layer in respect of the policy under which the extra contractual
obligation and/or excess limits liability arises.  

Coverage under this Layer is
applicable only as respects policies with limits exceeding $1,000,000 on which a cession
has been made to this Layer.  

97 

	WARRANTIES:	
FIRST LAYER
ONLY:  

	 	
Maximum
original policy limit subject to this Agreement is $1,000,000 each loss, each insured, or
so deemed.

		
BOTH LAYERS:  

	 	
The
Company warrants that all Professional Liability coverage subject to this Agreement will
be issued on Claims Made forms.

	PREMIUM:  	
FIRST LAYER  

	 	
1. As respects First
Professionals Insurance Company: 
Deposit
premium of $28,350,000 payable in equal quarterly installments of $7,087,500, at January
1, April 1, July 1, and October 1, 2003. 

	 	
Adjustable
at a rate of 13.5% of GNWP allocated by the Company to the first $1,000,000 of policy
limits within 60 days after Agreement expiration on a provisional basis.

	 	
2.       
          As respects Anesthesiologists’ Professional Assurance Company:
Deposit
premium of $4,305,000 payable in equal quarterly installments of $1,076,250, at January 1,
April 1, July 1, and October 1, 2003.

	 	
Adjustable
at a rate of 20.5% of GNWP allocated by the Company to the first $1,000,000 of policy
limits within 60 days after Agreement expiration on a provisional basis.

	 	
3. As respects
Intermed Insurance Company:
Deposit
premium of $7,500,000 payable in equal quarterly installments of $1,875,000, at January 1,
April 1, July 1, and October 1, 2003. 

	 	
Adjustable
at a rate of 25.0% of GNWP allocated by the Company to the first $1,000,000 of policy
limits within 60 days after Agreement expiration on a provisional basis.

	 	
As
respects the item 1, 2 and 3 above, subsequent adjustments quarterly thereafter , until
all subject premium for the period this Agreement is in effect is fully earned. In the
event of cut-off, the first adjustment will be final, and will be based on that portion of
the GNWP that is earned as of the cancellation or expiration date.

		
SECOND LAYER  

	 	
Within
30 days following the end of each calendar quarter, the Company will pay the Reinsurers
the GNWP for the quarter in question, developed by the Company from the increased
limits factors for limits exceeding $1,000,000, less the ceding commission set forth
below.

	 	
GNWP
will be only that portion of the GNWP actually received by the Company as of the date that
any report or payment of the GNWP is due.

	

98 

		
BOTH LAYERS  

	 	
Regardless
of the option chosen by the Company at expiration or cancellation, in the event the
Company is bound by statute or regulation to continue coverage, the Reinsurers will
continue to receive premium as set forth above on such policies quarterly as earned.

	CEDING
COMMISSION: 	
SECOND LAYER

22.5%
of GNWP ceded.  

	CONTINGENT
PROFIT
COMMISSION: 	
FIRST LAYER
ONLY

35%,
in accordance with the following formula:  

          	 	 	1. 	
               Earned premium, less 

               

          	 	 	2. 	
               Reinsurers’ expenses at 30% of earned premium, less 

               

          	 	 	3. 	
               Paid and outstanding Losses and corresponding loss expense, less 

               

          	 	 	4. 	
               IBNR as original (to correspond with LOC funding), less 

               

          	 	 	5. 	
               Deficits as respects the participation of Reinsurers who participated in both
               the preceding agreement(s) and this Agreement, if any, carried forward from the
               First Layer of the following agreements: 

               

          	 	 	 	a) 	
               As respects First Professionals Insurance Company (formerly known as Florida
               Physicians Insurance Company only: 

               

	 	
Casualty
Excess of Loss Reinsurance Agreement CXS-3014(94); effective in calendar years 1994 and
1995; and/or Physicians, Dentists, and Chiropractors Casualty First through Fourth and
Clash Excess of Loss Reinsurance Agreement AR 4302, effective in calendar year 1996;
and/or

	 	
Physicians,
Dentists, and Chiropractors Casualty First through Fourth and Clash Excess of Loss
Reinsurance Agreement AR 4373, effective in calendar years 1997 through 1999.

          	 	 	 	b) 	
                As respects all FPIC Insurance Group companies:

               

	 	
Medical
Malpractice and Lawyers Professional Liability Excess of Loss Reinsurance Agreement AR
12427, effective in calendar year 2000, 2001, and 2002.

          	 	 	6. 	
               Less Deficit, if any, from the 2003 Second Layer of this Agreement calculated as
          follows: 

               

          	 	 	 	a. 	
                Gross Earned Ceded Premium, less

               

          	 	 	 	b. 	
                Ceding Commission, less

               

          	 	 	 	c. 	
                Reinsurers’ expenses at 30% of a minus b, less

               

          	 	 	 	d. 	
                Paid and outstanding Losses and corresponding loss expense, less

               

          	 	 	 	e. 	
                IBNR as original (to correspond with LOC funding)

               

	 	
First
computation 24 months after expiration of this Agreement, recomputed annually thereafter
until all losses have been settled.

	

99 

	 	
At
the first computation, one-third of the profit commission will be payable; at the second
computation (first re-computation), two-thirds (less any amount previously paid) will be
payable; and at the third and subsequent computations, the full amount (less any amounts
previously paid) will be payable.

 

	OTHER
REINSURANCE:	
Company is permitted to have other treaty reinsurance. Additionally, it may purchase
facultative reinsurance on any risk it deems advisable. The premium for any such
reinsurance that inures to the benefit of this Agreement will not be included within the
subject premium hereunder. 

	 	
For
all purposes of this Agreement, any form of intracompany reinsurance among the companies
included within the definition of “Company” and the Net Account Quota Share
Reinsurance Agreement (AR 13987) will not constitute inuring reinsurance.

	FUNDING OF 
RESERVES:	
First Layer 

	 	
Letters
of Credit and/or Trust Agreements required from unauthorized Reinsurers for outstanding
losses and expenses, recoverables and Bulk Reserves (“IBNR”), and unearned
premium if any (difference between deposit premium and earned premium).

	 	
Second Layer

Letters
of Credit and/or Trust Agreements required from unauthorized Reinsurers for unearned
premium, outstanding losses and expenses, recoverables and Bulk Reserves
(“IBNR”). 

	REPORTS:	
Within 60 days following the close of each calendar quarter, the Company will furnish the
Reinsurers with a report containing such information as may be required by the Reinsurers
for completion of their NAIC statements. 

	 	
Premium
and loss reporting requirements are set forth in the Reinsurance Premium Clause, and in
the Loss Notices and Settlements Clause, respectively. Loss notices and premium payments
made to the Reinsurers are to be in sufficient detail to identify what portion of any
premium or loss relates to each reinsured company.

  

	SPECIAL 
ACCEPTANCES:	
As respects
Sections A, and B of Business Covered:  

	 	
The
Company may submit in writing to the Reinsurers, for special acceptance hereunder,
business not covered by this Agreement.

	 	
If
said business is accepted in writing by the Reinsurers, it will be subject to the terms of
this Agreement, except as such terms are modified by such acceptance.

	 	
Further,
should Reinsurers become a party to this Agreement subsequent to the acceptance of any
business not normally covered hereunder, they will automatically accept same as being a
part of this Agreement.

	OTHER PROVISIONS:	
All reinsurance for which the Reinsurers will be obligated by virtue of this Agreement
will be subject to the same terms, conditions, interpretations, waivers, modifications,
and alterations as the respective policies of the Company to which this Agreement applies,
provided any such waivers, modifications, or alterations, when made at the Company’s
discretion, do not provide coverage for a previously excluded loss that has occurred under
a policy prior to the date the waiver, modification, or alteration is issued. Nothing
herein will in any manner create any obligations or establish any rights against the
Reinsurers in favor of any third parties or any persons not parties to this Agreement
except as provided in the Insolvency Article. 

	

100 

	 	
Access
to Records Clause
Aon Re Inc. Intermediary Clause
Arbitration Clause — as attached

Currency Clause
Definitions Clause – as attached
Delays, Errors, or Omissions Clause

Entire Agreement and Amendments Clause

	 	
Excess
of Original Policy Limits Clause (90%) / Extra Contractual Obligations Clause (90%) —
included within ultimate net loss as respects First Layer, pro rata and in addition to
limit as respects the Second Layer — as attached

          	OTHER PROVISIONS: (continued) 	Insolvency
Clause 

               Loss Notices and Settlements Clause — as attached
Net Retained Liability
               Clause
Offset Clause (this Agreement only)
Subrogation Clause – as attached
               
Service of Suit Clause – as attached
Taxes Clause
Ultimate Net Loss, Loss Expense, and Declaratory Judgment Expense Clause - as
                                    attached 

               

          	ESTIMATED SUBJECT PREMIUM: 	First Layer  

               

          		First Professionals:  	$210,000,000 GNWP

                                                            (applicable to limits in the first million) 

               

          		APAC:  	$21,000,000 GNWP

                                                            (applicable to limits in the first million) 

               

          		Intermed:  	$30,000,000 GNWP

                                                            (applicable to limits in the first million) 

               

 

	 	Second
      Layer

      

       	 
		For All
      Companies

        Combined: 	$7,000,000
      of estimated ceded premium 

               

	

* * * * *  

101 

	

In accordance with your instructions,
we have placed reinsurance with the Reinsurers listed hereon, subject to the terms and
conditions hereinabove stated. We ask that you promptly advise us if the terms,
conditions, or Reinsurers vary in any respect from your instructions. Aon Re Inc. will not
be responsible for the financial or other obligations of any Reinsurers. Should you desire
financial information regarding the Reinsurers listed hereon, please contact us and we
will furnish it. 

The Reinsurer’s
obligations under this Agreement are several and not joint and are limited solely to the
extent of their individual participations. The Reinsurers are not responsible for the
participation of any co-subscribing Reinsurer who for any reason does not satisfy all or
part of its obligations. 

	REINSURED
      WITH:

      

      COMPANY NAME  	NAIC#
      

    	FEIN#
      

    	LAYER 1
      

    	LAYER 2
      

    
	Domestic
      Reinsurers  	 		 		 		 		 
	Continental
      Casualty Company 	 	20443	 	36-2114545	 	5.00	%	5.00	%
	Partner Reinsurance
      Company of the U.S. 	 	38636	 	13-3031176	 	15.00	%	15.00	%
	Transatlantic
      Reinsurance Company 	 	19453	 	13-5616275	 	20.50	%	20.50	%
				
      

    		
      

    	
	         Total
      Domestic Reinsurers 	 					40.50
      	%
      	40.50
      	%
      
					
	 	 
	Non-Domestic
      Reinsurers  	 
	Through
      Aon Limited 	 
	Alea London
      Limited	 	 	 	AA-1120126	 	2.50	%	2.50	%
	Converium
      Ltd.	 	 	 	AA-1464100	 	10.00	%	10.00	%
	Hannover
      Rückversicherungs-Aktiengesellschaft	 	 	 	AA-1340125	 	30.00	%	30.00	%
	Wellington
      Reinsurance Limited	 	 	 	AA-1120337	 	5.00	%	5.00	%
				
      

    		
      

    	
	         Total
      Non-Domestic Reinsurers 	 	 	 			47.50
      	%
      	47.50
      	%
      
	 	 
	Underwriters
      At Lloyd’s 	 
	Lloyd’s
      Syndicate FDY #0435	 	 	 	AA-1126435	 	7.00	%	7.00	%
	Lloyd’s
      Syndicate AGM #2488	 	 	 	AA-1128488	 	5.00	%	5.00	%
				
      

    		
      

    	
	         Total
      Underwriters At Lloyd’s	 	 	 	 	 	12.00
      	%
      	12.00
      	%
      
	         Total
      Aon Limited	 	 	 	 	 	59.50
      	%
      	59.50
      	%
      
	         Total
      All Participants	 	 	 	 	 	100.00
      	%
      	100.00
      	%
      

	

Assuming that you find everything in
order, please indicate your acceptance and approval by signing and returning this Final
Placement Slip to Aon Re Inc., 199 Fremont Street, 12th Floor, San Francisco, California
94105. 

ACCEPTED & 
APPROVE: /s/ Robert E. White, Jr.

REFERENCE 
>NUMBER:_____________________________________ DATED:
March 24, 2003  

(For processing purposes it is
important that you provide your Company’s reference number for this program.) 

102 

	

EXCLUSIONS 

This Agreement does not apply to and
specifically excludes the following:  

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

	B.    	Reinsurance  assumed
by the Company other than: 

		1.	Intra-company
reinsurance; and 

		2. 	Policies
underwritten by the Company but issued by another carrier at the           Company’s
request and reinsured 100% by the Company. 

	C.  	Loss
or liability excluded by the provisions of the Nuclear Incident Exclusion
          Clause — Liability — Reinsurance — U.S.A. — attached to and
          forming a part of this Agreement. 

	D. 	       Business
produced and underwritten by others, including but not limited to: 

		     1.      	Business  written
in states other than Florida by Medical Group Insurance           Services, Salt Lake
City, Utah; and 

		2. 	All
business written by Professional Medical Administrators. 

	  E.          	 Insureds written
in the Company’s Non-Standard Medical and Dental           Malpractice Quota Share
Reinsurance Agreement AR 11997 (or any replacement           thereof). 

	

DEFINITIONS 

“Claims made” will
mean those claims first made against the insured during the policy period and occurring
on or after the retroactive date, if any. The date on which a claim is made or reported
will be understood to be the earlier of the date on which a written notice of claim is
received by the Company, or a report by telephone is made to the Company by the insured
or its representative. Claim made dates for claims made during any extended reporting
period for which the Reinsurers are liable hereunder will be deemed to be the last
in-force day of the original policy period.  

“Declaratory judgment expense”will
mean all expenses which are incurred by the Company in direct connection with declaratory
judgment actions brought to determine the Company’s policy obligations, and which
are allocable to specific claims alleged against policies subject to this Agreement.
Declaratory judgment expense will be deemed to have been incurred by the Company on the
date of the actual or alleged claim giving rise to the declaratory judgment action. 

“Extended reporting
endorsement” will mean the endorsement or other document issued by the Company
on a claims made policy that grants extended reporting period coverage, and will include: 

	1.  	Optional extended reporting endorsements purchased at the expiration of
          modified claims made policies; and 

	

103 

	2.  	Coverage granted under the Company’s policies for deceased, disabled, and
          retired insureds, and other withdrawing insureds.

	

The obligations of the Reinsurers
under this Agreement will follow that of the Company as respects all extended reporting
endorsements. 

“Extended reporting period” will
mean a time period after a claims made policy’s termination date within which claims
may be made with respect to occurrences happening between the original retroactive date,
if any, and the original termination date of the policy. 

“Gross net written premium”(“GNWP”) will
mean the Company’s gross written premium on all business the subject matter of this
Agreement under policies written and policies renewed during the term of this Agreement,
less return premiums for cancellations and reductions and less the premium paid for
inuring reinsurance as provided in the Other Reinsurance Section. 

Notwithstanding the foregoing: 

	  1.   	  As respects
business falling within subparagraph 2. of the           “Effective” Section of
this Agreement, “gross net written           premium” will be $420,000. 

	2.  	 As  respects
business falling within subparagraph 3. of the           “Effective” Section of
this Agreement, “gross net written           premium” will be included within
base as per subparagraph 1. above.

	 	
Where
the Company’s claims made policies use rates loaded for unlimited extended reporting
periods for deceased, disabled, retired, and other withdrawing insureds, the net original
premium relating to the load for any such extended reporting periods will not be included
in the gross net written premium hereunder until and unless such extension comes into
effect. 

	 	
The
premium, if any, for any kind of extended reporting period for which the Reinsurers are
liable will be deemed to be fully earned as of the date such period commences. 

	 	
“Gross
net earned premium” (“GNEP”) will mean that portion of the gross net
written premium that is earned as of the date in question. 

	 	 “Insured”
      will mean each person or group subject to a separate limit of liability
      under the Company’s policy. 

	 	 “Loss
      expense” will mean all expenses incurred by the Company in the
      investigation, appraisal, adjustment, litigation, and defense of claims
      under policies reinsured hereunder, including court costs, interest accrued
      prior to judgment if included as part of expense on reinsured policies,
      and interest accrued after final judgment, but excluding internal office
      expenses, salaries, per diem, and other remuneration of regular Company
      employees. 

	 	
“Loss
of privileges” will mean the protection afforded to the original insured in the
Company’s policy for service as a member of a formal hospital or professional
society board or committee. 

	 	 “Occurrence,”
      unless otherwise defined in the policies reinsured hereunder, will mean
      each disaster, casualty, accident, or loss or series of disasters, casualties,
      accidents, or losses arising out of one event. 

	 	 “Policies”
      will mean all policies, binders, contracts, or agreements of insurance
      or reinsurance, whether written or oral, to which this Agreement applies.
      

	 	
The
Company’s policies will not exceed 12 months duration plus odd time, not to exceed
18 months in all, and all claims made policies will contain a warranty to the effect that
there have been no known incidents likely to give rise to a claim, other than those
already reported to the Company. 

	

104 

	 	
“Policy
period” will mean each period of the Company’s policy that is subject to a
separate aggregate limit. 

	 	
“Retroactive
date” will mean the date prescribed in the Company’s claims made policy,
which is the earliest date losses can actually occur for which an insured can claim
coverage. 

	 	 “Ultimate
      net loss” will mean: 

		1. 	As
respects the First Layer: 

	 	
The
amount of any settlement, award, or judgment the Company has paid or has become liable to
pay, including: plaintiff’s attorney fees to the extent that such fees are included
within the limit of the Company’s policy; interest accrued prior to final judgment
if included as part of loss on reinsured policies; and any co-insurance retention,
deductible, or self-insured retention paid by the insured, subject to a maximum of
$100,000 allowable hereunder; all of the foregoing being subject to a maximum of
$1,000,000 as respects any one claim made or occurrence, any one policy. 

	 	
Ultimate
net loss will also include, without limitation: 90% of any claims-related extra
contractual obligations; 90% of any claims-related excess limits liability; and
declaratory judgment expense. 

	 	
Ultimate
net loss will not include loss expense, which will be apportioned between the Company and
the Reinsurers in proportion to their respective interests in the ultimate net loss as
such interests finally appear. (subject to the exceptions set forth in subparagraph 3. b.
below). 

	 	
All
ultimate net loss recovered by the Company from the Second Layer will be deducted from
the ultimate net loss for this Layer. 

		2. 	As
respects the Second Layer: 

	 	
The
amount of any settlement, award, or judgment the Company has paid or has become liable to
pay, including: plaintiff’s attorney fees where applicable; interest accrued prior
to final judgment if included as part of loss on reinsured policies; and any co-insurance
retention, deductible, or self-insured retention paid by the insured, subject to a
maximum of $100,000 allowable hereunder. 

	 	
Ultimate
net loss will also include declaratory judgment expense where the Company has not paid or
has not become liable to pay any settlement, award, or judgment under its policy. 

	 	
Ultimate
net loss will not include loss expense or declaratory judgment expense incurred by the
Company in an action that results in a loss to the Company. Such expenses will be
apportioned between the Company and the Reinsurers in proportion to their respective
interests in the ultimate net loss as such interests finally appear. 

	 	
Extra
contractual obligations and excess limits liability will be subject to coverage in
addition to the ultimate net loss, as set forth in the Retention and Limit Section of the
Second Layer. 

	

105 

		3. 	As
respects both Layers: 

	 	 a.          	All inuring
reinsurance whether recovered or not, and all other recoveries and           subrogations
which are actually received by the Company, will be first deducted           to arrive at
the amount of the ultimate net loss hereunder. All salvages,           recoveries, or
reinsurance received subsequent to any loss settlement hereunder           will be
applied as if received prior to the settlement, and all necessary           adjustments
will be made by the parties hereto. Nothing, however, in this           definition will
be construed as meaning that losses are not recoverable           hereunder until the
final amount of the Company’s ultimate net loss has           been ascertained.  

	 	  b.         	 In regard
to loss expense, the exceptions to the apportionment between the           Company and
the Reinsurers in proportion to their respective interests in the           ultimate net
loss as finally determined are as follows:  

	 	i. 	To
the extent the Company’s policies include loss expense as part of the
          policy limit, loss expense will be included in the ultimate net loss;  

	 	ii. 	In
the event a verdict or judgment is reduced by an appeal or a settlement,
          subsequent to the entry of the judgment, resulting in an ultimate saving on
such           verdict or judgment, or a judgment is reversed outright, or a subrogation
          recovery is made, the loss expense incurred in securing such final reduction,
          reversal, or recovery will be prorated between the Reinsurers and the Company
in           the proportion that each benefits from such reduction, reversal, or
recovery,           and the expenses incurred up to the time of the original verdict,
judgment, or           loss payment will be:  

	 	(a) 	Prorated
in proportion to each party’s interest in such verdict, judgment,           or loss
payment; or  

	 	(b) 	Added
to the ultimate net loss when the Company’s policies reinsured           hereunder
include loss expense as part of the policy limit.  

	

ARBITRATION 

As a condition precedent to any right
of action hereunder, any dispute that arises out of or in connection with this Agreement,
including its formation or validity, will be submitted for decision to an arbitration
panel composed of two arbitrators and an umpire. The arbitration will be conducted under
the Federal Arbitration Act and will proceed as set forth below. 

All notices in connection with
arbitration will be in writing and sent certified or registered mail, return receipt
requested. The term “days” as used herein will mean calendar days. Notice
requesting arbitration will reference this Article, will state issues to be resolved in
the view of the claimant, and will appoint the arbitrator selected by the claimant. Within
30 days after receipt of such notice, the respondent will notify the claimant of any
additional issues to be resolved and of the name of its appointed arbitrator. As time is
of the essence, if the respondent fails to appoint its arbitrator within 30 days after
receipt of notice requesting arbitration, the claimant is authorized to and will appoint
the second arbitrator. 

Unless otherwise mutually agreed,
each member of the arbitration panel will be an impartial active or former officer of an
insurance or reinsurance company or an Underwriter at Lloyd’s of London. Before
instituting the hearing the two appointed arbitrators will choose an impartial umpire. If
the two arbitrators fail to agree on the appointment of an umpire within 30 days after the
appointment of the second arbitrator, within 10 days thereafter the two arbitrators will
request the American Arbitration Association (“AAA”) to appoint an umpire with
the qualifications set forth above in this Article without regard to the AAA’s
Commercial Arbitration Rules. If the AAA fails to appoint an umpire within 30 days after
its receipt of the arbitrators’ request, either party may apply to a court of
competent jurisdiction to appoint an umpire with the qualifications set forth above in
this Article. The umpire will immediately notify each party of his selection. In the event
of the resignation or death of any member of the arbitration panel, a replacement will be
appointed in the same manner as the resigning or deceased member was appointed. 

106 

	

Within 30 days after notice of
appointment of the umpire, the claimant and respondent will each submit an initial brief
to the panel. Within 45 days after notice of appointment of the umpire, the panel will
meet and determine timely periods for the submission of reply briefs and amended briefs,
procedures for discovery, and a scheduled date for the hearing. Arbitration will be held
in the city of the Company’s home office unless the parties mutually agree to another
venue. 

The panel will be relieved of all
judicial formality and the umpire will be the final judge of the panel’s procedures,
the rules of evidence, privilege, and production, and the excessiveness and relevancy of
any witnesses and documents upon the petition of any participating party. The panel will
be authorized to issue interim orders and awards in the interest of fairness and the
prompt and orderly resolution of issues in dispute. To the extent permitted by law, the
umpire and the panel will be empowered to issue orders to enforce such decisions. Insofar
as the panel looks to substantive law, it will consider the law of the state of Florida. 

The panel will make its award with
regard to the terms expressed in this Agreement, the original intentions of the parties to
the extent reasonably ascertainable, and the custom and practice of the insurance and
reinsurance business. The panel will make its award within 30 days after the close of the
hearing. Each award by the panel will be in writing and may state factual findings that
served as a basis for the award. Each award by the panel will be by a majority of the
panel’s members and will be final and binding on all parties to the proceeding. Any
party may apply to a court of competent jurisdiction for an order confirming the award,
and a judgment of that court will thereupon be entered on the award. If such an order is
issued, the attorneys’ fees of the party so applying and court costs will be paid by
the party against whom confirmation is sought. 

Each party will bear the expense of
the arbitrator appointed by or for it and the fees of attorneys retained by it, and will
jointly and equally bear the expense of the umpire and any stenographer requested. The
remaining costs of the arbitration proceedings will be allocated by the panel. Punitive
damages will not be awarded; however, the panel may award interest, costs and expenses as
it deems appropriate, including but not limited to attorneys’ fees, to the extent
permitted by law. 

LOSS NOTICES AND
SETTLEMENTS 

The Company will advise Reinsurers
within 60 days of all losses reserved at: 

A.              $100,000
from the ground up as respects the First Layer; or  

B.              $500,000
from the ground up as respects the Second Layer; or that, in the           opinion of the
Company, may involve the Reinsurers under this Agreement, and of           all subsequent
developments pertaining thereto that may materially affect them           as well.  

Inadvertent omission in dispatching
the aforementioned notices will in no way affect the obligation of the Reinsurers under
this Agreement, provided the Company informs the Reinsurers of such omission upon
discovery. 

107 

	

The Company will have the right to
settle all claims under its policies. The settlements, provided they are within the terms
of the Company’s policies (not applicable as respects extra contractual obligations,
excess limits liability, and loss expense that is not a part of the Company’s policy
limit) and of this Agreement (applicable in all cases), will be unconditionally binding on
the Reinsurers in proportion to their participation in this Agreement. The Company will
likewise, at its sole discretion, commence, continue, defend, or withdraw from actions,
suits, or proceedings and generally handle all matters related to all claims and losses,
and all payments made and costs and expenses incurred in connection therewith, or in
taking legal advice therefor, will be shared by the Reinsurers. When so requested,
however, the Company will afford the Reinsurers, at the Reinsurers’ own expense, an
opportunity to be associated with the Company in the defense of any claim, suit, or
proceeding involving this Agreement, and the Company and the Reinsurers will cooperate in
every respect in such defense. Amounts due the Company hereunder in the settlement of
ultimate net loss and loss expense will be payable by the Reinsurers within 10 business
days upon being furnished by the Company with reasonable evidence of the amount the
Company has paid or has become liable to pay in excess of the Company’s applicable
retention as set forth in the Retention and Limit Articles. 

SUBROGATION 

The Reinsurers will be credited with
their share of subrogation in respect of claims and settlements under this Agreement, less
their share of recovery expense. Unless the Company and Reinsurers agree to the contrary,
the Company will enforce its right to subrogation and will prosecute all claims arising
out of such right. Should the Company refuse or neglect to enforce this right, the
Reinsurers are hereby empowered and authorized to institute appropriate action in the name
of the Company. Amounts recovered from subrogation will always be used to reimburse the
excess reinsurers (and the Company, should it carry a portion of excess coverage net) in
the reverse order of their participation in the loss before being used in any way to
reimburse the Company for its primary loss. 

SERVICE OF SUIT 

(This Article applies to Reinsurers
domiciled outside the United States of America or unauthorized in any state, territory, or
district of the United States of America that has jurisdiction over the Company and in
which a subject suit has been instituted. This Article is not intended to conflict with or
override the parties’ obligation to arbitrate their disputes in accordance with the
Arbitration Article.) 

In the event of the failure of any
Reinsurer to pay any amount claimed to be due hereunder, such Reinsurer, at the request of
the Company, will submit to the jurisdiction of a court of competent jurisdiction within
the United States. Nothing in this Article constitutes or should be understood to
constitute a waiver of the Reinsurer’s right 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 permitted by the laws
of the United States or of any state in the United States. The Reinsurer, once the
appropriate court is accepted by the Reinsurer or is determined by removal, transfer, or
otherwise, as provided for above, will comply with all requirements necessary to give said
court jurisdiction. In any suit instituted against it upon this Agreement, the Reinsurer
will abide by the final decision of such court or of any appellate court in the event of
an appeal. 

Service of process in such suit may
be made upon Mendes and Mount, LLP, 750 Seventh Avenue, New York, New York 10019-6829,
when such suit is instituted in the state of New York; Mendes and Mount, LLP, 725 South
Figueroa, 19th Floor, Los Angeles, California 90017-5524, when such suit is instituted in
the state of California; either of the foregoing if the suit is not instituted in New York
or California; or another party specifically designated in the applicable Interests and
Liabilities Agreement attached hereto (hereinafter “agent for service of
process”). However, if another party is so designated, the Reinsurer in question
recognizes that the laws of the states of New York and California require that service be
made on a law firm located in the respective state if a suit is instituted in that state,
so that if the party designated on the Reinsurer’s Interests and Liabilities
Agreement is not located in California as respects a suit instituted in California, or New
York as respects a suit instituted in New York, the applicable office of Mendes and Mount
stipulated above must be used for service of suit. 

108 

	

The agent for service of process is
authorized and directed to accept service of process on behalf of the Reinsurer in any
such suit and/or upon the request of the Company to give a written undertaking to the
Company that they will enter a general appearance upon the Reinsurer’s behalf in the
event such a suit is instituted. 

Further, pursuant to any statute of
any state, territory, or district of the United States that makes provision therefor, the
Reinsurer hereby designates the Superintendent, Commissioner, or Director of Insurance or
other officer specified for that purpose in the statute, or the successor or successors in
office, as its true and lawful attorney upon whom may be served any lawful process in any
action, suit, or proceeding instituted by or on behalf of the Company or any beneficiary
hereunder arising out of this Agreement, and hereby designates the agent for service of
process as the person to whom the said officer is authorized to mail such process or a
true copy thereof. 

EXTRA CONTRACTUAL
OBLIGATIONS AND EXCESS LIMITS LIABILITY 

This Agreement will cover any
claims-related extra contractual obligations and excess limits liability as provided in
the definition of “ultimate net loss” as respects the First Layer, and as
provided in the Retention and Limit Section as respects the Second Layer. 

“Extra contractual
obligations” as used in this Agreement will mean those liabilities not covered under
any other provision of this Agreement, which arise from the handling of any claim on
business covered hereunder, such liabilities arising because of, but not limited to, the
following: failure to settle within the policy limit; by reason of alleged or actual
negligence, fraud, or bad faith in rejecting an offer of settlement; in the preparation of
the defense; in the trial of any action against the insured or reinsured; or in the
preparation or prosecution of an appeal consequent upon such action. 

“Excess limits liability”
as used in this Agreement will mean any amounts payable in excess of the policy limit as a
result of alleged or actual negligence, fraud, or bad faith in failing to settle or
rejecting a settlement within the policy limit, in the preparation of the defense, in the
trial of any action against the insured or reinsured, or in the preparation or prosecution
of an appeal consequent upon such action. Excess limits liability is any amount for which
the Company would have been contractually liable to pay had it not been for the limits of
the policy. 

There will be no recovery hereunder
where the extra contractual obligation or excess limits liability has been incurred due to
fraud committed by a member of the board of directors or a corporate officer of the
Company, acting individually, collectively, or in collusion with a member of the board of
directors, a corporate officer, or a partner of any other corporation, partnership, or
organization involved in the defense or settlement of a claim on behalf of the Company. 

The date on which any extra
contractual obligation or excess limits liability is incurred by the Company will be
deemed, in all circumstances, to be the same date established in respect of the claim from
which the extra contractual obligation or excess limits liability arose. 

In the event any provision of this
Article is rendered illegal or unenforceable by the laws, regulations, or public policy of
any jurisdiction, such provision will be considered void as respects that jurisdiction
only, and such a consideration will not affect the validity or enforceability of any other
provision of this Article in that jurisdiction nor the enforceability of such provision in
any other jurisdiction. 

109FPIC Insurance Group, Inc.

	

Exhibit 10(uu) 

SECOND AMENDMENT 
TO THE

MANAGEMENT AGREEMENT
DATED AS OF JUNE 30, 1998 

        This
Second Amendment to the Management Agreement dated as of June 30, 1998 is effective as of
the 1st day of January 2002, by and among ANESTHESIOLOGISTS PROFESSIONAL
ASSURANCE COMPANY, a Florida corporation (“Company”), APA MANAGEMENT,
INC., a Florida corporation (“Manager”), and FPIC INSURANCE GROUP,
INC., a Florida corporation (“FPIC”), hereinafter collectively referred to
as “Parties.” 

W I T N E S S E T H 

        WHEREAS,
for good and valuable consideration, the Parties previously entered into a Management
Agreement dated as of June 30, 1998 and an Amendment to the Management Agreement dated as
of October 7, 1999 (hereinafter collectively referred to as “Management
Agreement”); and 

        WHEREAS,
the Parties desire to amend the Management Agreement in accordance with SECTION TWENTY
FOUR of the Management Agreement; and 

        NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby conclusively acknowledged, the Parties agree and hereto intend to be
legally bound as follows: 

AMENDMENTS 

1. SECTION ONE, Appointment
of Manager and Term, Subparagraph B, of the Management Agreement is hereby amended,
in its entirety, to read as follows:  

	 	        “The
term of this Management Agreement shall be extended through December 31, 2003.
Unless either party has given the other written notice of its election to
terminate the term of the Management Agreement on or before April 30 of a given
year, beginning with 2003, the Management Agreement shall automatically be
extended for one additional year (i.e. if such notice is not given by April 30,
2003, the Management Agreement will be extended through December 31, 2004). The
initial term of this Management Agreement, together with any such extension of
such initial term, is herein referred to as the “Term”.” 

	

2. SECTION SIX, Expenses,
of the Management Agreement is amended, in its entirety, to read as follows: 

	 	        “In
consideration of the receipt of payment by Manager of the compensation described
in SECTION SEVEN, Compensation, as amended below, of the Management Agreement,
Manager shall be responsible to pay all operating expenses and capital expenses
of the Company that Manager reasonably deems necessary to the Company during the
Term of this Management Agreement, including, but not limited to: (1) expenses
for any new equipment or fixed assets (which, if paid for by Manager, shall be
the property of Manager and Manager shall be entitled to retain the same free
and clear of any claim of the Company or FPIC upon any termination of the Term);
(2) a fixed fee of $600.00 per month for use of Help Desk support provided by
FPIC; (3) hourly fees to be computed based on an hourly rate, as determined from
time-to-time, multiplied by the number of hours devoted by FPIC Information
System staff to system projects, directly or indirectly, relating to the
Company, plus related out-of-pocket travel expense; (4) costs associated with
one T-1 line connection between the Company and FPIC; (5) brokerage commission
up to a 5% maximum; and (6) support costs associated with coordination of the
purchase, customization, installation, implementation and operation of the
Policy Administration System for the Company. The following amounts shall be the
obligation of the Company: 

	

110 

	

        (1)
     Taxes on premiums received. 

        (2)
     Assessments  payable to the Florida  Insurance  Guarantee  Fund (“FIGA”) or any
other  guarantee fund of any other state and other similar or residual expenses, such as
assessments or premiums payable to government sponsored risk pools. 

        (3)
     All costs (including  consulting  expenses) of becoming  licensed or admitted to
conduct an insurance  business in any state (inasmuch as the Company has ceased to be a
risk retention group as of the Closing of the Merger Agreement). 

        (4)
     Consulting fees payable pursuant to the Consulting Agreement, as previously defined
herein,  and as entered into by the Company and Consulting  Group of APA, Inc. with
respect to certain  consulting  services to be provided by Consulting Group of APA, Inc.
to the Company. 

        (5)
     Allocated Loss  Adjustment  Expenses of the Company.  For purposes of this Agreement
 “Allocated  Loss  Adjustment Expenses” shall mean the following: 

	 	        (a)
     Fees and related costs of defense counsel; 

	 	        (b)
     Court reporting and transcription expenses; 

	 	        (c)
     Medical and Economic  Consultant and/or Accounting Fees and related costs.  (This
will not include hourly fees for work performed by Frank Moya, M.D., Elizabeth Moya,
Esq., Joan McNulty or Monte Lichtiger, M.D.); 

	 	        (d)
     Expert witness fees and expenses; 

	 	        (e)
     Other Expenses: 

	 	(i) 	Certified
mail, express mail, courier service and postage; 

	 	(ii) 	Fax
transmission and receipt expenses (as billed to the Company); 

	 	(iii) 	Travel
expenses of outside professionals (including lodging, meals, mileage, parking and
airfare); 

	 	(iv) 	Mediation
fees; 

	

111 

	 	(v) 	Arbitration
fees; 

	 	(vi) 	Process
server fees; 

	 	(vii) 	Telephone
charges (long distance related to claim); 

	 	(viii) 	Appeal
- related expenses; 

	 	(ix) 	Research
and Data Base access expenses; 

	 	(x) 	Miscellaneous
court expenses; 

	 	(xi) 	Other
similar out of pocket  expenses,  which under industry  practice are typically  allocated
to an individual claim file                                     of the Company. 

	

        (6)
     Any state or federal  income taxes and any personal  property or intangible  taxes
imposed upon the Company or its property. 

        (7)
     Corporate overhead  allocations from FPIC or its affiliates  (including but not
limited to all costs of compliance with applicable state and federal  securities  laws,
rules and regulations)  other than those types of expenses listed in clause (8)
immediately  below,  but,  with respect to each such expense,  only up to the maximum
 amount for which  Manager is  responsible  as provided in the table contained in such
clause (8). 

        (8)
     The excess amounts (“Excess  Amounts”),  if any, of the types of expenses listed
below over the associated maximum amounts  (“Maximum  Amounts”) of such expenses for
which Manager shall be responsible as set forth below (it being  understood  that the
Company, and not Manager, shall be responsible to pay any such Excess Amounts): 

	Type of Expense 

		Maximum Amount for which
Manager is Responsible 

	 
	Department of Insurance Financial

Examination (Tri-Annual)

Department of Insurance Market

Conduct Examination (Tri-Annual)

Expenses of Annual Audit

Expenses of Annual Tax Compliance

Annual Actuarial Expense (both Rate and Reserve

Studies)

Annual Statutory Printing Expense

(135 Books)		

110% of cost of previous Examination

115% of cost of previous Examination

$20,000

$ 1,000

$25,000

$ 3,300

	

        (9)
Intentionally deleted.  

        (10)
    All interest expense of the Company. 

        (11)
Intentionally deleted.  

112 

	

        (12)
    Expense of the Policy Administration System, whether direct or indirect,  including,
but not limited to, purchase, customization,  installation,  implementation  and
 operation  of the Policy  Administration  System,  is to be paid by the Company.
Notwithstanding any other terms or provisions of this Management  Agreement,  proprietary
rights to the Policy Administration System will reside with First  Professionals
 Insurance  Company,  Inc., a wholly owned  subsidiary of FPIC,  and upon  termination
 of the Management Agreement, the Manager will have no claim of ownership rights to such
Policy Administration System. 

        (13)
    Excess  brokerage  commission,  above the maximum 5% brokerage  commission  paid by
Manager out of management  fee compensation,  as outlined above, not to exceed reasonable
and customary brokerage  commission  percentages paid in the professional liability
insurance industry.” 

3. Subparagraphs A (1) and (6)
of SECTION SEVEN, Compensation, of the Management Agreement are amended to read as
follows:  

        “(1)
    For the  management  of  anesthesiologist  business  produced  by the  Company or by
the  Manager on behalf of the Company,  Manager shall receive  annual  compensation
 consisting of an annual 4% claims  management  fee and an annual service fee. The annual
service fee shall be based on a percentage of direct earned premium,  defined as direct
earned  premium,  net of refunds, not net of ceded  reinsurance,  and  excluding  assumed
 reinsurance,  premiums  under  fronting  arrangements  and  premiums  under
inter-company pooling agreements.  The annual service fee is to be calculated in
accordance with the following schedule: 

Direct Earned Premium 

		From

$0

$8 Million

Over $10 Million 	To

$8 Million

$10 Million 	Annual Service Fee

10.5%

7.0%

6.0% 

	

        (6)
Fees and commissions referred to in subparagraphs (1) through (5) above are
based on a percentage of direct earned premium, defined as direct earned premium, net
of refunds, not net of ceded reinsurance, and excluding assumed reinsurance, premiums
under fronting arrangements and premiums under inter-company pooling agreements,
payable monthly as premium is earned, but subject to appropriate reimbursement to the
Company under circumstances and in the amounts provided in SECTION EIGHT,
Compensation Refunds, below. Such direct earned premium shall not include premium on
policies written or earned on or prior to December 31, 2001 for which management fees
have already been paid under the provisions of the Management Agreement. Manager shall
submit monthly a full accounting of fees and commissions earned and collected by Manager
under the Management Agreement.”  

4. The following subparagraphs
are added to SECTION SEVEN, Compensation, of the Management Agreement:  

        “(7)
    Fronting  Fee.  Manager  will be paid  compensation  equal to 7% of fronting  fees
earned  from  fronted  business produced by the Company or by the Manager on behalf of
the Company. 

113 

	

        (8)
Financial Targets. The Parties hereby acknowledge that gross and net premiums
written of the Company shall remain consistent with planning submissions, such
planning submissions having been submitted to and approved by FPIC, beginning in fiscal
year 2002. Any material deviations from such approved planning submissions must be
pre-approved by FPIC. FPIC reserves the right to modify gross and net premiums written
targets and affected financial targets. Parties hereby further acknowledge the fiscal
year 2002 financial targets set forth as Exhibit A attached hereto, and agree to
submit for review and approval 2003 financial targets.”  

5. SECTION NINE, Incentive
Performance Plan, of the Management Agreement is amended in its entirety, to
read as follows:  

        “(A)
    In the event that the adjusted  target  income,  defined as pre-tax net income less
 investment  income (loss) and realized  investment  gains  (losses)  (the  “Adjusted
 Target  Income”)  is above the  target set forth in the  financial  targets, attached
 hereto as Exhibit A for fiscal year 2002,  Manager  shall be entitled to receive as an
 incentive  fee equal to 10% of the excess above the target  (“Incentive  Fee.) The
 Incentive  Fee, if any, due to Manager shall be paid within ten (10) days after the
Adjusted  Target Income of the Company is calculated  for the  applicable  year, but in
any event no later than April 10 of the year immediately following such applicable year. 

        (B)
    In the event that the Adjusted  Target Income is below the target,  Manager’s
 Management  Fee shall be reduced by 25% of the deficiency  below the target. A
deficiency  adjustment,  if any, to the Management Fee shall be made within ten (10) days
after the Adjusted  Target Income of the Company is calculated for the  applicable  year,
but in any event no later than April 10 of the year immediately following such applicable
year. 

6. SECTION TWENTY-ONE,
Notices, is amended as follows:  

	 	 “If to Company: 

	 	
Anesthesiologists Professional Assurance Company 
1320 South Dixie Highway, Suite
1060 
Coral Gables, Florida 33146 
Attention: Frank Moya, M.D. 

	 	
If to Manager:  

	 	
APA Management, Inc. 
1320 South Dixie Highway, Suite 1060 
Coral Gables, Florida
33146 
Attention: Gene C. Witherspoon 

	

114 

	 	
If to FPIC:  

	 	
FPIC Insurance Group, Inc. 
225 Water Street, Suite 1400 
Jacksonville, Florida
32202 
Attention: Roberta Goes Cown” 

	

        This
Amendment is made a part of and is hereby  incorporated  by reference into the Management
 Agreement.  Where the terms of this  Amendment  conflict with the terms of the Agreement
the terms of the Amendment  shall be  controlling.  All other terms and provisions of the
Management Agreement remain in full force and effect. 

(Signatures on next
page) 

115 

	

        IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first
above written. 

	FPIC INSURANCE GROUP, INC.
 
  	APA MANAGEMENT, INC.
  
	By:

Name:
Title:		/s/ John R. Byers

John R. Byers
President and Chief Executive Officer		By:

Name:
Title:		/s/ Frank Moya

Frank Moya
Chairman
	 
 
	ANESTHESIOLOGISTS PROFESSIONAL

ASSURANCE COMPANY
 
  	
	By:

Name:

Title:		/s/ Gene Witherspoon

Gene Witherspoon

President				

	

116 

	

EXHIBIT A  

2002 FINANCIAL TARGETS  

	1.	 	GAAP Net Income	 	 	 
	 	 	      Pre-Tax	 	$2.970M	 
	 	 	      After Tax	 	$2.159M	 
	 	 
	2.	 	Adjusted Target Income	 
	 	 
	 	 	Adjusted Target Income =	 
	 	 	Pre-Tax Net Income less	 
	 	 	Investment Income (Loss)	 
	 	 	and Realized Investment	 
	 	 	Gains (Losses)	 	$  199,317	 
	 	 
	3.	 	Loss Ratio	 	86.5%	 
	 	 
	 	
Should FPIC determine a Loss Ratio higher than an
actuarially required Loss ratio is appropriate, Manager
will receive a proportional adjustment to Adjusted
Target Income. If it is determined that an 86.5% Loss
Ratio is not actuarially sufficient, no adjustment will
be made to Adjusted Target Income.
 
	 	 
	4.	 	Expenses Ratio	 	12%	 
	 	 
	5.	 	Combined Ratio	 	98.5	 
	 	 
	6.	 	Return on Equity	 	8.5%	 
	 	 
	7.	 	Dividend Payable	 	$1.5M payable Second Quarter of 2002	 
	 	 
	8.	 	Loss and LAE Reserves	 	Within 1% of Independent Actuary’s mid-point	 
	

	

117

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